1. INNOVATION MANAGEMENT Jiří Vacek vacekj @ kip.zcu.cz Department of Management, Innovations and Projects UWB, Faculty of Economics Summer semester 2009/10

2. Lesson 1 Introduction Basic concepts Importance of innovations

10. Classification of innovations SYSTEM New series of cars, planes, computers, TV New generation (MP3 and download as substitution of CD) Steam engine, ICT, biotechnology, nanotechnology COMPONENT Improvement of components New components for existing systems Advanced materials improving component properties INCREMENTAL „ do better what we already do“ „ new for the company“ RADICAL „ new for the world“

17. CASE STUDIES

19. No comment … 1990 2005

22. Types of design engineers spouter of ideas suggests designs and problem solutions without detailed consideration of all possible results and consequences system designer examines all ideas and thoughts systematically finisher of ideas elaborates independently in details the ideas which he gets to elaborate routine engineer efficient and reliable engineer; however, without creative approach attendance engineer performs routine tasks [1%] [5%] [54%] [30%] [10%]

23. Con nective ti ssue pro ducts RNDr. Vladimír Velebný, CSc . Contipro

25. Sales in regions

27. 3M and post-it notes http://www.3m. com / us / office /postit/ pastpresent / history _ ws . html

28. More about 3M A Century of Innovation The 3M Story http:// solutions .3m. com / wps / portal /3M/en_US/ About /3M/

32. Bang & Olufsen – products

36. Lesson 2 Disruptive and open innovations

40. Clayton M. Christensen: The Innovator´s Solution, Harvard Business Press, 2003

42. Clayton M. Christensen: The Innovator´s Solution, Harvard Business Press, 2003

43. Clayton M. Christensen: The Innovator´s Solution, Harvard Business Press, 2003

44. Clayton M. Christensen: The Innovator´s Solution, Harvard Business Press, 2003

45. Clayton M. Christensen: The Innovator´s Solution, Harvard Business Press, 2003

54. Chesbrough H.W.: The Era of Open Innovation, MIT Sloan Management Review, Spring 203, p. 35 - 41

56. Closed innovation Open innovation All the best people are working for us Not all the best people are working for us . We must work with clever people within and outside our company. R & D creates profit only when we invent, develop and market everything ourselves. External R&D can create remarkable value; to employ it, we need absorption capacity, often as internal R&D. If we develop the product ourselves, we will be the first on the market. R & D can create profit even if we do not initialize an d perform it ourselves. Winner is who gets the innovation to the market first. To develop better business model is more important than to be the first in the market. We will win if we develop most of the ideas (an the best of them). We will win if we make best use of intern al and extern al ideas. We must have our intellectual property under control so that our competitors can make advantage of it. We must be able to profit from others using our intellectual property and we must license the intellectual property if it supports our business model.

57. Closed innovation Open innovation Examples : nuclear industry, mainframe computers Examples : PC, movies Mostly intern al ideas Many external ideas Low workforce mobility High workforce mobility Low role of the venture capital Active venture capital Few new businesses, weak ones Many new businesses Universities are not important as the sources of ideas Universities are not important as the sources of ideas and people

61. Interdependent Architecture System Component A Component B Component C

63. Modular Architecture System Component A Component B Component C

66. Lesson 3 Assessment of company innovation potential

77. Lesson 4 STRUCTURING THE NEW PRODUCT DEVELOPMENT PROCESSES EVALUATION OF THE NEW PRODUCT DEVELOPMENT AND R& D PROJECTS HOW TO SELECT THE PORTFOLIO OF NEW PRODUCT DEVELOPMENT PROJECTS

78. STRUCTURING THE NEW PRODUCT DEVELOPMENT PROCESSES

79. The objectives of process models

81. 2-nd generation SG process

83. I nterdisciplinary view

88. Difference Between FFE and NPD Milestone achievement. Strengthened concepts. Measures of Progress Multifunction product and/or process development team minimize risk and optimize potential Activity Predictable, with increasing certainty, analysis, and documentation as the product release date gets closer. Often uncertain, with a great deal of speculation. Revenue Expectations Budgeted. Variable Funding High degree of certainty. Unpredictable or uncertain. Commercialization Date Disciplined and goal-oriented with a project plan. Experimental, often chaotic. “ Eureka” moments. Can schedule work—but not invention. Nature of Work New Product Development (NPD) Fuzzy Front End (FFE)

89. N ew concept development model (NCD) Technology push Market pull

92. Traditional and technology stage-gate processes

93. EVALUATION OF THE NEW PRODUCT DEVELOPMENT AND R& D PROJECTS

94. Stage-gate process IDEA Gate 1 Idea screening Stage 1 Preliminary evaluation Gate 2 Detailed evaluation Stage 2 Product definition Gate 3 Decision to develop Stage 3 Development Gate 4 Decision to test Stage 4 Testing Gate 5 Decision to commercialize Stage 5 Commercialization EVALUATION

99. Development D ECV YES NO Success p d Failure Commercialization C YES NO Success p C Failure P V ECV = project expected commercial value p d = probability of successful development p c = probability of successful commercialization D = development costs C = commercialization costs PV = net present value of expected project earnings ECV = [(PV * p c – C) * p d ] – D according to [Cooper 2001]

