Innovation Management and New Product Development

[Pages:13]Innovation Management and New Product Development

Fifth Edition

Paul Trott

Portsmouth Business School

Financial Times Prentice Hall is an imprint of Harlow, England ? London ? New York ? Boston ? San Francisco ? Toronto ? Sydney ? Singapore ? Hong Kong Tokyo ? Seoul ? Taipei ? New Delhi ? Cape Town ? Madrid ? Mexico City ? Amsterdam ? Munich ? Paris ? Milan

Contents

Preface Foreword by Professor Guus Berkhout Acknowledgements Plan of the book

~

xix

xxiii

xxiv

xxviii

Part One Innovation management

1

Innovation management: an introduction

2

The importance of innovation

4

The study of innovation

6

Recent and contemporary studies

9

The need to view innovation in an organisational context

10

Individuals in the innovation process

11

Problems of definition and vocabulary

'

12

Entrepreneurship

12

Design

13

Innovation and invention

15

Successful and unsuccessful innovations

16

Different types of innovation

,

16

Technology and science

. "

18

Popular views of innovation

20

Models of innovation

-

20

Serendipity

21

Linear models

21

Simultaneous coupling model

23

Architectural innovation

23

Interactive model

24

Innovation life cycle and dominant designs

25

Open innovation and the need to share and exchange knowledge

(network models)

'

25

Discontinuous innovation - step changes

27

Innovation as a management process

28

A framework for the management of innovation

29

New skills .

31

Innovation and new product development

32

Case study: The success of the iPod and iPhone raises the licensing question

for A p p l e . . . again

33

vii ,

Contents

Chapter summary

40

Discussion questions

40

Key words and phrases

41

References

41

Further reading

44

Economics and market adoption

46

Innovation in its wider context

-

48

The role of the state and national 'systems' of innovation

.

50

How national states can facilitate innovation

51

Fostering innovation in the United States and Japan

52

The right business environment is key to innovation

54

Waves of innovation and growth: historical overview

54

Fostering innovation in 'late-industrialising' countries

57

Innovation within the 25 EU states

58

Improving the innovation performance of the EU

60

The times they are a changing: how frugal innovation is providing a future

path for firms in emerging markets

61

Innovation and the market

61

Innovation and market vision

62

Innovative new products and consumption patterns

62

Marketing insights to facilitate innovation

64

Lead users

66

Innovation diffusion theories

67

Adopting new products and embracing change

69

Market adoption theories

71

Case study: How three students built a business that could affect

world trade

71

Chapter summary

77

Discussion questions

78

Key words and phrases

78

References

' 78

Further reading

80

Managing innovation within firms

82

Organisations and innovation

84

The dilemma of innovation management

84

Managing uncertainty

85

Pearson's uncertainty map

86

Applying the uncertainty map in practice

88

Managing innovation projects

89

Organisational characteristics that facilitate the innovation process

91

Growth orientation

93

VIII

Contents

Organisational heritage and innovation experience

94

Vigilance and external links

95

Commitment to technology and R&D intensity

.

95

Acceptance of risks

95

Cross-functional cooperation and coordination within organisational structure

95

'..

Receptivity

96

;:

Space for creativity

96

*

Strategy towards innovation

96

?

Diverse range of skills

97

|:

Industrial firms are different: a classification

99

Organisational structures and innovation

101

Formalisation

101

Complexity

102

Centralisation

102

Organisational size

103

The role of the individual in the innovation process

103

IT systems and their impact on innovation

104

Management tools for innovation

107

Innovation management tools and techniques

107

Applying the tools arid guidelines

109

'

Case study: Gore-Tex? and W.L. Gore & Associates: An innovative company

/

and a contemporary culture

110

;-

Chapter summary

,

114

"?

Discussion questions

114

I

Key words and phrases

115

JT,

References

115

h

Further reading

117

Innovation and operations management

118

Richard Noble, University of Portsmouth

Operations management

120

The nature of design and innovation in the context of operations

121

Design requirements

122

Design and volumes

124

Craft-based products

126

Design simplification

?

127

Process design and innovation

128

Innovation in the management of the pperations process

129

Triggers for innovation

130

Design of the organisation and its suppliers - supply chain management

135

Business process re-engineering (BPR)

138

Operations and technology

139

Innovation as an operations process itself

144

Case study: Novels, new products and Harry Potter

145

Chapter summary

151

IX

Contents

Discussion questions Key words and phrases References Further reading

Managing intellectual property

Intellectual property Trade secrets An introduction to patents

Novelty Inventive step Industrial applications Exclusions from patents The patenting of life Human genetic patenting The configuration of a patent Patent harmonisation: first to file and first to invent Some famous patent cases Patents in practice Expiry of a patent and patent extensions Patent extensions The use of patents in innovation management Do patents hinder or encourage innovation? Alternatives to patenting Trademarks Should satisfy the requirements of section 1(1) Distinctive Non-deceptive Not confusing Brand names Using brands to protect intellectual property Exploiting new opportunities Brands, trademarks and the internet Duration of registration, infringement and passing off Registered designs Copyright Remedy against infringement Damages Injunction Accounts Counterfeit goods and IP

