Metro AG’s ‘Future Store’

1
Teaching Slide 1 Decide how best to invest 15
Million in Development cost
2
Teaching slide 2 Possible solutions
3
Table 6.1 Acronyms used in Valuation and
Portfolio management
 
4
Table 6.2 Portfolio Management Issues and their
Impact  
 
5
Figure 6.1 Single Stage, Multi-Stage and Network
Projects
Stop
a) Single stage Project
Stop
Stop
Stop
5
50
25
Sales
b) Multi-stage Project
75
50
95
Stop
60
Sales
c) Network Project
Stop
20
40
Sales
90
80
Stop
10
6
Figure 6.2 Development of NPV with Time

NPV
Max NPV
Time
Time to
break
even
-
File Diagram 6_2.ppt
7
Figure 6.3 Decision Tree for Project Alpha
Stage 4
Stage 2
Stage 3
Stage 1
Stop
30
Design
Sales
-6m
75m
50
Feasibility
75
-2m
Pilot
70
-12m
50
Stop
25
Stop
8
Figure 6.5 Monte Carlo Simulation for a Project
Mean 1.73
Confidence
-30.00
-15.00
0.00
15.00
30.00
Project value,
9
Figure 6.6 Truncated Distributions Showing
Upside Downside
Confidence
Confidence
Upside
Downside
Upside
Downside
0.6
0.6
0.4
0.4
0.2
0.2
ECV
ECV
ECV
X
X
60
20
-20
60
20
-20
40
0
40
0
Project Result, Millions
Project Result, Millions
10
Table 6.4 Duponts Project Scoring System
11
Table 6.5 Domino Lasers Project Scoring Matrix
HARD
SOFT
12
Figure 6.8 Appropriate Valuation Methods
Several
Monte-Carlo
ECV and DTA
Number Of Stages
NPV
Scoring methods
One
IRR
High
Low
Uncertainty (Commercial and technical)
13
Figure 6.9 Strategic Alignment of Projects by
Market Served
MARKET 4
MARKET 3
MARKET 2
MARKET 1
14
Figure 6.10 Time Balance in a Project Portfolio
Number Of Projects Completing
Number Of Projects Completing
Time
Time
(b) Feast and Famine
(a) Regular Delivery
15
Figure 6.11 Risk-Reward Matrix
Low reward

16
Table 6.6 Domino Lasers Project Risk Assessment
TECHNICAL
COMMERCIAL
17
Figure 6.13 Portfolio Tools at Various Stages of
Innovation
18
Mini Case 6.1 The World Bank

• Aim is to alleviate poverty. Used to avoid
  funding anything with a high risk, decision
  process was slow
• Now project selections projects in the way
  venture capitalists make funding decisions
• Spread risks , not just going for the big one
• Initial funding is now available for the first
  stages
• Subsequent financing is dependent on defined
  results being achieved in a set timeframe
• Experimenting more and running pilot programmes
  to test radical ideas
• Range of products being considered and the
  selection process is transparent Innovation
  Fair
• Decisions made by panel of judges drawn from
  industry and a variety of non-profit
  organizations

Source Chapman Wood and Hamel, 2002.
19
Mini Case 6.1 Embraer Aerospace

• Using decision for introduction of RFID
  technology
• Trees constructed for one, two, or no trial
  implementations
• Mote Carlo results truncated and used to
  compare upside and downside

20
Figure 6.7(1) Decision Tree for Embraer
21
Figure 6.7(2) Monte Carlo Simulation for Embraer
22
Table 6.3 Comparison of Strategies for Embraer





Highest

Expected

Expected


value

Upside

/

Mean

Upside

/

(HLV)

Downside

LLV







No pilot

475


3.1

135

1.0







1 pilot

765


3.2

160

1.2
5








2 pilots

697


5.3

190
1.0


Best
Most secure
expectation
bet
23
Mini Case 6.3 Domino Lasers

• A manufacturer of laser systems based in the US
  and Germany
• It was clear that managers in the two parts of
  the company had different tolerances of risk. The
  two teams also tended to emphasize different
  aspects of the market, the Americans being more
  used to seeking high volume opportunities while
  the Germans tended to pursue applications with
  lower volume but higher margins.
• we discussed the facts of each project and then
  scored them individually. Then we discussed the
  scores.
• At the end we recorded the range of each score as
  well as the mean. People felt much more
  comfortable not trying to force a consensus.

