Innovation in enterprises - Universidad Autónoma...

148
Seminar Innovation in enterprises Relevance, strategic management, success factors and barriers Eva Kirner Universidad Autónoma Metropolitana-Iztapalapa, Mexico City January 16/17, 2007

Transcript of Innovation in enterprises - Universidad Autónoma...

Seminar

Innovation in enterprisesRelevance, strategic management,

success factors and barriers

Eva Kirner

Universidad Autónoma Metropolitana-Iztapalapa, Mexico City

January 16/17, 2007

OUTLINE

1. Fraunhofer Society and the Fraunhofer Institute for Systems and Innovation Research

2. Innovation: definitions, basic concepts, theories and typologies

3. Management of the innovation process: innovation routines, success factors and barriers

4. Measuring innovation: macroeconomic and microeconomic indicators, innovation capability

5. The role of SMEs in the innovation system

6. Knowledge/technology transfer and the concept of open innovation

7. Summary

Fraunhofer Institute for Systems and Innovation Research (ISI)

Fraunhofer Society

58 institutes

12,600 employees

Budget € 1 billion(2/3 from researchcontracts)

History

Joseph von Fraunhofer(1787-1826)

The Fraunhofer-Society 1949 - today

Discovery of“Fraunhofer-Lines“

in the sun spectrum

New methods of lensprocessing

Head of Royal Glass Factory

The Fraunhofer-Society in Germany

Itzehoe

BerlinGolm

Magdeburg

Hannover

Braunschweig

Bremen

OberhausenDortmund

Duisburg

AachenEuskirchen

SchmallenbergSt. Augustin

IlmenauJena

Dresden

Chemnitz

Würzburg

Erlangen

Pfinztal

DarmstadtKaiserslauternSt. Ingbert

SaarbrückenKarlsruhe

Stuttgart

Freiburg

Freising

Rostock

Teltow

CottbusHalleSchkopau

Paderborn

Nürnberg

Efringen-Kirchen

MünchenHolzkirchen

Leipzig

Branches of Institutes, Research Institutions, Working Groups, Branch Labs and ApplicationCenters

Institutes

80 research units at approx. 40 locations

Financing of the Fraunhofer-Society

ContractResearch

0

200

400

600

800

1000

1200 Mio €Defense Research

Expansion Investments

Public Project Financing

Contract Financing(industry)

Institutional Funding

2004200019951990

The Fraunhofer Institute for Systems and Innovation Research

§ studies how innovations originate, who profits from themand how they can be promoted

§ evaluates economic, social and political potentials and the limits of technical innovations

§ helps decision-makers in industry, science and politics in taking strategic decisions / setting a strategic course

§ utilises the newest theories, models, social-sciencemeasurement instruments and databases and constantlydevelops them further

§ handles ca. 250 research projects per year

Technology Industry

interdisciplinaryresearch at

the interface of

Society

Research Areas

Innovation Systems and Policy

Policy analyses and policy consultancyNational and sectoral innovation systemsInnovation indicators

Regions and Market Dynamics

Regional innovation systemsFounding and financingNew services

Regulation and New Markets(ISI capital office Berlin)

Regulation and innovationStandardisation and new markets

Emerging Technologies

Emergence and diffusion of new technologiesPolitical, societal framework conditionsNew technologies in innovation systemsHealthcare system

Energy Policy and Energy Systems

Energy and climate policyEnergy and material efficiencyRenewable energy sourcesEnergy sector

Sustainabilityand Infrastructures

Water resources managementTraffic systems Value added chainsClimate policy

Task Force:

Innovation Indicators

Industrial and Service Innovations

Evaluation of industrial innovation policyTechnical-organisational innovationsHolistic innovation managementInnovative business models

Facts and Figures

33% economists

13% industrial engineers

15% engineers

18% natural/ life scientists

21% social scientists

53% state national

3.8% state international

13.7% industry

23% EU

6.5% research promotion funds (DFG etc.)

Broadly based know-how

Clients

Budget 2005: approx. € 12 million

240 research and consultancyprojects per year

Number of staff: 140(90 scientists)

Fraunhofer ISI – Systemic Approach towards Innovation

• Analysis of the innovation system

• Analysis of the interaction between different agents and institutions in the innovation process

• Research within the triangle Economy, Technology and Society

• Use of different methods to analyse innovation processes and patterns

-Set of innovation indicators at micro and macro level

-Quantitative empirical research (different types of surveys)

-Qualitative empirical research (case studies, expert and stakeholder interviews, workshops)

-Foresight (delphi, scenario analysis, roadmapping)

Industrial and service innovations

Field of research: Modernisation of production and service mainly in the manufacturing industry

Type of research: interdisciplinary research at the interface of society/individual, organisation and technology

Form of activity: contract research for national and European public and private sector

People: interdisciplinary research team:EngineeringSocial SciencesEconomicsBusiness AdministrationWork Psychology

Evaluation of Industrial Innovation PoliciesAssessment of policy measuresInternational comparisonPolicy instruments Identification of research needs

Holistic Innovation ManagementAnalysis of enabling factors and obstacles for product, service, process and organisational innovation Indicators for innovation activity, speed and success Instruments for strategic development and planning

Techno-Organisational Innovations

Scenarios, Foresight, Technology AssessmentDiffusion analysisPotential assessment on a sectoral, regional, corporate and national level

Innovative Business Models and Value ChainsInnovative (sustainable) service, operating and business models Outsourcing and relocation trends, location assessmentStrategic controlling

Industrial and service innovations: research areas

Section 2

Innovation: definitions, basic concepts, theories and typologies

§ Definition of innovation

§ Types of innovation

§ Dimensions of innovation

§ Theories and basic concepts

§ Example 1: Indicators in the innovation system

§ Example 2: Future technologies

Why Innovation?

§ Technological progress: increased rate of scientific discoveries, increase of technological knowlede base

§ Change of market: customers demand differenciated and complex problemsolutions

§ Intensification of competition: market competition is largely carried out and isbased on innovation

§ Globalisation: increases all other developments additionally

Firms have to innovate in order to survive

Innovation: Definitions

Everybody is talking about innovation, but what exactly is an innovation?

§ The original meaning of innovation (innovare) is to make something new

§ Innovation emerges through "creative destruction" (Schumpeter)

§ Innovation is a means to achieve competitive advantage through "new technologies and new ways of doing things" (Porter)

§ Innovation = Invention + Exploitation (Rogers)

§ Innovation as a core business process, necessity for firms survival (Tidd et al.)

§ Innovation as the result of complex collaboration and interaction patterns between individuals, companies, and institutions within the innovation system (Lundvall)

§ Innovation is any thought, behavior or thing that is new because it is qualitatively different from existing forms (Barnett)

Examples for innovations and innovative firms

• Toyota

• Amazon

• Ebay

• Li & Fung

• Nokia

• Low-cost airlines

• IKEA

• Benetton

• ZARA

• …

• Personal computer

• Internet

• Mobile phones

• New pharmaceuticals

• High tech fibres, new materials

• Robots

• Functional food

• Sensor systems

• …

Types of innovation

Schumpeter: innovation is a new product, a new production method, a new market, a new source of supply or a new form of organisation

Dosi: innovation is the search, discovery, experimentation, development, imitation and adoption of new products, new production processes and new organisational set-ups

Damanpour: innovation is the adoption of an internally generated or purchased device, system, policy, program, process, product or service that is new to the adopting organisation

OECD: "an innovation is the implementation of a new or significantly improvedproduct (good or service), or process, a new marketing method, or a neworganisational method in business practices, workplace organisation or externalrelations" (Oslo Manual 2005)

Types of innovation: the "4 Ps" of innovation (Tidd, Bessant, Pavitt

§ Product innovation: changes in the things (products/services) which an organisation offers

§ Process innovation: changes in the ways in which they are created and delivered

§ Position innovation: changes in the context in which the products/services are introduced

§ Paradigm innovation: changes in the underlying mental models which frame what the organisation does

Dimensions of innovation: Complexity and degree of novelty

New versions of motor car,

aeroplane, TV

New generations e.g. MP3 and

download vs. CD and cassette

music

Improvements to components

New components for existing

systems

Advanced materials to

improve component

performance

Steam power ICT 'revolution' bio-

technology

COMPONENT LEVEL

RADICALINCREMENTAL

SYSTEM LEVEL

('doing what we do better') ('new to the enterprise') ('new to the world')Source: Tidd,Bessant, Pavitt 2005,

Innovation space

INNOVATION

(incremental… radical)

(incr

emen

tal…

radi

cal)

(incr

emen

tal…

radi

cal)

(incremental… radical)

POSITION

'PARADIGM' (MENTAL MODEL)

PROCESS PRODUCT/SERVICE

Source: Tidd, Bessant, Pavitt 2005

Different innovation fields in enterprises

§ Holistic understanding of innovation

§ Innovation is more than R&D!