110. HOW TO SELECT THE PORTFOLIO OF NEW PRODUCT DEVELOPMENT PROJECTS

113. 31.10.-1.11.2008 AEDS 2008 - Jiří Vacek, KIP FEK UWB A reluctance to kill projects. Many projects added to the list A total lack of focus Too many projects – resources thinly spread. Projects in the queue. Quality of execution suffers. Increased time to market Higher failure rates Weak decision points (broad gates) Poor Go/Kill decisions Too many low value projects Good projects are starved Too few stellar product winners Many ho hum launches No rigorous selection criteria Project selected on emotion, politics W r ong projects are selected Many failures No strategic criteria for project selection Projects lack strategic direction Projects not strategically aligned Scatter gun effort Does not support strategy No portfolio management means … Immediate result End result: poor new product performance

116. 31.10.-1.11.2008 AEDS 2008 - Jiří Vacek, KIP FEK UWB Projects net present values and resource requirements Project NPV Remaining resource requirements Bang-for-buck index Immediate resource requirements A 52,0 9,5 5,5 3,2 B 30,0 3,1 9,7 0,3 C 8,6 2,1 4,1 1,4 D 42,0 3,8 11,1 2,5 E 48,5 7,0 6,9 1,3 F 43,8 5,0 8,8 1,5 G 37,5 8,3 4,5 3,8 H 3,0 1,0 3,0 0,7 I 9,5 2,5 3,8 0,5 J 6,2 0,8 7,8 0,8 K 4,5 1,4 3,2 1,2 L 55,0 5,0 11,0 5,0

117. Rank-ordered list of projects 31.10.-1.11.2008 AEDS 2008 - Jiří Vacek, KIP FEK UWB Project NPV Remaining resource requirements Bang-for-buck index Immediate resource requirements Cumulative immediate resource requirements D 42,0 3,8 11,1 2,5 2,5 L 55,0 5,0 11,0 5,0 7,5 B 30,0 3,1 9,7 0,3 7,8 F 43,8 5,0 8,8 1,5 9,3 J 6,2 0,8 7,8 0,8 10,1 E 48,5 7,0 6,9 1,3 11,4 A 52,0 9,5 5,5 3,2 14,6 G 37,5 8,3 4,5 3,8 18,4 C 8,6 2,1 4,1 1,4 19,8 I 9,5 2,5 3,8 0,5 20,3 K 4,5 1,4 3,2 1,2 21,5 H 3,0 1,0 3,0 0,7 22,2

118. Project expected value (ECV) 31.10.-1.11.2008 AEDS 2008 - Jiří Vacek, KIP FEK UWB Project PV Probability of technical success Probability of commercial success Development cost* Commercialization cost* ECV A 30,00 0,80 0,50 3,00 5,00 5,00 B 63,75 0,50 0,80 5,00 2,00 19,50 C 9,62 0,75 0,75 2,00 1,00 2,10 D 3,00 1,00 1,00 1,00 0,50 1,50 E 50,00 0,60 0,75 5,00 3,00 15,70 F 66,25 0,50 0,80 10,00 2,00 15,50

119. Rank-ordered list according to ECV/D, resource constraint 15 mil 31.10.-1.11.2008 AEDS 2008 - Jiří Vacek, KIP FEK UWB Project ECV ECV/D Cumulative development costs Adjusted cumulative development costs B 19,50 3,90 5,00 5,00 E 15,70 3,14 10,00 10,00 A 5,00 1,67 13,00 13,00 F 15,50 1,55 (23,00) D 1,50 1,50 24,00 14,00 C 2,10 1,05 26,00 16,00

120. Rank-ordered list according to ECV 31.10.-1.11.2008 AEDS 2008 - Jiří Vacek, KIP FEK UWB Project ECV Cumulative development costs B 19,50 5,00 E 15,70 10,00 F 15,50 20,00 A 5,00 23,00 C 2,10 25,00 D 1,50 26,00

122. Multi-criteria project valuation input data 31.10.-1.11.2008 AEDS 2008 - Jiří Vacek, KIP FEK UWB Project IRR NPV SI PTS A 20% 10 5 80% B 15% 2 2 70% C 10% 5 3 90% D 17% 12 2 65% E 12% 20 4 90% F 22% 6 1 85%

124. Multi-criteria project valuation, final project ranking 31.10.-1.11.2008 AEDS 2008 - Jiří Vacek, KIP FEK UWB Project IRR * PTS Ranking by IPR*PTS NPV * PTS Ranking by NPV*PTS SI Ranking by SI Avg . Final A 16,0% 2 8 2 5 1 1,67 1 B 10,5% 5 1,4 6 2 4 5,00 6 C 9,0% 6 4,5 5 3 3 4,67 5 D 11,1% 3 7,8 3 2 4 3,33 3 E 10,8% 4 18 1 4 2 2,33 2 F 18,7% 1 5,1 4 1 6 3,67 4

