1. Innovations often fail due to internal causes within an organization's control, such as poor leadership, communication, and goal definition, as well as external causes outside its control like government regulations or new competitor technologies.
2. Proper management of innovation is important because innovations require significant investments but have high failure rates, so losses must be minimized. Innovation success should also be measured using metrics like new product revenue and customer satisfaction.
3. For innovations to succeed, likely failures should be identified early, exceptional inventors retained, cross-functional collaboration ensured, and a supportive culture with flexibility and tolerance for mistakes established.
2. Why do innovations fail?
• Innovations have high failure rate.
• There are many causes of failure of innovations. Some
causes are external to the organisation and outside its
influence of control. Others are internal and ultimately
within the control of the organisation.
3. Why do innovations fail?
• Internal causes of failure can be divided into causes
associated with the cultural infrastructure and causes
associated with the innovation process itself.
• Failure in the cultural infrastructure varies between
organisations but the following are common across all
organisations at some stage in their life cycle (O'Sullivan,
2002):
• Poor Leadership
• Poor Organisation
• Poor Communication
• Poor Empowerment
• Poor Knowledge Management
4. Why do innovations fail?
Common causes of failure within the innovation process in
most organisations are as under:
• Poor goal definition
• Poor alignment of actions to goals
• Poor participation in teams
• Poor monitoring of results
• Poor communication and access to information
5. Why do innovations fail?
Innovation can fail if seen as an organisational process
whose success stems from a mechanistic approach i.e.
'pull lever obtain result'.
Some examples of internal causes are:
• R&D efforts not guided by marketing research or
customer requirements & preferences
• R&D efforts not guided by manufacturing capabilities &
skills and no change / improvement in mfg
capabilities/skills
• No corresponding change in organizational processes
• New product launch not accompanied by change in
marketing strategies.
6. Why do innovations fail?
External causes are beyond the control of the organization.
Some examples of external causes are:
• Mismatch between price charged & value benefits
perceived by customer
• Mere imitation /copy without any increase in value/utility
to customer
• Competitor brings in disruptive technology / innovation
• Govt regulations undergo change adversly affecting
innovation.
7. Why management of innovation is
important?
Economics of Innovation
• Economics call for study of cost vs benefits involved in the
innovation for making a rational decision about the viability
of innovation.
• Total costs of innovation including invisible costs, need to be
studied for making a rational decision about the viability of
innovation.
• Organisations spend a significant amount of their turnover on
innovation. The average investment is estimated to be around
four percent.
• This budget is typically spread across various functions
including marketing, product design, information systems,
manufacturing systems and quality assurance. The investment
may vary by industry and by market positioning.
8. Economics of Innovation
Why management of innovation is
important?
• Innovations have high rate of failure. Thus chances of
huge losses are there due to high investment.
• The impact of failure goes beyond the simple loss of
investment. Failure can also lead to loss of morale among
employees, an increase in cynicism and even higher
resistance to change in the future. Sometimes innovations
lead to displacement of existing products or services.
• Sometimes, innovation may lead to price war.
Competitor may introduce better product at lower price.
Thus benefits of innovation may not be fully realized.
• Such losses also need to be accounted for.
9. Economics of Innovation
Why management of innovation is
important?
• Innovation should drive growth and, consequently,
improve shareholder value. Business measures like
balanced scorecards related to finances, processes,
employees and customers should be used to find out
benefits of innovation (e.g. new product revenue, time to
market, customer and employee perception & satisfaction).
Organizational capabilities can be evaluated through
various evaluation frameworks e.g. EFQM (European
Foundation for Quality Management).
• Innovations are pursued when their estimated benefits
outwieigh total estimated costs.