Case study: Pricing, patents and profits in the pharmaceutical industry

Chapter summary Discussion questions Key words and phrases References Further reading

151 151 152 153

154

156 159 160 161 162 162 162 163 163 164 165 166 167 167 169 170 170 172 173 175 175 175 175 176 177 178 179 179 180 181 183 183 184 184 184

185

189 189 189 189 191

Part Two Turning technology into business

Managing organisational knowledge

The battle of Trafalgar

Technology trajectories

The acquisition of firm-specific knowledge

The resource-based perspective

Dynamic competence-based theory of the firm

Developing firm-specific competencies

Competencies and profits

Technology development and effort required

The knowledge base of an organisation

The whole can be more than the sum of the parts

Organisational heritage

When the performance of the organisation is greater than the abilities

of individuals

Japanese organisations and the role of organisational knowledge

Characterising the knowledge base of the organisation

The learning organisation

Innovation, competition and further innovation

Dominant design

How firms cope with radical and incremental innovation

Developing innovation strategies

Leader/offensive

Fast follower/defensive

Cost minimisation/imitative

Market segmentation specialist/traditional

A technology strategy provides a link between innovation strategy and

business strategy

/

Case study: The cork industry, the wine industry and the need for closure

Chapter summary Discussion questions Key words and phrases References Further reading

Strategic alliances and networks

Defining strategic alliances The fall of the go-it-alone strategy and the rise of the octopus strategy Complementary capabilities and embedded technologies

Interfirm knowledge-sharing routines Forms of strategic alliance

Licensing Supplier relations Outsourcing Joint venture

Contents

193

194

196 197 198 198 199 200 202 203 203 204 205

205 206 207 209 209 211 212 216 216 217 218 218

218 219 228 228 228 229 231

232

234 236 237 238 239 239 240 240 241

XI

Contents

xii

Collaboration (non-joint ventures)

241

R&D consortia

241

Industry clusters

242

Innovation networks

243

The 'virtual company'

245

Motives for establishing an alliance

246

The process of forming a successful strategic alliance

247

Negotiating a licensing deal

248

Terms for the agreement

;

248

Rights granted

249

Licence restrictions

249

Improvements

249

Consideration (monetary value)

249

Reports and auditing of accounts

249

Representations/warranties

250

Infringement

250

Confidentiality

250

Arbitration ..

250

Termination

250

Risks and limitations with strategic alliances

250

The role of trust in strategic alliances

253

The concept of trust

253

Innovation risks in strategic outsourcing

255

Eating you alive from the toes up

257

The use of game theory to analyse strategic alliances

258

Game theory and the prisoner's dilemma

259

Use of alliances in implementing technology strategy

260

Case study: And the winner is Sony's Blu-ray - the high-definition DVD format war 261

Chapter summary Discussion questions Key words and phrases References Further reading

267

?'

268

268

268

271

Management of research and development

272

What is research and development?

274

The traditional view of R&D

?

275

R&D management and the industrial context

275

R&D investment and company success

278

Classifying R&D

281

The operations that make up R&D

283

R&D management and its link with business strategy

285

Integration of R&D

286

Strategic pressures on R&D

288

The technology portfolio

289

The difficulty of managing capital-intensive production plants in a dynamic

environment

290

Contents

Which business to support and how?

291

Technology leverage and R&D strategies

293

Strengths and limitations of this approach

294

Allocation of funds to R&D

,

295

Setting the R&D budget

296

Level of R&D expenditure v

298

Case study: The long and difficult 13-year journey to the marketplace for

Pfizer's Viagra

299

Chapter summary

306

Discussion questions

306

Key words and phrases

307

References

307

Further reading

308

Managing R&D projects

310

Successful technology management

.

312

The changing nature of R&D management

314

Organising industrial R&D

317

The acquisition of external technology

318

Level of control of technology required

319

Forms of external R&D

320

Effective R&D management

323

Managing scientific freedom

324

Skunk works

327

The link with the product innovation process

328

The effect of R&D investment on products

329

Evaluating R&D projects

330

Evaluation criteria

330

Case study: CSI and genetic fingerprinting

334

Chapter summary

340

Discussion questions

340

Key words and phrases

340

References

.

341

Further reading

343

Open innovation and technology transfer

Background

The dominant economic perspective

Open innovation

Introduction to technology transfer

Information transfer and knowledge transfer

p

Models of technology transfer

|J

Licensing

||;

Science park model

Intermediary agency model

344

346 347 348 350 350 351 352 352 353

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