§ Interdependencies between innovation

fields

§ Strategic fit between innovation strategy and overall business strategy necessary

§ Innovation does not need to be pursued in all fields at once, but influences of activities in one field on the others should be taken into consideration

physical

Dienstleistungs -

innovation

Produktions -

technik

Organisatorische

Innovation

FuE - basiertes

neues Produkt

intangible

innovation

product

innovation

process

Dienstleistungs -

innovation

Produktions -

technik

Organisatorische

Innovation

FuE - basiertes

neues Produkt

Service innovations

Manufacturingtechnology

Organisational innovations

ProductInnovations

Fraunhofer ISI

Innovation: Theories and basic concepts

Market based view (Porter)

§ Focus on the market

§ Economic development of firms is determined by their respective market or sector

§ Competitive advantage is achieved by successfully adapting products and services to the relevant market

§ "Five forces" driving industry competition: power of suppliers, power of buyers, new entrants, substitute products, rivalry amongst established firms

§ Generic market strategies for firms: cost leadership (economies of scale, minimise costs), product differentiation (high quality, response time), niche strategy (niche market)

Innovation: Theories and basic concepts

Resource based view (Prahalad/Hamel, Teece, Pisano)

§ Focus on resources, competencies and capabilities of the firm

§ Internal resources determine competitiveness through "individual strength", not external market

§ Internal resources and capabilities are easier to manage and control than external market

§ They determine the markets the firm can be active in and it´s success

§ Firms are successful by possessing better capabilities and resources than their competitors

§ Differences in market success are explained by different resource bases of firms

"Strategic Fit" between internal capabilities and market requirements

Porter: "What is Strategy" (1996):

§ Necessity to integrate general business goals/business strategy and inovationactivities. Otherwise there is a risk for inconsistencies and loss of competitiveadvantage

§ This view combines the market oriented and the resource oriented view. Neithermarket demand, nor the firm´s resource base alone determine the success of innovation, but their strategic combination

§ A strategic fit between business strategy and innovation strategy, based on internalresources, is required. This can be achieved through systematic mapping of strategically important business activities and their options for innovation

Example for strategic fit: Southwest Airlines' activity system

Limitedpassenger

service

Frequent, reliabledepartures

Lean, highlyproductive

ground and gatecrews

Very low ticketprices

Short-haul point-to-point routes

between midsizecities and

secondary airports

High aircraftutilization

No baggagetransfer

Noconnectionswith other

airlines

Standardizedfleet of 737

aircraft

Limited useof travelagents

Automaticticketing

machines

15-minutegate

turnarounds

No meals

No seatassignments

Highcompensa-

tion ofemployees

Flexibleunion

contracts

HIgh level ofemployee

stock

“Southwest,the low-fare

airline“

Source: Porter 1996

Innovation: Theories and basic concepts

Evolutionary economics (Nelson, Winter, Freeman):

§ Changes in technology, routines occur constantly in the economy

§ Therefore, some kind of evolutionary process must be in act

§ Following Darwin mechanisms of variation, selection and self-replication have been identified

§ Further developments: self-organisation, complexity theories, system theories, emergence

Innovation: Theories and basic concepts

Within the last decades, a shift has occurred from the classical, linear paradigm of innovation to non-linear models:

§ "Chain Link Model" of innovation (Kline/Rosenberg): connection between innovation activities and actors, feedback loops

§ Innovation as "Think, Play, Do" (Dodgson/Gann/Salter): intensification of innovation through "innovation technology" like simulation, modelling, virtual reality etc. Different modes, fluid processes, feedback, integration and learning

§ "Fifth Mode of Innovation" (Rothwell): complex system of networks

Innovation as non-linear, creative, interwoven, complex and collaborative activity

Three generic types of technology: intensification of innovation

Intensify

OMTImplement

ICTEnable

IvTCreate

Innovation technology:

Search tools

Modelling and simulation

Visualization / virtual reality

Rapid prototyping

Design and production technology:

CNC / FMS / CAD / CAM / CIM / CIP

Networking and coordination technology:

MRP / ERP / PMS / TQM / JIT

Information technology:Computers and servers

Open systems

Bandwidth

Sensors

Communications

technology:Internet / www

WIFi / 3G

EDI

Source: Dodgson et al. 2005

Think, Play, Do: Technology, Innovation, Organisation

Play

OMTICT

IvT

DoThink

Source: Dodgson et al. 2005

Rothwell’s five generations of innovation models

System integration and extensive networking, flexible and customized response, continuous innovation

Fifth

Parallel model, integration within the firm, upstream with key suppliers and downstream with demanding and active customers, emphasis on linkages and alliances

Fourth

Coupling model, recognizing interaction between different elements and feedback loops between them

Third

Simple linear models – need pull, technology push

First and second

Key featuresGeneration

Source: Tidd, Bessant, Pavitt 2005

Historical idealized character of innovation

Individualized innovation

Corporatized innovation

Distributed innovation

19th century 21st century20th century

Inte

rdep

end

ence

s

Understanding Innovation

Source: Tidd, Bessant, Pavitt 2005

Innovation Systems Approach

Nelson, Carlsson, Lundvall:

- Innovation Systems generate, diffuse and use innovations

- Innovation Systems consist of components and relationships between the components

- Components of Innovation Systems are: actors (individuals, firms, organisations, institutions, groups of actors like associations), tangible and intangible artefacts, institutional regulations and framework conditions

Different forms of Innovation Systems:

§ National Innovation Systems (Lundvall, Nelson, Edquist)

§ Regional Innovation Systems (Howells, Cooke/Morgan)

§ Technological Innovation Systems (Carlsson)

§ Sectoral Innovation Systems (Malerba)

Innovation System: A Heuristic

Large companies

Mature SMEs

New, technology-based firms

Demand

Consumers and/ or state (agencies) (final demand)

Producers (intermediate demand)

Framework Conditions

Financial environment; taxation and

incentives; propensity to innovation

and entrepreneurship; mobility

Industrial System

Intermediaries Research institutes

Brokers

Professional education and

training

Higher educationand research

Public sectorresearch

Education and Research System

Government

Governance

RTD policies

Political System

Banking, venturecapital

IPR and informationInnovation and

business supportStandard and norms

Infrastructure

The reach

of public policies …

Source: Technopolis 2000, modified and extended by Kuhlmann and Edler, ISI

Factors influencing national systems of innovation

? Innovations in oil and gas, mineral ore, and food and agriculture in North America, Scandinavia and Australia

Local natural resources

? Labour-saving innovations in the USA

? Europe-USA differences in automobile technology

? Environmental technology in Scandinavia

? Synthetic fertilizers in Germany

Input prices

? Railways in France

? Medical instruments in Sweden

? Coal-mining machinery in the UK (<1979)

Public investment activities

? Automobile and other downstream investments stimulating innovation in computer-aided design and robots in Japan, Italy, Sweden and Germany

Private investment activities

? Quality food and clothing in France and Italy

? Reliable machinery in Germany

Local buyers' tastes

ExamplesFactors in

Source: Tidd, Bessant, Pavitt 2005

Technological accumulation in different national Innovation Systems

Textiles

Textile machinery

Dyestuffs

Iron ore

Fine chemicals

Marine engines

Productionmachines

Iron and steel

Miningmachines

Discovery of insulin

Robots

Metal products

Synthetic insulin

Naturalinsulin

Pigproduction

Enzymes

Switzerland

Sweden

Denmark

Source: Tidd, Bessant, Pavitt 2005

Technological trajectories and disruptive innovation

"Technological trajectories" (Dosi) are laid out by the core set of possibilities of a firm or an innovation system. These trajectories or innovation paths are a result of past activities and previous accumulation of knowledge

"Disruptive innovation" (Christensen) occurs either through significant market changes or through radical technology changes. "The innovator´s dilemma" constitutes in deciding which is the adequate response to faced challenges, whether continuous or discontinuous change is necessary

Innovation through new technologies

§ New technologies are the driving force behind most innovations

§ Typically, new technologies go through a cycle of development, starting with the scientific discovery and ending with market diffusion

§ Although the technology cycle seems to be prototypical, not every technology passes through all stages. Some technologies "never make it" to market diffusion

§ To know in which phase of the cycle a particular technology is at present, is of uttermost importance for policy makers

Technology cycle - Phases

1. Discovery – Basic development and exploration of new opportunities offered by a new technology

2. Euphoria – Transdisciplinary work on the new opportunities the invention is offering for solving old problems. Stimulation of ambitious ideas for even broader application

3. Disillusion – Problems becoming more frequent and therefore focussing on only the most promising application possibilities

4. Reorientation – Stabilisation on selective fields through technology substitution

5. Rise – First imitations by competitors and development of a dominant design

6. Diffusion – Development of further application possibilities through scale effects

Technology Cycle

Meyer-Krahmer and Dreher 2004

Example 1: Technology phase specific indicators in the innovation system

Aim of project:

§ Innovation system analysis – selected energy-related new technologies

§ Identification of indicators for different phases of the technology cycle

§ Identification of relevant areas of indicators in the innovation system

§ Assessment of policy measures and priorities for support

EduaR&D: National Research Project on technological system analysis and assessment of new technologies (2004-2006)

Example: Policy measures for different technology phases

Fraunhofer ISI

Discovery: Institutional funding, science support programmes encouraging high risk research, funding of infrastructure

Euphoria: Cooperation between basic and applied research, structural cooperation between research and industry, mobility schemes between research and industry, support of patenting and licensing

Disillusionment: Support of supply side, support of testing and demonstration activities, seed financing

Reorientation: lead market studies, user involvement, venture capital

Rise: Public procurement, technology transfer, regulation and standardization

Diffusion: adjustment to the development of niches, enable feedback loops between diffusion and knowledge creation

Example 2: Manufacturing Visions (ManVis)

§ Creating a knowledge community “Manufacturing Visions” by gathering diverse views from actors of different European countries and regions on the future of manufacturing

§ Initiating public discourse across established lines of thinking and strengthening competitive and sustainable manufacturing

§ To provide detailed input to policymakers at all levels (national, regional, EU) for informed decision-making on actions towards sustainable and competitive manufacturing in Europe

§ To support European manufacturing industries to learn about and face the long-term challenges of changing markets and frameworks

European foresight project in preparation of the Manufuture platform (2003-2005)

Objectives:

Austria, ARC Systems Research

Belgium, Agoria, the multisector federation for the technology industry

Bulgaria, BAMDE, Bulgarian Association for Management Development and Entrepreneurship

Croatia, University of Zagreb, Faculty of Economics Department of Organisation and Management

Denmark, DTI, Danish Technological Institute

Estonia, IBATTU, Institute of Business Administration at Tallinn Technical University

Finland, VTT, Technical Research Centre of Finland

France, Innovation 128

Germany, ISI, Fraunhofer Institute for Systems and Innovation Research, B-WISE GmbH