24
Mini Case 6.4 Agilent Technologies now Verigy

• Financial controlling took wider role champions
  and drives the portfolio for maximum return
• Became a business partner
• Developed portfolio tools and techniques (e.g.
  scoring for attractiveness/risk diagrams) with
  top management
• The value is in the discussion and less in the
  absolute value of the scores
• Senior managers all measured on the performance
  of the whole portfolio (not just, for example,
  RD progress)
• Team learnt to have the courage to say no

25
Mini Case 6.5 Fruit of the Loom

• Used a bubble diagram to summarize all of the
  process innovation projects within the company
• Process innovation portfolio management has been
  very successful for Fruit of the Loom

26
Mini Case 6.6 SmithKline Beecham now
GlaxoSmithKline

• Controlling advocacy in project selection
• Figures cant lie but liars can figure
• Four proposals baseline buy-up buy-down
  and minimal (avoids all or nothing advocacy)
• Discussed by senior managers
• Information collected reviewed by separate panel
• Portfolio proposed by separate group
• Final selection

27
Mini Case 6.7 Richardson

• How can successful companies avoid being trapped
  with one technology or product concept?
• How can links between the innovation strategy and
  new product development be made effective?

• How can the product concepts be selected that are
  most likely to be successful?
• Should new technologies be developed parallel to
  new products?

28
Case Study Britannia Building Society

• What difficulties face a company trying to create
  an innovation culture?
• Can innovation be imported into an organization
  from outside or must it grow from within?
• How does innovation management differ in service
  and manufacturing enterprises?
• What criteria are appropriate for evaluating
  projects in the service sector?

29
Figure 6.14 Britannias Project Scoring System
30
Chapter 7
31
Figure 7.1 Development of Committed Costs and
Expenditure
Cost
Committed
Commitment
Expenditure (and often management attention)
Concept
Planning
-
Implementation
Roll-out
Project phase
After Roussel, Saad and Erikson 1991
File Diagram7.1. ppt
32
Figure 7.2 The Project Management Triangle
SPECIFICATION
TIME
COST
33
Table 7.1 Project Trade-offs (1)
Source Reinertsen 1983
34
Table 7.2 Project Trade-offs (2 different
assumptions)
35
Figure 7.3 Work Breakdown Structure
Project
MainTask 1 (eg design)
Main Task 2 (eg implementation)
Main Task 3 (eg marketing)
Task
Task
Task
Task
Task
Task
Task
Task
Task
Task
Task
Task
Task
Task
36
Table 7.3 Risk Checklist (marketing factors)
Source After Keizer, Halman and Song, 2002.
37
Table 7.4 FMEA for Supermarket Checkout
38
Figure 7.4 The House of Quality
Conflicts
5
Specification
Customer needs
2
Interaction matrix
1
3
Specification priority scores
4
39
Figure 7.5 QFD for Postal Delivery
Local distribution depots
Staff quality incentives
Address reading system
Customer profile info.
Sorting process
Local transport
Low cost




Reliable 7



Daily Delivery 10


Mail not damaged 9
Mail can be diverted 5


Low cost 6



Arrangements for absence 4
41
100
73
37
63
54
81
40
Figure 7.6 Conflict between Features in QFD
x
x
x
Staff quality incentives
Address reading system
Local distribution depots
Customer profile info.
Sorting process
Local transport
Low cost
41
Table 7.5 The Service Concept
42
Figure 7.7 Service Blueprint for Consultancy
Services
43
Figure 7.8 Stakeholder Mapping
High
Power
Low
Interest
Low
High
Adapted from Johnson and Scholes
44
Figure 7.9 Phase-gate Process of Six Stages
45
Table 7.6 Maturity of NPD Process
Source Fraser (2003)
46
Figure 7.10 Efficiency of Engineers
0.8
0.6
Efficiency
0.4
0.2
0
1
2
3
4
5
Number of projects
Source Wheelwright and Clark 1992
Source Wheelwright and Clark (1992)
47
Figure 7.11 Improvement of Utilization by
Loadsharing
Multi-server queues
5 servers
0.8
2 Servers
0.6
1 server
Utilisation
0.4
0.2
0
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
Delay/ average service time
48
Table 7.7 Maturity Stages for NPI Collaborations
Source After Fraser et al 2003
49
Mini Case 7.1 Organon

