Tools for Innovation Management

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Tools for Innovation Management

• Prasada Reddy
• Lund University, Sweden

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Tools for Scanning Internal Environment

• Audits
• What is an audit?
• - inventory of resources, assets, systems and
  procedures of an organization
• What is the purpose?
• - identify what a firm has
• - identify how firm utilizes them
• - improve/learn - basis for betterment
• - provide background for identification of core
  competences.

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Audits

• How to use an audit?
• - Audit collects data and is based on
  questionnaires designed mostly ad hoc.
• - Audits need to be related to the objectives of
  the firm.
• - Audits can be performed for the entire
  organization or just for parts of it
  (departments).

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Types of Audits

• Skills/Organizational Capabilities Audit
• Technology/Innovation audit

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Organizational Capabilities 1

• Source Ulrich, D. Smallwood, N. (2004)
• What people respect is not how they are
  structured or their specific approaches to
  management, but their capabilities - an ability
  to innovate or to respond to changing customer
  needs.
• Such organizational capabilities are key
  intangible assets (one cannot see or touch them).
  But they make all the difference in the world
  when it comes to market value.

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Organizational Capabilities 2

• Organizational capabilities - the collective
  skills, abilities, and expertise of an
  organization - are the outcome of investments in
  staffing, training, compensation, communication
  and other human resource areas.
• They form the identity and personality of the
  organization by defining what it is good at doing
  and what it is.
• They are stable over time and difficult for
  competitors to imitate.
• They are not easy to measure.

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Organizational Capabilities 3

• 1. Represents a persons functional competence,
  such as technical expertise in marketing, finance
  or manufacturing.
• 2. Refers to a persons leadership ability - to
  set direction, to communicate a vision or to
  motivate people.
• 3. Comprises a firms core technical
  competencies, e.g. Financial firms risk
  management knowledge.
• 4. Represents an organizations underlying DNA,
  culture and personality and may include such
  capabilities as innovation and speed.

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Organizational Capabilities 4

• A firm typically excel in as many as three of the
  following 11 capabilities, while maintaining
  industry parity in others.
• Talent (attracting, motivating and retaining)
  Speed (in making changes) Shared Mind-Set and
  Coherent Brand Identity (employees and customers
  have positive images) Accountability (high
  performance) Collaboration (working across
  boundaries) Learning (generating ideas)
  Leadership Customer Connectivity Strategic
  Unity Innovation (new in content and process)
  Efficiency (managing costs)

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Organizational Capabilities - Audit Process 1

• 1. Determine which part of the business to audit
  - division, region or the entire company.
• 2. Create the content of the audit - adapt the 11
  generic capabilities listed to the organizations
  requirement.

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Organizational Capabilities - Audit Process 2

• 3. Gather data from multiple groups on current
  and desired capabilities.
• - For a 90-degree assessment, collect data only
  from the leadership team of the unit under audit.
  Quick, but deceptive as leaders self-reports may
  be biased.
• - For a 360-degree assessment, collect data from
  multiple groups within the firm. Different groups
  may tell different stories, but can provide
  insights that might otherwise be missed.
• For 720-degree assessment, collect data from
  internal and external groups such as investors,
  customers and suppliers.

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Organizational Capabilities - Audit Process 3

• 4. Synthesize the data to identify the most
  critical capabilities requiring managerial
  attention - Look for patterns in the data and
  focus on not more than three capabilities
  required to deliver on strategy goals. Identify
  those with most impact and the easiest to
  improve.
• 5. Put together an action plan with clear steps
  to take and measures to monitor, and assign a
  team to the job of delivering on the critical
  capabilities.
• - Actions - coordinating education or training
  events, setting performance standards, creating
  task forces, investing in technology, etc.

