Product Innovation Management & Processes


By

Prof. R.K. Gupta
BE Mech Hons MBA FIE
Professor of Management
&
Director Sobhagya Consultancy & Marketing Services-India
E-mail: cityju@rediffmail.com
 


ABSTRACT

Technology is a systematic way of doing something. Innovation comes from inner vision (Tata). Hence innovation is confluence of technology, materials and systems available to any organization. But most important is the hot spots if these exist in the organizations (Lynda Grattan). These hot spots release self-propelling immense energy in the work teams. New technologies are considered radical or breakthrough only when these are 10 times better than the existing one, which these aim to replace. Then only consumer notices it to be significantly different and having 'wow' effect. For technology innovation some driving forces are required.

I give some examples from my own industry experience of 3 decades in some of leading companies. First example is use of 200 series of stainless steels for sheets and utensils in place of 300 series that was developed indigenously in Rathi Alloys, Alwar. The driving force was to eliminate Nickel in the metal as it was expensive and imported constituent. The stainless steel was also competing cheaper substitute Aluminum sheet. The process of development of technology to produce low nickel steel was daunting & long winding. Another example is under development non-invasive Laser cardio-surgery to eliminate open heart and telescopic intervention for opening of clogged arteries. The driving force here is high cost and risk to human life and low capacity of handling the rising cases of angina by conventional technology. Third example is development of technology for joint-less tubes for tires so as to minimize pollution in the factory (soap stone), protect workers and to speed up production capacity in a highly manual process. In these examples technology management has seen adopting of radically different approaches and materials and exploiting available technologies in various fields.

Is then the technological innovation management a process or a project management or combination of both? Is technology management based on human creativity in the organization or is it more systematic and scientific management of all these ingredients- human resource, creation of hot spots, social and industry networking and continuous scanning of technological environment to pick up relevant inventions both in manufacturing processes and in materials. The paper is based on empirical experience of the author in Indian industry and the cases of recent advances in digital and electronic technology products under both collaborative and competitive mode by organizations. It attempts to unveil the current systems of product innovation management.

Drivers for innovation processes:

We first develop premise for invention vs. innovation. Invention refers to new concepts or products that derive from individual's ideas or scientific research the latter refers to commercialization of the invention itself. Dr Crawford put it this way: Innovation happens when you figures out how to make money from invention. Inventions mostly relate to laboratory level achievements. Modern Innovation is essentially a tem/project work not internally but even linked globally.

The major driving forces for the innovation in an organization are:

- The spirit of creativity and innovation culture in the organization

- The commercial need for survival in competitive market

- Changing consumer demand or habits, which in turn are driven by various factors including awareness, substitute products, lifestyle changes and prices.

- New technologies: which can be alternative technologies or breakthrough technologies

- The R&D infrastructure in an organization and its role within the organization.

- The threat from substitutes

- Technology cycles eroding the product life cycles

While innovations are a continuous process, breakthroughs come occasionally that take people by surprise and make significant difference in the way the existing needs are met or the unknown needs are discovered.

Unless the breakthroughs occur the needs may also not be known. The example is hetero-laser invention that found its way to compact disc writer-reader of modern day. The invention of this laser was never meant for this application. It is a good example of product innovation.

Innovations cannot occur by themselves, which may be isolated occasional events. This requires focus on strategic management of technology in the organization and networking with outside institutional framework in global context and scanning of various technologies, materials and basic scientific research happening in other laboratories or companies. Collaborative technology management is essential today for short time new product development processes and at economical cost with lower risk. Many companies like Sony have created new and innovative product in cooperative research with other organizations.

Another issue is the risk and return question of technological innovations. Soon after a technology is commercialized and brought to market, the competition follows or even competitive entry may lead the commercial launch thus depriving the innovating organization from profits and recovery of expenditure.

Many companies therefore prefer acquisitions and outsourcing technologies for expansion and growth.

The product life cycles are modified by start of new cycles based on newer technologies. Before the product decay starts in cycle a new product life cycle starts based on new technology or an innovation. Hence there is built in danger not to initiate and manage innovation in products and services for successful organizations.

