Innovation Management : by Jayabalaji Sathiyamoorthi

INNOVATION MANAGEMENT:

HOW IDEAS GET TRANSFORMED INTO INNOVATION

SCIENTIFIC ENGINEERING PROJECT REPORT

Done by:

Jayabalaji Sathiyamoorthi

Mat Nr: 5019665

Submitted to:

Prof. Dr.-Ing. Agnes Pechmann Technical Management

FH OOW, Emden

UNIVERSITY OF APPLIED SCIENCES

Constantiaplatz 4, D-26723 Emden

Germany

[ Jayabalaji Sathiyamoorthi ] 2

Contents 1. INTRODUCTION ............................................................................................................................... 3

2. INNOVATION ................................................................................................................................... 5

2.1. KINDS OF INNOVATION ........................................................................................................... 7

2.2. MISUNDERSTOOD TERMS ....................................................................................................... 9

3. GENESIS OF AN IDEA ..................................................................................................................... 10

3.1. IDEA GENERATION PROCESS ................................................................................................. 11

3.2. PHASES OF IDEA .................................................................................................................... 12

4. METRICS FOR GENERATED IDEAS ................................................................................................. 20

4.1. QUALITY BASED METRICS ..................................................................................................... 20

4.2. QUANTITY BASED METRICS ................................................................................................... 22

4.3. INNOVATION METRICS FRAMEWORK ................................................................................... 26

4.4. GUIDELINES FOR NEW METRICS ........................................................................................... 30

5. LATEST TRENDS & FUTURE OF INNOVATION ................................................................................ 31

6. QUESTIONNAIRE RESULTS ............................................................................................................ 34

7. CONCLUSIONS ............................................................................................................................... 38

8. ACKNOWLEDGEMENT ................................................................................................................... 39

9. REFERENCES .................................................................................................................................. 40

APPENDIX – A ........................................................................................................................................ 44

APPENDIX – B ........................................................................................................................................ 47

APPENDIX – C ........................................................................................................................................ 63

Table of Figures

Figure 1: Ideas to Innovation phases in different stages of business ........................................ 13

Figure 2 : R&D Return, Productivity and Yield Framework ......................................................... 26

Figure 3 : Resource View .................................................................................................................. 27

Figure 4 : Capability View ................................................................................................................. 28

Figure 5 : Innovation Metrics Framework ....................................................................................... 29


INNOVATION MANAGEMENT:

HOW IDEAS GET TRANSFORMED INTO INNOVATION

1. INTRODUCTION

No distance is too far and no dream is too large because the cycle of life

keeps changing. Certainly, changes bring improved lifestyle and technological

progress, consecutively to keep the momentum of improvements one has to really

appreciate innovation. But where does the innovation come from? An apple in

Newton‟s head sparked to deliver an Idea, which plays a vital role in everyone‟s life

till today. Innovation can be considered to be as creativity, i.e., to create new ideas

and knowledge creation. However it goes beyond idea generation to putting those

ideas into action. So it is important to evaluate the ideas in order to yield good

innovation. An idea that is developed and put into action creates innovation.

Moreover, “seamless flow of new Ideas is the vital source” for sustained innovation.

In order to gain advantage of sustainable innovation, we need to evaluate the

ideas and organizations‟ need to have some metric in place to access the progress.

Metrics can be customized by the managers to keep track on innovation success in

their companies. These metrics can help senior executives assess their company‟s

innovativeness and hence combat the insidious strategy decay that often afflicts a

company‟s business.

According to Hamel and Valikangas (2003) the organizations' strategies can

be decayed mainly by four reasons.

Over time they get replicated and they lose their distinctiveness and,

therefore, their power to produce above-average returns or better strategies

supplant them

Strategies also get exhausted as markets become saturated

Customers get bored, or optimization programs reach the point of diminishing

returns

Finally, strategies get eviscerated. Customers or suppliers become so

powerful that they can dictate much lower prices than before.


So, how to tackle this situation? The only solution to combat strategy decay is

to keep innovating. There comes the importance of knowing what is a good idea,

how it is created and gets transformed into innovation. All these aspects form the

syllabus of this paper. First the theoretical aspects of the idea to innovation phases

were discussed, then the industry approach is explained with examples and it is

supported by a survey. Additionally, a modified framework for the idea assessment is

also proposed.

SCOPE AND METHODOLOGY

In this paper, I would like to analyse how ideas could be generation, what are

all the significant techniques for idea generation, different phased involved in

transformation of ideas into innovation. Most importantly, I tried to evaluate the

existing methodology to assess ideas; furthermore I propose different metrics for

idea evaluation.

Idea is more often one‟s brainchild, so how can we evaluate it? As George

Bernard Shaw quotes “if you have an idea and I have an idea and we exchange

these ideas, then each of us will have two ideas.” A forum to share ideas will help to

pick the good ideas. But to evaluate it we need to see the outcome of the idea with

supporting factors. Thus the phase by which the simple idea is getting transformed

into an innovative idea is discussed. The innovative idea will help the company to

bring out its new products.

To prepare this topic, I evaluated many technical literatures, technical books,

Government reports of EU and US, companies‟ survey reports for the theoretical

concepts and its practical implementations in the industry.

In the beginning chapters of this paper, I discuss about what innovation

means to industry and market, later I divulge the factors which calls for innovation,

followed by the idea generation process and in the later chapters I discuss about

factors supporting new metrics for Idea evaluation. In the final chapters, I review the

existing surveys and also a dedicated questionnaire.

A questionnaire is developed and it is circulate among the companies whom

appreciate Innovation and believe innovation leads to sustained growth. All of these

companies were representing their presence in European Union, Americas and Asia


market regions. The feedback from the companies are thoroughly evaluated in the

later chapters and analysed how far ideas are measured till it becomes innovation.

2. INNOVATION

DEFINITION - “INNOVATION”

The US federal advisory committee on measuring innovation defines

innovation as follows. “The design, invention, development and /or implementation of

new or altered products, services, process, systems, organizational structure or

business models for the purpose of creating new value for customers and financial

returns of the firm”.

The definition of innovation can be divided into two perspectives, namely

Opportunities to exploit and Opportunities to explore (Amy Wong, 2001). Let‟s try to

understand both of them.

First perspective, opportunities or changes to exploit are those where most of

the parameters are well defined and understood. It is something like improving an

ongoing process, reducing cycle time, increasing throughput or reducing cost. So

these are basically incremental improvements.

On the other hand, opportunities/changes to explore are those areas, where

we have newly started and have little information about it. Here we have ideas and

solutions which are applied in new ways to solve new problems. It creates the

environment for transformational innovation.

For this paper, I adopt Peter Drucker‟s (1993) definition of Innovation, who

defines Innovation in business terms as the fundamental to the quest for profitable

and sustainable growth. Precisely one of the important business competencies

needed for the future, it implies that innovation is not all about marginal

improvements on some unimportant products.

OTHER CLASSICAL DEFINITIONS OF INNOVATION

ABS, the Australia's most comprehensive Innovation Survey (1996) defines,

“An innovation is any new or substantially improved goods or services which has

been commercialised or any new or substantially improved process used for the

commercial production of goods and services. New means new to your business”


UK Govt, Department for innovation, universities & skills, has two perspective

definitions for innovation.

First at the level of an individual firm, Innovation is defined as the “application

of ideas that are new to the firm, whether the new ideas are embodied in products,

processes, services or in work organization, management or marketing systems.”

Second at the business perspective, “Innovation is something that is new or

significantly improved, done by an enterprise to create added value either directly for

the enterprise or indirectly for its customers.”

NEED FOR INNOVATION

Why that innovation is playing a vital role in companies now? What is the

need for innovation and how does it impact companies‟ growth? Horibe (2001)

emphasizes “What is likely to kill a company in this new economy is not somebody

doing something better, it‟s somebody doing something differently.” So is it all about

being different in the market, may be true for some industry sectors but not

applicable for general industries.

In today‟s fast moving economic situation, mostly category breaking business

environments meet their objectives. Only such companies meet their estimate

growth, gain profit, out run their competitors and show excellence in execution. They

achieve by the culture of “INNOVATION”.