• Organon creates, produces and markets
  prescription drugs mainly for reproductive
  medicine, psychiatry and anaesthesia.
• The main risks related to the uncertain demand
  for pharmaceuticals are over- capacity and lost
  sales.
• Organon product launch plans include different
  sales scenarios best, expected, and worst cases.
  
• Based on these sales scenarios, a number of
  supply chain design options are prepared.
• Each supply chain design option is quantitatively
  evaluated on 5 criteria finance, risk, available
  resources, flexibility to scale production up and
  down, and the confidence in the assumptions.
• It is important not only to have an excellent
  product but also to match it with the best supply
  chain design.

50
Mini Case 7.2 Pizza Hut

• 7-stage NPD process called the FRPP the Field
  Ready Product Process
• Defines the steps that are necessary to develop
  the recipe, select suppliers, test
  manufacturability and ensure positive customer
  reactions
• Ensures that employees are adequately trained on
  the new product before its release
• Essential to have a reliable but flexible NPD
  process
• Key success factors?

51
Mini Case 7.3 NZ DoC, New Zealand

• Invasions of rats from overseas on many south
  Pacific islands killing indigenous birds
• NZ DoC looked at eliminating rodents entirely
  (impossible) - the Pest Eradication
  Programme Restoring the Dawn Chorus
• Development of new poisons and experiments on
  small islands to eliminate a single rodent
• Moved to larger and more complex islands and
  multiple species
• 13 species of rodent had been eradicated from 60
  islands by 1990 20 by 2001
• Other countries are now copying the DoCs success
• Key success factors?

52
Mini Case 7.4 Bank of America

• Bank of America realized that testing new
  services and delivery mechanisms is just as
  important as physical prototypes for tangible
  products.
• 20 test branches were equipped with new systems
  and the staff received training on the test
  services that would be offered.
• Staff members are normally paid on a commission
  basis and so they found that their incomes were
  dropping significantly because of the time that
  they spent on new services. This was solved by
  putting the staff on a fixed salary
• It shows that the motivation of employees can be
  a key consideration in the design of new service
  products.

53
Mini Case 7.5 Boxer Design Consultants

• Design agency focusing largely on food packaging
  and branding
• Translating the literal into the emotional
• Have re-designed all of McDonalds packaging
• Re-branded Birmingham Many worlds, one great
  city

54
Mini Case 7.6 Cruise Liners

• World cruise business is 8 million guests per
  year, approx 150 cruise liners sailing the
  worlds oceans
• Typical guest spends 2,500 for 7 nights
• New concepts often encounter problems (e.g.
  Cunard)
• Safety deposit Minies missing
• Lack of drawer space in staterooms
• Lack of drinks stations in Food Court slowed
  the service
• Waste outlets and air inlets
• Blueprints discussed

55
Case Study Wipro Technologies

• What are the issues when new product development
  is conducted at multiple sites? How can these
  issues be addressed?
• How can the product development process be
  optimized through learning from each project?
• What should companies do to stimulate learning
  that is not just related to specific new product
  development projects?

56
Chapter 8
57
Figure 8.1 The Links to the Other Pentathlon
Elements

• Leadership and culture
• Change management
• Alliances, networks and innovation

Implementation (NPD, etc)
Prioritization
Ideas

• Cross-functional teams
• Champions
• Project-to-project learning

• Participation
• Risk-taking no-blame
• Teams for projects

• Culture
• Atmosphere
• Recognition

People and Organization
People Management
58
Figure 8.2 The Cultural Web
Source Balogun et al. 1999
59
Figure 8.3 The Current Cultural Web for BuildCo

• 4 Stories
• Board level
• discussions
• Management consultants
• Operational problems
• Alliances