The examples of the drivers for innovations in Industry are explained hereunder:

The utensils in India have traditionally been made of Brass, Aluminum and stainless steels besides less used other alloys and metals.

India does not have deposits of Nickel, which is imported, and costly alloying element used in steels and heating elements besides several other applications. The standard AISI Grade SS contains 8-9 % nickel. On account of this addition stainless steel sheets were getting out competed by Aluminum sheets for making Utensils that appealed to large middle class and lower middle class markets in India. There were huge problems in importing Nickel due to License requirements and delivery schedules. Hence some enterprises like Rathi Alloys, Jindal Steel and others started looking for low cost steel that would resemble property of AISI 304 steel. The grade of 200 series was available but not applied in this usage. It had several problems due to replacement of Nickel by Manganese. The material was brittle in processing and reduced ductility and draw-ability and also was inflicted with problem of seasoning cracks after some duration. Intense efforts by industry players to optimize the production and processing of this composition of steel saw huge expansion of utensil grade stainless in India and it virtually drove out Aluminum since the price of Aluminum went up while that of 200 series SS came down due to very small Nickel required under 0.8 to 1.2 % in place of 8-9%.

We can easily identify the driving forces here:

- Competitive substitute product

- Poor availability and high cost of a main component Nickel

- Market opportunity for expanding utensil market in India (30 million households)

- Entrepreneurship

The next example is of Laser based Cardio vascular treatment for removing clogs from arteries leading to heart. Here the main driving forces are three:

- Availability of laser technology

- High risk in bypass surgery and reaction to it by many people and age factor

- High cost of traditional surgery and time taken thus limiting capacity of hospitals to treat ever-growing number of heart patients globally.

Although laser has been successfully used in operations of eye including detached retina and radial keratotomy, the heart surgery is still in research stage as it has problems in controlling the effect of laser on blood vessels. Laser-mediated vaporization of athero-sclerotic plaque in the coronary arteries and peripheral circulation may offer a percutaneous approach to the treatment of arterial occlusive disease. Cardiovascular uses of lasers are purely investigational at the current time but it has potential. We can see clearly huge risk and investment in research required but outcomes are promising for mankind. In this case a break through is needed.

Another example in small sector of innovation is the BB cups used in cycle axles to hold balls. Traditionally it was manufactured from a steel rod piece turning out the material from inside of the rod to give it a hollow cup shape. Not only it was cumbersome, time consuming and wastage of material and energy but also it increased the cost. Some enterprising businessmen from India visited Germany and saw how it is made there. Steel makers for this application developed the deep drawing quality steel. The sheets were rolled from it and then BB axle cups were simply drawn out in one simple stroke of Press machine thus reducing energy consumption and cost of production while several times increasing productivity.

Here the driving forces can be easily identified as:

- Cumbersome and slow turning process for cycle component

- Low productivity

- Availability of better steel stock in India

We can easily observe that innovations are on account of several driving factors and occur not only in an organized sector environment but at grass root level in society and in small sector also.

Strong driving forces, available basic technology or materials and entrepreneurship spirit can be easily detected as three main sources of Innovation.

Of course the most important generator of innovation is identification of consumer need through a systematic and ongoing market research to discover unsatisfied consumer needs or solutions to existing or even unknown problems of consumers.

Constructive Destruction

We can thus see that management of technology and management of creative environment are two hand-in-hand challenges for organization to remain in advantageous position. The challenge to innovative companies themselves has to be managed by understanding the concept of constructive destruction.

We are quite familiar with technology adoption curves called S-curves. After sometime the replacement technology takes over.

Companies that once revolutionized and dominated new industries for example, Xerox in copiers or Polaroid in instant photography have seen their profits fall and their dominance vanish as rivals launched improved designs or cut manufacturing costs. Wal-Mart is a recent example of a company that has achieved a strong position in many markets, through its use of new inventory-management, marketing, and personnel-management techniques, using its resulting lower prices to compete with older or smaller companies in the offering of retail consumer products. Just as older behemoths perceived to be juggernauts by their contemporaries (e.g., Montgomery Ward, Kmart, Sears) were eventually undone by nimbler and more innovative competitors, Wal-Mart faces the same threat. Just as the cassette tape replaced the 8-track, only to be replaced in turn by the compact disc, itself being undercut by MP3 players, the seemingly dominant Wal-Mart may well find itself an antiquated company of the past. This is the process of creative destruction.