In every industry, the leading companies are the innovators. However the

cadre of innovators keeps changing. For example, Thomas J. Peters and Robert

Waterman (1982) cited that companies like Amdahl, Texas Instruments, Eastman

Kodak, and Maytag as exemplars in their business classic, In Search of Excellence.

They achieved that stage by extensive innovation and market presence for years.

Meanwhile, today‟s innovators such as Wal-Mart (chain of retail shops), Southwest

Airlines (good service for low fare), eBay (online auctions), and the University of

Phoenix (degree programs for working adults) are themselves relative newcomers.

Such high turnover at the top suggests that the real problem is not with the lack of

innovation, but it is “Sustained Innovation”.

Companies may seize upon a good idea that gives them an advantage for a

while, but sooner or later, they cede this advantage to a competitor who has found

an even better idea. As Nicholas Stein (2000) correctly mentioned, “Innovation is at

the heart of sustaining a company‟s competitive advantage”. This holds very true as


long as any company wants to stay on top of their competitors and win the

innovation game.

Innovation is very important criterion for success in the future, (Horibe,

Frances Dale Emy, 2001) an important study done on the rate of return of 17

successful innovations shows a mean return of 56% in comparison with an average

Return on Investment (ROI) of 16%. It is clear that organizations need to innovate to

survive and achieve good profit figures.

WHAT TO INNOVATE

Now we understood the importance of the role that innovation plays in an

organization. The next important question now arise is where and which things to

apply innovative ideas in a big organization. Suggestion and recommendation for

where to apply innovations are as follows,

1. Innovation can be applied to products, services, design, invention,

development, process, and systems.

2. To make a product/ service compete with the new economy. This is

essentially to educate organizations to move out of their traditional old habits1

to the new innovation culture.

3. To avoid high risks – Avoiding high risks involving money, staying ahead of

competition and high pay off opportunities are the essence of the innovation

4. To gain long term market focus, as a result the company can save money.

2.1. KINDS OF INNOVATION

Based on the way, it is implemented Innovation can be divided into two major

categories namely,

1. Incremental Innovation and

2. Radical Innovation

Let us discuss about how these innovation methods are applied in the industry and

which are the companies adopt them.

2.1.1. INCREMENTAL INNOVATION

Incremental innovation projects are built upon an existing knowledge and

resources within an organization. As a result the existing competencies of the

company are being enhanced. There is a modest technological change and the

1 Traditional myths & habits may change firms incompetent to the current market and it is no longer useful


existing product remains competitive in the market. Literally, these organizations

don‟t work against their competitors, instead build innovation groups among their

own different kind of products and be an active competitor for their products.

For example, the Hewlett-Packard2 Company produces both laser and ink jet

printers. These products equally compete in the market. They came up with a plan,

to divide the markets of both the ink jet and laser divisions. As a result, HP has

become the leader in both laser and ink jet printers.

2.1.2. RADICAL INNOVATION

On the other hand, Radical Innovation projects are developed and

implemented in a completely new area of operation. So organizations require to

completely acquiring new knowledge and resources. In the execution, it involves

large technological advancements. As a result the existing competence of the

organization might get turmoil and become obsolete.

For example, Intel, one among the largest PC processor manufacturers,

appreciates radical innovation. It initially developed single core processors, however

as soon as it released its dual core processors, the former became obsolete and the

later gained its market. This process is endless, as Intel recently released its multi

core processor, which might cease the interest of dual core processors in future.

Literally, Intel cannibalizes its own business by constantly bringing out better

processors to replace the ones that are once market leaders.

PROBLEMS WITH CHANGE

As we discussed about the types of innovation, now it is important to find out

which method does an organization need to select. There arise the problems with

managing changes, which are the results of innovation activity.

Most organizations are resistant to rapid and discontinuous change, because

of many factors like its traditional values, business strategies etc.; moreover it is

difficult for them to find solutions in a new direction in which their business is not

focussed.

The fear of chance makes many companies to stick in their standard mode of

operation. They work hard to bring up existing model work better and don‟t spend

time looking for a better model, or a better method of operation.

2 Popularly called as HP


Gary Hamel (2003) puts forward, “Most companies are built for continuous

improvement, rather than for discontinuous innovation. They know how to get better,

but they don‟t know how to get different.”

But successful companies deploy their managers to take responsibility for

initiating and directing change in addition to their objectives. Successful companies

believe that they need to do something that the world has not seen before. They

change and innovate so that they are first and unique in this wild and competitive

market.

Let us analyse this with the scenario from software industry. Yahoo first

released its popular instant messaging program Yahoo! Messenger (YM). This is a

GUI based beta release of the software, which became very popular in late90‟s3.

Though YM is more popular, it had many bugs reported by the customers, so YM

has to develop and release bug fix and patches. The lesson learnt is being ahead in

the market and managing chance to sustain. Lately, YM introduced voice and live

video messaging options, all as a result of adapting to chance and applying

innovation.

2.2. MISUNDERSTOOD TERMS

There are few terms which are normally misunderstood in context. Perhaps this

section will address those terms and avoid confusions of the same.

2.2.1. CREATIVITY AND INNOVATION

Creativity and innovation might sound similar in contextual meaning.

Ofcourse, innovation typically involves creativity but it is not identical to it. Linda

Naiman (2005) defines, “Creativity is typically used to refer to the act of producing

new ideas, approaches or actions, while innovation is the process of both generating

and applying such creative ideas in some specific context.”

In simpler words, innovation involves successful implementation of creative

ideas. We can say that creativity is the act of producing new approaches and

imaginative ideas. But, Innovation is the production or implementation of an idea in

some specific context. So if we have ideas, but don't act on them, then it means that

we are simply imaginative but not creative.

3 Source: http://yhoo.client.shareholder.com/press/ReleaseDetail.cfm?ReleaseID=173501

http://yhoo.client.shareholder.com/press/ReleaseDetail.cfm?ReleaseID=173501


2.2.2. INNOVATION VS INVENTION

Following the above mentioned concept of creativity, the next similar

misunderstood concepts are Innovation and Invention.

Fagerberg (2004) distinguishes them as; “Invention is the first occurrence of

an idea for a new product or process, while innovation is the first attempt to carry it

out into practice".

Interesting thing is that, Innovation does occur when someone uses an

invention or an idea to change how the thing it works. So to make it more precise,

invention is a ladder to reach the spot called “innovation”.

3. GENESIS OF AN IDEA

The types of innovation helped us to understand the methodology in which the

innovation is applied in industry. This also helped us to understand the risks involved

if the organizations resist changing. This is a business view of innovation, now let us

look it from the conceptual view of innovation. The basic building blocks of innovation

are IDEAS.

Ideas are basically the outcomes of the thought process. The quantity and

quality of idea does have a direct impact in innovation, so it is important to classify

ideas. As supported by Paulo Matos (2002) that is if a company classifies a good

idea it means that there is little evaluated risk involved to achieve excellence in

execution. Therefore, to come up with good ideas and concepts for new products,

CEOs have to encourage break through thinking. So to be innovative, the idea has to

be creative and implemented.

The core discussion of this paper is to analyse the ideas process and to apply

suitable metrics to evaluate whether the germinated ideas is a good or not.


3.1. IDEA GENERATION PROCESS

The idea generation process is nothing but the whole process from thinking to

action, i.e., from the generation of first ideas to the final innovative result.

Understanding these phases will helps us to review the ways of combining and

creating knowledge that can relate to reality.

People/ team’s role in Idea generation process

The idea generation process and thereby innovations are strongly connected

to people's attitudes. As Peter Drucker (1993) points out that in order to organise

work, it is necessary to start with a specific task/problem, to then make the

information input and finally develop the necessary human relations to get the work

done.

But who has to take the ownership of this task? Druker (1993) reinforces the

people's role, according to him it is necessary that someone takes matters into his

won hands and make them happen. A simple NO answer must always be confronted

to get to know the underlying reasons and ease the search for answers.

In other words it just means that "people and organisations have to exceed

what is pre-defined in their functions." So people have to think that a problem is in

place not to fail but as an opportunity to seize for growth. If such an attitude has to

be in people, then their motivation level needs to be higher. Thus innovation should

be attractive and beneficial for the owners/ managers involved, for this there must be

a clear definition of the innovation's importance and its dimension in the global

setting.

