Ing. Petr Mikuš, Ph.D. Innovation Content of the lecture 1.What? - General definition of innovation 2.Who? – Josef Alois Schumpeter 3.What kind? - Typology of innovation 4.Where? Position in the company 5.Why? The source and motives of innovation 6.How? Management of the innovation process 7.How 2nd? Tools and conditions for the creation of business innovations Innovation 2 What are innovations? Everything that is created by humans was once an innovation... it is everything that surrounds us, everything was once for the first time... a product of scientific and technical development. It was usually not just invented, but led to sustaining the market or livelihood. These are one of the main drivers of innovation. Innovation - What? 3 Innovation Innovation is a multi-step process in which organizations transform ideas into new / improved products, services or processes in order to successfully advance, compete and differentiate themselves in their market. DOI: 10.1108/00251740910984578 Innovation is the production or adoption, assimilation and use of novelty with added value in the economic and social sphere; renewal and expansion of products, services and markets; development of new production methods; and the introduction of new management systems. It is both a process and an outcome. OECD Innovation - What? 4 Innovation An innovation is a new or improved product or process (or combination thereof) that is significantly different from the unit's previous products or processes and that has been made available to potential users (product) or put into operation by the unit (process). OSLO Manual 2018 (4 th edition ) Innovation - What? 5 Innovation Or the definition according to ISO 56000:2020 - Innovation management new or changed entity, realization or redistribution of value Note 1: Novelty and value are relative and determined by the perception of the organization and relevant stakeholders. Note 2: An innovation can be a product, service, process, model, method, etc. Note 3: Innovation is an outcome. The word "innovation" sometimes refers to activities or processes leading to or aimed at innovation. When 'innovation' is used in this sense, it should always be used with some form of qualifier, eg 'Innovation activities'. Innovation - What? 6 WHO? Joseph A. Schumpeter Josef Alois Schumpeter (February 8, 1883, Třešť - January 8, 1950, Taconic, USA) was an academic economist and political scientist. He also served as Minister of Finance of Austria and President of a private bank. innovation = the driving force of business activity •new combinations of production factors •the main means that sets the capitalist machine in motion a is a source of acquisition •new products, (products) •new markets and (products) •forms of industrial organization. (process) Rooseweltova 6/462, 589 01, Třešť Technological cycles – Kondratev cycles Innovation - Who and what? 8 Kondratev period : •Industrial Revolution (1771) •The Age of Railways and Steam (1829) •The Age of Heavy Engineering and Steel (1875) •The Age of the Automobile, Electricity and Mass Production (1908) •The Information and Telecommunications Age (1971) •Healthcare (2005) - was a premise - now more AI, automation Innovation - Who and what? 9 Which companies? Innovation 10 Breakdown of innovations from a qualitative point of view •Disruptive – if you can combine the previously uncombinable… •https://www.youtube.com/watch?v=TlO2gcs1YvM •Radical - Revolutionary revolutionary (discontinuous) changes. – if you know who you are playing against…(ISBN 978-80-869-4610-8) •Gradual - Partial evolutionary (incremental) changes - if you don't know who you're playing against but you know where you're going (ISBN 978-80-7400-198-7) Innovation - What kind? 11 Disruptive innovation -Completely new discoveries, but especially their applications! -Disruptive technology is the term of American professor Clayton M. Christensen . Disruption generally means to tear, crack, or break apart. Disruptive is usually translated as revolutionary. -In general, disruptive technologies fundamentally outperform and displace existing technologies. So it is not a gradual, evolutionary change, but a radical change. From a process perspective, this is a revolutionary process change (according to Tom Davenport ). -Clayton Christensen later moved from the term "disruptive technology" to the term "disruptive innovation". By this, he wanted to indicate that it is not so much the technologies themselves that are revolutionary, as the revolutionary way of their implementation in the organization (either in production or support processes). - Innovation - What kind? 12 Order of innovation Innovation - What kind? 13 Order of innovation Description according to Valenta - 0-85860-11-2 - n degeneration, nothing is preserved, loss of properties changes, wear and tear 0 regeneration, the object itself is preserved, properties are restored, maintenance 1 change of quantum, all properties are preserved, frequency of factors is changed, labor is added 2 intensity, quality and connection are maintained, speed of operations changes, accelerated belt movement 3 reorganization, qualitative characteristics, the division of activity will change, transfers of operations 4 qualitative adaptation, quantity remains, links to other factors change, technological construction 5 variant, the design solution remains, partial quality changes, faster machine 6 generation, the design concept remains, the design solution changes, the machine with electronics 7 type, the principle of technology remains, the design concept, the jet condition changes 8 genus, belonging