• 3 Symbols
• Gate Review
• Board
• Stage-Gate
• Manual

• 5 Routines and
• Rituals
• Monthly / quarterly
• reports
• Project planning
• workshops
• Gate Review
• meetings

• 7 Paradigm
• Cautious
• Cost cutting
• Wavering focus
• Must look busy
• Any progress is
• progress

• 2 Power Structures
• Parent calls shots
• Business units

• 1 Organizational
• Structures
• Head of Business
• Development
• Process Managers
• Project leaders
• Stage-Gate

• 6 Control
• Systems
• Timesheets
• Budgets
• Stretch revenue
• targets

60
Figure 8.4 The Desired Cultural Web for BuildCo

• 2 Power Structures
• Power vested in a market focus
• Balance between Business Unit and parent

61
Table 8.1 Best Practices for Achieving a
Culture of Innovation
62
Table 8.1 Best Practices (continued)
63
Figure 8.5 Functional Teams
Business Unit Manager
R D Manager
Operations Manager
Marketing Manager
Finance Manager
Kaizen Team
Finance Functional Team

• Team of employees from one function
• Typical example is continuous improvement
  (kaizen) teams in operations
• Team leadership may be provided by a supervisor,
  or a team member from the same function

64
Figure 8.6 A Cross-Functional Team
Business Unit Manager
R D Manager
Operations Manager
Marketing Manager
Finance Manager
Project Manager

• Project manager is normally drawn from one of
  the functions and still reports to functional
  manager
• Team of employees from across the functions
  reporting relationship is dotted line

65
Figure 8.7 A Heavyweight Cross-Functional Team
Business Unit Manager
Heavyweight Proj. Manager
R D Manager
Marketing Manager
Operations Manager
Finance Manager

• Team of employees from across the functions
  report to the heavyweight project manager for
  the duration of the project
• Project manager reports to top management and is
  at a similar level to the functional managers

66
Figure 8.8 An Autonomous Team
67
Figure 8.9 A Virtual Team
Sponsor
Operations
Marketing
Finance
R D

• Sponsor organization provides management and
  maybe some functional expertise

Project Manager
R D
Operations
Marketing
Finance

• Different organizations provide functional
  expertise

Org. A
Org. B
Org. C
R D
Finance
R D
Finance
R D
Finance
Operations
Marketing
Operations
Marketing
Operations
Marketing
68
Table 8.2 Choosing the Right Type of Team
69
Table 8.3 Team Roles
Source Adapted from Belbin, 1981.
70
Table 8.3 Team Roles
Source Adapted from Belbin, 1981.
71
Figure 8.10 The Teamwork Wheel
Mature Closeness
Testing
Getting Organized
Infighting
Source Based on Tuckman, 1985.
72
Table 8.4 Suggested Ground Rules for C-F Teams
73
Figure 8.11 Cascading Innovation Goals to
Employees
Example increase revenues from new products by
x this financial year.
Organizations Goals
Example introduce a new product by month m, at
a cost of, generating a market share of and
revenues of this year.
Project Teams Goals
Team Rewards / Recognition
Example program software for function z, with a
defect rate lower than , by month
mincorporating production test routines which
are more effective than the previous
product and linked to Software Module B.
Individual Bs Goals
Individual As Goals
Employee Rewards / Recognition
74
Table 8.5 Employee-Level Innovation Metrics
75
Table 8.6 Rewards and Recognition for Innovation
76
Figure 8.12 Reward and Recognition Matrix
Powerful motivators peer and management
Intra-preneurship
High
Recognition
Part oftheir job
Less appropriate
Low
Low
High
Reward
77
Mini Case 8.1 United Parcel Service

• One of 16 Fortune 100 companies from 1900,
  350,000 employees
• Culture perceived as myths, rituals, language,
  ideas, goals and values
• Policy Book and Code of Business Conduct
  documentation
• First logistics company to experiment with air
  freight (in 1925)
• Focus on cost-effective package shipping led them
  to trail Fedex
• Now offer choice of services (options on delivery
  and price)