Greece, LOGOTECH SA, Innovation & Development

Hungary, FME, Foundation for Market Economy

Italy, FR, Fondazione Rosselli

Netherlands, TNO-STB, TNO-Institute for Strategy, Technology and Policy

Norway, Sintef, Stiftelsen for industrial og teknisk forskning vedNorges Tekniske Hogskole

Poland, University of Lodz, Department of Entrepreneurship and Industrial Policy

Romania, AES-Manager, Academy of Economic Studies

Slovakia, University of Technology, Department of Manufacturing Systems, Faculty of Manufacturing Systems

Slovenia, LAPOM, University of Maribor, Faculty of Mechanical Engineering

Spain, Ascamm Foundation; OPTI; IPTS

Sweden, IVF, Industrial Research and Development Corporation

Turkey, Tubitak, Scientific and Technical Research Council of Turkey

United Kingdom, Institute for manufacturing, University of Cambridge, Cranfield University - School of Management

Example: Delphi-study "Manufacturing Visions" (ManVis): Partners

Example: ManVis Delphi-Electronic questionnaire with 101 statements

Assessment of statements on:

General sections:•Manufacturing Technology

•Strategy, org. & management

•Product features and concepts

•Logistic/ supply chain

•Working conditions

Industrial sectors:•Transport

•Machinery

•Fabricated metal products

•Traditional products

•Equipment/electronics/instruments

•Rubber and plastics

Example: Expert participation in the ManVis countries

Ca. 3100 participants from all over Europe:

• Industry 54%

• Research 36%

• Government 9%

• Unspecified 1%

0

50

100

150

200

250

300

350

400

450

500

Ger

man

y

Italy

Fran

ceUn

ited

King

dom

Polan

dSp

ainRo

man

iaTu

rkey

Hung

ary

Neth

erlan

dsSw

eden

Austr

iaBu

lgaria

Belgi

umG

reec

eSl

ovak

iaDe

nmar

kFi

nland

Croa

tiaSl

oven

iaNo

rway

Esto

nia

0,0%

5,0%

10,0%

15,0%

20,0%

25,0%

Highest number of answers to a statement

Median number of answers to statements

Weight according to number of employees (%)

num

ber o

f ans

wer

s pe

r sta

tem

ent

wei

ght a

cord

ing

to n

umbe

r of e

mpl

oyee

s

Manvis Survey 1st Round - FinalTotal number of experts: 3.121Median number of answers per statement: 1.332

level of activity

timediscoveryand exploration

euphoria disillusion reorien-tation

rise diffusion

sciencepush

demandpull

1

23

4

6

5

Nano-/bio-manufacturing

Advancedmaterials

Rapid technologies

MEMS

ICT in manufacturing

scope of activities

level of activity

timediscoveryand exploration

euphoria disillusion reorien-tation

rise diffusion

sciencepush

demandpull

1

23

4

6

5

Nano-/bio-manufacturing

Advancedmaterials

Rapid technologies

MEMS

ICT in manufacturing

scope of activities

Example: Selected ManVis results: New manufacturing technologies

Example: New technologies, Nano- und biotechnologies starting 2020

Smart materials (15% don't know)

Electronic lablesNano Manufacturing (8% never, 12% don't know)

MEMS

Manufacturing with living organisms (15% don't know)Rapid technologies (15% don't know)

2005 2010 2015 2020

Lo

wH

igh

Time

Imp

ort

anc

e

Summary Section 2

§ Innovation is imperative. Changes in the products and services offered and in the ways of producing, delivering or organising are necessary for survival

§ Innovation has to realise a strategic competitive advantage

§ Innovation is a multidimensional and multidisciplinary phenomenon

§ Innovation has become more complex in the last decades, involving different actors

§ Innovation is an interactive, socially embedded process

§ National Systems of Innovation shape the innovation environment of firms (resources, demand, technological paths) but they do not determine strategy

§ New technologies are a main driving force behind innovation

§ Strategic choices need to be made by enterprises: the management of innovation is a key task

Section 3

Management of the innovation process: innovation routines, success factors and barriers

§ Generic phases of the innovation process in enterprises

§ Innovation through alliances

§ The relevance of innovation routines and dynamic capabilities

§ Example: Acceleration of innovation

The "Black Box" of the innovation process

InputInputTransformation

?

Transformation

?

OutputOutput

"Black Box"

InputInputTransformation

?

Transformation

?

OutputOutput

"Black Box"• Innovation input

(resources) as basis and necessary starting point for innovation

• Innovation output as the result of innovation

• Transformation of input into output is a complex process (innovation process)

• No clear relation between input and output

The innovation process: generic phases

§ Searching (What is happening out there which needs a response?): scanning the environment (internal and external), processing relevant signals about threats and opportunities for change

§ Selecting (We cannot do everything): deciding which of these signals to respond to (on the basis of a strategic view of how the enterprise can best develop

§ Implementing (Make it happen): translating the idea into something new and launching it in an internal or external market. This phase involves:

- Acquiring the knowledge resources to enable innovation - Executing the project under conditions of uncertainty which require extensive problem solving- Launching the innovation and managing the process of initial adoption- Sustaining adoption and use in the long term – or revising the original idea and modifying it –

reinnovation

§ Learning (What can we do better next time?): using the opportunity to learn from processing through this cycle so that a knowledge base can be built and the management of the process can be improved

Adapted frome: Tidd, Bessant, Pavitt 2005

Generic phases of the innovation process in enterprises

LEARN

Search Select Implement(Acquire/Excecute/Launch/Sustain)

TIME

Source: Tidd, Bessant, Pavitt 2005

Innovation through alliances: Why collaboration?

§To reduce the cost of technological development or market entry

§To reduce the risk of development or market entry

§To achieve scale economies in production

§To reduce the time taken to develop and commercialise products

§To promote shared learning

Example:

Collaboration between Philips and Sony on compact disc (CD). Initial development or a prototype by Philips in 1978. Anticipated problems with turning it into a world standard, therefore strategic alliance with Sony (due to its manufacturing capability and access to the Japanese market). Jointly, the commercial product has been developed, produced and introduced into the market, first in Japan, then in Europe and the US (1983). The new format was adopted by the influential Electronic Association of Japan, becoming an official and de facto international standard.

Adapted from: Tidd, Bessant, Pavitt 2005

Innovation through alliances: Forms of collaboration

§ There is no single optimal form of collaboration

§ Technological and market characteristics, as well as company culture and strategic considerations determine possible forms of collaboration

§ Low versus high strategic significance:

- Low strategic significance: contracting, technology licensing as tactical, short term forms of collaboration

- High strategic significance: joint ventures, strategic alliances, innovation networks as long term structures for collaborative learning (e.g. Airbus, co-development, critical mass)

§ Horizontal versus vertical relationships:

- Horizontal collaboration includes consortia or relationships with potential competitors. Motives are access to complementary technological or market know-how

- Vertical collaboration includes relationships with suppliers or customers. Motives are mainly cost reduction, but also access to new ideas and market know-how

Adapted from: Tidd, Bessant, Pavitt 2005

Innovation through alliances: Forms of collaboration

? Search costs, product performance and quality

? Cost and risk reduction

? Reduced lead time

Short termSubcontract / supplier relations

? Knowledge leakageSubsequent differentiation

? Expertise, standards, share funding

Medium termConsortia

? Contract cost and constraints

? Technology acquisitionFixed termLicensing

Network

Joint venture

Strategic alliance

? Static inefficiencies

? Strategic driftCultural mismatch

? Potential lock-inKnowledge leakage

? Dynamic, learning potential

? Complementary know-how

? Dedicated management

? Low commitmentMarket access

Long term

Long term

Flexible

Type of collaboration

Disadvantages (transaction costs)

Advantages (rationale)Typical duration

Source: Tidd, Bessant, Pavitt 2005

Innovation through alliances: Common reasons for the failure of alliances

13Asymmetric incentive

25Unrealistic expectations/time

25Lack of commitment

25Personnel clashes

25Operational/ geographic overlap

25Insufficient trust

25Cultural mismatch

38Strong-weak relation

38Partner problems

50Strategic/goal divergence

% studies reporting factor (n=16)Reason for failure

Source: Tidd, Bessant, Pavitt 2005

Supplier relationships: the influence of objectives and supply market

Market relation/

contractual

Lean supply/

partnership

relation

Supply alliances/

Co-innovation

Homogeneous

Cost

IndeterminateDifferentiated

Process and product innovation

Lead time,

quality

OB

JEC

TIV

ES

SUPPLY MARKET

Not

coupled

Tightly

coupled

Loosely

coupled

Source: Tidd, Bessant, Pavitt 2005

Innovation through alliances: Vertical collaboration, supplier relationships

§ Vertical relationships are explained by resource dependence and agency theory –need to control key technologies in the value chain

§ Closer links to suppliers and customers can help to reduce costs through specialisation and sharing information

§ Timing of the involvement and the quality of the relationship with suppliers are critical factors

§ There are different forms of intensity in supplier relationships, varying from short-term contractual agreements to long-term close supplier relationships with input into design or engineering

§ Depending on the objective of collaboration, different forms of supplier relationships are suggested

Innovation through alliances

§ Main reasons for collaboration: reduction of costs, time or risk of access to unfamiliar technologies or markets

§ Make-or buy-decisions (transaction cost analysis) consider the short-term trade offs between developing an innovation in-house versus external mechanisms, whereas a strategic learning framework focuses on the dynamic, long-term potential for acquiring new technological, market or organisational competencies

§ The chosen form of collaboration depends on many factors such as motives of the partners, the nature of technologies and markets or the degree of complexity

§ The success of alliances depends on various factors: organisational issues dominate such as mutual trust and the level of communication

Adapted from: Tidd, Bessant, Pavitt 2005

Innovation routines and dynamic capabilities

Resources/Input (tangible and intangibleassets, competences)

Routines/Transformation process

DynamicCapabilities

Results/Output

Source: Burr (2004) with adaptations

Dynamic capabilities: organisationalknowledge which enables the firm to sustain the competitive advantage in a changing environment (Nelson/Winter; Teece/Pisano)

Organisational/Innovation routines: the "personality of the firm" (Tidd et al.) and involve established sequences of actions, a mixture of technologies, formal procedures or strategies and informal conventions or habits (Levitt/March). Routines have an existence independent of particular individuals.

