Innovation Management and New Product Development, Sixth Edition PDF by Paul Trott

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Innovation Management and New Product Development, Sixth Edition

By Paul Trott

Innovation Management and New Product Development

Contents

Preface xix

Acknowledgements xxiii

Plan of the book xxix

Part One Innovation management 1

1 Innovation management: an introduction 2

The importance of innovation 4

The study of innovation 7

Two traditions of innovation studies: Europe and the USA 9

Recent and contemporary studies 10

The need to view innovation in an organisational context 11

Individuals in the innovation process 12

Problems of definition and vocabulary 12

Entrepreneurship 13

Design 13

Innovation and invention 15

Successful and unsuccessful innovations 16

Different types of innovation 17

Technology and science 18

Popular views of innovation 20

Models of innovation 21

Serendipity 21

Linear models 22

Simultaneous coupling model 23

Architectural innovation 24

Interactive model 24

Innovation life cycle and dominant designs 25

Open innovation and the need to share and exchange knowledge

(network models) 26

Doing, using and interacting (DUI) mode of innovation 27

Discontinuous innovation – step changes 28

Innovation as a management process 30

A framework for the management of innovation 30

New skills 33

Innovation and new product development 34

Case study: Has the Apple innovation machine stalled? 35

Chapter summary 41

Discussion questions 42

Key words and phrases 42

References 42

Further reading 46

2 National systems of innovation and entrepreneurship 48

Innovation in its wider context 50

The role of the state and national ‘systems’ of innovation 52

Why firms depend on the state for so much 52

How national states can facilitate innovation 53

National scientific capacity and R&D offshoring 56

The impact of the economic crisis on innovation 56

Fostering innovation in the United States and Japan 56

Triple Helix of university–industry–government relationships

that drives innovation 57

The right business environment is key to innovation 59

Waves of innovation and growth: historical overview 59

Fostering innovation in ‘late-industrialising’ countries 62

Innovation within the 28 European Union states 63

Improving the innovation performance of the EU 65

Entrepreneurship 68

Entrepreneurship and innovation 69

Defining entrepreneurship 71

Technological entrepreneurship: a question of context 73

Science and technology policy 74

Small and medium-sized enterprise 74

Innovation policy 75

Entrepreneurship policy 76

Case study: Pizza delivery with unmanned drones 76

Chapter summary 81

Discussion questions 81

Key words and phrases 82

Websites worth visiting 82

References 82

Further reading 85

3 Market adoption and technology diffusion 86

Time lag between innovation and useable product 88

Innovation and the market 88

Innovation and market vision 89

Analysing internet search data to help adoption and

forecasting sales 89

Innovative new products and consumption patterns 89

Marketing insights to facilitate innovation 91

Lead users 93

Users as innovators in the virtual world 95

Crowdsourcing for new product ideas 95

Frugal innovation and ideas from everywhere 97

Innovation diffusion theories 98

Beacon products 100

Seasonality in innovation diffusion 102

The Bass Diffusion Model 102

Adopting new products and embracing change 102

Market adoption theories 104

Case study: How three students built a business that could affect world trade 104

Chapter summary 110

Discussion questions 111

Key words and phrases 111

References 111

Further reading 113

4 Managing innovation within firms 116

Organisations and innovation 118

The dilemma of innovation management 118

Innovation dilemma in low technology sectors 119

Dynamic capabilities 120

Managing uncertainty 120

Pearson’s uncertainty map 121

Applying the uncertainty map in practice 123

Managing innovation projects 124

Organisational characteristics that facilitate the innovation process 126

Growth orientation 129

Organisational heritage and innovation experience 130

Vigilance and external links 130

Commitment to technology and R&D intensity 130

Acceptance of risks 131

Cross-functional cooperation and coordination within organisational structure 131