78
Mini Case 8.2 Texas Instruments

• There can be a downside to inventiveness if it
  becomes the strongest component of RD culture -
  it can lead to the proverbial reinvention of the
  wheel.
• RD engineers do not always need to start from
  scratch. Unfortunately the not invented here
  (NIH) syndrome, where researchers do not adopt or
  adapt existing ideas, instead insisting on
  developing their own original solutions, wastes
  resources.
• Texas Instruments (TI), the developer and
  manufacturer of integrated circuits, has taken
  steps to avoid NIH as part of their Vision 2005
  initiative.
• This includes an annual NIHBWDIA prize for the
  RD employee who takes an idea from somewhere
  else and makes a significant contribution to
  product or process innovation

79
Mini Case 8.3 QB Shell, Japan

• Hairdressing chain in Asia
• Addressed time poor segment
• Process flow analysis conductedand service
  augmentation optimized
• Ergonomic shells
• No payments
• Waiting lights
• Locations
• Major success

80
Mini Case 8.4 3M

• There are three levels at which 3M has taken
  steps to stimulate more innovation at the
  company, team and individual level.
• At the company level these goals were 30 per cent
  of revenues must be from products less than four
  years old and ten per cent from products less
  than one year.
• Action Teams were introduced for NPD. 3M found
  that not only the Action Teams needed training
  but also top management needed coaching to back
  off and really empower the team.
• At the individual level, 3M have taken steps to
  promote and reward innovation. The rule that
  development people can spend up to 15 per cent of
  their time on investigating their personal ideas
  is almost as famous as the Post-it.

81
Mini Case 8.5 Lockheed

• Sometimes large organizations can stifle
  innovation through their control systems and
  routines.
• Mimicking the advantages of a small start-up is a
  popular approach that is normally referred to as
  starting a skunk works.
• The original skunk works was created to
  accelerate the design of a new jet fighter in
  1943. Lockheed assigned a team of 23 engineers to
  the project and freed them from the bureaucracy
  and the official RD process.
• The results for Lockheed were dramatic the
  Shooting Star jet was designed in 43 days and
  was the first American-designed aircraft to
  exceed 500 miles per hour.

82
Mini Case 8.6 Fischer GmbH

• Manufacturer of industrial fixing devices based
  in southern Germany
• The company has a tradition of innovationit has
  filed hundreds of patentsand so there has always
  been a strong focus on RD generating ideas for
  new products.
• Employees contributions to innovation are
  assessed in annual appraisals using a 1-5 scale.
• Although the rating is subjective, it stimulates
  discussion between employees and management about
  innovation.

83
Mini Case 8.7 Zenith Electronics

• The US-based Zenith Electronics Corporation
  normally used after the event awards, given to
  teams or individuals for top performance.
• A multi-million dollar contract with a heavy
  delivery time penalty clause led to a new
  approach.
• It was decided to create a share scheme for
  the project with a sum of several hundred
  thousand dollars reserved for rewarding the large
  team
• Dedicated team members were allocated 200 shares
  and part-timers received 50. The initial value of
  the shares was zero but the successful
  achievement of each milestone and quality target,
  led to set increases in the share value, whereas
  each day of delay would lead to a defined loss in
  share value.
• Zenith has recognized the need to regularly
  update their reward system.

84
Case Study timematters
Overnight is old news. We deliver today! Why wait
until tomorrow, when it can be done on the same
day? timematters delivers extremely
time-critical shipments sameday
Onboard courier service Your shipment is so
valuable that you do not want to let it out of
your hands? Our onboard courier service ensures
constant, personal monitoring throughout the
transport
Worldwide transportation solutions Sameday
worldwide - only timematters can accomplish
that! Within just a few hours we can deliver your
urgent shipment to the most remote corners of the
earth
Innovation Management
84
85
Chapter 9
86
Figure 9.1 Improving Innovation Performance
Process Steps
Implement Changes
Projects
Assess Current Performance
Identify Priorities Linkages
Determine Actions
Organization
Change Equation
Pentathlon
Measures Innovation Audit Cultural Web
Main Inputs / Approaches
87
Figure 9.2 Input-Output View of the Innovation
Process