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Organizational Capabilities - Audit Process 4

• 4. Synthesize the data to identify the most
  critical capabilities requiring managerial
  attention - Look for patterns in the data and
  focus on not more than three capabilities
  required to deliver on strategy goals. Identify
  those with most impact and the easiest to
  improve.
• 5. Put together an action plan with clear steps
  to take and measures to monitor, and assign a
  team to the job of delivering on the critical
  capabilities.
• - Actions - coordinating education or training
  events, setting performance standards, creating
  task forces, investing in technology, etc.

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Organizational Capabilities - Audit Process 5

• Lessons Learned
• Get focused Recognize the interdependence of
  capabilities Learn from the best Create a
  virtuous cycle of assessment and investment
  Compare capability perceptions Match capability
  with delivery Avoid underinvestment in
  organization intangibles Dont confuse
  capabilities with activities.

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Technical Innovation Audit 1Source Chiesa et
al. (1996)

• Core Processes
• Concept generation - identification of new
  product concepts
• Product development - taking the innovation from
  concept, through development and transfer to
  manufacturing and use
• Process innovation - the development of
  innovations in manufacturing processes
• Technology acquisition - the development and
  management of technology per se.

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Technical Innovation Audit 2Source Chiesa et
al. (1996)

• Enabling Processes
• Resources - the deployment of human and financial
  resources
• Systems and tools - the effective use of
  appropriate systems and tools
• Leadership - providing the top management
  leadership and direction.

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Technical Innovation Audit 3Source Chiesa et
al. (1996)

• Detailed Audit
• Assessing the current innovation practice and
  performance
• Identifying the gaps between current and targeted
  practice and performance and the reasons for
  gaps
• Defining the action plans needed to close these
  gaps.

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Technical Innovation Audit 4Source Chiesa et
al. (1996)

• Audit - Two Dimensions
• 1. Process audit
• - the degree to which there are appropriate
  business processes in place
• - the deployment of good practice - the breadth
  of use in the company
• The degree to which each practice meets known
  best in class or world class standards.

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Technical Innovation Audit 5Source Chiesa et
al. (1996)

• Audit - Two Dimensions
• 2. Performance audit -
• Focus on the outcomes i) of each individual core
  and enabling process ii) of the overall process
  of technological innovation and iii) the impact
  of this on competitiveness.
• Produced quantitative results that facilitate
  comparison between and within organizations and
  monitors trends.
• Weaknesses - insufficient as basis for learning.
  It does not specify extent of gaps or how to
  cover gaps.

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Technical Innovation Audit 5Source Chiesa et
al. (1996)

• Innovation Scorecards Process Audits
• Provide a rapid overall assessment of the
  practices adopted with respect to the known best
  practice and whether or not the required
  managerial processes are in place.
• The basis of the score card is a description, for
  each process of innovation, of the
  characteristics of good practice and poor
  practice.
• This description can be translated into scales
  against which companies can review themselves.

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Technical Innovation Audit 6Source Chiesa et
al. (1996)

• Performance Audit
• 1. The performance of each core and enabling
  process that is relevant for firm
• 2. The global result of the innovation process,
  that is how it impacts on the competitive ability
  of the firm.
• - the performance of innovation in financial
  terms
• - the impact of the innovation on the competitive
  performance of the product portfolio to which the
  innovation belongs
• - the contribution to firms process of learning.

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Technical Innovation Audit 6Source Chiesa et
al. (1996)

• Testing the Audit Tool
• Functionality - i) test the basic functionality
  of the tool and the functionality of the support
  process and ii) to test the degree to which the
  tool was generic and thus appropriate for firms
  from different sectors, sizes and technologies.
• Usability - i) the degree to which users are able
  to use the tool properly without support from
  experts and ii) clarity of language and
  terminology.
• Usefulness - Short term, whether companies found
  it useful? Did it lead to effective action plans?
  Long term - measuring the effectiveness of the
  programs that resulted from the assessment.

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Group Exercise

• Conduct 1 Audit in a Firm
• Make Analysis of the results - Graph
• Prepare presentation
• Include advantages and inconveniences of a) the
  technique and b) the exercise.