Human relations are based on communication. Thus effective communication

between the employees and top management will certainly impact the idea

generation process and to get appropriate solution in case of problems.

Organisation role on innovation

In this section, let us discuss about the strategies and tactics that

organizations need to follow in order to gain advantage from idea generation

process.

According to Paulo Matos (How to improve management of ideas, 2002), One

important skill that organizations‟ need for idea generation and Innovation are


The long term vision,

The ability to identify or even anticipate market tendencies and

The will and ability to gather and integrate the process.

Additionally, the EU innovation manuals states the other necessary skills

that organization needs to posses are

The ability to take risk (Calculated risk)

Internal co-operation between the different functional department and

The external cooperation, with public investigation, with consulting

services.

Therefore, when developing new ideas it is important to understand the

organizations‟ skill and it is a good idea to have a list that allows controlling the

critical factors for the idea implementation. One among the critical factor is

controlling the change.

So to handle this change, a good method could be to inherent organisation

change process into small entities such that it does not cause any ruptures with the

on going procedures, articulating, and sequencing them so that in the long term the

desired result is achieved. Once the tactics are set, organizations need to employ

appropriate tools and methodologies which are discussed in the later chapters.

Summarizing the organizations‟ role from the strategic point of view, an

organization necessarily has to define the evaluation system towards the initial set

goals. The system will include the aims to be attained, manage change, and

organize the skill of the company and the indicators to consider in the innovation

activity analysis.

3.2. PHASES OF IDEA

There are many theories about the individual phases of ideas; different

authors postulate different number of phases in the idea generation process. For this

paper, I adopt Professors Hansen and Birkinshaw (2003) work on innovation values

chain. They divide innovation process as a sequential three phases.

1. Idea Generation

2. Idea Conversion

3. Idea Diffusion

Additionally, for this discussion I tried to add one more phase,

4. Idea Assessment


Now let us review the above mentioned phases in detail and find out how

ideas are moulded into innovation.

Figure 1: Ideas to Innovation phases in different stages of business

3.2.1. IDEA GENERATION

“A good start is half of the work”4, says an old Albanian adage. Similarly a

good start for an innovation/ innovative product is GOOD IDEAS. But where do these

good ideas come from? People who make difference in an organization are the key

resource of idea generation process. So the fragments of ideas that come across the

organization will influence in generating a creative idea. For the idea generation

phase, the financial, practical, physical limitation and other business parameters are

not considered, this is to ease seamless flow of ideas and to encourage out of box

thinking.

Sources of ideas

Besides depending on the internal sources, organizations need to be open to

gain information from external sources for idea generation. This could be from

customers, end users, competitors, universities, independent entrepreneurs,

investors, inventors, scientists and suppliers who play a vital role. The common

fallacy among companies‟ is that outside ideas were not good as in-house ones.

4 Famous proverb from an unknown Albanian author

Idea Generation Idea Diffusion Idea Assessment Idea Conversion Product Launch

Project Charter

Business Plan

Launch Proposal

Evaluation


The common techniques used in this phase are brainstorming, or individual team

meetings.

3.2.2. IDEA CONVERSION

Now we have lots of good ideas, but how are we utilize it? This is handled by

this phase. The main objective of this phase is to filter out ideas, so that only feasible

and refined ideas are selected. Refined ideas are the ones identified to be financially

successful and technically viable. It doesn‟t mean that ideas are simply put away, but

it is in this phase ideas are turned into revenue generating products, services and

processes.

Typical methodology that could be used in this phase is brainstorming, to

analyse the feasibility and problems. The possible problems might vary from one

company to the other. It has to be noted the tight budgets, conventional thinking and

strict funding criteria caused many novel ideas to shut down.

Tips5:

Involving people with differences (can be based on lingual, cultural,

geographical, ethnic etc.,) can be used in such brainstorming discussions/ sessions

constructively. Because this gives room to ask as many weird and challenging

questions about the ideas, which involve people‟s educational, professional and

cultural diversity.

For instance, British Telecom, the UK telecommunications group doesn‟t lag

with good ideas for its business; however its division providing services to

multinational companies failed to hit targets6. We can infer such problem arise due to

the inadequate commercial/ business skills to tackle such projects.

Significant Tools & Techniques for Idea Conversion Process

According to Robert & Cordeiro (2005), the generation of high number of ideas

depends on the tools & techniques that an organization adapts. Consequently, this

helps to avoid strangling the innovation process for lack of ideas. Thus the idea

generation can be done in several ways namely,

5This is my personal learning from Global Management group discussion while forecasting periods in FHoow.

6 Source: http://www.independent.co.uk/news/business/news/bt-issues-surprise-profits-warning-980548.html


1. Market surveys

According to Robert, market surveys can be done through interviews,

through panels or by monitoring the evolution of a set of demographical,

economical and consumption indicators as well as others. In this paper, there

is a survey appended which helps us to understand the organizations‟

perception on idea generation and innovation.

2. Benchmarking

Benchmarking is an important tool for competition analysis.

Benchmarking is an ongoing process of measuring and improving business

practices against the companies that can be identified as the best worldwide.

It emphasizes the importance of improving, rather than maintaining the status

quo. It addresses searching worldwide for the best companies. Hence, the

more innovative the ideas that are discovered, the greater the potential

rewards that can be gained from the adaptation of the ideas.

3. Collecting Ideas from

a. Employees

The collection of employee‟s ideas can be done through a

specific programme or through more informal methods in smaller

groups. The more ways to participate in the company the employees

have, the bigger employee participation leads to a decrease in

administrative staff (Paulo Matos, 2002)

Stewart (1997) quotes the General Electric process, where,

through series of continuous meetings in several cities, employees

propose several ideas and the bossed have to approve or reject them

right there on the spot. These programmes are successful as they

allow people to have a safe place to share ideas without any kind of

restriction.


b. Suppliers

In business terms, competitive suppliers usually have a better

knowledge of what they are selling and how the client can obtain better

benefits. When suppliers are experts on their area, they may even

present solutions for the company‟s specific needs. So collecting ideas

from the suppliers is very important.

c. Customers

Customers are the important source of proposals concerning

changes in products and services.

According to Peter Drucker (1993), building relationship with

clients is also an important criterion as it creates a strong information

source.

However getting inputs/feedback from the end customers is not

easy. For example in consumer products business like tooth paste etc.,

so in those cases mediums like suggestion boxes, suggestion phone

lines will help the organization to address the complaints and feedback.

4. Co-operation with institutions

Certain institutions like universities and industrial associations help the

organization to have new ideas through co-operation settlements/agreements.

Industrial forums like IEEE, NASSCOM7 etc., where organization get and

provide inputs. Member organizations participate and form an ideal source for

development of innovative ideas.

For instance, Infosys, a multinational software services company,

started a campus-company programme by the name “Campus Connect8”.

This is to bring up ties with the academic institutions and there by creating a

platform for information sharing.

However, there is a notable problem with having co-operation with

academic institutions, relating to the data security. Because at the university

level, there is an interest in divulging as much as possible the information

7National Association of Software and Services Companies (NASSCOM)

http://www.nasscom.in/Nasscom/templates/LandingPage.aspx?id=50154 8 More info about the program can be found at http://campusconnect.infosys.com

http://www.nasscom.in/Nasscom/templates/LandingPage.aspx?id=50154


obtained, while at the companies‟ level there is an important set of information

that the company does not want to see in the hands of competitors. This is

evident during seeking surveys/interviews for this paper, as most of the

companies don‟t wish to keep their information confidential.

5. Brainstorming

Brainstorming is a widely used technique, in which a group of people

were put together and discuss their ideas that they can think of, even if

apparently foolish. The important thumb rule of this technique is not to criticise

ideas presented until the discussion ends. An advantage of this method is the

fact that the association of several ideas can trigger new ones.

3.2.3. IDEA DIFFUSION

As we have reviewed how to select ideas for funding and developing into

products. Now, in this phase we diffuse those products and practices. Thus

Professor Hansen (2003) added that, organizations must get the relevant

constituencies within the organization to support and spread the new products,

business and practices across desirable geographic locations, channels and

customer groups.

This phase is particularly important for the large companies who have their

divisions in many geographical locations. So the biggest question that I am

interested is “what is the impact of diffusing of ideas within the organization?”