to the tribe remains, the principle of technology changes, the hovercraft 9 tribe, nothing is preserved, the approach to nature changes, genetic manipulation Order of innovation Innovation - What kind? 14 Closed vs. Open innovation Innovation - What kind? 15 Closed vs. Open innovation Own R&D staff Profitability is synonymous with product discovery, development and sales. Our own innovation is available on the market under our name Whoever innovates first wins, whoever innovates the most is even better ;) Absolute control of intellectual property, no one else can profit from it. Cooperation with people outside our R&D Synergistic effect of interdisciplinary cooperation (CEITEC, HUMELAB, MU and the private sector – contract research) We profit from ideas used outside our company (licensing, sale of intellectual property, etc.) Innovation - What kind? 16 Closed vs. Open innovation Innovation - What kind? 17 https://sloanreview.mit.edu/article/why-companies-should-have-open-business-models/ Closed vs. Open innovation - what if? Our developers leave and start their own business… XEROX PARC - Palo Alto Research Center, founded by XEROX in 1970 R&D center for the development of new technologies for XEROX If XEROX didn't like any of the new technologies, it gracefully let the developer leave… Innovation - What kind? 18 XEROX PARC Innovation - What kind? 19 Breakdown of innovations - substantive point of view From the point of view of the company, innovations can be categorized as follows (OSLO manual): •Innovation in the field of business processes - product •Innovation in the field of production and services - process •Organizational innovation – (process) •Marketing Innovation – (Process) •Innovation of the position (FORD – luxury estate to ordinary estate) •Paradigm innovation (low-cost airlines, ordinary product to designer) Innovation - What kind? 20 Product innovation focused on creating completely new products •based on new design concepts and principles (differentiation) •satisfying completely new needs (diversification) The goal is: •replacement of obsolete products •striving to maintain market share •gaining new markets Innovation - What kind? 21 Product policy product variants product innovation discarding the product product differentiation horizontal diversification product diversification vertical diversification lateral diversification Product innovation Innovation: •product differentiation = supplementing the product line with a new product •product diversification = introduction of a new product line •horizontal – product introduction at the same production level •vertical – a product corresponding to a subsequent or previous stage of production •lateral – products of a completely different type Innovation - What kind? 22 Innovation of new product introduction strategy New product introduction strategy: •copycat strategy (clone, problematic, reverse engineering) •innovation option (own research, creation of a patent) •purchase option (license, acquisition, patent purchase) Innovation - What and how? 23 Product innovation and link to the life cycle •product innovations – precede the introduction of the product into production and are connected •with the penetration phase •product variants – are put into production in the maturity phase •disposal of the product - closes the life cycle and is approached normally •in the stage of degeneration Innovation 24 Business life cycle Innovation 25 zivot vyrobku.gif Product life cycle Innovation 26 Product life cycle Innovation 27 Innovation 28 BCG Innovation 29 Process innovation The goal is: •Cost reduction: •material consumption •labor costs •reducing energy consumption •waste •improvement of working conditions •reducing the burden on the environment Innovation - What kind? 30 Process innovation Innovation - What kind? 31 C:\Documents and Settings\Jerry\Plocha\FFX DOWN\Experience_curve.gif https://www.bain.com/insights/tipping-points-when-to-bet-on-new-technologies/ Organizational innovation (management and administration) You will find these innovations in the first parts of management textbooks as a historical development... For example, driving schools Organizational charts and structure Bureaucracy Innovation - What kind? 32 Marketing innovation News in the field of communication, branding... -Influenced by technology -Affected by the problem -Influenced by company policy -Influenced by the market -Etc… Innovation - What kind? 33 34 Breakdown of innovations by business area – management level Innovation Where? 35 Strategic production management, process and product innovation production program - participation in decision-making on the fundamental directions of the development of the production program , joint decision-making on large-volume orders , capacities and equipment - fundamental directions of development and rationalization, reconstruction, volume and dislocation of resources (investments) , production planning and management - concepts and methods of production planning and management, concept of using information technologies in production management , quality management - the concept of production quality management (for example, the decision on accreditation according to ISO), long-term development trends and measures in the field of production quality , inventory management - method of securing, deciding on key suppliers, volume and dislocation, rationalization , workforce - increasing qualifications, motivation, wage policy, relations with trade unions, organization - organizational structure, centralization and decentralization of management, type of production organization, roles, powers, responsibilities , integration - system of internal economic management, relations with customers, suppliers, etc. Innovation Where? 