• Input Measures
• e.g. revenues
• for RD

• Process Measures
• e.g. time-to-market
• e.g. of ideas commercialized

• Output Measures
• e.g. sales from
• new products

Innovation Process
Inputs
Outputs

• Time
• Resources
• - transforming
• - transformed
• Investments

• Products
• Services
• Processes

• Effectiveness
• Efficiency

88
Table 9.1 Points to Consider in Choosing
Performance Measures
Source Based on Neely et al., 1997.
89
Table 9.2 Example Input, Process and Output
Measures
Source Based on Goffin, 2001, Neely et al., 1997
and Johnston and Clark, 2001.
90
Table 9.2 Example Input, Process and Output
Measures
Source Based on Goffin, 2001, Neely et al., 1997
and Johnston and Clark, 2001.
91
Table 9.3 Example Innovation Audit Questions
from BSI
92
Table 9.4 Innovation Audit Questions for the
Service Sector
Source Anonymous, 2000.
93
Figure 9.3 Fast Innovation Audit Questions
INNOVATION STRATEGY

• Has innovation been introduced as a fundamental
  part of your company philosophy and values?
• What is the role of technology in innovation?
• Does top management spend sufficient time
  supporting all stages of innovation?
• Are innovation goals - for new products, services
  and processes - defined?
• Do performance measures reflect the strategy? Are
  they simple, appropriate and valid?
• Is there a good balance of truly innovative
  projects as well as product improvements?
• Does your innovation strategy integrate all five
  areas of innovation management?
• Has the organization developed an innovation
  network?

IDEAS
IMPLEMENTATION (NPD, etc)

• Are creative ideas collected on a regular basis?
• How many ideas for new products, services and
  processes were developed in the last 12 months?
• Do ideas originate from all departments, often
  from contacts with customers (including hidden
  needs)?
• Are ideas quickly developed into new product /
  service concepts?
• Are creativity techniques and workshops used?

PRIORITIZATION

• Is this a bottleneck stage, because too many
  projects are attempted?
• Are best practice techniques such as simultaneous
  engineering applied, where appropriate?
• Is your time-to-market comparable to your
  competitors?
• Are manufacturing ramp-ups fast and efficient?
• Does manufacturing regularly develop new
  processes?
• Are project reviews effectively used?

• Is there a good balance of ideas for new
  products, services and processes?
• Are concept reviews held regularly?
• Are choices made quickly?
• Is there a good feedback mechanism from actual
  product performance to ensure screening
  decisions
• Does the responsibility for screening decisions
  lie too high in the company hierarchy?
• Are appropriate tools and techniques used?

PEOPLE AND ORGANIZATION

• Is the broad meaning and importance of
  innovation-new products, services and processes-
  understood by all employees?
• Are clear individual innovation targets set and
  known by all employees?
• Do human resource policies support a culture of
  innovation through stimulating a creative,
  problem-solving working environment? Are
  organizational structures flexible and effective?
• Is innovation covered by employees appraisals?

Source Updated from Goffin and Pfeiffer, 1999.
94
Table 9.5 Emerging Issues Linkages in
Innovation
95
Figure 9.4 Innovation Manager Job Description
Title Director of Innovation Reports to Chief
Executive Officer and Management Board Liaises
closely with Group Director of Organizational
Development, Director of Quality, Chief
Officers,
General Managers and others. Scope and Purpose of
Job To establish and maintain processes of
Innovation within the XXXX Hotel Group, in
order to create and sustain competitive advantage
in the eyes of our principal stakeholders and
support the achievement of the strategic
objectives of the Company. Creating a market
perception innovation and the XXXX brand are
inexorably linked. Key measures and outcomes will
be applied to products, services and internal
processes. Main Roles and Responsibilities To
establish the Innovation architecture within the
Company, applying the Pentathlon Framework
(Goffin Mitchell) or similar. This involves the
following Determining and agree the objectives /
measures / outcomes of the Innovation process,
linked to strategy and stakeholder
expectations. Identifying gaps between
stakeholder expectations and provision of
products and services, taking appropriate
corrective planned action. Managing the
generation and prioritization of ideas through
creative processes. Leading the selection of
ideas and development of concepts with a
management task force Managing Innovation
projects, including cross-functional
teams Understand and assess organizational
culture, in order to adapt interventions to
ensure their success. Contribute to the
development of organization culture. Promote
entrepreneurial spirit and compliance with our
Innovation Guiding Principle. This involves the
following Taking the lead in communicating the
need for innovation across the organization. Deter
mining the need for training key staff in
innovation management techniques. Implementing
appropriate programmes. Working closely with one
selected project team to ensure an early big
success. Using this success story to ensure
innovation thinking quickly becomes embedded
throughout the organization. Contribute to the
selection, performance, development and
recognition of individuals who will support and
contribute to Innovation, in defined roles. Apply
principles of change management where
necessary. Evaluate the Innovation process and
make continuous improvements.
96
Mini Case 9.1 Evotec