Innovation routines and dynamic capabilities

• Routines are know-how which became encoded in organisational memory (Coriat)

• There are different levels of routines: "higher" meta-routines monitor and evaluate "lower" repetitive routines and change them if necessary, therefore no basic contradiction between innovation and routines

• Routines are programmes drawing upon individual skills (Coriat)

• Routines are the building blocks of capabilities (Nelson/Winter)

• Dynamic capabilities are closely related to strategy

Innovation routines and dynamic capabilities

§ Innovation routines are firm-specific, that is what makes them an individual asset of the firm

§ Well functioning innovation routines are accumulated innovation knowledge in action

§ Routines are the "genes" of the firm (from an evolutionary perspective)

§ Innovation routines lead to dynamic capabilities, which apply the firm´s accumulated knowledge to a changing environment

§ Dynamic capabilities emphasize the key role of strategic management in adapting, integrating and re-configuring internal and external organisational skills, resources and functional skills toward a changing environment (Dreher)

§ To be strategic, a dynamic capability needs to be directed towards an actual market need, needs to be unique and difficult to copy

Routines in different phases of the innovation process

LEARN

Search Select Implement(Acquire/Excecute/Launch/Sustain)

TIME

Source: Tidd, Bessant, Pavitt 2005

Routines for Scanning

§ Defining the relevant market

§ Understanding market dynamics

§ Market forecasting

§ Technological forecasting

§ Establishing external linkages

§ Benchmarking

§ User interaction

Dreher 2006

Routines for Selection

§ Establishing fit with business strategy, defining framework

§ Concept development

§ Concept testing

§ Integration of different perspectives

§ Supplier involvement

§ Lead user involvement

§ Stakeholder involvement

Dreher 2006

Routines for Implementation

§ Stage gate process

§ Early involvement and concurrent engineering

§ Teamworking (cross functional teams)

§ Project management structure

§ Support tools (rapid prototyping, CAD)

§ Market development tools

Dreher 2006

Routines for Learning

§ Goal setting and regular assessment

§ "Lessons learned", structured reflection

§ Communities of practice

§ Regular feedback

§ Review process

§ Continuous improvement processes

Dreher 2006

"Ingredients" of successful innovation

§ Successful innovation is strategy based

§ Successful innovation depends on effective internal and external linkages

§ Successful innovations requires enabling mechanisms for making change happen

§ Successful innovation can only happen within a supportive organisational context

Areas of routines for successful innovation

Phases in the innovation process

StrategyEffective implementation mechanisms

Supportiveorganizationalcontext

Effective externallinkages

Source: Tidd, Bessant, Pavitt 2005

"Good practice" in innovation management

? Involvement of different perspectives, use of teambuilding approaches to ensure effective team working and develop capabilities in flexible problem-solving

Cross-functional teamworking

? Choice of structure – e.g. matrix / line / project / heavyweight project management – to suit conditions and tasks

Appropriate project management structures

? Concurrent or simultaneous engineering to aid faster development whilst retaining cross-functional involvement

Overlapping / parallelworking

? Carrying forward lessons learned – via post-project audits, etc.

? Development of continuous improvement culture

Learning and continuous improvement

? Use of tools – such as CAD, rapid prototyping, computer-supported co-operative work aids (e.g. Lotus Notes) – to assist with quality and speed of development

Advanced support tools

? Bringing key perspectives into the process early enough to influence design and prepare for downstream problems

? Early detection of problems leads to less rework

Early involvement of allrelevant functions

? Stage-gate model

? Close monitoring and evaluation at each stage

Systematic process for progressing new products

Key featuresComponent

Source: Tidd, Bessant, Pavitt 2005

Components of the innovative organisation

? Participation in organisation-wide continuous improvement activityHigh involvement in innovation

? Within and between the organisation and outside

? Internally in three directions – upwards, downwards and laterally

Extensive communication

? Long-term commitment to education and training to ensure high levels of competence and the skills to learn effectively

Continuing and stretching individual development

? Internal and external customer orientation

? Extensive networking

External focus

? Appropriate use of teams (at local, cross-functional and inter-organisational level) to solve problems. Requires investment in team selection and building

Effective team working

? Promoters, champions, gatekeepers and other roles which energize or facilitate innovationKey individuals

? High levels of involvement within and outside the firm in proactive experimentation, finding and solving problems, communication and sharing of experiences and knowledge capture and dissemination

Learning organisation

? Positive approach to creative ideas, supported by relevant motivation systemsCreative climate

? Organisation design which enables creativity, learning and interaction. Not always a loose 'skunk works' model; key issue is finding appropriate balance between 'organic and mechanistic' options for particular contingencies

Appropriate structure

? Clearly articulated and shared sense of purpose

? Stretching strategic intent

? 'Top management commitment'

Shared vision, leadership and the will to innovate

Key characteristicsTheme

Source: Tidd, Bessant, Pavitt 2005

Example: Acceleration of innovation

Core questions:

1. How could product innovation be accelerated in enterprises?

2. Which are the most relevant "time drivers" in firms which prolong development times?

3. How much of the development time could be saved if these time drivers could be eliminated?

4. Which organisational routines are the most relevant as regards development speed?

Internal research project of the Fraunhofer Society between 2003 and 2005, involving various research institutes

Starting point 1: No innovative dynamics in the German mechanical and electronical engineering sector

Source: Survey Innovationen in der Produktion, Fraunhofer ISI; n=1329 (1997), n=1442 (1999), n=1258 (2001), n=1140 (2003)

[in %]

0

10

20

30

40

50

60

70

80

90

100

Turnover in the last 3 years with:Enterprises which in the last 3 years produced:

new products products newto the market

Fraunhofer ISI, Karlsruhe

1997

1999

2001

2003

new products products newto the market

Example: Acceleration of innovation

Starting point 2: Constant use of resources for R&D in the German mechanical and electronicalengineering industry

Fraunhofer ISI, Karlsruhe

1997

1999

2001

2003

0

2

4

6

8

10

12

14

16

18

20

Percentage of R&D expenditures of turnover Employees in R&D

Source: Survey Innovationen in der Produktion, Fraunhofer ISI; n=1329 (1997), n=1442 (1999), n=1258 (2001), n=1140 (2003)

[in %]

Example: Acceleration of innovation

Starting point 3: innovation competence concentrated only on few employess the German

manufacturing sector

12,2

31,1

41,8

5,3

6,9

14,1

43,8

6,4

10,2

14

37,1

7,3

9,6

28,8

31,3

0% 10% 20% 30% 40% 50%

Single employee

Processes and structures independent of persons

EnterprisesSource: Survey Innovationen in der Produktion 2003, n=1399, Fraunhofer ISI

Production innovation competence

Process innovation competence

Reorganisational competence

Fraunhofer ISI, Karlsruhe

Fewemployees

Team of employees

Not relevant forthe enterprise

Example: Acceleration of innovation

Starting point 4: in spite of increased global competition, constant time-to-market in the German mechanical and electronical engineering industry

02468

1012141618202224262830

02468

1012141618202224262830

99 or less employees

100 to 499 employees

500 or more employees

1997

1999

2001

2003

1997

1999

2001

2003

Tim

e-to

-mar

ket

(in m

onth

s)

Fraunhofer ISI, Karlsruhe

Average time-to-market fora new product

Example: Acceleration of innovation

Example: Acceleration of innovation – an empirical study on "time drivers"

Methodology:

Telephone interviews of 253 manufacturing enterprises in Germany with own product development

Aim of survey:

Identification of the most important factors (time drivers), which prolong time-to-market

Assessment of time-saving possibilities

Results:

• 40% of the whole time-to-market could be saved in the ideal case (independent of company size)

• Time-to-market is crucial for the market success of the new product

• 62% of enterprises need more time for the product development than actually planned

• The most important time-driving factors are: unclear goals, changing product specifications, the need for technical adjustments as well as lacking skills and expertise of employees

-

1

4

2

3

73

61

66

62

21

20

9

13

15

15

0 10 20 30 40 50 60 70 80

500 or more

100 to 499

99 or less

Total

Share of enterprises [in %]

1

4

2

3

73

61

66

62

17

21

17

20

9

13

15

15

0 10 20 30 40 50 60 70 80

less time than plannedtime as plannedmore time than plannedno planning of time-to-market

Nearly two thirds ofthe interviewed firmsneeded longer than planned

Planning of time-to-market by firm size

Example: Acceleration of innovation – an empirical study on "time drivers"

Fraunhofer ISI, Karlsruhe

Example: Acceleration of innovation – an empirical study on "time drivers"

1. Unclear goals at the beginning of the project (50%)

2. Unclear or changing product specifications (44%)

3. Unexpected need for technology adjustments (28%)

4. Project management and planning deficiencies (28%)

5. Collaboration problems within the team or company (25%)

6. Insufficient coordination of available expertise (22%)

7. Lacking skills of workforce (22%)

8. Lack of motivation of project members (17%)

9. Difficulties in the application of new technologies (12%)

10. Difficulties with product launch (11%)

11. Problems in collaborating with external partners (8%)

12. Delay in development of product-related services (8%)

13. Unsolved legal questions (5%)

Time drivers by frequency:

Fraunhofer ISI, Karlsruhe

Fraunhofer ISI, Karlsruhe

Time-drivers by frequency and time-saving potential

0

5

10

15

20

25

30

35

40

45

50

0 2 4 6 8 10 12 14 16 18 20 22 24 26

Unklare Ziele bei Projektbeginn

Produktspezifikationen unklar bzw. ä ndernd

Unerwarteter technischer bzw. technologischer Anpassungsbedarf

Fehlende Mitarbeiterkompetenzen (fachlich oder personell)

Motivationsprobleme bei Projektbeteiligten

Mangelnde Zusammenf ü hrung von vorhandenen Kompetenzen

Marktzugangs -schwierigkeiten

Ungekl ä rte Rechtsfragen

Keine rechtzeitige Erstellung von produktbegleitenden Dienstleistungen

Probleme bei der Zusammenarbeit mit externen Partnern

Projektleitungs - und Planungsdefizite

Probleme bei Zusammenarbeit im Projektteam bzw. innerhalb des Unternehmens

Schwierigkeiten beim Einsatz neuer Technologien

0 14,8

0 21,5

0

5

10

15

20

25

30

35

40

45

50

0 2 4 6 8 10 12 14 16 18 20 22 24 260 14,8

0 21,5

Average time-saving potential for the time-to-market [in %]

Unclear goals at the beginning of the project

Unexpected need for technology adjustments

Lacking skills of workforce

Lack of motivation of project members

Insufficient coordination of available expertise

Difficulties with product launch

Unsolved legal questions

Delay in development of product-related services Problems in collaborating with external partners

Project management and planning deficiencies

Collaboration problems within the team or company

Difficulties in the application of new technologies

Sh

are

of

ente

rpri

ses

[in

%]

Unclear or changing product specification

Example: Acceleration of innovation – an empirical study on "time drivers"

§ Most common time-drivercategory: Problems related to strategic and operative innovationmanagement

§ Workforce and skill-related problems as well as technical problemsrank in the middle

§ Interface problems rare, but hold high time-savingpossibilities

Fraunhofer ISI, Karlsruhe

Groups of time-drivers

0 21,5

0

5

10

15

20

25

30

35

40

45

50

0 2 4 6 8 10 12 14 16 18 20 22 24 260 14,8

Average time-saving potential for the time-to-market [in %]

Unclear goals at the beginning of the

project

Unexpected need for technology adjustments

Lacking skills of workforce

Lack of motivation of project members

Insufficient coordination of available expertise

Difficulties with product

launch

Unsolved legal questions

Delay in development of product-related services Problems in collaborating

with external partners

Project management and planning deficiencies

Collaboration problems within the team or company

Difficulties in the application of new technologies

Share of enterprises [in %]

Unclear or changing product specifications

Example: Acceleration of innovation – an empirical study on "time drivers"

Summary Section 3

§ In order to generate successful innovations, firms need to manage the innovation process strategically

§ The innovation process passes through different phases which require specific abilities

§ Alliances can contribute to generate innovations

§ Innovation routines help to manage the innovation. They are accumulated firm specific knowledge in action

§ Dynamic capabilities adapt, integrate and re-configure internal and external skills toward a changing environment

§ Well functioning routines and strategically deployed capabilities are success factors for innovation

Section 4

Measuring innovation: macroeconomic and microeconomic indicators, innovation capability§ Challenges in measuring innovation

§ Indicators for innovation

§ Example: Assessment of firms` innovativeness

§ Example: Measuring organisational innovation

Challenges in measuring innovation

1. Different levels: innovation on firm level, regional level, national level

2. Different types of innovation: product, service, process, organisation

3. Different forms: input (resources), process or output (result, performance)

4. Time: time lag between input and output

5. Tacit aspects: non-technological innovation is more difficult to measure than technical innovation

Innovation indicators on macro and micro level

§ On macro economical level of a country: aggregated measures (total expenditures for R&D, patent issues, publication of scientific papers, share of skilled workforce etc.)

§ On micro economical level of the firm: new products, innovation expenditures, use of new technology, process improvement measures

§ Current innovation indicator systems on both macro and micro level are dominated by technological innovation indicators: indicators for non-technological innovations are rarely found

§ Process performance measures: improvement of quality or flexibility, customer satisfaction, cost reduction

EurostatEurostat

Eurostat, OECDOHIMOHIM

• EPO patents per million population• USPTO patents per million population• Triadic patent families per million population• New community trademarks per million population• New community designs per million population

5.15.25.3 NEW5.4 NEW5.5 NEW

OUTPUT – Intellectual property

Eurostat, Eurostat, Eurostat, (CIS)Eurostat, (CIS)Eurostat,

• Employment in high-tech services (% of total workforce)• Exports of high technology products as a share of total exports• Sales of new-to-market products (% of total turnover)• Sales of new-to-firm not new-to-market products (% of total turnover)• Employment in medium-high and high-tech manufacturing (% of total workforce)

4.14.2 NEW4.34.44.5

OUTPUT - Application

Eurostat, (CIS)Eurostat, (CIS)Eurostat, (CIS)Eurostat,Eurostat,Eurostat, (CIS)

• SMEs innovating in-house (% of all SMEs)• Innovative SMEs co-operating with others (% of all SMEs)• Innovation expenditures (% of total turnover)• Early-stage venture capital (% of GDP)• ICT expenditures (% of GDP)• SMEs using non-technological change (% of all SMEs)

3.13.23.33.43.53.6

INPUT – Innovation & Entrepreneurship

Eurostat, OECDEurostat, OECDEurostat, OECDEurostat, (CIS)Eurostat, OECD

• Public R&D expenditures (% of GDP)• Business R&D expenditures (% of GDP)• Share of medium-high-tech and high-tech R&D (% of manufacturing R&D expenditures)• Share of enterprises receiving public funding for innovation• Share of university R&D expenditures financed by business sector

2.12.22.3 NEW2.4 NEW2.5 NEW

INPUT – Knowledge Creation

EurostatEurostat, OECDEurostatEurostatEurostat

• S&E graduates per 1000 population aged 20-29• Population with tertiary education per 100 population aged 25-64• Broadband penetration rate (number of broadband lines per 100 population)• Participation in life-long learning per 100 population aged 25-64• Youth education attainment level (% of population aged 20-24 having completed at least upper

secondary education)

1.11.21.3 NEW1.41.5 NEW

INPUT – Innovation Drivers

European Innovation Scoreboard – Innovation indicators for countries

Assessment of firm´s innovativeness

• Innovativeness needs to be measured multidimensionally: different innovationfileds/areas AND both quantititive and qualitative aspects

• In order to obtain a reference point against which to assess, there are variousoptions:

1. General benchmarking: position the firm in relation to similar firms in the economy

2. Best-practice benchmarking: compare the individual firm´s performance to best-performers

3. Target/actual comparison: identify target innovation measures for the individual firm and compare to actual values

Example 1: Benchmarking of firms’ innovativeness

• Objective: Development of an internet-based self assessment tool for manufacturing firms, especially SMEs. Adaptability to existing enterprise rating systems of banks

• Approach: multidimensional metrics, including quantitative input and output innovation indicators and also qualitative indicators (critical success factors for innovation)

• Result: comprehensive mapping of firms’ innovativeness, benchmarking report

Research and implementation project for the German Federal Ministry for Education and Research (2005-2007)

Example: Benchmarking of firm´s innovativeness: different fields

physical

Dienstleistungs -

innovation

Produktions -

technik

Organisatorische

Innovation

FuE - basiertes

neues Produkt

intangible

innovation

product

innovation

process

Dienstleistungs -

innovation

Produktions -

technik

Organisatorische

Innovation

FuE - basiertes

neues Produkt

Service innovations

Manufacturingtechnology

Organisational innovations

ProductInnovations• Firm level innovation indicators need

to be found for different innovation fields

• Both input (resources) and output (performance) relevant

Fraunhofer ISI, Karlsruhe

Example: Comprehensive assessment of firm´s innovativeness

InputInputTransformation

?

Transformation

?

OutputOutput

"Black Box"

InputInputTransformation

?

Transformation

?

OutputOutput

"Black Box"

Qualitative indicators for the innovation process

physical

-innovation

- Innovation

FuE-basiertes

intangibleinnovation

product

innovation

process

Dienstleistungs-innovation

- Innovation

FuE-basiertes Service innovat

ions

Manufacturing

technology

Organisational

innovations

ProductInnovati

ons

physical

-innovation

- Innovation

FuE-basiertes

intangibleinnovation

product

innovation

process

Dienstleistungs-innovation

- Innovation

FuE-basiertes Service innovat

ions

Manufacturing

technology

Organisational

innovations

ProductInnovati

ons

Product innovation Service innovation

Manufacturing technology Organisational innovation

Input

Input

Input

Input

Output

Output

Output

Output

• Share of sales of R&D expenditures

• Workforce in R&D• Innovation alliances

• Process integrated qualitycontrol (Sensors)

• Electronic Procurement• Use of industrial robots• Supply Chain Management• Simulation

• Workforce in service

• Service alliances

• Offer of new services

• Products younger than 3 years

• Share of sales with newproducts

• Time to market

• Share of sales with newservices

• Development of share of sales with services overtime

• Labour productivity

• Scrap-rate

• Lead time

• Delivery time

• Lead time

• Scrap-rate

• Labour productivity

• Just in time• Segmentation of production• Decentralisation• CIP• Teamwork• Zero buffer• Task integration

Example: Benchmarking of firm´s innovativeness: input and output

Already existing data source: German Manufacturing Survey (n=1200) and German Innovation Survey (n=1131)

Example: Qualitative indicators for innovation processes

n Survey among preselected innovative firms with the objectives of:

- Validation of 28 critical success factors for innovation previously identified in one day-workshops with highly innovative firms

- Development of a data base for best-practice benchmarking

n Realisation: CATI-service providern Time frame: 03. April - 06. May 2006n Target group: Innovative member enterprises of the two largest industrial associations:

- VDMA (German Engineering Association)- ZVEI (German Electrical and Electronic Manufacturers´ Association)

n Adressee: Top managment, members of executive boardn Duration: approx. 20-30 minutesn Interviews: 150

Example of operationalisation

-

+

Operationalisation

-Competence & Knowledge

Strategy

- Qualifications of employeeshas to be adapted to theconstant changen (lifelonglearning)

- Specific development of competencies

"Technical and socialqualifications of employees aresystematically developed."