This question is not part of any of the author‟s research paper; however it is

just to quench and explore the intuitions behind.

One possible negative upshot could be leaking of your idea to the

competitors, as happened in case of Procter & Gamble (P&G). The company first

launched Pampers diapers in Germany, and then it developed ideas to establish the

product in France. However it has taken long time to do so, P&G can able to launch

its product only after five years. Meanwhile, Colgate Palmolive sensed that idea and

launched its line of diapers in France two years before to P&G‟s launch9. This is a

typical example of improper diffusion of ideas.

Idea specification is important in case there are several ideas to change a

given product, service or process. Idea specification consists of choosing the idea

9 Source: http://www.unitedbit.com/idea-diffusion-3rd-phase-in-the-innovation-chain/


that will have better advantages in being applied or combine existing ideas, to find a

solution that is superior to each idea by itself.

There are several tool and techniques for idea selection process, which an

organization can avail. In this paper, two techniques are detailed.

1. Feasibility Analysis

Feasibility analysis is a preliminary study undertaken to determine a

project's viability, which helps to ensure the successful completion of specific

project goals and objectives. In addition, feasibility analysis gives a clear

picture, if an existing system is worth upgrading or not.

Feasibility analysis can be done in two perspectives, technical

perspective and business perspective (Paulo Matos, 2002). However

feasibility analysis can be done in many kinds.

In the technical point of view, the feasibility study is carried out to check

if it is possible to implement the idea at an acceptable cost. This involves

questions such as whether the technology needed for the system exists, how

difficult it will be to build, and whether the organization has prior experience

using that technology

In the business perspective, the feasibility study is conducted to check

the factors affecting the commercial viability of the business. Also to ensure

the cost-effectiveness of the proposed system i.e. if the benefits of the new

idea do not outweigh the costs, then it is not worth going ahead. So it could be

precisely called as a cost benefit analysis.

For example, car manufacturers are now greatly involved in making

use of hydrogen as the fuel source (Robert Boyd, 2007). But its use in cars is

highly conditioned for safely. Thus, hydrogen fuel project is stronger in the

technical point of view, but weaker in the business point of view.

2. Financial and Risk Analysis

In a financial analysis, there is an attempt to project all the predictable

revenue in relation to the predictable costs. Then it is applied financial

calculation to evaluate the process‟s profitability towards a value. From the

comparison between the idea‟s profitability and the risk associated to the


same, a decision can be made about the idea. With a raising number of ideas

analysed and processed there is a better understanding of the risk level of

several types of ideas and the costs each one brings. The study of this

technique is strongly supported by a wide bibliography related to the

economical and financial areas.

3.2.4. IDEA ASSESSMENT

From the previous discussion, it is clear that Innovation develops through an

evolutionary, interactive process between actors and between different stages in the

development of an idea into innovation. Now lets us discuss Idea assessment which

is one among the core topics in this paper. So the later part of this paper is

structured to address the following questions.

What is idea assessment?

Why organizations need to adopt Idea Assessment?

The word „Assessment‟ in this context refers to Metric and Measurement of

Ideas. Idea Measurement is a simplified & quantified observation of ideas. Idea

Metric is a comparative measure of the performance of the ideas and product or

process. By using metrics we can find the deviation i.e., what is planned against

what is achieved?

Idea Assessment is very important to any organizations to monitor the trends

in the actual effort spent on Idea generation process. This helps to understand where

does company stand and find areas of improvements. It also helps to re-plan or alter

the ideas so that it is more technically viable.

Significance of Idea Assessment

The US government advisory committee‟s report on measuring Innovation,

stresses the importance of measuring the innovation. They add that the outcomes of

innovative activity need to be tracked and measure to determine fully the impact of

innovation on the economy. This is on a macro level, simply means to evaluate the

variations.

Considering companies at a micro level, it is indeed important that Idea

Assessment need not be made with the variations but also from customers (internal

& external) survey and feedbacks. A typical feedback will help the organization to


identify the areas of improvement and areas of strength. The important aims of idea

assessment process are as follows,

1. Ideas need to be Optimally Quantitative, i.e. it will stretch out to the maximum

possible extent to guide decision making based on measurable and

quantifiable criteria

2. To help in addressing ideas submitted for the organizational perusal,

minimizing the scope of escapes in estimating the organization‟s potential

long term returns, i.e., to ensure some business important factors doesn‟t left

unnoticed.

4. METRICS FOR GENERATED IDEAS

Innovation metrics are important for at least two reasons as stated by Amy

Muller (2001). First, metrics help managers make informed decisions based on

objective data, which is especially valuable given the long-term nature and risk

associated with certain innovation projects. Second, metrics affect behaviour by

helping align goals and actions with the best interests of the company.

Defining metrics is a bit risk and misleading task for the fact that if some of the

important indicators if left unnoticed will lead to a major confusion. Such indicators

can consist of measure of the intensity or quality of innovation. Innovation indicators

should also be able to differentiate between innovation as adoption and innovation

as a creative activity (A. Arundel, 1998).

In this paper, I try to propose the metrics for IDEAS based on two majors,

namely

Quality based metrics

Quantity based metrics (Metrics driven by figures)

4.1. QUALITY BASED METRICS

Let‟s discuss about how to measure the quality of an idea, which leads to

innovation. A single indicator cannot provide all of the information that is needed,

although traditional indicators such as R&D expenditures or patents can serve a

variety of purposes. There has also been some success in developing techniques to

extract more information out of traditional indicators such as patents (K.Smith 1998).

Nevertheless, new indicators are required to meet policy needs and to test

innovation theories.


First, many innovation activities are not directly measurable. Organizations

use some codified knowledge to assess such activities. Codified knowledge is a kind

of tacit knowledge, which is generally undefined and firms have some internal

methods for determining them. So, literally codified knowledge can be indirectly

measured. For example, Informal contacts between firms are more likely based on

some tacit knowledge.

4.1.1. INDICATORS BASED QUALITY METRICS

There are certain indicators which can be made used to certify how much

does an idea qualifies for its succession into a product. But these indicators can‟t be

standardised entities as it is affected by type of innovation, like a product innovation

or a process innovation.

For example, consider the case of a substantial improvement in which an

organization, just want to make some minor adjustment to an existing product, in

comparison with a company developing revolutionary product that is completely new.

In such a scenario, A. Arundel, (1998) proposes some possible indicators one can

adapt to measure. They are as follows,

o Number of patents filed

o R& D performance

o R&D intensity

o Proportion of employees who are scientists/ engineers

It has to be noted that categorizing a common indicator is always a difficult

task. It has a serious drawback as the indicators fail to identify all firms that expend

some creative effort on innovation. In brief, using R&D as an indicator is biased

against firms that develop mechanical innovations, which is often based on design

and complex production systems and underestimate innovative activities in small

firms.

4.1.2. KNOWLEDGE BASED QUALITY METRICS

This metrics is designated to measure the organizations‟ performance based

on the knowledge they can generate and the ability to use them. The learning

capacity of an individual company plays a vital role in measuring the ideas.

People are assets in such metrics, because they create ideas and transform

that basic knowledge into desired product. So the rate in which people learn new

skills to keep pace with chances in technology really matters.


A. Arundel, K. Smith, R. Patel, G. Sirilli claim that knowledge based metrics

acts as the root for other innovation indicators like patents, bibliometrics, and

adsorptive capacity, because all are the results of knowledge creation or the

activities that produce new knowledge.

The knowledge based metrics are however affected by “Absorptive Capacity”

and degree of diffusion of the organization. For our discussion, the absorptive

capacity gains more interest. So let us try to understand what absorptive capacity is

and how does it affect?

According to Patel and Pavitt, (1995), some technical information is freely

available to all firms, in the sense that it can be used without paying a fee for the use

of the information. However, even freely available knowledge is rarely completely

free because of the effort that is necessary to understand and exploit technological

knowledge. So the organization has to necessarily invest time, effort and money to

understand the freely available knowledge and make use of it for its future products.

Amy Muller (2001) defines absorptive capacity as the ability of a firm to effectively

use external knowledge, ranging from basic research and reverse engineering to the

implementation of new production equipment. This capacity varies with a firm‟s

experience and the range of its innovative activities. So higher the absorptive

capacity of an organization, better is the companies knowledge scale.

