The Process of Innovation The Process of Innovation MGMT-6960 Innovation in Services Lally School of Management & Technology John Maley eff, Ph. D. Innovation-2 Stages Stages Idea generationEvaluationDevelopmentImplementation The material in this section is derived from Smart Things to Know About Innovation & Creativity by Dennis Sherwood, John Wiley & Sons, (c) 2001." Mind Map" of innovation stages Innovation-4 Discussion Discussiono How does innovation differ from other forms of improvement? Innovation-5 Barriers Barriers Idea generation- often not a major barrier unless organizational "groupthink" exist so Evaluation- conservative guidelines may result in only "safe " recommendation so Development- requires a formal or informal process with visibility and top management support Implementation- success / failures should be analyzed critically Innovation-6 Stage 1 Stage 1- Idea Generation Idea Generation The necessary ability can be learned- effectiveness does NOT require a "gift" for creativity IDEA GENERATION PRACTICE PRACTICE ENJOYMENT Innovation-7 Exercise Exercise Which is the odd word out? NOLI TERI G GROM NLE NEL FEI ACT Innovation-8 Discussion Discussion Innovation-9 Idea Generation Theory Idea Generation Theory " The essence of creativity is the discovery of anew pattern of elements that already exist." Dennis Sherwood"[The creative act] does not create something out of nothing; it uncovers, selects, re-shuffles, combines, synthesizes already existing facts, ideas, faculties, skills." Arthur Koestler The Act of Creation Innovation-10 Idea Generation Process Idea Generation Process Koestler's ideas would led a business manager to appreciate: - the need for involvement / empowerment across the organization- the need to create a process to allow innovation tohappenThe idea generation process should be deliberate, systematic, and safe Innovation-11 Importance of Unlearning Importance of Unlearning A personal barrier that must be overcome is "hardwired " ideas, constructs, and notion so Several causes of this barrier exist- existing or perceived rules- personal stake in current situation- fear (safety in maintaining status quo) - pressure to keep situation as-is Innovation-12 Exercise Exerciseo Create the simplest shape out of the puzzle piecesprovidedInnovation-13 Results Resultso Team 1 - iterative construction Team 2 - no iterative construction Innovation-14 Discussion Discussiono Give examples of how the need for unlearning can impedeinnovationInnovation-15 Idea Generation Steps Idea Generation Steps State the Focusof Attention Create a List ofCharacteristicsHave Individuals Define What They Know Choose aCharacteristicAsk "How Might ThisBe Different"? Allow Free Flowof Discussion Innovation-16 o Sets scope (not too narrow or broad) - can relate to a "problem," or- a case of "constructive restlessness "o Team should include variety of perspectives- even those with little prior knowledge State the Focusof Attention Create a List ofCharacteristicsHave Individuals Define What They Know Choose aCharacteristicAsk "How Might ThisBe Different"? Allow Free Flowof Discussion Due to R. M.

Kanter. Innovation-17 o Start the unlearning process by listing what is known- simple, distinct bullet-type current facts (not evaluations or wishes) are documented- should include obvious and subtle items- can be accomplished using post-it notes (one per item) - limited sharing allowed to help stimulate thought (done in silence without possibility of intimidation) State the Focusof Attention Create a List ofCharacteristicsHave Individuals Define What They Know Choose aCharacteristicAsk "How Might ThisBe Different"? Allow Free Flowof Discussion Innovation-18 State the Focusof Attention Create a List ofCharacteristicsHave Individuals Define What They Know Choose aCharacteristicAsk "How Might ThisBe Different"? Allow Free Flowof Discussiono Combine similar characteristics into single items to create "shared" list- done most easily (physically) with post-it notes- breakdown into components assists the unlearning process- resulting list may have other valuable uses Innovation-19 o Successful only if unlearning process is accomplished- constraints on ideas must be real, not assumed- good facilitation is helpful to bring out ideas- consideration should be given to introverted thinkers- main ideas should be documented for later referral State the Focusof Attention Create a List ofCharacteristicsHave Individuals Define What They Know Choose aCharacteristicAsk "How Might ThisBe Different"? Allow Free Flowof Discussion Innovation-20"Mind Map" of key question Innovation-21 Exercise Exerciseo Join the nine dots below with a single straight line Innovation-22 Notes Notes Innovation-23 Alternative Approach: Retro Alternative Approach: Retro-Fits Fits Random words- force participants to relate otherwise irrelevant concept so Simile, metaphor and analogy- used with random words to stimulate thought so Proverbs- relate issue at hand to common sayings and clich'e so Role-play- as how others would tackle the issue at hand Innovation-24 Notes Notes Innovation-25 Exercise Exerciseo Consider the improvement of a restaurant- use a random word to generate innovative ideas to change the service offering or system Innovation-26 Exercise Notes Exercise Notes Innovation-27 Exercise Notes Exercise Notes Innovation-28 Notes Notes Innovation-29 Comprehensive Exercise Comprehensive Exerciseo Apply various idea generation approaches to one of the following service systems: - RPI student contact system, or- RPI Plan of Study system Innovation-30 Exercise Notes Exercise Notes Innovation-31 Exercise Notes Exercise Notes Innovation-32 Notes Notes Innovation-33 Stage 2 Stage 2- Evaluation Evaluationo An evaluation procedure should consider which ideas to develop further- no regard to who generated the idea The evaluation procedure must be formal but fast- many formal evaluation procedures thorough but slow The evaluation must consider multiple perspectives- customers, company culture, etc. Ideally, little evaluation is done during the idea generation stage Innovation-34 Discussion Discussiono How does the person who generated an idea typically influence evaluation? o What can be done to solve this problem? Innovation-35 Principles of Effective Evaluation Principles of Effective Evaluationo Transparent (i. e.