36 Tactical production management, process and product innovation Innovation Where? 37 Innovation as a competitive advantage Why does the company innovate? The purpose is to: •improve manufactured products and provided services (product innovation), •make the used production (technological), management and administrative procedures cheaper and more productive (process innovation). Innovation - Why? 38 Acting in the position of the company Mechanism of innovation Strategic advantage examples product novelty the ability to offer something first fountain pen, camera dishwasher, wlkman novelty of the process a way to offer a product in a way that others cannot special production procedures, distribution procedures, cryptocurrency payment complexity the ability to offer something that others find difficult to pass up rolls royce, aircraft engines i.e. demanding products legislative protection of intellectual property license, fees medicines expansion of competitive factors price, quality, selection cars, clothes timing first mover advantage Seznam.cz, atlas.cz, Google, Facebook Innovation Where and why? 39 Forced and voluntary innovations •Above all, legislation and requirements •Current emission of cars, factories (permits) •Prohibition of leaded petrol, other plastics • •Voluntaries are driven by demand and the market Innovation - What kind? And why? 40 A source of innovation Innovation - Why? 41 • •overlooked •ignored •forgotten • • • • •connections •thoughts •imaginations •opinions C:\Documents and Settings\Jerry\Plocha\FFX DOWN\innovation.jpg Innovation - How? 42 Business economy - innovation Innovation management Introducing innovations - risks A business cannot do without innovation. They are needed from the point of view of the future growth of the company (voluntary and involuntary innovation), but at the same time —difficult to implement —costly —time consuming Innovation - How? 43 A learning curve Introducing innovations - risks Innovation - How? 44 performance/sales time Introducing innovation "disruption of the old established order" learning, adopting innovation Failed innovation Innovation - How? 45 C:\Documents and Settings\Jerry\Plocha\dat.jpg C:\Documents and Settings\Jerry\Plocha\dribbble_newton.jpg C:\Documents and Settings\Jerry\Plocha\laser.jpg C:\Documents and Settings\Jerry\Plocha\betamax.jpg C:\Documents and Settings\Jerry\Plocha\FFX DOWN\chrome-evolution.png C:\Documents and Settings\Jerry\Plocha\FFX DOWN\firefox-evolution1.png Failed innovation Process innovations concerned, for example, Vltava stores , Mall , cz and thus gave rise to ALZA.cz Blockbuster …a video rental store Innovation - How? 46 Innovation management - in general Reactive – You react late to the competition/industry trend Risks and benefits? Proactive - you react ahead of time - your business is a leader Risks and benefits? Innovation - How? 47 Tools for introducing innovations in the enterprise Communication - between employees, with employees, across the entire company, the HR department must be involved Business portals – tools for data exchange (failure of Česká pošta email) Meetings – Innovation circles, informal meetings, sharing problems Boxes - if too demanding, create a space for anonymous and non-anonymous suggestions Innovation - How? 48 The stage of innovation from the point of view of the management process 1.Research - internal and external environment, signals, threats, opportunities... 2.Choice - deciding which signal the company will respond to 3.Implementation - transferring the potential from a new idea to an internal or external market 4.the gain of knowledge resources for the development of innovation - research, development, technology transfer, clusters... 5.project implementation - in conditions of deterministic (certainty, alternative), stochastic (risk, probability), game models 6.bringing the innovation to market 7.maintaining innovation in the market 8.feedback, learning 9.variation Innovation - How? 49 Innovation - market test, MVP Kickstarter , starter , indiegogo …D Day,…. JICs and incubators Lean Startup - Lean Canvas , pivoting Small business vs. Startup Innovation potential of SMEs? Innovation - How? 50 7 steps to successful innovation (1-3) 1. Formulating a strong vision - the vision will help prove that the innovation makes sense, and it will at the same time motivate others to support the innovator. The vision should be described simply and understandably. It includes a justification of the benefit of the innovation and a proposal for a milestone for the implementation of the innovation. 2. Stakeholder identification – determining the people who will be affected by the innovation. It is not only employees, but also suppliers, customers, etc. 3. Getting support for the project – Innovation is rarely the product of an exceptional intellect individual, therefore the support of other people is needed. There is a need for technical, political, financial and other forms of support so that the innovation can take place. Innovation - How? 51 7 steps to successful innovation (4-5) 4. Preparation of the business case - when creating the basis, it is important to clearly define the goals of the project, its benefits for customers and the organization, important time points of implementation, possible obstacles, costs and other resources associated with implementation. 