Receptivity 131

Space for creativity 131

Strategy towards innovation 132

Diverse range of skills 132

Industrial firms are different: a classification 133

Organisational structures and innovation 135

Formalisation 136

Complexity 136

Centralisation 137

Organisational size 137

The role of the individual in the innovation process 137

IT systems and their impact on innovation 138

Management tools for innovation 141

Innovation management tools and techniques 141

Applying the tools and guidelines 144

Innovation audit 144

Case study: Gore-Tex® and W.L. Gore & Associates:

an innovative company and a contemporary culture 145

Chapter summary 149

Discussion questions 150

Key words and phrases 150

References 150

Further reading 153

5 Operations and process innovation 154

Operations management 156

The nature of design and innovation in the context of operations 157

Design requirements 158

Design and volumes 160

Craft-based products 162

Design simplification 163

Reverse engineering 163

Process design 164

Process design and innovation 166

The relationship between product and process innovation 168

Managing the manufacturing: R&D interface in process industries 168

Stretch: how innovation continues once investment is made 168

Innovation in the management of the operations process 169

Triggers for innovation 170

Design of the organisation and its suppliers: supply chain management 175

Business process re-engineering (BPR) 178

Lean innovation 179

Case study: Innovation on the production line 180

Chapter summary 184

Discussion questions 184

Key words and phrases 185

References 185

Further reading 186

6 Managing intellectual property 188

Intellectual property 190

Trade secrets 193

An introduction to patents 193

Novelty 195

Inventive step 195

Industrial applications 195

Exclusions from patents 196

The patenting of life 196

The configuration of a patent 198

Patent harmonisation: first to file and first to invent 198

Some famous patent cases 199

Patents in practice 200

Expiry of a patent and patent extensions 201

Patent extensions 202

The use of patents in innovation management 203

Patent trolls 203

Do patents hinder or encourage innovation? 204

Alternatives to patenting 205

Trademarks 207

Satisfy the requirements of section 1(1) 208

Be distinctive 209

Not be deceptive 209

Not cause confusion 210

Brand names 210

Using brands to protect intellectual property 210

Exploiting new opportunities 211

Brands, trademarks and the internet 212

Duration of registration, infringement and passing off 212

Registered designs 213

Copyright 214

Remedy against infringement 216

Damages 216

Injunction 216

Accounts 216

Counterfeit goods and IP 216

Case study: Pricing, patents and profits in the pharmaceutical industry 218

Chapter summary 221

Discussion questions 222

Key words and phrases 222

References 222

Further reading 224

Part Two Turning technology into business 225

7 Managing organisational knowledge 226

The Battle of Trafalgar 228

Technology trajectories 229

The acquisition of firm-specific knowledge 230

The resource-based perspective 230

Dynamic competence-based theory of the firm 231

Developing firm-specific competencies 233

Competencies and profits 234

Technology development and effort required 235

The knowledge base of an organisation 236

The whole can be more than the sum of the parts 237

Organisational heritage 237

When the performance of the organisation is greater than the abilities

of individuals 238

Characterising the knowledge base of the organisation 239

The learning organisation 241

Innovation, competition and further innovation 242

Dominant design 244

How firms cope with radical and incremental innovation 244

Developing innovation strategies 248

Leader/offensive 249

Fast follower/defensive 250

Cost minimisation/imitative 250

Market segmentation specialist/traditional 250

A technology strategy provides a link between innovation strategy

and business strategy 251