, the process is "open") o Complete (i. e. , nothing of importance overlooked) o Balanced (i. e.

, unbiased and professional) o Fast (maintains sense of urgency & enthusiasm) o Diligent (including feedback from originators and others) o Pragmatic (i. e. , flexible to accommodate unusual ideas) Innovation-36 Categorization of Ideas Categorization of Ideas Resources Needed Potential Benefit Low High Low HighRejectThoroughConsiderationCasualConsiderationAcceptInnovation-37 Analysis of Benefits Analysis of Benefitso To customer so To employee so To shareholder so To partner so To the community To supplier so To other stakeholders Innovation-38 Analysis of Resources Required Analysis of Resources Required Financial Education & trainin go Facilities Personnel Materials & supplies Consultants Other Innovation-39 Benefits? Data Required & Sources Available Quantification of Benefits Evaluation Perspectives Evaluation Perspectives Mgmt. Issues? Affected Constituencies? Solution to Mgmt.

Issues Constituencies AddressedMoreAnalysis? MoreAnalysis? MoreAnalysis? Proceed to Development Phasen n n 112 3 y y y 32 Innovation-40 Benefits Benefitso Effective place to start- mitigates effect of common "why it won't work " discussion Should consider all stakeholders- customers, employees, suppliers, community, etc. o Should focus on both hidden and visible benefits- e. g. , increased revenue (visible) - e.

g. , enhanced reputation (hidden) Innovation-41 Management Issues Management Issues What "technical" issues need to be considered to bring this idea to success? - note implicit assumption that idea can be successful Typical issues include impacts on employees, processes, legal / regulatory requirements, etc. - should address how change will be manage do Main risks should be identified and their Costs must also be considered Innovation-42 Affected Constituencies Affected Constituencies What "feelings and emotions" need to be considered to bring this idea to success? - upheaval caused to some individuals / groups - some individuals / groups disadvantaged disproportionably o Problems resulting from poor evaluation would be blocking, defensiveness, evasion, political maneuvering o Positive effects include support, endorsement, alliance so Passive aggressive behavior must be considered through strict guidelines and process controls Innovation-43 Data Required & Sources Available Data Required & Sources Available Facts- regulatory laws, equipment costs, etc. o Historic data- labor costs, product pricing, etc. o Forecasts- new customers recruited, current customers retained, etc. o Surveys- employee, customers, suppliers, etc.

