INTRODUCTION TO INNOVATION MANAGEMENT (INN001, 5 p.)

1. INTRODUCTION TO INNOVATION MANAGEMENT(INN001, 5 p.)

2. INTRODUCTORY LECTURE August 27-28th 2007 Emelie Stenborg

3. Today’s contents • Course outline • The role of innovation • What is innovation (definitions, typologies of innovation) • What is innovation management? • Models of the innovative process

4. PEOPLE • Main teacher and course responsible: • Emelie Stenborg, 046-2223892, emelie.stenborg@circle.lu.se • Teachers in week 2 and 3: • Lars Coenen, 046-2227744, lars.coenen@circle.lu.se • Olof Ejermo, 046-2229650, olof.ejermo@circle.lu.se • Course secretary, matters of registration & administrative character: • Elna Jönsson, 046-2220576, elna.jonsson@circle.lu.se

5. LOCATIONS Teaching the first three weeks mainly in the Math’s house Sölvegatan 18 The following 4 weeks in CIRCLE’s new location at Sölvegatan 16 (MNO-house) • Mondays 10-12: Lecture • Tuesdays 13-15: Lecture • Wednesdays/Thursdays 10-15: Seminar

6. LOCATIONS MNO-house CIRCLE

7. COURSE AIMS... • to provide students with fundamental knowledge of the phenomenon of innovation and innovation processes in capitalist economies from the perspective of firms and industries; • to enable students to use basic theoretical tools that help analyse and manage real-world processes of innovation; • to enhance students’ appreciation of the importance of understanding innovation-related issues for the development of businesses, industries, countries and citizens.

8. WEEKLY THEMES • Overview of the study field, with basic definitions, concepts and typologies, Chapter 1-2 • Strategy analysis: I - building the framework and the environment, II - technology and learning, Chapter 3-6 • The external dimension: markets, networks, institutions, systems, Chapter 7-8 • Resource mobilization and strategy implementation, Chapter 9-10 • Creating an innovative organisation, Chapter 11-12 • Assessing and improving, Chapter 13

9. WEEK 1-5 • Mondays and Tuesdays: Lecture • Thursdays (one Wednesday): intensive seminar • The seminar is strongly compulsory • Active participation expected • Assignments to be handed in before the seminar • Seminar may include presentations etc.

10. LAST 2 WEEKS • Sixth week: • Mainly reserved for writing the home exam. • One lecture on the Monday (and Tuesday if you need it) with room for questions. • Seventh week: • Examination – presentation and discussion in small groups (5-6 people) of the final essay (which is a part of the home exam).

11. EXAMINATION Your progress and learning is assessed not only at the end of the course but throughout the entire course. Different forms of examination are used to gauge students’ progress: • Weekly written assignments in preparation for seminars • Formal presentations at seminars • Home exam, including final discussion seminar The home exam is the more important of the three.

12. About the grading • The seminar assignments are not graded, but you have to hand them in – otherwise you will not get a grade on the course • The first part of the home exam determines half of your grade • The second half of the home exam determines the second half of the grade

13. Home exam • The first part is a number of short questions relating to the course literature. These questions will be handed out on Monday of the sixth course week (October 1st) • The second part is a more open essay: students are asked to select a specific firm (or other organization) of their own choice and then relate the firm and its innovation activities to a number of more specific issues that have been taken up in the course literature and in teaching.

14. Questions for the second part of the home exam • What types of innovation does the firm (not) concentrate on? • Does it seem to be successful in its innovative activities? Why (not)? • To which technological trajectory does the firm belong? • How would you characterise the firm’s innovation strategy? • What parts of the firm seem most important for innovation to be successful in the firm? • Does the firm use external collaboration to enhance its innovations? If so, what types of collaboration, and why exactly those forms? And what types of partners? • What type of competition is threatening the survival of the firm on the short and the long term? • Does the firm use corporate ventures, and if so, of what type are they? • In what stage of development is the industry in which the firm is active? • What type of market (international?, local?, mass market?, niche market?) is at focus? • Are there any institutional regulations or other political developments that are particularly important influencing the innovation activities of the firm? And how does the firm itself try to influence political developments?

15. What is expected from you? • You can choose between width and depth – answer several questions or just a few • You are not expected to answer all questions – neither to do so in detail • Specify the questions you are addressing • 2 000 words per part – in sum 4 000 words (approximately 8 pages) • A LTH grade is given U, 3, 4, 5

16. Note the following about plagiarism • Copying text from someone else without using quotation marks and citing the source is considered plagiarism. • For the home exam, there are no requirements of listing your references (however, this may show that you have found adequate resources), but you MUST USE quotation marks and list the source if you quote (you are not allowed to just copy text)! • If you violate this rule you may be reported! I will check for plagiarism. • If there is anything unclear about this, don’t hesitate to contact me

18. Course literature Managing InnovationIntegrating Technological Market and Organizational Change 3ed Joe Tidd John Bessant Keith Pavitt ISBN 0470093269

19. Today’s contents • Course outline • The role of innovation • What is innovation? • What is innovation management? • Models of the innovative process

20. Chapter 1: Key Concepts in Innovation Management The aim of innovation... • Depends on the type of firm • Goal is mostly to survive, to grow, to make profit • R&D departments generally strive for the best technical solution... • ... but what matters for innovation is how it influences survival chances, profit and growth opportunities!