Disadvantages of this metric on innovation are that the boundaries are

artificial. For example there is no obvious demarcation line between knowledge

creation and dissemination or between dissemination and absorption.

4.2. QUANTITY BASED METRICS

We need to understand that risk of qualitative judgment in evaluating the

goodness of an idea to fit in the organization‟s interest, and hence to pursue it.

Hence, the need on evolving a model which can be measured at each stage is

important.

The idea is to set quantifiable parameters to measure the potentiality of an

idea and also to judge an idea‟s goodness of fit in the organization‟s context.

We know ideas root from individuals; teams make it through to customers,

while the organization provides a facilitating environment for all these activities. But

evaluating the first fit of an idea in line with the organization‟s business interest


brings in a challenge, especially if decisions have to be based on a quantified metric.

Because all the success factors of an organization can‟t be quantitatively measure.

4.2.1. MEASURE OF FIRST FIT

The methodology followed here is more extracted from general financial

concepts. The rate of return or return on investment is calculated from one idea

stage to the other (see figure 1 for the idea stages), so that it can aptly be measured

by its contribution. If the contribution is acceptable for the organization then the ideas

can be forwarded to the next phase, else it could be filtered.

Groppelli and Ehsan Nikbakht (2000) concept of determining the present

value of the future income is adapted to explain this metrics. So let us see how the

return on investment is calculated.

Business domain is a unit of the business model where there is a defined set

of tasks and milestones.

Business Domain Contribution, DC = (Gross Investment – Net Returns),

from the domain of practice.

If R be the net revenue earned after tax and expenditure deductions, across

all domains of practice of the organization, and then a new metric, called “Domain

Identification Scale factor” is added. It can be mathematically explained like,

Ω = DC / R

This aptly signifies the importance of the return value and there by we can find

the importance of the domain in an organization‟s current business practice.

Ω = . Gross investment – Net Returns .

∑ (Net revenue earned after tax and expenditure deductions)

Where, ∑ is the summation of returns across all business domains of practice of the

organization.

Next the profitability of pursuing the idea in terms of the organization‟s funding

or financial venture is calculated by Return on Investment (ROI).


ROI can be formulated by a simple and easy to evaluate metric of standard

practice, as follows:

ROI = . Σ Cumulative Net Profits from New Products .

(R&D Costs + Incremental Production Investments + Pre-launch Costs)

The first fit of a submitted idea can be quantifiably judged from the following novel

metric, as:

Measure of first fit, λ = Ω x ROI

Where, Ω serves as the scaling factor (as Ω <= 1) against ROI.

As innovation encompasses a broad variety of process, product, technology,

strategy, organizational, business and marketing innovation, the Measure of First Fit

(λ) can not be made too specific to cover all of them. This is the biggest setback of

metric based calculation. Thus providing an example to workout the above formulae

may not accurately work, hence sample calculations are not included in this paper.

However, through empirical surveys, a standard exit criterion, say A, can be defined,

such that, whenever,

λ >= A,

Submitted idea can be regarded as a “Fit to innovate” & innovation to be

pursued, and will meet the acceptance criterion at the first gate. But, ideas for which

λ < A, those ideas need to be filtered10.

4.2.2. R&D YIELD - US PERSPECTIVE

The Centre for Innovation Management Studies, North Carolina state

university arranged a workshop on innovation metrics in US industries in June 2006.

The excerpts from the workshop are adopted for the discussion of the quantity based

metrics, which is totally based on R&D returns. Let us discuss how it is implemented.

R&D returns framework is a quantified approach to measure ideas and innovation.

This links and relates organizations‟ profits to the R&D investment. In this method,

each and every idea generation process is considered as an R&D activity. So the

10

Managing filtered/ eliminated ideas are discussed in the later part of this paper


calculations are carried out for specific innovation activities. It is given by the

following formulae,

R&D Returns = Profits / R&D investment

R&D productivity = Technical progress / R&D investment

R&D yield = Profits / Technical Progress

Once the specific R&D investment is devised for specific innovation activity,

and then a financial output metrics is defined, which are Net Sales Ratio (NSR) and

Cost Savings Realized (CSR). It is given by the following formulae,

New Sales Ratio (NSR) = Revenues realized this year from new products introduced

in last 5 years Total revenues realized this year

CSR = cost savings realized this year from process improvements introduced in last

5 years Gross profits11 realized this year

The chart in the following page will help us to understand way the R&D

returns are calculated. The factors which affect/influence the R&D productivity and

R&D yield are displayed.

11

Gross profits = Sales Revenues – Cost of Goods sold


Figure 2 : R&D Return, Productivity and Yield Framework

Source: Innovation Metrics in US Industry:

http://www.nsf.gov/statistics/workshop/innovation06/bean.pdf

4.3. INNOVATION METRICS FRAMEWORK

In this section, I try to propose a simple model of the innovation framework.

To develop this framework, the three views on innovation (Amy Muller, 2001) are

adapted, besides the innovation theory. So the three views on innovation are

combined to form a framework which is used to measure the ideas and access the

companies‟ capacity for innovation.

Resource view

Capability view

Leadership view

4.3.1. RESOURCE VIEW

Resource view assesses the proper allocation and utilization of the

companies' resources. It helps companies to allocate its resource in a way that it is



balanced with the existing business and also the new business. Balance optimization

of the resources like capital, labour, time etc., is very important in this state.

The metrics for the resources can be sub divided into inputs and outputs. The

resource view inputs measures the resources that are allocated by the company for

innovation. And like wise, the resource view output measure the company‟s success

at innovation.

Figure 3 : Resource View

Key indicators

Based on this view, the possible key indicators for innovation metrics are

listed below. This list has indicators for both inputs and outputs of this view. Please

note that company doesn‟t really need to measure & adapt all the indicators

mentioned below. However, under their own discretion suitable indicators can be

followed, so that they have a simple and better metrics for innovation.

The key indicators are as follows,

1. Percentage of capital that is invested in idea generation, idea conversion, idea

diffusion and Idea assessment phases for new products and services.

2. Number of talented workforce in the company, i.e. individuals who have prior

knowledge of business, either within the company or before joining the

company.

3. Percentage of workforce time that is currently dedicated to innovation

projects.

4. Number of new products, services, and businesses launched in the past year.

5. Share of wealth, which is nothing but the change in the company‟s market

value during the past year divided by the change in the total industry‟s market

value during the same period

Capital

Resource

View

Return on

Investment Talent

Time

Output Inputs


6. Percentage of revenue from products or services introduced in the past three

to five years.

4.3.2. CAPABILITY VIEW

The capability view assesses the extent to which the company‟s

competencies, culture, and conditions support the conversion of innovation

resources (see resource view) into opportunities for business renewal.

Figure 4 : Capability View

Like that of resource view, the capability view can also be sub-divided into

inputs and outputs. The capability view inputs measure the company‟s culture and

innovation competence. This also involves the employee access to innovation

training, tools, and methodologies. On the other hand, the outputs of the capability

view measure the company‟s success at providing renewal options. For example, it

might measure new competencies in comparison with the existing business.

The key indicators for capability view are as follows,

1. Percentage of employees who have received training in innovation, for

instance, instruction in estimating market potential of an idea.

2. Percentage of employees for whom innovation is a key performance goal.

3. Number of innovation tools and methodologies available to employees.

4. Number of new competencies (i.e. distinctive skills and knowledge domains

that spawn innovation) measured as a simple count among a threshold

proportion of employees.

5. Number of strategic options (i.e. newly created opportunities to significantly

advance an existing business).

6. Number of new markets entered in past year.

Preconditions

Capability

View

New

competencies Tools

Trainings

Output Inputs


4.3.3. LEADERSHIP VIEW

The leadership view helps to evaluate leaders‟ involvement in innovation

activities, the establishment of formal processes to promote innovation, and

dissemination of innovation goals. The leadership view assesses the degree to

which a company‟s leadership supports innovation.

Figure 5 : Innovation Metrics Framework

(Source: Amy Muller 2001)

DISCUSSION ON METRICS

As discussed earlier, simple and straight metrics are always beneficial.

However, selection of the optimal metrics and the optimal value of any particular

metric will be varying from company to company.

