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Managing Innovation(Research, Design, Production,

and Marketing)

Subagyo

http://subagyo.staff.ugm.ac.id

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Overview

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7 Habits of Highly Effective People(by Stephen R. Covey)from http://www.chimaeraconsulting.com/covey.htm

Sharpen the saw-This powerful idea can really only be describedby Covey's word-picture:

Suppose you were to come upon someone in the woods workingfeverishly to saw down a tree.

"What are you doing?" you ask.

"Can't you see?" comes the impatient reply. "I'm sawing downthis tree."

"You look exhausted!" you exclaim. "How long have you been atit?"

"Over five hours," he returns, "and I'm beat! This is hard work."

"Well why don't you take a break for a few minutes and sharpenthat saw?" you inquire. "I'm sure it would go a lot faster."

"I don't have time to sharpen the saw," the man saysemphatically. "I'm too busy sawing!

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Why technology and innovation Management?

Technology and innovation are seen asimportant source of competitive advantagefor individual firms and stimuli to economicgrowth industrial R&D expenditures have been steadily increasing

during the past decades

3-15% of sales is invested in R&D in technology intensive

sectors (in some sectors even more)

technology-intensive industries account for a lions share ofsales growth

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Innovation Dilemma

Most innovations fail.

Companies that dont innovate die.

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Indicators Used to Assess R&D Competence

R&D

Papers

Patents

R&D

Expenditure

Researchers

ScientistsEngineers

INPUT OUTPUT

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Scientific Knowledge, Technologies, and Products

PVC

polymer sheet

PVC

molded parts

Continuous sheet

extrusion ofthermoplastics

Formulation

of PVCresins

Extrusion ofthermoplastics

Free radical chemistry

Polymer rheology

Vinylchloride chemistry

Products

Technologies

Engineering

and

scientificknowledge

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Technology

Technoware

Info-

ware

Tacitness

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Technology vs. Innovation Management

Basic

research

Product

commercialization

Innovation management

Technology management

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R&D Strategy and Efficiency

Design easy-to-manufacture products

Reduce numbers of parts per unit.

Reduce assembly time.

Closely coordinate R&D and production activities.

Pioneer process innovations

Innovations create competitive

advantage through gains in process efficiencies.

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Innovation Management Competencies

Manage innovation process

Product develop process,

Interface with other functional activities e.g.

Marketing,

Engineering,

Production, and

Executive management)

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Innovation Management Competencies

Perform research

Contributing to identifying requirements forresearch,

Undertaking surveys,

Seeking new knowledge,

Identify prospective commercial applications, and

Identifying and communicating results of research

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Innovation Management Competencies

Identify and seek allocation of resources fordevelopment of research outcomes

Contributing to defining ultimate user needs,

Preparing proposals for seeking resources for development,and

Preparing cost estimates for development, design,production or construction, and operation

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Innovation Management Competencies

Perform market research on research outcomes

Gathering information and making

recommendations for determining product pricing,

Making recommendations regarding distribution ofproduct, and for promoting the product

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Innovation Management Competencies

Commercialise research outcomes Contributing to economic evaluation of

outcomes,

Selecting likely mechanisms for marketresearch,

Preparing demonstration models for provingtechnical and commercial viability, and

Developing pilot schemes

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Innovation Management Competencies

Develop and manage intellectual property

Creation,

Protection,

Valuing, and

Enhancing

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Achieving Superior Innovation

Causes of the high failure rate of innovation:

Uncertainty

Quantum innovation

Incremental innovation

Poor commercialization

Poor positioning strategy

Technological myopia Slowness in marketing

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Sequential and Partly Parallel Development Processes

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The Development FunnelGate 1 Gate 2

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Production and Efficiency

Economies of scale

Lower unit costs due to large scale productionvolumes.

Learning effects

Cost reductions due to learning by doing.

The experience curve

Systematic unit-cost reductions that are the resultof accumulated output.

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Production and Efficiency: Economies of Scale

A typical long-run unit-cost curve:

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Production and Efficiency: Learning Effects

Economies of scale and learning effects:

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Production and Efficiency: The Experience Curve

A typical experience curve:

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Production and Efficiency: The ExperienceCurve

Unit production costs in an integrated steel mill and a minimill.

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Production and Efficiency: Manufacturing andMass Customization

Flexible manufacturing technology (lean production) Reduced setup times

Increased machine utilization

Improved quality control

Lower inventory levels

Mass customization

Low cost and product customization

Flexible machine cells

Increased variety of operations

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Production and Efficiency: FlexibleManufacturing

The tradeoff between costs and product variety

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Marketing and Efficiency

Marketing strategy:

Product design

Advertising

Promotion

Pricing

Distribution

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The Relationship between Average Unit Costs andCustomer Defection Rates

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The Relationship Between CustomerLoyalty and Profit per Customer

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Infrastructure and Efficiency

Achieving superior efficiency requires acompany-wide commitment built through topmanagement leadership in:

Articulating the vision.

Facilitating cross-functional cooperation.

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Implementing TQM

Build organizational commitment to quality

Focus on the customer

Find ways to measure quality

Set goals and create incentives Solicit input from employees

Identify defects and trace them to source

Improve supplier relations

Design for ease of manufacture Break down barriers between functions

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Question?