Case study: The cork industry, the wine industry and the need for closure 251

Chapter summary 260

Discussion questions 260

Key words and phrases 260

References 261

Further reading 262

8 Strategic alliances and networks 264

Defining strategic alliances 266

The fall of the go-it-alone strategy and the rise of the octopus strategy 268

Complementary capabilities and embedded technologies 269

Interfirm knowledge-sharing routines 270

Forms of strategic alliance 271

Licensing 271

Supplier relations 272

Outsourcing 272

Joint venture 273

Collaboration (non-joint ventures) 273

R&D consortia 273

Industry clusters 274

Low technology industry rely on networks for innovation 275

Innovation networks 275

The ‘virtual company’ 278

Motives for establishing an alliance 279

The process of forming a successful strategic alliance 279

Negotiating a licensing deal 280

Terms for the agreement 281

Rights granted 281

Licence restrictions 281

Improvements 281

Consideration (monetary value) 281

Reports and auditing of accounts 282

Representations/warranties 282

Infringement 282

Confidentiality 282

Arbitration 282

Termination 282

Risks and limitations with strategic alliances 283

The role of trust in strategic alliances 284

The concept of trust 285

Innovation risks in strategic outsourcing 286

Eating you alive from the toes up 289

The use of game theory to analyse strategic alliances 289

Game theory and the prisoner’s dilemma 290

Use of alliances in implementing technology strategy 292

Case study: And the winner is Sony’s Blu-ray – the high-definition

DVD format war 292

Chapter summary 299

Discussion questions 299

Key words and phrases 299

References 300

Further reading 302

9 Management of research and development 304

What is research and development? 306

The traditional view of R&D 307

R&D management and the industrial context 307

R&D investment and company success 310

Classifying R&D 313

The operations that make up R&D 315

R&D management and its link with business strategy 317

Integration of R&D 318

Strategic pressures on R&D 319

The technology portfolio 320

The difficulty of managing capital-intensive production plants

in a dynamic environment 322

Which business to support and how? 322

Technology leverage and R&D strategies 324

Strengths and limitations of this approach 326

Allocation of funds to R&D 326

Setting the R&D budget 327

Level of R&D expenditure 329

Case study: The long and difficult 13-year journey to the

marketplace for Pfizer’s Viagra 330

Chapter summary 337

Discussion questions 337

Key words and phrases 338

References 338

Further reading 339

10 Managing R&D projects 342

Successful technology management 344

The changing nature of R&D management 346

Organising industrial R&D 349

The acquisition of external technology 350

Level of control of technology required 351

Forms of external R&D 352

Effective R&D management 355

Managing scientific freedom 355

Skunk works 359

Technology roadmapping 360

The link with the product innovation process 360

The effect of R&D investment on products 362

Evaluating R&D projects 363

Evaluation criteria 363

Case study: CSI and genetic fingerprinting 368

Chapter summary 374

Discussion questions 374

Key words and phrases 375

References 375

Further reading 376

11 Open innovation and technology transfer 378

Background 380

The dominant economic perspective 381

Open innovation 382

The paradox of openness 384

Introduction to technology transfer 384

Information transfer and knowledge transfer 385

Models of technology transfer 386

Licensing 386

Science park model 387

Intermediary agency model 388

Directory model 388

Knowledge Transfer Partnership model 388

Ferret model 388

Hiring skilled employees 390

Technology transfer units 390

Research clubs 390

European Space Agency (ESA) 390

Consultancy 391

Limitations and barriers to technology transfer 391

NIH syndrome 392

Absorptive capacity: developing a receptive environment for technology transfer 393