Process

Project management

- Routines for the risk control of innovation projects

"We systematically manage thefinancial and technical risk of innovation projects (eg. withrisk or portfolio analysis likeSWOT)."

"Employees promotinginnovations are distributed overall hierarchy levels."

Innovation culture- Promotors of innovations in the top managemetn of enterprise

- Staying power in theexecution of innovations

- Each employee should be a promotor of innoations

"In our enterprise there aremany employees who activelypromote innovations."

AreaSuccess factorIndicator

Innovationculture

Innovationculture

Free space foremployees

Free space foremployees

Budget for initial researchwhich is not financed by

customer orders

Budget for initial researchwhich is not financed by

customer orders

Likert Scale

Lev

el o

f ab

stra

ctio

nL

evel

of

abst

ract

ion

Critical success factor

Indicator

Area

Example: Benchmarking of firm´s innovativeness: qualitative innovation indicators

Example: Success factors as qualitative indicators

100% 75% 50% 25% 0% 25% 50% 75% 100%

Relevancy very importantEntirely true

A sufficient number of employees is act ively promot ing innovat ion

Employees promoting innovation are dist ributed over all hierarchy levels

The management actively promotes innovation

Systematic financial and technical risk management

Adaption of working conditions according to individual needs

Individual performance evaluat ion of employees

Employees contribute to innovation with ideas and suggestions

Short and rapid decision-making processes

Systematic incentive systems for new ideas

Employees show high commitment and self-initiat ive

Available budget for initial research

Innovat ion activities are an integral part of the corporate strategy

Required competencies are available within the enterprise

Systematic developement of employees competencies

Competencies of employees can be brought together easily

Availability of an established network of business partners

Regular contacts to external R&D institutions are established

Regular contacts to external organisat ions

Customer involvement in product development

Customer feedback is processed systematically

Excellent knowledge about the competitive environment

Clear def initions of goals at the beginning of innovation projects

Open and t ransparent f low of information

Mistakes in innovation projects are seen as a chance to learn

Early consideration of requirements of different departments

Implementation of future-orientated technologies

Completion of innovation projects within time planned

Systematic selection of innovat ion projects on the basis of selection criteria

-28 different success factors as qualitative indicators for innovativeness

-They reflect previously identified "good practice" in innovation management

- Provide empirical validation of the relevance and use of such "good practice" in actually innovative firms

- Not every factor is of equal importance or needs to be implemented in every enterprise

< 500 employees = 500 employees

Innovation activities are an integral part of the corporate strategy

0% 25% 50% 75% 100%

The management actively promotes innovation

Employees contribute to innovation with ideas and suggestions

Employees show high commitment and self-initiative

Excellent knowledge about the competitive environment

Short and rapid decision-making processes

The management actively promotes innovation

Employees contribute to innovation with ideas and suggestions

Short and rapid decision-making processes

Open and transparent flow of information

Innovation activities are an integral part of the corporate strategy

0% 25% 50% 75% 100%

The management actively promotes innovation

Employees contribute to innovation with ideas and suggestions

Short and rapid decision-making processes

Employees contribute to innovation with ideas and suggestions

Employees contribute to innovation with ideas and suggestions

A sufficient number of employees is actively promoting innovation

Available budget for initial research

Clear definition of goals at the beginning of innovation projects

Employees show high commitment and self-initiative

Relevance “very important” “Entirely true"

Example: Empirically most important critical success factors for innovation

Example: Self assessment tool – Innovation benchmarking

Selecting reference group for benchmarking

Seite 1/3

Up to 49 50-249 250-499 500 and more

Manufacturers of rubber and plastics

Manufacturers of metal products

Manufacturers of machinery

Manufacturers of office machinery and computers

Manufacturers of electrical machinery and apparatus

Manufacturers of medical, precision and optical instruments

Manufacturers of motor vehicles

Selecting reference group for benchmarking

Seite 1/3

Up to 49 50-249 250-499 500 and more

Manufacturers of rubber and plastics

Manufacturers of metal products

Manufacturers of machinery

Manufacturers of office machinery and computers

Manufacturers of electrical machinery and apparatus

Manufacturers of medical, precision and optical instruments

Manufacturers of motor vehicles

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

100%90%80%70%60%40%30%0% 20%10%

The top 5% of enterprises achieved a share of sales withnew products of 50% and more.

Position of yourenterprise

Size(s)= up to 49 employeesSector(s)= manufacturing engineering

The average achieved shareof sales with new products

is at 7% (Median).

The worst 25% ofenterprises achieveda share of sales with newproducts of 0%.

The top 25% of enterprisesachieved a share of sales

with new products of 20% and more.

50%Sah

re o

f sa

les

a chie

ved b

y pr o

duct

innova

tions

Dat

a so

u rce

: Man

nhei

mer

Inno

v atio

nspa

nel (

ZE

W 2

003)

Reference group(s):

Enterprises of reference group

Example for quantitative benchmarking results: sales with new products

Product InnovationsSummary of the findings for your enterprise compared to the reference group*

Worst 25%

Best 25%

Share of sales achieved by product innovations

Share of sales achieved by market innovations

Share of employees working in R&D

Innovation expenditures

R&D-expenditures

Time to market

Key Data

Yes/No-Questions

Continuous R&D-activities

Participation in R&D-cooperations

*Reference group(s): Size(s)= up to 49 employeesSector(s)= manufacturing engineering

= Position of your enterprise

50%

Reference Group

Innovation benchmarking: Input and output indicators per field

100

Example 2: Patterns of Organisational Change in European Industry

Objective: Improvement of surveying organisational innovation in European industry with a special consideration of industry sectors

§ Objective 1:Analysis of the importance of organisational innovations across industry sectors

§ Objective 2: Recommendations for surveying organisational innovation in large scale surveys

§ Objective 3: Use of results to improve the concept and methodology of the European Innovation Scoreboard (EIS) with respect to organisational innovation

Consulting project for the European Commission (2005-2006)

101

• 100 stakeholder interviews with industry and research representatives have been conducted (face-to-face, telephone)

• 28 research interviews and 72 industry interviews

• 9 Sectors: Aerospace, Automotive, Biotechnology/Bio-Pharmaceuticals, Chemical, Electronics, Food, Machinery, Medical devices, Textile

• 12 different countries: UK, Germany, France, Italy, Slovenia, Spain, Ireland, Czech Republic, Bulgaria, Croatia, Sweden, Poland

Example: Importance of organisational innovations – stakeholder interviews

102

Example: Importance of organisational innovations

(1) Decentralisation on a strategic level of the company• Decentralisation of functions into customer or

product-line oriented departments• Decentralisation of formerly centralised functions

(2) Decentralisation on an operative level of the company• Team work/Group work• Cross-functional teams

(3) Cooperation with other companies• Cooperation in production• Cooperation in R&D• Cooperation in administrative activities

(4) Outsourcing/Relocation• Outsourcing/Relocation of production• Outsourcing/Relocation of R&D• Outsourcing/Relocation of administrative activities

(5) Quality Management• Continuous Improvement Processes (CIP)• Total Quality Management (TQM/ISO)

(6) Human Resources Management• Flexibility of work schedules/flexible work time• Upskilling• Regular individual appraisals• Performance based wage systems

(7) Knowledge Management• Systematic instruments to strengthen knowledge

sharing between employees

(8) Production Management• Just-in-time• Zero-Buffer• Simultaneous Engineering• Supply Chain Management

103

Example: Questionnaire

Relevance Impact on increased quality

Impact on increased flexibility

Impact on reduction of costs

Impact on increased innovation ability

yes

no

low

mod

erat

e

stro

ng

don’

t kno

w

low

mod

erat

e

stro

ng

don’

t kno

w

low

mod

erat

e

stro

ng

don’

t kno

w

low

mod

erat

e

stro

ng

don’

t kno

w

(2) Decentralisa-tion on an op-erative level of the company

Team work/Group work O O O O O O O O O O O O O O O O O O

Cross-functional teams (teams consisting of members from different func-tions)

O O O O O O O O O O O O O O O O O O

104

Example: Recommendations for surveying organisational innovation

(1) Complexity of organisational innovation It is not sufficient to ask only for "organisational innovation" in general.It is necessary to differentiate between several concepts of organisational innovation.

(2) Life-cycle of organisational innovation (use or change)It is not sufficient to ask only if organisational concepts have been changed in the last xyyears. It is important to collect data which organisational concepts are implemented at all.

(3) Scope of organisational innovation (use or extent of use)It is not sufficient to ask only for "use" or "non-use" of organisational innovations.It is necessary to gather information about the extent of "use".

105

Type

of O

rgan

isat

iona

l Inn

ovat

ion

Stru

ctur

al In

nov.

