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INNOVATION MANAGEMENT IN DESIGN PROCESS

MOPP 200 5 February 10, 200 5 , Pilsen. INNOVATION MANAGEMENT IN DESIGN PROCESS. J iří Vacek Department of management, innovations and projects UWB, Faculty of Economics vacekj @ kip.zcu.cz. Importance of innovation. innovation is critical to success

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INNOVATION MANAGEMENT IN DESIGN PROCESS

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  1. MOPP 2005 February 10, 2005, Pilsen INNOVATION MANAGEMENT IN DESIGN PROCESS Jiří Vacek Department of management, innovations and projects UWB, Faculty of Economics vacekj@kip.zcu.cz

  2. Importance of innovation • innovation is critical to success • product life cycle is getting shorter and shorter • new products must me introduced ever more frequently • design-push approachmust be changed to market-pull MOPP 2005 - Jiří Vacek, KIP FEK UWB

  3. Problems encountered • most new products are overengineered • majority of businesses commercialize less than 20% of promising ideas • the biggest barrier is a lack of people with adequate skills MOPP 2005 - Jiří Vacek, KIP FEK UWB

  4. Possible solutions • technological excellence is necessary, however often not sufficient for the innovation’s success • technical skills must be combined with business and managerial ones • information and communication technologies, can support design process innovation MOPP 2005 - Jiří Vacek, KIP FEK UWB

  5. Change of the design paradigm • Design process must incorporate such disciplines as • innovation management • team work • creativity • knowledge management MOPP 2005 - Jiří Vacek, KIP FEK UWB

  6. Design-driven cost reduction • Four cornerstones of the design-driven cost reduction: • Process discipline imposed at every stage • Target setting and transparent monitoring • Cross-functional organization removing organizational barriers and fostering collaboration and creativity • Management commitment, empowering design teams to make and implement difficult decisions MOPP 2005 - Jiří Vacek, KIP FEK UWB

  7. Stage-Gate process Kill unsuccessful projects in early stages, before they waste significant resources MOPP 2005 - Jiří Vacek, KIP FEK UWB

  8. DISRUPTIVE INNOVATION • Christensen, C.M., “The Innovator’s Dilemma”, Harvard Business School Publishing, Boston MA, 1997 • Christensen, C.M., Raynor, M., “The Innovator’s Solution”, Harvard Business School Publishing, Boston MA, 2003 Even the best managed companies, focused on their best customers and most profitable markets, often fail in competition with far less technologically sophisticated products. MOPP 2005 - Jiří Vacek, KIP FEK UWB

  9. Sustaining vs.disruptive innovation • sustaining:focus on better product that can be sold with greater margin • disruptive: brings to the market simpler, more convenient, cheaper product that at the beginning appeals to new or unattractive customers MOPP 2005 - Jiří Vacek, KIP FEK UWB

  10. The disruptive innovation model Christensen 2003, p.33 MOPP 2005 - Jiří Vacek, KIP FEK UWB

  11. The Up-market Migration of Steel Minimills Christensen 2003, p.37 MOPP 2005 - Jiří Vacek, KIP FEK UWB

  12. Innovator's dilemma and solution • moving up the trajectory into successively higher-margin tiers of the market and shedding less-profitable products at the low end is something that all good managers must do • innovator’s dilemma – each company prepares its own disruption • start of the innovator’s solution: the company has to be prepared to disrupt itself, before anybody else does it MOPP 2005 - Jiří Vacek, KIP FEK UWB

  13. New market disruption • products compete with non-consumption. • more affordable and simpler to use by new users (PC, transistor radio, desk copiers) • as their performance improves, they become good enough for the mainstream market with all the consequences • there has to be sufficient number of less skilled or less affluent people who can own and use the technology that was formerly available only to more skilled or more affluent people, possibly only in centralized, inconvenient location. MOPP 2005 - Jiří Vacek, KIP FEK UWB

  14. Low-end disruption • focuses on the low end of the mainstream market (minimills, discount retail stores, Korean car makers) • there are customers happy to purchase a cheaper product with less (but good enough) performance • it is possible to create a business model making money at lower price per unit sold. MOPP 2005 - Jiří Vacek, KIP FEK UWB

  15. OPEN INNOVATION • Chesbrough, H., “Open Innovation”, Harvard Business School Publishing, Boston MA, 2003 • Closed innovation - requires control • Open innovation • companies use external as well as internal ideas and both external and internal ways to market • internal ideas can be taken to the market through external channels to generate additional value MOPP 2005 - Jiří Vacek, KIP FEK UWB

  16. Product architecture Hierarchy of connections between disparate functions within a system MOPP 2005 - Jiří Vacek, KIP FEK UWB

  17. System Component A Component B Component C Interdependent Architecture MOPP 2005 - Jiří Vacek, KIP FEK UWB

  18. Interdependent Architecture • changing one component requires changes in all other parts of the system, because the relationships between the parts are not clearly understood • can be best managed through internal processes MOPP 2005 - Jiří Vacek, KIP FEK UWB

  19. System Component A Component B Component C Modular Architecture MOPP 2005 - Jiří Vacek, KIP FEK UWB

  20. Modular Architecture • components could change without causing any change in other components • modular design enables to assemble system more easily, from “plug and play” components whose interfaces are well understood • modular architecture makes it easy for many companies to innovate components without worrying about possible impact on other parts of the system MOPP 2005 - Jiří Vacek, KIP FEK UWB

  21. IMPLICATIONS FOR NPD • extended circle of company stakeholders - customers, NGOs, local and regional governments • not only superior quality, but also environmentally friendly, aesthetically appealing new products • designed for X, where X can be quite large and multi-faceted set • after-sale service plays an increasing role – and brings increased turnover and profit MOPP 2005 - Jiří Vacek, KIP FEK UWB

  22. Life-long learning • The engineers of tomorrow must be able to solve problems that have not been even formulated during their studies • life-long learning becomes necessary MOPP 2005 - Jiří Vacek, KIP FEK UWB

  23. What to do • look for unsatisfied needs, new ways of delivering value to their customers • create new business models for new products • technological and business intelligence • competently work with intellectual property MOPP 2005 - Jiří Vacek, KIP FEK UWB

  24. Acknowledgement The work summarized in the paper was performed with financial support of the Czech Ministry of Education, Youth and Sports Research project MSM 232100006 - “Research and Development of Innovations, Design, Technology and Material Engineering of Machinery Products”. MOPP 2005 - Jiří Vacek, KIP FEK UWB

  25. Contacts • Jiří Vacek • University of West Bohemia, Faculty of Economics, Department of management, innovations and projects • Husova 11, Plzeň, 306 14, Czech Republic • Tel.: +420-377633204, fax: +420-377633202 • e-mail: vacekj@kip.zcu.cz • web: http://www.kip.zcu.cz, http://www.fek.zcu.cz MOPP 2005 - Jiří Vacek, KIP FEK UWB

  26. THANK YOU FOR YOUR ATTENTION ? MOPP 2005 - Jiří Vacek, KIP FEK UWB

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