21. Innovation and the corporate strategy Innovation management..... • has to be understood as a core process of the organisation -> It is related to what is being produced • Is a long term race • Is about continuity • Has to deal with complexity!! • Is about being systematic  developing routines around innovation

22. WHAT IS INNOVATION? • Invention • Technology • Innovation • Creating new or improved products, processes and services • Knowledge and learning • Uncertainty

23. Schumpeter’s distinction between ”Invention” and ”innovation” • An ’invention’ is an idea, a sketch or model for a new or improved device, product, process or system. It has not yet entered to economic system, and most inventions never do so. • An ’innovation’ is accomplished only with the first commercial transaction involving the new product, process, system or device. It is part of the economic system.

24. Dimensions of Innovation the ‘4Ps’ of innovation • Product innovation: changes in the things (products or services) which an organization offers • Process innovation: changes in the ways in which they are created an delivered • Position innovation: changes in the context in which the product or services are introduced • Paradigm innovation: changes in the underlying mental modes which frame what an organization does

25. According to the degree of codification: Information to tacit knowledge Wisdom Tacit knowledge Explicit Knowledge Information Data Tacit Codified

26. Figure 1.1 Dimensions of innovation ©2005 Joe Tidd, John Bessant and Keith Pavitt

27. Figure 1.4 Component and architectural innovation ©2005 Joe Tidd, John Bessant and Keith Pavitt

28. The knowledge of innovation

29. Triggers of discontinuity • New market emerges • New technology emerges • New political rules emerge • Running out of road • Change in market sentiment or behaviour • Deregulation or reregulation • Fractures along ’fault lines’ • Unthinkable events • Business model innovation • Shifts in techno-economic paradigm • Architectural innovation

30. Important contextual factors • Type of sector • Size of firm • The country and region • The stage in the industry life cycle • Political regulations

31. Abernathy & Utterback – industry life cycles • The fluid phase – co-existence of old and new technologies • rapid improvement of both →’the sailing ship effect’ • Target: What product and what market? • Technical: What product who will produce it ? • Experimentation

32. Important contextual factors • Globalisation • Sustainability • Networking organisation

33. The transitional phase • A dominant design • Convergence around one design • Rolling bandwagon → innovation channeled around a core set of possibilities → a technological trajectory • Imitation and development • Reliability, cheaply, higher functionality, quality • The specific phase • Rationalization & scale economies • Differentiation through customization • Scope for innovation becomes smaller

34. Table 1.2 Stages in innovation life cycle ©2005 Joe Tidd, John Bessant and Keith Pavitt

35. Three key questions • How do we structure the innovation process? • How do we develop effective routines? • How do we adapt or develop parallell routines to deal with incremental vs. discontinuous innovation?

36. Conclusions • Different kind of innovations • Context specific • Innovation has different stages • Knowledge is the key

37. Repetition Chapter 1 Four dimensions of innovation • Product, process, position, paradigm • System-Component • Incremental-New to the firm-Radical • Codified-Tacit

38. Figure 1.4 Component and architectural innovation ©2005 Joe Tidd, John Bessant and Keith Pavitt

39. Repetition Chapter 1 Innovation: • Depends on the type of firm, sector, industry life cycle, country and so on • Depends on the ”environment” • Goal is mostly to survive, to grow, to make profit • Technical solutions vs. societal and organisational aspects • Different from invention

40. Innovation management • Core process • Production • Commercialisation – design, marketing, resources, competence • Long term • Continuity • Complexity • Systematic, routines

41. New factors affecting innovation • Globalisation • Sustainability • Networking organisation

42. Chapter 2: The innovation management process • Evolving models of the innovation process • Can we manage innovation? Introducing the concepts of Organizational Routines or Capabilities • Specify the different phases of the innovation process • How context affects innovation

43. First and second generation models First generation (50’s-60’s): Technology push “Linear model” R&D DESIGN & ENGINEERING MANU- FACTURING MARKETING SALES Second generation (mid 60’s-70’s): Demand pull MARKET NEEDS MARKETING DEPT. R&D MANU- FACTURING SALES

44. 3rd generation model

45. 4th generation model marketing R&D Product development Components manufacture Product manufacture

46. 4th generation model marketing R&D Product development Components manufacture Product manufacture Reduced time to market

47. 5TH generation model University Financial System R&T Centres IP IP INDUSTRY Users Suppliers IP Government

48. Innovation processes – 5th generation model • Relevance of external sources of knowledge “firms do not innovate in isolation” • Related to Innovation System concept • Focus on networking • Still strong emphasis on R&D and formal knowledge (ICT)

49. 6th generation of innovation processes “Revolve around knowledge and learning” • Networks embrace all knowledge types, not only R&D. • Most innovative firm is the one that learns fastest • It is the use of knowledge that makes the competitive difference, and creates the advantage

50. Managing complexity product Radical Incremental Market Intellectual Capital R&D processes Networks