Pro

cedu

ral I

nnov

.Focus of Organisational Innovation

Inter-Organisational

•Cooperation/networks/alliances (R&D, production, service, sales, etc.) •Make or buy/Outsourcing•Offshoring/relocation•…

•Just in time (to customers, with suppliers)

•Single/dual sourcing•Supply chain management•Customer quality audits•…

•Job enrichment/job enlargement•Simultaneous engineering/concurrent engineering•Continuous Improvement Process/Kaizen•Quality circles•Quality audits/certification (ISO)•Environmental audits (ISO)•Zero-buffer-principles (KANBAN)•Preventative maintenance•…

•Team work in production•Cross-functional teams•Decentralisation of planning, operating and controlling functions•Manufacturing cells or segments•Reduction of hierarchical levels •…

Intra-Organisational

Example: Complexity of organisational innovation

Fraunhofer ISI, Karlsruhe

106

Summary Section 4

§ Innovation is a multidimensional phenomenon, therefore different indicators need to be applied for measurement

§ The selection of a specific innovation metrics depends on the type and area of measurement

§ Besides indicators for innovation input and output, also qualitative measures for the innovation process are relevant

§ Benchmarking provides an assessment of firms` innovation capability

107

Section 5

The role of SMEs in the innovation system§ SMEs in the economy

§ Innovation in SMEs

§ Advantages and disadvantages of SMEs

§ Example: Empirical typology of innovative SMEs

108

Innovation in SMEs

Some facts:

§ The majority of firms in every country are SMEs (in Germany, 80% of all firms employ less than 500 people)

§ The majority of the workforce is employed in SMEs (over 60%)

§ All new firms start as SMEs

- National competitiveness largely depends on the competitiveness of SMEs. Therefore, innovation in SMEs is a key issue

- SMEs cannot be said to be better or worse performers in general compared to large firms, their performance depends on their respective role in the innovation system

109

Innovation in SMEs

§ Compared to large firms, innovation in SMEs is much lesser studied

§ Innovation activity in SMEs is often strongly related to the personality of the owner and lacks a systematic strategy

§ SMEs are believed to operate in niche markets and to have advantages as regards flexibility, proximity to customers and coordination

§ Their disadvantages are seen in the lack of economies of scale, lack of technological basis and in the general lack of resources, which confine their possibilities for entering markets with high investment (entry barriers)

110

Misleading assertions about innovation in small firms

They also lose a lot, since they have high birth and death rates

‘New small firms create a lot of employment’

Not if you include unmeasured, ‘part-time’ R&D

‘Small firms are much more innovative than large firms, since they account for a higher share of innovations than of R&D’

They do lots of ‘informal’, ‘part-time’ and non-measured R&D, and produce a share of total innovations roughly proportionate to their output and employment

‘Small firms make few innovations since they do so little R&D’

It depends on the product and the technology

‘Small firms make most of the major innovations’

What the evidence showsMisleading assertions

Source: Tidd, Bessant, Pavitt 2005

111

How tasks of innovation strategy are accomplished in large and small firms.

? Deliberate organisational design

? Judgement based on formal criteria and procedures

? Own R&D and external networks

? Organisational design

? Organisational processes for knowledge flows across boundaries

? Qualifications of managers and staff

Matching strategic style with technological opportunities

? Judgement based on qualifications and experience of senior management

Judging the learning benefits of investments in technology

? Trade and technical journals

? Training and advisory services

? Consultants

? Suppliers and customers

Monitoring and assimilating new technical knowledge

? Responsibilities of senior managersIntegrating technology with production andmarketing

Large firms Small firmsStrategic tasks

Source: Tidd, Bessant, Pavitt 2001

112

Advantages of SME´s

• Time-to-market: Small enterprises need only half as long to develop a product as large enterprises (11 months compared to 22 months).

• Access to market: Product launch and access to market is less of a problem for SME´s,

• Coordination of available skills: SME´s coordinate available skills better than larger enterprises.

• Application of new technologies: SME´s have less problems applying new technologies than large enterprises.

• Product-related services: For SME´s, product-related services pose less of a problem compared to large enterprises.

"Time driver" survey results (Fraunhofer ISI 2005):

113

• Problems with external partners: SME´s more frequently have problems with external partners compared to larger enterprises.

• Lack of motivation of innovation project members: The lack of motivation of project members is a problem for SME´s, due to skill shortage

• Skills of employees: Lacking expertise of workforce is more of a problem for SME´s than for large enterprises

• Legal questions: This factor is much more often a problem for SME´s than for large enterprises.

Disadvantages of SME´s

"Time driver" survey results (Fraunhofer ISI 2005):

114

Innovation in SMEs – existing empirical evidence

§ General figures show that SMEs participate less in product innovation than large firms

§ SMEs invest on average less in innovation than large firms

§ In spite of that, SMEs are an important source of creativity and innovation, especially young high-tech firms

§ Some evidence suggests that SMEs are more efficient in their innovation activities

§ Typologies of innovation have been based in the past on sectoral classifications

§ Most influential sectoral innovation typology by Pavitt: supplier dominated, scale intensive, specialised suppliers and science based firms

§ Problem: official statistical classifications do not reflect adequately the heterogeneity of market structures and frame conditions

115

Categories of innovating small firms (Tidd et al.)

Main tasks of innovation strategy

Sources of competitive advantage

Examples

Links to advanced users and pervasive technologies

Combining technologies to meet users' needs

Producer goods (machines, components, instruments, software)

1. 'Superstar' or 'specialized supplier'?

2. Knowledge or money?

1. Product or process development in fast moving and specializes area

2. Privatizing academic research

Start-ups in electronics, biotechnology and software

Exploiting new IT-based opportunities in design , distribution and co-ordination

Preparing replacements for the original invention (or inventor)

Integration and adaptation of innovations by suppliers

Successful exploitation of major invention or technological trajectory

Traditional products (e.g. textiles, wood products, food products) and many services

Polaroid, DEC, TI, Xerox, Intel, Microsoft, Compaq, Sony, Casio, Benetton

Specialized suppliers

New technology-based firms (NTBFs)

Supplier-dominated

Superstars: small firms into big since 1950

116

Example: SMEs and innovation – empirical typology

• Empirical firm typology based on cluster analysis

• Database: German Manufacturing Survey 2003, core manufacturing industries NACE 25, 28-35 (n=926)

• Approach: cluster analysis (Ward) on the basis of structural variables (export rate, production structure, product complexity, batch size, supplier status etc.), NOT on the basis of sector or firm size

• Analysis of clusters as regards different innovation indicators

117

Example: SMEs and innovation – general figures

Performance Indicators Non-SMEs SMEs

Product innovator [%-share of "Yes"] 0.74 0.63**Share of Sales achieved by product innovations [%] 0.12 0.13

Market innovator [%-share of "Yes"] 0.72 0.60**Share of sales achieved by market innovations [%] 0.11 0.12

Delivery time [calendar days] 80.4 48.0*

Manufacturing lead time [calendar days] 53.3 37.5+

Scrap rate [%] 0.04 0.05+

Return on sales [%] 0.05 0.05

Labour productivity [in thousand EUR] 96.9 73.7***

Share ofsales achieved by services [%] 6.1 7.6

N 184 742% 0.20 0.80

Significance levels: *** p<0.001 / ** p<0.01 / * p<0.05 / + p<0.1

118

Example: Innovation in SMEs – empirical typology

Cluster Variables Categories

Position in value chain - Supplier vs. Original Equipment Manufacturer (OEM)

Product development - According to customer's specification - Standardised programme - No product development

Type of production / assembly - Initiated upon customers´ order - To stock (i.e. made to stock)

Batch size - Single unit production or small batch size (up to 20 pcs. per month) - Medium batch size (20-1000 pcs. per month) - Large batch size (more than 1000 pcs. per month)

Product complexity - Simple products (e.g. cogwheels) - Multipart products with simple structure (e.g. pumps) - Complex products (e.g. machine tools or manufacturing systems)

R&D-Orientation(Percentage of employees workingin the field of Research, Development and Construction )

- < 11% of all employees vs. = 11% of all employees

Export-Orientation(share of exported products)

- < 46% of all products vs. = 46% of all products

119

Example: Innovation in SMEs – empirical typology

0%

5%

10%

15%

20%

25%

30%

35%

40%

Cluster 1nC=187 (20,2%)

Cluster 2 nC=278 (30,0%)

Cluster 3 nC=104 (11,2%)

Cluster 4 nC=112 (7,5%)

Cluster 5 nC=69 (7,5%)

Cluster 6 nC=78 (8,4%)

Cluster 7 nC=98 (10,6%)

SMEs (N=742)

Non-SMEs (N=184)

n=1

68

n=2

45

n=7

8

n=7

5

n=4

5

n=6

6

n=6

5

n=1

9 n=3

3

n=2

6 n=3

7

n=2

4

n=1

2

n=3

3

Note: nC = Total number of firms within the correspondent cluster

1. National niche producers of standardised simple products

2. National suppliers of simple products

3. National suppliers of complex, customer specific products

4. Export oriented OEMs of standardised complex products

5. Export oriented suppliers of simple products

6. National manufacturers of complex products

7. Export oriented OEM of standardised, complex products

120

Example: Innovation in SMEs – empirical typology

• Identification of seven structurally different industrial clusters, independent of sector or firm size

• SMEs are mainly found in three clusters: national niche producers of standardized, simple products, suppliers of simple products to national customers and high-tech manufacturers of complex products

• While general performance comparison confirmed previously known differences between SMEs and large firms, these general differences did not prevail within clusters

• Innovation performance of SMEs depends more strongly on their structure and market than on size or sector

• Within one cluster the performance of SMEs and large firms is similar

• There seems to be no size disadvantage or advantage per se which would determine performance

• Performance depends on the market and frame conditions

121

Summary Section 5

§ SMEs contribute significantly to economic development

§ SMEs have organisational advantages but resource and technological disadvantages

§ SMEs often lack a strategic innovation process

§ They are innovative also in technological (high-tech firms), but more often in non-technological ways

§ Innovation in SMEs is related to their market environment, frame conditions and structural characteristics rather than on the sector they belong to

§ SMEs operate in markets where they can best use their advantages

122

Section 6

Knowledge/ technology transfer and the concept of open innovation§ Management of knowledge and technology transfer

§ Closed versus Open Innovation Paradigm

§ Intellectual Property (IP), Lead Users

§ Example for successful technology transfer and open innovation

123

Knowledge and technology transfer

§ The major challenge in successfully connecting different agents in the innovation system within an open innovation paradigm is effective management of knowledge and technology transfer

§ Innovative national economies are able to successfully manage technology transfer (Finland, Ireland, USA)

§ The high rate of successful spin-offs from the Palo Alto Research Centre (Xerox) demonstrate the possibility of strong value creation through commercialisation of scientific knowledge (Adobe, 3Com)

§ Different forms of transfer mechanisms: collaborative research, technology licensing, start-ups, spin-offs etc.