• Leading provider of biological, chemical and
  screening services, 600 employees
• Clients include BASF, GlaxoSmithKline, Pfizer and
  Roche
• 5 years ago OAI conducted an innovation audit
• Interviews held with all functions and levels
• Results were revealing staff rated OAI low on
  creativity innovation was not perceived as
  customer-led knowledge not optimally applied
  not enough communication between the two
  divisions clearer rewards needed
• Audit showed that management and employees viewed
  potential for innovation differently. Management
  quickly set about making some significant changes

97
Mini Case 9.2 Synectics

• Leading innovation management consultancy,
  founded in 1960
• Founders taped thousands of hours of new product
  development meetings and analysed how people
  interacted
• Tools and techniques were developed for
  generating creative product ideas
• springboards generating thoughts that lead to
  new thinking
• excursions process to enable the power of the
  subconscious to be released onto a problem
• itemized response process for protecting
  ideas
• These techniques have been applied in a diverse
  range of companies. Key successes include
• helping Liptons turn iced tea from a summer
  product to a popular year-round drink
• improving the logistics processes for a major
  shipping line

98
Mini Case 9.3 Cobra, Thailand

• Based in Chonburi in Thailand, founded in 1985.
  Manufacturer of windsurf and surfboards and a
  range of other items for recreational sports.
• Cobra is constantly developing the combination
  of methodologies and materials says Pierre
  Olivier Schnerb, Vice President of Technology.
  For example, Cobra Tuflite? technology applies
  techniques learnt from windsurfing to surfing.
• The employees have intimate knowledge of the
  sports for which they manufacture equipment.
• In order to stay innovative, employees are given
  the power to create, experiment, and decide.

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Mini Case 9.4 Fiat Iveco

• Massimo Fumarola says, in my opinion there are
  three challenges in managing innovation.

• one has to do with the organization and there is
  a dilemma. On the one hand we want employees to
  work in structured, methodical ways to produce
  products in a timely, in fact a very disciplined
  way. On the other hand, we want people to
  challenge the established ways of thinking and
  working.
• Getting enough people with the right experience
  is something we need to work on.
• Thirdly, its about getting everyone involved.

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Mini Case 9.5 BlackDecker DeWalt

• DeWalt is the brand for BlackDeckers
  professional tools
• First-to-market strategy tracked using product
  vitality the percentage of sales of products
  launched in the previous 3 years (30-50)
• Engineers and product managers spending hours
  and hours on building sites talking to the guys
  making their living with these tools

101
Mini Case 9.6 Dr Magnus Shoeman

• Has worked for RioTinto Borax, UK Department of
  Health and Steria (an IT services company)
• Three key lessons
• Align processes and systems, such as performance
  appraisal and incentive schemes to support
  innovation
• Pay heed to the softer factors of symbolism,
  rituals and routines (the red Porsche effect)
• Ensure that the units championing innovation are
  insulated from the day-to-day business
• An innovation has to deal with innovation
  antibodies

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Case Study Sidler GmbH Co

• What roles can outsourcing play in a companys
  innovation strategy?
• What criteria should be used for selecting
  partners?
• How can confidentiality be managed for innovation
  projects involving interorganizational
  collaborations?

