Managing Global Innovation

1. Managing Global Innovation Attila Kurucz University of West-Hungary Department of Business Sciences

2. Distinguishing R&D Processes Highly differentiated phase concepts are commonly accepted and applied in R&D practice, but they suffer from the strictly sequential execution of project phases and are therefore often impractical. On the other hand, if projects are carried out without reviews or milestones, there is the danger of achieving little effectiveness (doing the wrong things) and low efficiency (doing things wrong). Today we know, at least in principle, how projects work. But we still do not know how to get from the useful many ideas to the vital few projects which the R&D lab is capable to execute. Even more difficulties arise when the new product is to be introduced to the market.

3. There are three phases in the R&D process: - Pre-project phase: How to create a good product concept and a manageable project - Development phase: How to manage a project - Market-introduction: How to transfer R&D results efficiently to operations and the customer Between the pre-project and the development phase we must translate from the language of the customers or scientists to the language of the company (market or technology driven). Between the project and the market-introduction phases, we need to translate from the company’s technical language to the emotional language of the sales force and the customer.

4. Main problems in transnational R&D processes Informal Links + Networks: - Create a manageable project - Build trust among project members - Ensure downstream Project + Processes: - Management of dispersed R&D teams - Match functions and processes - Creating integral designs Hierarchical + Functional: - Structured versus unstructured processes - Translate between language of the company and language of the customer - Innovation factors can’t be measured and controlled Regional + Legal: - Transfer of R&D results to sales units and customers - Integrating local expertise without moving people toomuch - Market maturity

5. Stage-Gate-Process to Support Project Management A combination of classical phase segmentation and process orientation is found in the concept of the „state-gate-process”. Every step or „stage” necessary to complete a particular project task is linked to the next by a „gate” at which decisions for the continuation of the project are made. Contrary to milestones, gates are more flexible in terms of time, date and content. Gates allow a deliberate parallelization of phases as well as their recombination or adaptation to new requirements. „You can get around a milestone, but you must go through a gate.”

6. Stage-Gate-Process to Support Project Management The number of stages and gates is project and industry dependent. Ex ante agreements serve as guidelines for the collaboration of project participants. Stage-gate process are not contradictory to the parallel execution of product and process development. The differentiation between pre-project phase and main development phase is of utmost significance for the quick and efficient execution of R&D projects. The stage-gate exhibits a further advantage should customer specifications change or competitors introduce rivalling products, so if high complexity and dynamics alter the competitive environment.

7. Transnational R&D Processes Pre-project Phase: Fostering Creativity

8. Characters of Pre-project phase • Budget: often none / low • Goals: vague • Costs: low • Processes: not structured • Results: unclear • Financial risk: small

9. Tasks during Pre-project Phase • It requires strong management support, • it relies on experience, knowledge and know-how (soft management factors) • The identification of the market segments (who is the customer?) • The work statement (what does the customer want?) • The product requirement specification (how can we fulfill the customer’s needs?)

10. The Product Concept Team • Team has a cross-functional role. • Team should be formed of member different functional departments (development, marketing, production, support) • Its activity concludes with the specification list.( translation of the customer’s requirements into technical specifications)

11. Specification List • Technical specification • Project plans and schedules • Time-critical path • Technical alternatives • Technical and market risks • (procurement, production, sales, market introduction)

12. Idea Generation • Needs exploration Traditional marketing research tools: panel research, focus group interviews, sales and distribution questionnaires, scenario techniques, lead market analysis Recently developed tools: cooperative forms of R&D, anthropological expeditions Technology-potential screening: leading edge innovation centres, conferences, technology forecasts, expert interview, patent database research,

13. Intensive Idea Flow and Workflow Systems • Idea generation take place on a global scale. • Function: transmits and distributes ideas, problems, commentaries and solutions by means of modern information and communication technologies.

14. Good Idea Require Good Promotion • The problem identification usually occurs by a single person or a group. • Looking for support they try to convince influential people about their idea. • The influence is based on their • Hierarchical position (power promoters) • Knowledge (functional promoters) • Communication abilities (process promoters) • Experience show that personal relations are the most important for winning decision-makers. • Project opponents are who bring in technological and economical arguments against new idea.

15. Product Profitability Calculation • Product profitability calculation is based on forecasted market returns discounted to present net value. • It is widely used, but it isn’t always an appropriate tool for project evaluation. • Project proposals should be complemented with qualitative data and evaluated in light of the firm’s strategy and technological vision.

16. Project Approval – Rational Criteria and Politics • Proposal is presented to a steering committee. • Project selection always takes place mostly at the location of the decision-maker. • Decisions about projects are made on a rather informal basis. (political agreement finding process) • Approval includes: decision about project members and participating locations

17. Transnational R+D processes Development (Project phase) Market Introduction

18. Development Phase • In transnational projects this process is characterized by high complexity • Goal conflicts may occur between R&D, production, marketing, and logistics • The conception of the system architecture is a critical success factor for the whole project • To share the knowledge and information is a principal factor

19. Development Phase • The activities in the development phase is more detailed, structured than in the pre-project phase • This phase requires a resource- and time-conscious project management • Prototyping • The complexity in innovation projects can be reduced by introducing tangible support tools and media

20. Development Phase • Prototypes serve a wider role: • To reduce risk • To learn from experiments • To determine customers preferences • To communicate across functional interfaces • Nowadays companies can employ rapid prototyping due to the CAD planning, Internet, and digital photography

21. Market Introduction • There are three important challenges to the company: • Market introduction is a global project, • Not all the participants work for the same company, • The costs often exceed the total costs of the two previous phases • The key to success rests in professional project management. The different tasks of R&D, marketing, production, sales and maintenance must be coordinated and integrated

22. Market Introduction • There are two types of introducing a product: • Big-bang market introduction when the company is presenting the product to all target markets at the same time, • And in the lead concept, the product is tested with lead customers or in lead markets, before the world wide introduction • Besides the product, complementary services must reach the market as well