128. Risk-Reward bubble diagram 31.10.-1.11.2008 AEDS 2008 - Jiří Vacek, KIP FEK UWB PEARLS OYSTERS BREAD & BUTTER WHITE ELEPHANTS

136. Lesson 5 Innovation impulses

151. Lesson 6 Innovation management tools INNOMAT http://www.inno-pro.com/aainn0.htm

153. General Innovation Tools

154. BENCHMARKING

155. BRAINSTORMING

156. REENGINEERING

157. CHANGE MANAGEMENT

158. Specific techniques useful at the different change management process steps. INNOVATION MANAGEMENT TOOLS http://www. wiley.co.uk/innovate/website/pages/atoz/atoz.htm CHANGE MANAGEMENT STEP SPECIFIC TECHNIQUE Making time time management techniques Preparing a vision statement SWOT analysis Identify what factors will hinder change force field analysis Selling the change internal marketing techniques Developing a plan strategic planning techniques Learning Monitoring effectiveness

159. TECHNOLOGY AUDIT

160. TECHNOLOGY FORECAST

161. VALUE ANALYSIS

162. Product Innovation Tools

163. DESIGN FOR X <>

164. „ X“ - examples Design for Manufacturing and Assembly (DFMA) Design for Environment (DFE) Design for Dimensional Control (DDC) Design for Inspectability Design for Storability Design for Reliability (DFR) Design for Electromagnetic Compatibility Design for Disassembly (DFD)

165. QUALITY FUNCTION DEPLOYMENT

166. House of Quality Interrelationships Technical Features Relationship between Customer Desired Traits and Technical Features Importance of Technical Features Importance of Traits to Customer Assessment of Competition Voice of the Customer

168. Managerial Innovation Tools

169. FAILURE MODE AND EFFECT ANALYSIS (FMEA)

170. INNOVATION MANAGEMENT TOOLS http://www. wiley.co.uk/innovate/website/pages/atoz/atoz.htm

171. INNOVATION MANAGEMENT TOOLS http://www. wiley.co.uk/innovate/website/pages/atoz/atoz.htm

172. PEER EVALUATION

173. TEAM BUILDING

175. TOTAL PRODUCTIVE MAINTENANCE

176. Process Innovation Tools

177. DESIGN FOR MANUFACTURING AND ASSEMBLY (DFMA)

178. LEAN THINKING

179. CONTINUOUS IMPROVEMENT

180. CONCURRENT ENGINEERING

181. JUST IN TIME (JIT)

182. INNOSKILLS

183. FASTER

184. Lesson 7 CREATIVITY BASICS & TECHNIQUES

200. Brain hemispheres Left brain functions Right brain functions sequential simultaneous analytical holistic verbal imagistic logical intuitive linear algorithmic processing holistical algorithmic processing mathematics: perception of counting/measurement mathematics: perception of shapes/motions present and past present and future language: grammar/words, pattern perception, literal language: intonation/emphasis, prosody, pragmatic, contextual

219. TRIZ process for creative problem solving

225. Example 1 - energy conversion initial transmission final storage kinetic – K kinetic – K kinetic – K electrical – E electrical – E electrical – E chemical – C chemical – C chemical – C thermal – T thermal – T thermal – T nuclear - N nuclear - N nuclear - N

227. Example 2 – cardboard packaging solution: throwaway beverage packaging Parameter Parameter values separated media solid / solid solid / fluid solid / gas fluid / fluid fluid / gas gas / gas level of separation total partial protection against gravitation mechanical forces heat radiation sound combination with paper plastic wood paint nothing

228. Think outside the box

230. 16 dots, 6 lines http://www. sciencenewsforkids . org / articles /20041027/ PuzzleZone . asp

234. Lesson 8 TEAM WORK

244. Team forming by a manager Manager On the way to rigidity On the way to teamwork Defines Everything if possible Vision Prefers Conformity Individuality, mutuality Believes in Plan, task, control Trust, motivation climate Views the problem solving by the team As denial of his/ her authority, waste of time As natural and necessary Communicates with team members When they require it or need it As much as possible Conflicts inside or outside the team Ignores them or solves them him- or herself Opens them for team solving before they become destructive Understands group unity As a potential threat to his/ her position As necessity Anticipates People’s worries of responsibility Independence and responsibility of people

245. Lesson 9 DECISION MAKING

258. PAYOFF TABLE Alternatives – facility size Possible future demand low moderate high Small 10 10 10 Medium 7 12 12 Large -4 2 16

264. DECISION TREES

266. DECISION TREES - Example

269. SENSITIVITY ANALYSIS State of nature Alternative #1 #2 A 4 12 B 16 2 C 12 8

270. Sensitivity Analysis

274. LP – solution 1 decision variables X1 10 X2 5 X3 0 objective function P 90 constraints 1 40 250 2 100 100 3 10 10

276. LP – Graphical method

277. Lesson 10 CONFLICT RESOLUTION

280. Two-dimensional model of a conflict

283. Lesson 11 COMPANY INNOVATION CULTURE „ Successful companies address the human needs and give them priority“ Thomas J. Peters, Robert H.Waterman

288. Motivation / performance cycle (MPC)