There is no fit to all metric available. For example, innovation for a cement

producer will require different skills, resources, and competences than in comparison

with an automobile producer. Thus, the goals and targets of the innovation will vary

from industry to industry. However, the generic indicators that are measured by the

innovation metrics will be quite similar across most industries. The financial analysts


of the company must analyse several metrics in order to develop a comprehensive

view of the company‟s innovation capability.

4.4. GUIDELINES FOR NEW METRICS

Robert Tucker (2002) proposes few Guidelines for the organizations for

design of an effective metrics for Ideas and innovation. The key insights of the

guidelines are as follows.

4.4.1. Comprehensive set of metrics.

Organizations‟ need to build a comprehensive set of metrics so as to get

everyone involved in the innovation initiative. Organizations can consider including at

least one metric for each of the idea generation stages. So with such a

comprehensive set, companies‟ will be more likely to detect problems (for example, a

lack of leadership involvement or a bottleneck in the innovation process) before they

become too serious.

4.4.2. Assessment of existing metrics.

Innovation has to be managed as a discipline, as a holistic process. So

organisations need to study and improve the existing metrics which is already in

place. They need to find whether these metrics suit their needs. In the interests of

standardization, they can seek consensus on a set of metrics with other managers

working in their firm.

4.4.3. Avoid complex metrics.

The simplest metrics are the best, so having a complex metrics for innovation

is totally irrelevant. Organizations have to ensure that the metrics are meaningful,

and intuitive. Such a metric will have greatest impact if they become a common

entity throughout the company.

4.4.4. Don’t measure every conceivable parameter.

Organisations need to resist the temptation to track every conceivable

parameter. So they need to select a manageable set of metrics (say not more than 8

to 10) and measure them diligently.

4.4.5. Purpose of metrics

Organizations need to keep in mind that creation of metrics is to measure

their progress, and analyse the results for comparison purposes only, not as a stick

to 'motivate' compliance


4.4.6. Include a few customer-driven metrics.

Organization can consider measuring customer driven metrics such as sales

from new products to complement the internally focused metrics such as the number

of new competencies under development or undue emphasis on customer-driven

metrics; otherwise these metrics will stifle innovation projects with a longer-term

return on investment [Amy Muller, 2001].

5. LATEST TRENDS & FUTURE OF INNOVATION

5.1. IDEA BACKUP MANAGEMENT

The concept of idea backup management is to track & manage filtered out

ideas. An idea which might not fit into the organization‟s context in the present

scenario might reward it with unanticipated gains in future. Hence, tracking and

managing filtered out ideas is equally important.

In this paper, a three fold ways are proposed for handling filtered out ideas

management.

• R&D Support

• Product/ Practice Line Diversification

• Sponsoring and/or sourcing

All of these are much discussed topics in themselves, and if dealt with details

here, might lose the relevance and context of the paper. So it is left for future work.

5.2. OUTSOURCING INNOVATION

Outsourcing innovation and research activities of a company might yield to

long term budget savings and it is an eminent cost cutting measure. The great

opportunity is that we can get multi -dimensional solution for a problem.

The possible advantages that an organization might gain by outsourcing

innovation include a reduction in technological and market uncertainty, cost sharing,

risk spreading, and reduced duplication of research, economic of scale and an ability

to combine different expertises. (A. Arundel, K. Smith, 1998)

However the biggest threat is that those solutions and ideas shouldn‟t reach

your competitors. This was evident from the questionnaire results as well, as most of

the organizations think that outsourcing innovation is not an opportunity but a mere


threat. The more detailed discussion of the questionnaire will be done in the later

chapters and also in appendix B.

Thus we can conclude that a company can outsource the contextual activities,

but it has to in-source the core activities. Those are what give the company a

competitive advantage.

5.3. NATIONAL INNOVATION INDEX

The National Innovation Index is just like an indicator to show the innovation

capability of a particular nation. We can compare with any other parameters like

GDP, GNP etc. It is a concept to have a coordinated emphasis on innovation

measurement and to evaluate nation‟s stand on innovation. This might help the

organizations and researchers of a country to create a strong framework for

identifying and measuring innovation in the national economy.

But generating such an index itself is not an easy task, as it requires better

existing data from the statistical agencies to allow for the consistent estimation of the

contribution of innovation in the gross domestic product and productivity accounts

and to develop greater understanding of innovation.

The US innovation advisory committee (2008) also supports the idea of

development of a National Innovation Index and they strongly believe that having a

National Innovation Index will help to assess the innovation capability of a nation and

also help them in calculating the contributions of innovation in the gross domestic

product

5.4. CO-OPERATIVE R&D

Co-operative research and development is a programme which was

introduced by European Union (EU). According to this, all the supporting nations of

EU made a contract to use the information services and markets, while at the same

time remaining closely tied to national infrastructure.

K. Smith (1999) claims, that this co-operative R&D is originated in a politically

driven effort to encourage contacts between firms in EU. One advantage is such

programmes are the improved relationships between large firms and sub

contractors, producers, consumers and collaboration networks.

On the other side of the coin, there is a “policy myth” which is stated by A.

Arundel (1998), co-operative R&D could be a panacea that will help European firms

to turn the fruits of research into competitive products, however this can be only


achieved through a good indicators, good theory (which is actually missing), and a

good analysis on co-operative R&D against its alternatives.

5.5. IDEA MANAGEMENT SOFTWARE SYSTEMS

In the current market trend, companies are competing based on the speed at

which they can generate and implement ideas for new products or services, so there

comes the need of the IDEA MANAGEMENT SOFTWARE SYSTEMS.

The idea management technology is a new type of enterprise software that

can help to make such an innovation strategy possible.

Idea management systems are basically web based applications, thus

enabling organizations to gather, share, and evaluate ideas from all employees,

regardless of their geographical locations. All the ideas are then collated and stored

into a centralized online database. These systems enable managers to measure the

bottom line impact of ideas collected and implemented, thereby making it easier to

determine the return on ideas.

There are few major vendors of web based idea management applications,

o “IdeaCentral” by Imaginatik12

o “NextNet” by General Ideas13

5.6. INNOVATION BY ACQUISITION

Innovation by acquisition is adopted when an organization wants to retain its

leadership position in the innovative product arena. So it buys innovation off the shelf

by acquiring the firms. This strategy is effective in short term and will put the parent

organization in the leadership position.

In the long run, this strategy of innovation through acquisition usually fails

because the acquiring corporation overestimates the value of synergies and

underestimates the post-merger integration difficulties. Inmost of the cases,

innovation by acquisition is always at enormous cost, either in cash or stock, to the

shareholders of the acquiring corporation. Shareholders see far higher returns when

companies successfully innovate organically

For example, as the carbonated drinks market went down in recent years,

Coca-Cola acquired Mad River Traders and PepsiCo bought South Beach Beverage

12

For product information visit, http://www.imaginatik.com/webdoc_prod_overview 13

For product information visit, http://www.innovationtools.com/Resources/ideamgmt-details.asp?a=82


Company, both makers of alternative beverages such as bottled waters, juices, and

teas laced with ginseng. (Amy Muller, Liisa Valikangas, Paul Merlyn, 2001).

6. QUESTIONNAIRE RESULTS

The innovation survey/questionnaire is drafted to get inputs from various

organizations. As a result we can understand their views on innovation and how do

they manage the idea generation process of innovation.

This questionnaire was framed merely to get inputs relevant to the course of

this scientific report, and thus other concepts were not included. Moreover,

companies were reluctant in sharing their method or model of innovation, which they

implement. Therefore, a real-time implementation for the proposed “Innovation

Metric Framework model” was not possible.

Approach & methodology

The questionnaire is framed with 15 simple self-assessment questions;

nevertheless it addresses most of the critical to success factors of innovation. The

survey is being filled by people at various levels within many organizations, so that

based on the output of the questionnaire; we can understand what are the IDEAL

models on managing ideas and innovations

The questionnaire was circulated among different organizations across

different geographical locations. The responses from the participants are captured

over emails and phones calls. The participant companies are from various business

fields like Automobile, Software Services, Software Consultants, Software Product

development, Banking services and Semiconductor industry. See appendix B for the

list of participant companies.

