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Metro AG’s ‘Future Store’

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Title: 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
m incorporating 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 of their 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 conducted and 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.

99
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.

100
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

102
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

113
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?
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