In fact, successful innovation is normally a source of temporary market power, eroding the profits and position of old firms, yet ultimately succumbing to the pressure of new inventions commercialised by competing entrants. Creative destruction is a powerful economic concept because it can explain many of the dynamics of industrial change: the transition from a competitive to a monopolistic market, and back again.It has been the inspiration of endogenous growth theory and also of evolutionary economics.

There are numerous types of innovation-generating creative destruction in an industry:

  • New markets or products
  • New equipment
  • New sources of labor and raw materials
  • New methods of organization or management
  • New methods of inventory management
  • New methods of transportation
  • New methods of communication (e.g., the Internet)
  • New methods of advertising and marketing
  • New financial instruments
  • New ways to lobby politicians or new legal strategies (though many economists would argue that this last is not a genuine example of creative destruction, so much as an example of using force of government to prevent more innovative or lower cost competitors from selling to one's customers)

Process of inovation management

There is big span to bridge while taking laboratory level invention or innovation to the useful application.It requires whole lot of management skill and resources to achive that. It should be very clear that while basic knowledge normally develops in University laboratories, these are harnessed into useful product or application in corporate R&D laboratories, an example is Lucent lab in USA.There is huge risk in doing that. Japnese have beaten US firms in adopting technology for new product launch in their own country.The investor also asks as to where he would get more returns on a dollar invested in technology and innovations.Many firms therefore may not find attractive to even attempt innovation from scratch but may go for collaborations,outsourcing technology and A&M for expansion and remaining  market leaders.

The processes for taking the laboratory innovation to commercialization need whole lot of resources and circumstances:

- Availability of materials

- Availability of tooling and equipment

- Availability of right production technology that can economically produce

- Creating favorable environment of innovation in organization

- Aligning R & D goals and positioning consistent with strategies and other corporate goals

- Market trials

- Risk taking consumers or early adapters

- Financial commitments or investment

- Demand potential

These are not easy to manage. Many times innovations or inventions take decades to get into market. Take example of several drugs that could not be administered unless 'controlled release' drug technology came into being. A product idea may not be feasible to be manufactured due to lack of technology or equipment available. It might also be unattractive for price-substitute combination available to potential users. Innovation by itself is not useful unless converted into useful commercially viable proposition. It is long chain full of activities and risks. It frequently happens that research project of a company is made redundant by announcement of a same or similar work by other company or rival. In countries like India  'me-too' and imitators pose a big threat to innovation efforts, as risk is enhanced. Third world countries often take route of buying second hand technology or copying rather than original investment in research efforts.

Conclusions:


Adopted from: 'Management of technological innovation: general issues' by Mark Dodgson

The above diagram explains in gist the factors required for managing Product innovation and management.

The product innovation is a project management as well as processes management within the organization while scanning the external and internal environment for available ideas, basic scientific knowledge and its potential for application. The role of managing human resource and talent within the organization and external networking cannot be overlooked for successful management of product innovation

References:

1.  Hot Spots; by Lynda Gratton

2.  Technology Management by C S V Murthy-

3.  Art of Technology Management by CEO Speak Publisher: Vision Books

4.  Market-oriented Technology Management by Phillips Fred

5.  Breakthrough Technology Project Management by Lientz Bennet P

6.  Innovation Management by Shlomo Maital, D V R Seshadri

7.  The Management Of Innovation by Tom Burns

8.  Handbook of technology management by Robert Szakonyi,Editor

9.  Breakthrough by Mark Stefik et.al

10. The Management of technological innovation by Mark Dodgson

11. The Power of Management capital by Figenbaum & Fignebvaum

12. Cardiovascular applications of laser technology; Dr. Lawrence I.
     Deckelbaum, MD 19th October 2005
 


Prof. R.K. Gupta
BE Mech Hons MBA FIE
Professor of Management
&
Director Sobhagya Consultancy & Marketing Services-India
E-mail: cityju@rediffmail.com
 

Source: E-mail February 5, 2009

 

        

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