The questions are devised and group in such a way that we understand what

is the company‟s stand on innovation and the methodology adopted by them. In the

following section, the important key competencies are discussed. The questions

framed will act like an objective for the appropriate key competency items, the

response from the companies are quoted under inference.


Data Security

Due to the participant organizations‟ concern about data security and data

confidentiality, the results will be open only for the internal discussions of this paper

only. Based on the request from the participant organizations‟, Information such as

which organization expressed what kind of views on a particular question is kept

hidden and therefore it is not disclosed.

Organizational expertise on innovation

Questions 1 to 4 are structured to understand the companies‟ expertise and

know how about the innovation trends. This will also help us to understand whether

the company became innovative by choice or by chance. In other words, is it the

company willingly adopted the innovation methods or out of competition it was forced

to adapt Innovation, in order to in the market.

o Responses:

The responses for these questions were more positive. In fact, most of the

companies‟ have a good understand about the need and urgency of innovation.

Thus, most of the participants agreed on the organizational need to emphasis

innovation.

Concern about people

Questions 5 and 6 are framed to understand how well the companies are

willing to take their employees and customers together in the innovation activities.

From the employees‟ point of view, this will help us to know if the employees‟ have

self interest towards innovation or they are just being driven by the order from their

superiors.

Next comes the customers, who are portrayed as kings by most of the

companies. So hearing from them is certainly important. This question will help us to

know how far the organization involves customers in discussing future ideas and

opportunities.

o Responses:

There were different responses for question no 5, a few companies reported

that they have to place some policies or some offers/ rewards in place to get

passionate to towards work. Some companies reported that their biggest strength is


having people who are passionate about their current job. However for question no

6, most of the companies responded that they have a strong understanding of their

clients and market. In case of new market they have understanding to some extent.

Innovation metrics in place

Questions 7 to 11 are framed to address the organizations importance of

measuring innovation. With the help of these questions we can be aware of

companies‟ alertness on Intellectual property and patents. Though most of the

companies were not interested to share the type of metrics they use, nevertheless

we can get an idea about whether the companies‟ believe strongly in placing a

metrics for innovation.

o Responses

Each and every company have at least one metric in place to measure their

innovation. However, they are so reluctant enough to share the kind of metric they

adopt. Only two companies reported to use ROI based metrics, or more precisely,

quantity based metrics.

Process and methods adapted

Questions 12 to 15 are framed to know whether organizations‟ equip

themselves to face the problems and difficulties of deploying the new ideas. The

number of training programmes and workshops will give a clear picture on how much

does companies‟ prepare their employees to implement the new ideas. The

companies‟ view on the future of innovation is also captured by question no 15,

which is to outsource innovation activities or not?

o Responses

Regarding cross cultural teams, most of the companies do accept that having

cross cultural team helps in idea germination. Also during brainstorming, such inter-

cultural teams will be of advantageous in bring out multiple view for an entity.

Regarding outsourcing innovation, there are a lot of differences among the

responses. A few companies think it is very risky to outsource innovate and some

companies take it as an opportunity for sharing risks. Both the arguments are


correct, so it all depends on the kind of business and also the competency area

which is being outsourced.

The detailed evaluations of the results are discussed in appendix B.

LESSONS LEARNT

Most of the companies think that Outsourcing innovation is a mere threat.

However few of the companies still agree to the contextual activities, but it has

to in-source the core activities

Almost every organization have a very high absorptive capacity

Having the cross culture team in place doesn‟t directly influence the

innovation process, however it does impact in idea generation process

Almost every organization has a defined and structured innovation process.

They device a defined phase from idea generation to innovation.

Most of the companies, do believe in measuring their progress in innovation.

So they certainly adopt an innovation metric system, whichever they feel it is

good for them.

Most of the employees are not passionate towards innovations, unless driven

by rewards.


7. CONCLUSIONS

From this study, it is indeed clear that the Long-term success of any organization

in any competitive marketplace demands constant innovation. To have such a

sustained innovation, the company should drive idea generation program, device

appropriate metric for measurement and manage the innovation activities.

It is also clear that the long lasting innovation requires a steady flow of new

ideas. So we can conclude that the effectiveness of a company‟s innovation efforts is

measured by how well promising ideas are selected, nurtured, and transformed into

tangible products and services.

Also it is understood that the entire process cycle of the idea generation till it

developed into product is a continual process, so performing well in one stage of

idea phase and doesn‟t necessarily promise success in the successive stages.

This can be done by facilitating the awareness of opportunities, also by getting

feedback from customers and foster the spread of entrepreneurial capabilities. Thus

development of innovative capabilities is the only means by which companies can

sustain a competitive advantage

The simplest metrics are the best for different phases of idea, so usage of simple

and suitable metrics to rank ideas and allow the best ideas to rise to the top.

Emphasis on communication, organizations should listen to the feedback and

comments from customers and partners. Besides, solicit immediate input from

employees at any level and from any organization.

Learning and improvement are to be gained from each stage of the process. So

Implementation of pilot projects to gauge the costs and benefits of new data

collection efforts could be encouraged.

Quote

“The best way to start achieving a thing is to dream about it. Imagination together

with innovation results in realization.”

– Dr. APJ Abdul Kalam


8. ACKNOWLEDGEMENT

The author gratefully acknowledge suggestion and guidance by

Prof. Dr. A. Pechmann, FHoow, Germany, and sincerely appreciate the support and

inputs provided by Mr. Swaminathan, General-Manager, TVS Motors Company,

India and Mr. Selvam, Business Analyst, Airmiles - British Airways, UK. A special

thanks to the organizations that have participated in the survey and expressed their

valuable inputs. Besides, author wish to thank and appreciate the library staffs of

FH-Emden, British Library- London and Uni-Library, Oldenburg for their support in

finding literatures. The author owes lot of thanks to his parents, who are a constant

source of support with their limitless love and care.


9. REFERENCES

Amy Wong (2001), “Metrics of Innovation”, Intl. journal of strategy and business

transformation, issue 1, spring 2001, pp 1 to 5.

Amy Muller, Liisa Välikangas, and Paul Merlyn (2001), “Metrics for innovation:

Guidelines for developing a customized suite of innovation metrics”, viewed on 10th

October 2008,

http://www.strategos.com/articles/InnovationMetrics/InnovationMetrics.pdf

Anthony Arundel, Keith Smith, Pari Patel and Giorgio Sirilli (1998), “The future of

innovation measurement in Europe”, IDEA papers, viewed on 22nd July 2008.

http://www.scribd.com/doc/239713/The-future-of-innovation-measurement-in-Europe

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APPENDIX – A

QUESTIONNAIRE ON INNOVATION

PURPOSE

This survey is solely circulated to companies whom appreciate innovation.

The results of which are used to analyse and review the data for the scientific project

(Project C), which is a mandatory subject in Master of Technical Management

course, University of Applied Sciences, Emden, Germany

SIGNIFICANCE

In today‟s economy, the importance of innovation is paramount in providing

the organization the desired competitive advantage. The following questionnaire is

structured to identify the significance of innovation and analyse the role of idea

generation process.

DATA PROTECTION

The data collected from this survey is strictly used for academic purpose and

to analysis how really ideas contribute in achieving innovation. The author takes

responsibility to ensure the confidentiality and privacy of the received information

from the contributors.

METHODOLOGY

What is your company‟s stand on managing ideas and Innovation? To get an

answer for this question, we have compiled a simple questionnaire of 15 statements.

We value your time, so we are not looking for elaborate answers; all you have to do

is simple to answer – 1. Agree, 2. Agree strongly, 3. To some extent, 4.disagree or 5.

Disagree strongly.

CONTRIBUTORS DETAILS

Family, First name:____________________________________________________

Designation: _________________________________________________________

Organization‟s Name: _________________________________________________

Email: ______________________________________________________________


QUESTIONS – Please select an answer for all statements

1. Our organization is known for its innovation and this is crucial to our success.

Strongly Agree Agree To Some Extent Disagree Strongly Disagree

2. The implications for the business of future trends and issues are analysed,

with the participation of our design experts (internal and external) and

technical specialists.


3. All levels of the organisation are proactive in generating, evaluating and

developing ideas for new products/services/processes.


4. Your business domain schedule regular meetings among employees to share

good & new ideas


5. Employees are passionate about what they do and really want to create

something special.