5. Talk to stakeholders - create awareness of the innovation, arouse stakeholder interest and desire by demonstrating its benefits and ask participants for help in implementing the innovation (or the AIDA principle - Awareness , Interest , Desire , Action ). Innovation - How? 52 7 steps to successful innovation (6-7) 6. Expect resistance – inevitably, some stakeholders will oppose the idea. It is very likely that during the presentation of the idea, there will be opposing arguments about technical infeasibility, excessive costs, high risk, lack of acceptance by the market, etc. In these cases, it is important to find the cause of the resistance and determine the importance of the argument. Subsequently, a suitable method must be chosen to reduce the resistance as much as possible. Persuasion using demonstrable facts, involvement of a person in project activities, but also negotiation of cooperation conditions or, in the worst case, a directive instruction, can be used. 7. Maintain enthusiasm for the cause - no innovation happens overnight and you need to devote time to it. It is important to maintain optimism and faith in the success of the innovation. This confirms Joseph Schumpeter's statement : "Successful innovation is not the intellect, but the will." Innovation - How? 53 Tools and Terms Innovation 54 Legal protection of innovations Innovations can be protected - patent protection https://upv.gov.cz/prumyslova-prava Do not confuse copyright and economic rights Newly, your applications are not tracked...you have to track them yourself L Innovation - Tools 55 PDCA – Demming cycle Plan Review current performance and assess potential problems or process limitations. Collect data on the main problems and focus on the root causes of the problems. Suggest possible solutions and plan the implementation of the most suitable solution. Implementation Implementation of the intended solution. Control, measurement Evaluate the test results and assess whether the planned results have been achieved. If there are any problems, focus on the obstacles that prevent improvement. Action Based on the tested solution and evaluation of the achieved value, develop the final solution so that it becomes a permanent and integrated new approach that can be used anywhere. Innovation - Tools 56 Ansoff matrix - product Existing product New product Existing market Market penetration Product development New market Market development Diversification Innovation - Tools 57 Market penetration - the company will try to penetrate more with an existing product in an existing market (market segment). The goal is to increase your market share. It is the least risky strategy because the company can use existing resources, processes and capacities. Market development - involves finding additional market segments or regions. The company uses existing products and if it manages to produce them well, it can be a suitable strategy. It is riskier than the previous strategy. Product development - the company innovates the product and tries to apply it to existing markets. This strategy is appropriate if the firm is strong in innovation. New product development is riskier than previous strategies. Diversification - this is the riskiest option of all four. A business must innovate an existing product or develop a new one and succeed with it in a new market. Blue ocean and Red ocean - strategy Blue Ocean Strategy , translated as blue ocean strategy. It is a method of creating a company's business strategy, which was described in the book of the same name by W. Chan Kim and Renée Mauborgne . The book was first published in 2005. Blue Ocean Strategy is based on the idea that any business can achieve higher profits by creating new demand in a non-competitive market (the so-called blue ocean) much more easily than by competing with competitors in existing markets. https://www.blueoceanstrategy.com/ Innovation - Tools 58 Blue ocean and red ocean - strategy Blue Ocean Strategy •A concept created by the pair of professors W. ChanKim and Renné Mauborg in 2005 •The blue ocean represents a new market space. •Some blue oceans can be created outside the boundaries of existing industries, most are found within red oceans. Ed OceanStrategy • In red oceans, the boundaries of individual sectors are firmly defined, so they are accepted and the competitive rules of the game are also known to all participants. •Companies strive to gain a larger market share than their competitors. •However, the market space is quickly filled and thus the prospects for profit and growth are reduced. Individual products become interchangeable and the ocean is colored red by competition. Innovation - Tools 59 Finding the problem 5 Why ? (WIKI) – process innovation Asking yourself "5 times why?" it resembles a child's dialogue with a parent. a round of questions question: Dad, why isn't the car running? answer: Because it doesn't have gas. a round of questions question: And why doesn't he have gas? answer: Because I forgot to buy it. a round of questions question: And why did you forget to buy it? answer : Because I didn't know we were running low. a round of questions question: And why didn't you know we were running out? answer: Because it's dark and I can't see the fuel gauge. a round of questions question: And why can't you see the fuel gauge? Answer: Because I didn't replace the broken light bulb in the instrument panel. Innovation - Tools 60 TOC – process innovation Assuming that the system objective has been formulated and its measurements defined, the steps are: 1.Determine system limitations. 2.Decide how to make more and better use of system limitations. 3.Subordinate everything else to the above decision. 