Linking external technology to internal capabilities 395

Managing the inward transfer of technology 396

Technology transfer and organisational learning 397

Case study: How developments in electronic sensors create

destruction in the disposable nappy industry 398

Chapter summary 403

Discussion questions 403

Key words and phrases 404

References 404

Further reading 406

Part Three New product development 409

12 Business models 410

What is a business model? 413

The business model and the business plan 415

The range of business models 416

The sixteen business model archetypes 417

Revenue models 420

Enterprise models 421

Industry models 422

The parts of the business model 422

The offering 423

The customer side 423

The infrastructure 424

The finances 424

The business model dilemma of technology shifts 426

Considerations in designing a business model 428

Switching costs 428

Scalability 428

Recurring revenues 428

Cashflow 429

Getting others to do the work 429

Protecting the business from competitors 429

Changing the cost structure 429

Intellectual property is an asset 430

The technology licence and business relationships 430

Continual adaptation of the business model 431

The licensing business model 431

Income from licensing 432

Marketing issues related to the licensing model 432

Financial and strategic implications 433

Costs and benefits of the licensing model 433

Other strategic uses of licensing 434

Case study: Developing a new product for the teeth whitening market 435

Chapter summary 441

Discussion questions 442

Key words and phrases 442

References 442

Further reading 443

13 Product and brand strategy 446

Capabilities, networks and platforms 448

Product platforms 449

Product planning 451

Product strategy 454

Competitive strategy 454

Product portfolios 455

The competitive environment 456

Differentiation and positioning 457

Differentiation 457

Product positioning 458

Competing with other products 460

Managing brands 462

Brands and blind product tests 462

Brand strategy 464

Brand extensions 465

Market entry 468

Launch and continuing improvement 470

Withdrawing products 471

Managing mature products 472

Case study: Umbrella wars: GustBuster® and senz° 473

Chapter summary 477

Discussion questions 477

Key words and phrases 478

References 478

Further reading 479

14 New product development 480

Innovation management and NPD 482

Product development as a series of decisions 484

New products and prosperity 484

Considerations when developing an NPD strategy 485

Ongoing corporate planning 485

Ongoing market planning 486

Ongoing technology management 486

Opportunity analysis/serendipity 486

NPD as a strategy for growth 486

Market penetration 487

Market development 487

Product development 487

Diversification 488

A range of product development opportunities 488

What is a new product? 490

Defining a new product 492

Classification of new products 494

Repositioning and brand extensions 496

New product development as an industry innovation cycle 497

Overview of NPD theories 498

The fuzzy front end 499

Customer cocreation of new products 501

Time to market 502

Agile NPD 502

Models of new product development 503

Departmental-stage models 503

Activity-stage models and concurrent engineering 505

Cross-functional models (teams) 505

Decision-stage models 506

Conversion-process models 507

Response models 507

Network models 507

Case study: Launching innocent into the growing fruit smoothie market 508

Chapter summary 516

Discussion questions 516

Key words and phrases 516

References 517

Further reading 519

15 New service innovation 522

The growth in services 524

Growth in knowledge-intensive business services (KIBS) 524

Outsourcing and service growth 525

Different types of services 528

Technology and new service development 530

New services and new business models 530

Characteristics of services and how they differ from products 531

Classification of service innovations 532

The new service development process 533

New service development models 535

Sequential service development models or Stage-Gate® models 535

Concurrent service development models 536

Service innovation and the consumer 538

Consumer user toolkits 538

Consumer testing of services 540

Case study: Developing new services at eBay 541

Chapter summary 548

Discussion questions 548

Key words and phrases 548

References 548

Further reading 551

16 Market research and its influence on new

product development 552

Market research and new product development 554

The purpose of new product testing 555

Testing new products 556

Techniques used in consumer testing of new products 557

Concept tests 557

Test centres 558

Hall tests/mobile shops 558

Product-use tests 558

Trade shows 558

Monadic tests 559

Paired comparisons 559

In-home placement tests 559

Test panels 559

When market research has too much influence 559

Discontinuous new products 562

Market research and discontinuous new products 563

Circumstances when market research may hinder the development

of discontinuous new products 564

Technology-intensive products 565

Breaking with convention and winning new markets 566

When it may be correct to ignore your customers 570

Striking the balance between new technology and market research 571

Using suppliers and lead users to improve product variety 572

The challenge for senior management 573

Case study: Dyson, Hoover and the bagless vacuum cleaner 573

Chapter summary 582

Discussion questions 582

Key words and phrases 583

References 583

Further reading 58417 Managing the new product development process 586

New products as projects 588

The Valley of Death 589

The key activities that need to be managed 590

Assembling knowledge 592

The generation of business opportunities 593

Developing product concepts: turning business opportunities into

product concepts 594

The screening of business opportunities 595

New technology product blogs 597

Development of product prototypes 597

Technical testing 599

Market testing and consumer research 599

How virtual worlds can help real-world innovations 600

Market introduction 601

NPD across different industries 603

Organisational structures and cross-functional teams 603

Teams and project management 604

Functional structures 604

Matrix structures 605

Corporate venturing 607

Project management 607

Reducing product development times through computer-aided design 608

The marketing/R&D interface 608

High attrition rate of new products 609

Case study: An analysis of 3M, the innovation company 612

Chapter summary 617

Discussion questions 617

Key words and phrases 618

References 618

Further reading 619

Index 621

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