6. Ideas and Opportunities we identify are driven by our deep understanding of

our customers, competitors and markets.


7. Ideas has to be necessarily tracked and certain kind of metrics has to be

adapted



8. Do you think, once a good idea is deployed, and it will certainly help you to

attain your organization‟s business goal?


9. Measuring idea quantitatively/ qualitatively help to assess your organization‟s

innovation capability


10. Our intellectual property is at the core of our competitive advantage and we

protect it accordingly in the most appropriate way.


11. We have a strong „absorptive capacity‟14


12. Our teams are usually made up of a broad mix of people from different

cultural background


13. Trainings and workshops are consistent; people are developed for bigger

roles in the organisation.


14. We have a defined and structured innovation process


15. In future, every organization might outsource Innovation


14

Absorptive capacity is the ability of your company to effectively use information from knowledge sources.


APPENDIX – B

Question #1

Our organization is known for its innovation and this is crucial to our success.

Sno Responses

1 Agree

2 Strongly Agree

3 Agree

4 Agree

5 Strongly Agree

6 Strongly Agree

7 Strongly Agree

8 Strongly Agree

9 Strongly Agree

Six of the participant companies have Strongly Agreed.

0

1

2

3

4

5

6

Strongly Agree Agree To Some Extent

Disagree Strongly Disagree

Responses


Question #2

The implications for the business of future trends and issues are analysed, with the

participation of our design experts (internal and external) and technical specialists.

Sno Responses

1 Agree

2 Agree

3 Strongly Agree

4 Strongly Agree

5 Strongly Agree

6 To Some Extent

7 Strongly Agree

8 To Some Extent

9 Strongly Agree

Five of the participant companies have Strongly Agreed.

0

1

2

3

4

5



Response


Question #3

All levels of the organisation are proactive in generating, evaluating and developing

ideas for new products/services/processes.

Sno Responses

1 Agree

2 To Some Extent

3 Strongly Agree

4 Agree

5 Strongly Agree

6 Strongly Disagree

7 Strongly Agree

8 Strongly Agree

9 Strongly Agree

Five of the participant companies have Strongly Agreed.

0

1

2

3

4

5

Strongly Agree

Agree To Some Extent


Response


Question #4

Your business domain schedule regular meetings among employees to share good

& new ideas

Sno Responses

1 Agree

2 Strongly Agree

3 Strongly Agree

4 Agree

5 Strongly Agree

6 Agree

7 Agree

8 To Some Extent

9 Agree

Five of the participant companies have expressed that they are agreed.

0

1

2

3

4

5

Strongly Agree



Response


Question #5

Employees are passionate about what they do and really want to create something

special.

Sno Responses

1 To Some Extent

2 Agree

3 Agree

4 To Some Extent

5 Strongly Agree

6 To Some Extent

7 Agree

8 Agree

9 Agree

Five of the participant companies have expressed that they are agreed.

0

1

2

3

4

5

Strongly Agree



Response


Question #6

Ideas and Opportunities we identify are driven by our deep understanding of our

customers, competitors and markets.

Sno Responses

1 To Some Extent

2 Agree

3 Agree

4 Strongly Agree

5 Strongly Agree

6 Agree

7 Strongly Agree

8 To Some Extent

9 Agree

Four of the participant companies have expressed that they are agreed.

0

1

2

3

4

Strongly Agree



Response


Question #7

Ideas has to be necessarily tracked and certain kind of metrics has to be adapted

Sno Responses

1 Agree

2 Strongly Agree

3 Agree

4 Agree

5 Agree

6 Agree

7 To Some Extent

8 Strongly Agree

9 Agree

Six of the participant companies have expressed that they are agreed.

0

1

2

3

4

5

6



Response


Question #8

Do you think, once a good idea is deployed, and it will certainly help you to attain

your organization‟s business goal?

Sno Responses

1 Agree

2 Disagree

3 Strongly Agree

4 Strongly Agree

5 Agree

6 Disagree

7 Strongly Agree

8 Strongly Agree

9 To Some Extent

Four of the participant companies have expressed that they are „Strongly Agreed‟.

0

1

2

3

4

Strongly Agree



Response


Question #9

Measuring idea quantitatively/ qualitatively help to assess your organization‟s

innovation capability

Sno Responses

1 Agree

2 Strongly Agree

3 Strongly Agree

4 Agree

5 Strongly Agree

6 Strongly Agree

7 Strongly Agree

8 Agree

9 Strongly Agree

Six of the participant companies have expressed that they are „Strongly Agreed‟.

0

1

2

3

4

5

6



Response


Question #10

Our intellectual property is at the core of our competitive advantage and we protect it

accordingly in the most appropriate way.

Sno Responses

1 Agree

2 Strongly Agree

3 Agree

4 Strongly Agree

5 Strongly Agree

6 Strongly Agree

7 Strongly Agree

8 To Some Extent

9 Strongly Agree

Six of the participant companies have expressed that they are „Strongly Agreed‟.

0

1

2

3

4

5

6

Strongly Agree



Response


Question #11

We have a strong „absorptive capacity‟

Sno Responses

1 Agree

2 Agree

3 Agree

4 Agree

5 Agree

6 To Some Extent

7 Agree

8 Agree

9 To Some Extent

Seven of the participant companies have „Agreed‟ that they got a strong absorptive

capacity.

0

1

2

3

4

5

6

7



Response


Question #12

Our teams are usually made up of a broad mix of people from different cultural

background

Sno Responses

1 Agree

2 To Some Extent

3 Strongly Agree

4 To Some Extent

5 Strongly Agree

6 Strongly Disagree

7 Strongly Agree

8 Strongly Agree

9 Agree

Four of the participant companies have expressed that they are „Strongly Agreed‟.

0

1

2

3

4

Strongly Agree



Response


Question #13

Trainings and workshops are consistent; people are developed for bigger roles in the

organisation.

Sno Responses

1 Agree

2 Strongly Agree

3 Agree

4 To Some Extent

5 Strongly Agree

6 Agree

7 To Some Extent

8 To Some Extent

9 Disagree

One set of three of the participant companies have expressed that they are „Agreed‟.

And the other set of three companies expressed that they are agreed to some

extent.

0

1

2

3



Response


Question #14

We have a defined and structured innovation process

Sno Responses

1 Agree

2 Strongly Agree

3 Agree

4 Agree

5 Agree

6 Strongly Agree

7 Agree

8 Disagree

9 Agree

Six of the participant companies have expressed that they are „Agreed‟.

0

1

2

3

4

5

6



Response


Question #15

In future, every organization might outsource Innovation

Sno Responses

1 Disagree

2 To Some Extent

3 To Some Extent

4 Agree

5 To Some Extent

6 To Some Extent

7 Strongly Disagree

8 Strongly Agree

9 Agree

Four of the participant companies have expressed that they are „agreed to some

extent‟.

0

1

2

3

4



Response


SUMMARY OF THE QUESTIONNAIRE

Most of the companies think, Outsourcing innovation is a mere threat.

However few of the companies still agree to the contextual activities, but it has

to in-source the core activities

Almost every organization have a very high absorptive capacity

Having the cross culture team in place doesn‟t directly influence the

innovation process, however it does impact in idea generation process

Almost every organization has a defined and structured innovation process.

They device a defined phase from idea generation to innovation.

Most of the companies, do believe in measuring their progress in innovation.

So they certainly adopt an innovation metric system, whichever they feel it is

good for them.

Most of the employees are not passionate towards innovations, unless driven

by rewards.


APPENDIX – C

List of organizations participated in the innovation survey

TVS Motor Company, India

http://www.tvsmotor.in/index.asp

Wipro Technologies, India

http://www.wipro.com/

Westpac, New Zealand

http://www.westpac.co.nz/

HCL Technologies, USA

http://www.hcltech.com/

Air miles, UK (A British Airways Subsidiary)

http://www.airmiles.co.uk/home.do

Robert Bosch, Germany

http:// www.bosch.com

Renault Nissan Technology and Business Centre India Private Limited

http://www.nissan-global.com/EN/GLOBAL/

SAP Labs India (P) ltd

http://www.sap.com/india/index.epx

Fastrack Design, Inc, USA

http://www.fastrack-design.com/

Innovation Management : by Jayabalaji Sathiyamoorthi

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