Article

Management of Innovation

RI 2016: Section 5.4

The next web lecture by Roland Ortt is about management of innovation and entrepreneurship. In this lecture, he will particularly focus on product innovations. Notably, he distinguishes between two perspectives:

  1. Innovation as a project
    The innovation process is seen as a project - a new product development project - that starts when a new technology is available. To complete this process successfully, R&D management is required to develop the technology and R&D is further involved in the subsequent product development project.
    Project management is required to manage the new product development project. Marketing management is required to prepare the market introduction plan, and to manage the subsequent diffusion process.
    From the 1980s on, mainstream innovation management handbooks have presented innovation as a project.

  2. Innovation as more than a project
    In this perspective (and also the core of this web lecture) the innovation process is far more nuanced and complex: 
  • Technology development and product development proceed in parallel. Usually the first products are unreliable, and the technology needs to be developed further to enable the development of reliable products. Jointly developing a product and the required technology is not just one project, but rather, resembles more a complex program of highly related and therefore iterative projects.    
  • Many companies (or networks of companies) compete with each other by working in parallel on technology and product development. Sometimes findings are patented and then used by other consortia. In the era of open innovation, innovation is an interlinked process of many separate projects.
  • Sometimes, a new product cannot just be introduced. The market initially usually lacks all types of complementary products and services (say, infrastructure), or worse, production facilities are not yet available.

You may know some examples!

 

 

Suggested readings

  • The pattern of development and diffusion of breakthrough communication technologies 
    by  J. Roland Ortt and Jan Schoormans

    Diffusion of many successful communication technologies, like telephony and television technology, follows an almost perfect S-shaped curve. This curve suggests that, after their introduction, subsequent sales of products on the basis of these technologies can be predicted accurately. However, the diffusion of other breakthroughs in communication technologies (like interactive television, video telephony or broadband mobile communication technology shows a more erratic pattern). Introduction of these technologies is often postponed, or once introduced, they are quickly withdrawn from the market after initial disappointing results. The article explains that the diffusion has to cope with considerable externalities (such as a network, in the case of telecommunication appliances). This also has managerial implications.
  • A very important topic when it comes to innovation is standards.  Standards are, for example,  needed for interoperability of technical systems.  ‘No flexibility without standards’. Some of you already mentioned the importance of standards in the forum,  But do pre-existing standards and regulations hamper or stimulate the development and diffusion of radically new high-tech products ?  Check out this article by J. Roland Ortt  and Tineke M. Egyedi.
  • Radical innovation and open innovation 
    by  Khanh Pham-Gia. The link is a copy to a chapter on radical innovation.
  • How to manage radical innovations
  • Joseph Schumpeter: http://en.wikipedia.org/wiki/Joseph_Schumpeter
  • Book (for sale, no open access): Determinants of Innovative Behaviour: A Firm's Internal Practices and its External Environment (2008) 
    by Cees van Beers (editor), Alfred Kleinknecht (editor), Roland Ortt (editor) and Robert Verburg (editor).

    Abstract:
    The idea that innovation and technological change is important for economic growth and human development has long been recognized. This book explores this idea, providing an overview of current research on determinants of innovation in firms from the perspective of economics and management. It deals with the innovating firm's internal and external organization and how their mutual relationship affects innovative behaviour. Using several methods of analysis, the book reveals the specific determinants that are predominant in explaining firm performance on innovation. Several chapters in this book address the needs of both scientific economists and management scientists as well as practitioners.