10. Innovation Strategies
Innovation strategies of an organization depend upon
following factors:
• Government support and policies for technology and
innovation
• Risk taking abilities of the organization
• Risk taking attitude of Top Management
• Organizational goals & policies
• Degree of technological changes
• Degre of competition
• Availabilty of funds / budgetory support for innovation
process
• Age of organiztion viz new vs old organization
11. Innovation Strategies
Types of Innovation Strategies:
• Innovation Leader- Under this strategy, a firm seeks to be
the first to introduce innovations and aims at tapping first
mover advantages like increased reputation, pre-empting
competition, early profits, new sales etc. Such stratgies
focus on radical , open, non-linear, flexible innovation
process.
• Innovation Follower – A conscious & active strategy, by
which a firm chooses not to be first on innovations and aims
at learning from the experiences of innovation leader, by
low cost imitation, by bringing better products or services
through improvement. etc. Such stratgies focus on
incremental , closed, linear innovation process.
12. Innovation Strategies
Types of Innovation Strategies:
• Competition vs Collaboration Strategies
• Whether to go for competitive development of innovation
or to go for collaborative development of innovation??
13. Innovation Strategies
Change in Innovation Strategies
It is very likely that a firm may like to change its innovation
strategies at some point of time. A firm pursuing
incremental innovation can shift to / transform to radical
innovation by using some of following tools:
• Strategic Framing
• Scouting R&D
• Idea Portfolio
• High Impact Research
• Target Selection
• Rapid Product Development
• Rapid Commercialization
14. Innovation Strategies
Change in Innovation Strategies …. Contd …..
Similarly a firm pusuing pursuing radical innovation can
shift to / transform to incremental innovation by taking
some of following steps:
• Installing more gatekeepers at various stages
• Spreading budgetory support over longer periods
• Carrying out rigorous progress reviews
• Using more controls etc.
15. Innovative Organization
• Innovation requires a structure that is capable of
coalescing /motivating individual technological
performers & non-technological performers into an
effectively functioning team.
• According to Mintzberg - An Innovative organization
cannot rely on any form of standardized co-ordination.
The enterprise must avoid : bureaucratic structures
including structures that result into sharp division of
labour, extensive unit differentiation, highly formalized
behaviour.
• An innovative organization is one which facilitates
creative chaos within a flexible guiding structure
• These are also called adhocracy organizations.
16. Traits of Innovative Organization
The enterprises should emphasize on :
• Top mangement’s commitment and support
• Capability / need to manage in the light of corporate
restructuring & transient senior management
• Planning & control systems with high degree of
flexibility
• Effective communication
• Absolute integrity between various sub-systems / parts of
an organization - Tight coupling of complimentary skill
sets
• Use of multifunctional teams - Higher order teaming
17. Traits of Innovative Organization
• Supporting organiztional culture & environment – like
– Appropriate reward / incentive system
– Respect for individual inititaive & personal
growth
– Tolerance for honest mistakes
– Allowing room for failure
• Enthusiasm for knowledge
• Drive to stay ahead in knowledge
• Willingness for Alteration to activities
18. Innovative Organization
Modes of Enterprise Innovation
• Science Based Product Innovation Mode Enterprises -
These enterprises spend big amounts on R&D and are
Technological leaders & Pace setters.
• The Enterpreneurial Fast Track Experimentation
Innovation Mode Enterprises - are characterized by
high degree of experimentation to develop a continuous
flow of products & services. Viz. 3M
• Global Cost Leadership Innovation Mode Enterprises -
are process innovaters, with strength driven from
development or acquisition of new processes. These are
high quality & low cost driven.
19. Innovation Organization
Modes of Enterprise Innovation …. Contd …..
• Reliance on Information Technology & Process Adoption
Mode Enterprises - are innovators who incorporate new
ideas stemming from information technology or other
engineering enterprises
• Social Innovation Mode Enterprises –combine busniess
methods and social value creation. They plug the gap
between the roles that governmental and philonthropic
efforts play, often solving societal problems, not in
opposition to or even at the charity of the organizations,
but rather in collaboration and mutual benefit to the
private sector.
20. Management of Innovation
• Innovation management is the process of
managing innovations in organisations.