103
Chapter 10
104
Figure 10.1 Maslows Hierarchy of Needs
NEED
EXAMPLES
105
Figure 10.2 Sales Growth and Price Decline
Analogue product
Qty

Going price
Quantities
Second generation
digital
First
-
generation
digital
0
1973
2003
1993
1983
1998
1988
1978
Source Adapted from Minderhout and Frazer, 2005
2
106
Figure 10.3 The Domain of Innovation
Transformational
Revolution
Blue Ocean Strategy
DEGREE OF
Roadmapping
INNOVATION
Options thinking
Cultural web
Hidden needs analysis
Innovation
Culture of
audit
Innovation pentathlon
Service blueprint
innovation
Kano
Radical
Open Innovation
Decision trees
Diffusion studies
Cross-functional teams
-
Repertory grids
Servicescape
Value Innovation
Feature fatigue
TRIZ
Stage gates
Quality
Dominant
Incremental
Competence ceiling
design
Agile project
Stakeholder analysis
The business
management
As usual
Business model
Deliverables
Processes
(Products, services, market positioning)
DIMENSION OF INNOVATION
107
Mini Case 10.1 Automotive

• The concept is to assemble cars in retail parks
  from kits shipped in from low-cost manufacturers
  in India or China.
• By using plastic panels the company would be able
  to customise the vehicles to a high degree so as
  to be able to follow fashions.
• Crucially, the vehicles would be leased, not
  sold, so that returned cars could be refurbished
  and leased again at a reduced rate.
• Since there would be no second hand market, theft
  would be little or no problem (why would you
  steal a car that cannot be resold?) so insurance
  would be cheap.

108
Mini Case 10.2 Vodafone Group Plc

• Worlds largest mobile telecomm company with 146
  million customers
• Group RD consists of 7 research and development
  centres around the world
• German centre in Munich has 34 permanent
  employees, 20 contract staff and 20 students
• Analyze trends, new technologies, build visions,
  monitor players and track the business
  environment to derive ideas for tomorrows
  competitive products and services
• Present ideas at the Annual Conference attended
  by 150 Chief Technology Officers and Strategy
  Directors worldwide

109
Mini Case 10.3 Innovationedge

• Cheryl Perkins has 20 years experience with
  Kimberly-Clark
• Consultant on innovation
• Open innovation is now all about creating
  collaborative networks with the right leaders and
  culture
• Innovation strategic roadmaps including
• Full range of partners needed (including
  crowdsourcing)
• How cultures can be balanced to produce creative
  tension
• Role of leaders
• Collaborations enable cost-savings that single
  organizations cannot achieve alone

110
Mini Case 10.4 The Lotus Effect

• Biologists from the University of Bonn in Germany
  investigated the lotus effect, the apparently
  smooth leaves of this plant repel water and
  almost all dirt and grime. Nanotechnology has now
  enabled this surface to be mimicked and
  easy-to-clean products are now entering the
  marketplace these include coatings for bathroom
  ceramics, paint for walls, and coatings for
  surgical devices. Easy-to-clean technology
  promises to save time.

111
Mini Case 10.5 The Jaipur Foot

• Bio-medical engineers have long studied the
  workings of the body and designed artificial
  limbs, some of which incorporate microprocessors.
• It is estimated that 500 people per day are
  killed or lose a limb as a result of land mines
• However, these civilians do not have the money or
  access to the high-tech devices
• The Jaipur Foot is the solution and it is made of
  simple materials rubber, wood and aluminum -
  which are not only readily available but also can
  be worked by local craftsmen. Typically it takes
  45 minutes to build, lasts five years and costs
  about 30.

112
Mini Case 10.6 Philips

• Katja van der Waal, Open Innovation Manager for
  Lifestyle Division We always remind our RD
  engineers that there are more people outside
  Philips working on the problems that interest us
  than there are engineers inside our company
• Artitec shaver came from working with a mobile
  phone manufacturer
• Bavista coffee company has given many ideas for
  the Senseo range of coffee machines

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Mini Case 10.7 PureInsight

• PureInsight is a consultancy on innovation
  leading edge methods and ideas
• CEO Klaus Schnurr believes that there will be
  three main changes in the future of innovation
  management
• The focus of open innovation will evolve to
  innovation ecosystems
• Innovation metrics will become more important
• Innovation management will become a management
  philosophy, not just a collection of tools and
  techniques

114
Case Study Hewlett-Packard BITS

• What will be the challenges in the future in
  managing innovation?
• Which aspects of the customer relationship are
  essential to a business model?
• What are the key differences between managing
  innovation in small and large organizations?