List of tools for innovation management is endless…
- Today’s goal is to show you a selection of valuable tools. Two problems:
- tools are often presented as one-size-fits-all super-solutions, which they are not
- tools are underutilized because managers do not know or do not fully understand them
- Important: the value of applying a tool varies with context
- – pick the right one yourself!
- – So: “More arrows for your quiver?”
- No: “more golf clubs – you have to pick the right one yourself!”
What are these tools good for?
- Innovation strategy requires up-to-date information about the environment –
- e.g., technological state of the art, customer needs, and possible competitor actions (judging from past action, resource position)
- Formulating an innovation strategy consequently implies technology, competition, as well as market and demand analysis.
Analysis of needs and demand: Tools
- How will the market / techno- logy develop in the long run?
- Delphi Analysis
- Are there attractive niches in the market?
- Positioning
- What should the ideal product look like?
- Conjoint Analysis
- What are the risks of the innovation?
- Risk analysis
Delphi analysis
Delphi analysis plus and minus
PLUS +
- suitable for long-term predictions in complex situations with little structure (on topics related to needs, demand, technology, …)
- avoids group pressure
- convergence of expert opinions
- holistic approach
MINUS –
- time-consuming
- participants may drop out
- no sound theoretical basis
- no direct discussion between experts
- results depending on choice of experts
- need to justify opinions may lead to overly conservative estimates
Example: Delphi Analysis at ISI (1998)*
Methodology: Two step process
- – 1st: Commission of experts (more than 100) makes up list of cases and forwards it to even larger number of specialists (~7.000!)
- – 2nd: Replies are processed and sent out again to the specialists who answered in Step 1 (2.453): seeing other expert assessments may cause a change in opinion (1.856 replies received)
The Study: Global Evolution of Science and Technology
- – 1070 theses out of 12 categories, e.g. information & communication, management & production, health & life sciences, …
- – Several short term (-2005), medium-term (-2015), and long-term (2015-) scientific and technological trends identified, as well as current major strength and weaknesses
Positioning
Positioning models provide a quick overview over the market.
They allow to identify niches and opportunities for innovation.
Basic idea: Reduce dimensionality of relevant space
Positioning: Factor analysis
Factor analysis: aggregation process
- The resulting list of rated variables possibly contains lots of redundancies
- – Factor analysis is a means to find variables that basically measure the same underlying factor and to combine them to a new variable
- – Example: Variables large trunk size and number of passenger seats might be aggregated to form a new factor ‘space’
- As a means, principle component analysis can be used
- – Factor generates a new dimension
- (or new axis) that contains nearly as much information as the corresponding variables (“rotation” of original data)
- – To explain additional variables, further dimensions can be introduced
- – Number of factors is increased as long as new factor represents variance of underlying variables adequately
Factor analysis: an example
- Survey: Marketing in a bank to identify key customers
- Asked for level of agreement, on a 0-9 scale
- – X1. Small banks charge less than large banks
- – X2. Large banks are more likely to make mistakes than small banks
- – X3. Tellers do not need to be extremely courteous and friendly; it’s enough for them simply to be civil
- – X4. I want to be know personally at my bank and to be treated with special courtesy
- – X5. If a financial institution treated me in an impersonal or uncaring way, I would never patronize that organization again
Positioning: Multidimensional scaling
Conjoint Analysis
Conjoint analysis” denotes methods of preference analysis that allow to derive the preference for individual characteristics and realizations from “holistic” judgments.
Conjoint-Experiment: Notebook
Conducted in course TIM Intro ST 2012
Experiment: Please tear off the nine conjoint cards and put them into your preference order (assuming other technical features are identical).
Recommendation: start by sorting the cards into three packs (good, medium, bad), and then do the fine-sorting.
When you are done ordering, write down your preference order:
Notebook 1 Dimensions: Performance: Price:
ultrathin and ultralight (1,7cm/1,5kg) high (2x2,3 Ghz/4 GB RAM)
€ 400
Notebook 2 Dimensions: Performance: Price:
desktop replacement (3,0cm/3,0kg) medium (2x1,6 Ghz/2 GB RAM) € 900
Notebook 3
Dimensions:
Performance: low (2x1,0 Ghz/1 GB RAM)
Price:
….
ultrathin and ultralight (1,7cm/1,5kg) € 900
Conjoint Analysis plus - minus
PLUS +
- Natural decision situation
- Respondents are not
- overstrained
- Importance of characteristics (e.g., horsepower) and realizations (100 / 150 / 200) is identified
- K.O. criteria and trade-offs are identified
MINUS –
- Only limited number of characteristics / realizations possible
- Correct choice of relevant characteristics required
Technology analysis Monitoring: Steps
Monitoring: Sources of information
- Research Institutions
- Suppliers
- Trade association
- Other companies
- Competitors
- Customers
Monitoring: Types of information
TYPE OF INFORMATION
- Activities in academic research and technology development
- Newly launched technology programs; results from basic research
- Characteristics and applications of new technologies
- Data on performance, cost, and new products embodying the technology
- Technology-related information on institutions and companies
- Key people; structure of R&D department; R&D budgets
- Trends related to business and market aspects
- Development of production capacity; import/export data; demand trends
- Industry news
- Start-ups; new product introduction; strategic decisions
- Public policy and legal framework
- Standards, regulation; public support programs
Monitoring: Methods of data collection
- Fieldobservation
- Test of new products, reverse engineering, visits to factories
- Direct contact to experts (e.g., scientists, lead users)
- Long-standing cooperation, interviews
- Indirectcontacttoexperts
- via consultants, contacts within JVs and licensing agreements
- Publications
- Technical / academic, company publications, industry news, conference proceedings, patent reports
- Databases
- Patents, business data (possibly panel data)
- Organizations
- Industry associations, networks
Forecasting Methods: Overview
Roadmapping: need and description
- Technology and products interact in various ways!
- – Examples
- The arrival of a new technology allows improving an existing product
- The arrival of a new technology leads to the development of a new product
- Customer feedback about a product leads to the development of a new technology
- Customer demands force the firm to develop a new technology •…
- Roadmapping
- – “process that contributes to the integration of business and technology and to the definition of technology strategy by displaying the interaction between products and technologies over time” (Groenveld 1997, p. 48)
- How does it work?
- – See illustration on next slide
Roadmapping
Roadmapping is a method for forecasting and visualizing inter- dependent developments (e.g., technologies 1, 2, and products).
Benefits of roadmapping
- Establishment of a shared product-technology strategy
- Interlinked approach for long-range product and technology
- planning
- Stimulation of learning and improvement of cross-functional communication
- Improvement of time-to-market and time-to-money
Summary
Design, implementation of innovation strategy depends on the availability of high-quality information
A sheer endless list of tools exist which can be applied to generate and analyze information, or help devise a strategy based on gathered information
Awareness of these tools and selection as appropriate given a specific context is key