4.Ease system restrictions. Warning! If the constraint was violated in the previous steps, go back to step 1, but do not let inertia cause the system to be constrained. 978-0-88427-178-9. ISBN Innovation - Tools 61 TQM process and product TQM ( Total Quality Management), usually not translated and the abbreviation TQM is used, is a very complex management method that emphasizes quality management in all dimensions of the organization's life. It thus goes beyond the framework of quality management and becomes a method of strategic management and a managerial philosophy for all the activities of the organization. There are a number of different forms and interpretations of TQM. •Kaizen – the idea that it is necessary to continuously improve processes, clearly describe them, measure them and ensure their repeatability •Atarimae Hinshitsu – the idea that things will work as they are supposed to (the knife will cut) •That 's it ok ... •Kansei – the idea that researching how a customer uses a product leads to product improvement •Miryokuteki Hinshitsu – the idea that things must have an aesthetic quality (the appearance of a tool must bring pleasure and ergonomics to its user) Innovation - Tools 62 KAIZEN – process and product Kaizen is a method of gradual improvement based on the cultural traditions of Japan (the word kaizen itself comes from Japanese). Improvement focuses on the gradual optimization of processes and work procedures, increasing quality and reducing scrap, saving material and time leading to cost reduction or work safety and reducing the incidence of accidents at the workplace. The essence of the method is the involvement of many workers from a given organizational unit, from rank-and-file to managers. Anyone can participate, everyone can come up with ideas for improvement that are collectively discussed. Innovation - Tools 63 5S Process innovation •The principles described by Benjamin Franklin since 1732 in the story Poor Richard or The Road to Prosperity - the core and foundations therefore originated in the USA • •Developed and mainly introduced on a larger scale in Japan after 1945 as Toyota production systems (since 1948) • •Transferred to the whole world as part of globalization • •Named in 1988 as LEAN Production • •Prevention of MUDA (waste) Cost + Profit = Price changes to: Price - Costs = Profit Waste MUD —Waste… WALL —Imbalance, unevenness… WALLS —Inadequacy… Job deployment history Shadow binder Innovation - Tools 70 5S Seiri - Divide - Go through and inspect the workplace and sort out unnecessary items. Seiton – Setřiď - Designation of items used in production with a reasonable number or name. Seiso - Arrange - Logical arrangement of items used in production as they follow in the sequential production process. Seiketsu - Document - Document and standardize all procedures. Shitsuke - Follow - Systematize and follow established procedures and plans. Brainstorming/ brainwriting – general innovation •Pleasant atmosphere - it is important to create a creative climate and a pleasant environment, to properly plan the entire meeting •We focus on quantity - the more topics there are, the more likely they will contain a quality solution proposal •No criticism - there are no restrictions, we postpone criticism until later so as not to hinder the flow of ideas and topics •Any ideas are welcome - unleash your imagination, think outside the box of conventions, generate ideas regardless of their reality, logic, reasonableness •We combine and improve already created ideas - "1+1=3", ideas are created through mutual cooperation of the entire team •Inspire each other - mutual encouragement and stimulation of new thoughts and ideas is an important part of brainstorming •All participants are equal - the boss's idea is not better than the junior's idea, the goal is any ideas that can inspire or enrich others Innovation - Tools 72 6 Hats Strategy - General innovation, rather a process •Information/Impartiality: (White) – is only what information is known, what are the facts considered? •Emotions and feelings: (Red) – instinctive emotional reaction or expression of emotions (but without reasoning). •Negative Reasoning: (Black) – logic applied to identify errors or barriers, looking for discrepancies. •Positive/Optimism: (Yellow) – logic applied to determining benefits, seeking approval. •Creativity: (Green) – expressing provocation and inquiry, seeing where ideas lead. •Thinking: (Blue) – thinking about thinking. Innovation - Tools 73 Mind maps Mental maps (Mind Maps ) are a highly effective analytical technique that can be used especially in problem solving, learning and personal development. It is a graphical treatment of a solved problem or learning material using graphs including all essential aspects and dimensions of the problem and their mutual connections and connections. Maps are created either using colored pencils on paper or using a computer and special software. Innovation - Tools 74 5 steps innovation process Idea generation Advocacy and screening Experimentation Commerzialization Diffusion and implementation Idea generation SCAMPER „S“ substitutes „C“ combine „A“ adapt „M“ modify „P“ put to other uses „E“ eliminate „R“ reverse, rearrange Substitute Výsledek obrázku pro substitute pen ink Combine Adapt Modify Výsledek obrázku pro watches digital Put to other uses Eliminate Reverse, rearrange Side dishes Innovation 84 https://sourceforge.net/projects/freemind/files/freemind/1.0.1/FreeMind-Windows-Installer-1.0.1-max -java-installer-embedded.exe/download http://leantools.info/5sgame/ Thank you for your attention