Innovation-44 Notes Notes Innovation-45 Direct Your Energy Immerse Yourselves in Customers Generate and Assemble Ideas Design & Prototype Test & Implement Strategy GateOrganizationalChange Gate Culture Gate Alternative Alternative Model Model Competing in a Service Economy by Gustafsson& Johnson, John Wiley& Sons, (c) 2003. Alternative to Stages 1 & 2 Innovation-46 Direct Your Energy: Example Direct Your Energy: Example " Quality, traditional product quality, nowadays also encompasses all the virtues and functions of Volvo products and services which create end-user pride and delight. In today's competitive environment, the quality commitment of Volvo extends beyond industrial craftsmanship and engineering skill to also embrace caring for the customer and his or her needs throughout the lifespan of the product." The Volvo Group (c) 2001 Innovation-47 Generate and Assemble Ideas Generate and Assemble Ideas Jonas Matching did research on customer involvement in new service development Main motivation stated as- "How (is it) possible to spend billions and billions on a mobile network and at the same time have a very low understanding of what is going to generate revenue." o Main research question was- "As co-producers in service value creation who are unrestricted by technology and organizational constraints, can ordinary customers generate better ideas for service innovation?" Innovation-48 Research Description Research Description Developed a collection of unified services based on the GMS (Global System for Mobile communications) standard SMS (Short Message Service) o Created a formal process to obtain ideas from customers- said to be missing from prior research Innovation-49 InitiateRecruitSubjectso R&D Experts Advanced Userso Ordinary Userso ExpertsEducateTeach theBasicsHave theRespondentsUse the Service sand Document Their ThoughtsGenerateIdeas Debrief Interview theParticipantsResearch Design Research DesignEvaluateIdeasEvaluationCriteriao Originality User Value User EasePanelsoR&DoConsultantsoMarketingoCustomersInnovation-50 Analysis Methodology Analysis Methodology CAT (consensual assessment technique) used to evaluate idea so Various panels of judges employed- industry experts- marketing staff- company experts- customer so 429 ideas generated and evaluated- each scored on a 1-10 scale for originality, user value and ease of implementation Innovation-51 Differences in Originality Differences in Originality 0123456789 ExpertAdvancedUserOrdinaryUserOU +ExpertScoreR&DMarketingConsultantsUsersInnovation-52 Differences in User Value Differences in User Value 0123456789 ExpertAdvancedUserOrdinaryUserOU +ExpertScoreR&DMarketingConsultantsUsersInnovation-53 Differences in Ease of Implementation Differences in Ease of Implementation 0123456789 ExpertAdvancedUserOrdinaryUserOU +ExpertScoreR&DUsersInnovation-54 Main Results Main Resultso Ordinary users consistently scored highest- most original ideas- highest user value- best ease of implementation o But when teamed with experts, ordinary users value may be dimensioned- why? Innovation-55 Strategy, Culture & Change "Gates" Strategy, Culture & Change "Gates"o Strategy and culture are screens or funnels for evaluating new service idea so Follows the construct suggested by Gustafsson &Johnson: - building your culture- staying focused on your customers- linking activities Innovation-56 Notes Notes Innovation-57 Stage 3 Stage 3 - Development Development The development stage is the first that may require significant resource so Here, an idea is translated to a practical reality Organizational commitment is require do Risk exists, increasing as idea gets closer to implementation- but risk should be balanced against the risk of maintaining the status quo Innovation-58 Stage 4 Stage 4 - Implementation Implementation What is the criteria for success? o How will performance be measured? o What are the performance expectations? o Can the innovation be tested? o Is there as process in place for learning what went right? o Is there as process in place for learning what went wrong? Innovation-59 Management of Risk Management of Risk Identification- specific risks should be identified o Understanding- impacts should be understood Monitoring- early warnings should be monitored o Management- failure likelihood should be reduced Innovation-60 Exercise Exerciseo The development stage is the first requiring significant organizational commitment- if you visited an two organizations: an innovative organization and a non-innovative organization- what differences would you notice? Innovation-61 Exercise Notes Exercise Notes Innovation-62 Notes Notes Innovation-63 A Few "Big" Things A Few "Big" Things Will (active leadership) - reward system- promotion policy- budget allocations- other... o Resources (time, money) - for the innovation process- for mistakes- for training- other... with sustained energy Innovation-64 Notes Notes Innovation-66 Notes Notes Innovation-67 Motivation Motivation - Discussion Discussiono Discuss the following options regarding rewards &recognitions for innovation- types of rewards? - individuals vs.

teams? - boss vs. workers? - how is contribution judged? - reward just for success? Innovation-68 Notes Notes Innovation-69 Discussion Discussiono Are explicit rewards & recognition needed to motivate innovation? Innovation-70 Notes Notes Innovation-71 Mgmt. of Innovation Mgmt. of Innovation - Discussion Discussiono Make some general statements about managing innovation in services- would it differ from product innovation management? Innovation-72 Notes Notes.