124

Knowledge and technology transfer mechanisms and transfer activity

Includes among its founding members a person affiliated with the university.

Spin-offs

Obtain licensing agreement to access university technologies.

Start-up companies

Used to expedite the performance of research and accomplished through material transfer agreements.

Exchange of research materials

Licensing of university patents (usually stemming from federally-funded research) to companies for commercialisation.

Technology licensing

University-industry research partnerships that can be encouraged through partial government funding.

Collaborative research

The most frequent form of research relationship, which involves companies directly funding university research.

Sponsored research

DescriptionCommercialisation / Transfer Mechanism

Source: Cunningham and Harney 2006

125

OECD: University licences per annum

16824.14049United States

219.5200Switzerland

1714.7250Netherlands

58.844Korea

201.427Italy

337.1234Australia

# Responding Universities

Average per University

Total # LicensesCountry

Source: Cunningham and Harney 2006

126

Cultural barriers

Protection / patentsPublication

SecrecyFree public good

Commercial approachAcademic freedom

Product- / service-drivenTo know how? What? Why?

Demand-side model of actionSupply-side model of action

Short-termLong-term

AppliedBasic research

Financial returnsNew means for further research

Added valueAdvancement of knowledge

New applicationNew invention

Industry ValuesUniversity Values

Source: Cunningham and Harney 2006

127

Strategic approach to technology transfer

Source: Cunningham and Harney 2006

StrategicTechnology

Transfer

Organisationstructure

Activities

Mechanisms

Evaluationmechanisms

Policies &procedures

Staff &resources

Culture & ethos for commercialisation

Research commitment, motivation, awareness

128

Management of technology transfer

- Main barrier: cultural differences between science and industry

- Other barriers: inflexible structures, lacking reward mechanisms, lacking skills

- Evaluation mechanism helpful: metrics to measure and evaluate technology transfer and commercialisation activities

- Coherent strategy needed

129

Example for strategic support for technology transfer: Twente University

? A part-time post in one of the departments at the university

? Expert advice and support by colleagues in the department

? The use of the university's facilities, such as laboratories and test equipment

? Basic accommodation and office facilities within the university

? A risk-bearing loan with no interest

? Use of the university's image and contacts within its wider network

? Possibilities of acquiring orders through the industrial liaison office

? Business management support and practical guidance by an experienced entrepreneur or mentor

? Support in the further development of a business plan via the school course in entrepreneurship

Source: Cunningham and Harney 2006

130

What is Open Innovation?

§ In the past: knowledge monopolies, concentrated knowledge

§ Today: lesser restricted flow of knowledge, distributed knowledge. New way of knowledge production: collaborative, transdisciplinary (Gibbons)

§ Contrary to the traditional innovation process, open innovation makes use of external knowledge and resources

§ Research is no longer only about knowledge creation, but also about knowledge brokering: identifying and accessing external knowledge

§ Selling and buying IP

§ Collaboration, alliances, use of internal and external ideas, building business models and strategic IP management are key elements of the open innovation paradigm

131

Contrasting Closed and Open Innovation

If we make the best use of internal and external ideas, we will win.

We should profit from others' use of our IP, and we should buy others' IP whenever it advances our own business model.

If we create the most and best ideas in the industry, we will win.

We should control our IP, so that our competitors don't profit from our ideas.

We don't have to originate the research to profit from it.

Building a better business model is better than getting to market first.

If we discover it ourselves, we will get it to market first.

The company that gets an innovation to market first will win.

External R&D can create significant value; internal R&D is needed to claim some portion of that value.

To profit from R&D, we must discover it, develop it, and ship it ourselves.

Not all the smart people work for us. We need to work with smart people inside and outside our company.

The smart people in our field work for us.

Open Innovation PrinciplesClosed Innovation Principles

Source: Chesbrough 2006

132

Innovation through Lead Users

§ Traditional concept of manufacturer-centred innovation paradigm: manufacturers identify user needs, develop products and profit by protecting and selling the new development

§ Involvement of Lead Users: Lead Users invent, develop prototypes and are first field users

§ Users innovate because they have a direct benefit from it (surgeons inventing new robotic system for neurosurgery)

§ Lead Users foresee general demand, require solution to specific problems

§ High commercial value of Lead User innovations (scientific instruments, but also consumer goods like TipEx, Gatorade)

von Hippel, Lettl, Luethje:

133

Innovation through Lead Users

Target Market

Time

First manufacturer product appears here

Users innovate here

# of usersperceiving

need

Source: Lettl 2006

134

Management of intellectual property

Ideas, Knowledge

Protectable Knowledge

Protected Knowledge • Novel

• Useful

• Tangible

• Lawfully managedSource: Chesbrough 2006

135

Closed Innovation: closed system of idea flow

Company A

Company B

Current Market

Current Market

Source: Chesbrough 2006

136

Xerox´s Innovation Process in 1996: classical, linear process

Emergent technologyopportunities

Emergent marketopportunities

Select marketsoptions

Select technologyoptions

Opportunity Scanning

Phase

I

IIIII

BusinessConceptDevelopment

CorporateStrategicShuttles

BusinessIncubation

Innovation Council

Licensing /spin-out

Source: Chesbrough 1999

137

Open Innovation Paradigm: permeability of boundaries

Company A

Company B

Current Market

Current Market

New Market

New Market

Source: Chesbrough 2006

138

"Living Labs" as one form of implementation of the open innovation paradigm

§ Living labs=living laboratories (European initiative)

§ "Innovation is moving out of the laboratory"

§ Regionally focused innovation initiatives aiming at creating and implementing innovations

§ Actors: firms, universities, research centres, local communities, individuals, associations, institutions

§ Example: Helsinki living lab: Nokia, Technical University Helsinki, City of Helsinki, inhabitants, artists etc.

§ Similar activities: firms creating new innovative areas or science parks around universities or research centres: spin-offs, research labs, education institutions

139

Examples for open innovation strategy

§ IBM (network of alliances, strategic IP management/licencing IP, open process of idea generation)

§ Nokia (interactive platform, systematic access of external knowledge)

§ Procter & Gamble (initiative "connect and develop": external sourcing of innovation, move own ideas outside)

§ Linux

140

Summary Section 6

§ Knowledge and technology transfer is essential for creating economic value out of scientific research

§ Technology transfer mechanisms help to commercialise inventions

§ Effective technology transfer becomes even more relevant through transformation of the closed innovation paradigm into the open innovation paradigm

§ Open innovation aims at the best possible use and commercial exploitation of existing knowledge, crossing firm and market boundaries

141

Section 7

General Summary

142

Summary Section 2: Definitions, theories, basic concepts

§ Innovation is imperative. Changes in the products and services offered and in the ways of producing, delivering or organising are necessary for survival

§ Innovation has to realise a strategic competitive advantage

§ Innovation is a multidimensional and multidisciplinary phenomenon

§ Innovation has become more complex in the last decades, involving different actors

§ Innovation is an interactive, socially embedded process

§ National Systems of Innovation shape the innovation environment of firms (resources, demand, technological paths) but they do not determine strategy

§ New technologies are a main driving force behind innovation

§ Strategic choices need to be made by enterprises: the management of innovation is a key task

143

Summary Section 3: Management of the innovation process

§ In order to generate successful innovations, firms need to manage the innovation process strategically

§ The innovation process passes through different phases which require specific abilities

§ Alliances can contribute to generate innovations

§ Innovation routines help to manage the innovation. They are accumulated firm specific knowledge in action

§ Dynamic capabilities adapt, integrate and re-configure internal and external skills toward a changing environment

§ Well functioning routines and strategically deployed capabilities are success factors for innovation

144

Summary Section 4: Measuring innovation

§ Innovation is a multidimensional phenomenon, therefore different indicators need to be applied for measurement

§ The selection of a specific innovation metrics depends on the type and area of measurement

§ Besides indicators for innovation input and output, also qualitative measures for the innovation process are relevant

§ Benchmarking provides an assessment of firm´s innovation capability

145

Summary Section 5: The role of SMEs in the innovation system

§ SMEs contribute significantly to economic development

§ SMEs have organisational advantages but resource and technological disadvantages

§ SMEs often lack a strategic innovation process

§ They are innovative also in technological (high-tech firms), but more often in non-technological ways

§ Innovation in SMEs is related to their market environment, frame conditions and structural characteristics rather than on the sector they belong to

§ SMEs operate in markets where they can best use their advantages

146

Summary Section 6: Technology transfer and open innovation

§ Knowledge and technology transfer is essential for creating economic value out of scientific research

§ Technology transfer mechanisms help to commercialise inventions

§ Effective technology transfer becomes even more relevant through transformation of the closed innovation paradigm into the open innovation paradigm

§ Open innovation aims at the best possible use and commercial exploitation of existing knowledge, crossing firm and market boundaries

147

GENERAL SUMMARY

1. Innovation is imperative, but innovation is also difficult

2. Innovation is a multidimensional, interactive and socially embedded process

3. Strategic management of the innovation process in firms is of key importance for success

4. Appropriate innovation metrics are necessary for evaluation and control

5. SMEs are important players in the innovation system

6. New technology is a major driver for innovation

7. Through intensification of knowledge production, knowledge and technology transfer are becoming increasingly important

8. Innovation is "moving out of the laboratory" and permeates firm and market boundaries

148

Contact

Dr. Eva Kirner

Tel: +49 (0) 721 / 68 09 – 309

e-mail: [email protected]

Fraunhofer Institute for Systems and Innovation Research (ISI) Breslauer Straße 48 76139 Karlsruhe, Germany www.isi.fraunhofer.de

Thank You for Your Attention!