• According to National Research Council (NRC),
Management of Innovation means linking of
engineering, science & management disciplines
to plan, develop and implement technological
capabilities to shape & accomplish the strategic
and operational objectives of an organization.
• Management of Innovation deals with meeting
and managing eight primary needs of an
organization.
21. Management of Innovation
These eight primary needs are as under : -
• How to integrate technology into overall strategic objectives of
an organization?
• How to get into & out of technologies faster & more
efficiently?
• How to assess or evaluate technology more efficiently?
• How to accomplish technology transfer?
• How to reduce new product development time?
• How to manage, large, complex & interdisciplinary or inter-
organisational projects & systems?
• How to manage organization’s internal use of technology?
• How to leverage the effectiveness of the technical
professionals?
22. Factors which affect Innovation
Management in Organization
• Degree of formalization, formal structures, systems &
procedures
• Centralization
• Resources available
• Openness to external information
• Degree of informal communication
23. Challenges in Management of
Innovation
Challenges for small organization as under : -
• Lack of risk taking abilities
• Non availability of adequate resources viz finance, technical
manpower etc
• Low linkage with external environment
• Difficulty in testing
• Difficulty in conducting market survey
• Difficulty in commercialization
• Difficulty in marketing
24. Challenges in Management of
Innovation
Challenges for big organization as under : -
• Degree of formalization, formal structures, systems &
procedures
• Degree of centralization
• Degree of formal communication
• Corporate Restructuring & Transient senior
management
• Integration of many complex projects being executed
simultaneously
• Bigger teams & their management
• Duplication of efforts
• Ensuring right direction
25. Management of Innovation
For proper management of Innovation, following should be
ensured:
• Likely Failures should be identified and screened out as
early in the process as possible.
• Exceptional productivity is concentrated among a few
people. There is need to employ, develop and retain
exceptionally talented inventors.
• Seeking maximum participation of all the concerened
individuals. Individuals are the 'atom' of the organisation
close to the minutiae of daily activities.
• Strong integration & orchestration of cross functional
activities
• Top management’s commitment and support
26. Management of Innovation
Contd…
• Capability / need to manage in the light of corporate
restructuring & transient senior management
• The enterprises should emphasis on
– Planning & control systems with high degree of
flexibility
– Respect for individual initiative & personal growth
– Tolerance for honest mistakes; allowing room for
failure
27. Management of Innovation
Contd…
• Innovation management education be aimed at upper
level managers & middle level managers comprising both
non-technical managers as well as technological
managers, for creating a common ground across the
organization
• Building a unified and committed multifunctional team
• Supporting organizational culture & environment
28. Management of Innovation
Contd…
• The incharge / manager of technology must be well
trained & sensitive to patterns of technology changes,
market needs, vision to see business opportunities & have
commitment for protection of firm’s technology .
• Supportive management structures, rationales & actions.
• Avoiding bureaucratic structures including structures
that result into sharp division of labour, extensive unit
differentiation, highly formalized behaviour
• Effective communication in the organization
29. Patents vs Copyrights
Invention & Patent
• Patent gives the inventor exclusive use of that
invention & the right to assign that use.
Invention need to be registered with specified
government bodies who in turn grant patent.
Trade Secret
• A Trade Secret is any commercial formula,
device, pattern, process or information that
provides an enterprise an competitive edge over
others who do not know it.
30. Patents vs Copyrights
Know How
• Knowhow is a factual accumulation of knowledge-
usually as a result of trial & error. It cannot be protected
or licensed until it is recorded in tangible medium.
Copy Right
• A Copy Right is an exclusive right granted to authors,
composers, artists or their assignees for the life of the
individual plus few more years. These rights are granted
to individuals when some new work is done / created by
them.
31. Patents vs Copyrights
Trade Mark
• A Trade Mark is a word, name, symbol, device, letter,
numeral, picture or any combination of these in any form
or arrangement that is used to identify the origin of
goods or services. Like copy-rights, trade marks can also
be registered.
