May 24, 2017

Innovation - Strategic Issues and Methodology

Strategy is about the future, and developing strategy is the process of thinking about the future, predicting it, making decisions about it, and taking action to create profitable future. Since
innovations are critical to the future, it’s clear that the management of innovation is entirely strategic in nature.

The classical model of strategy development begins with an assessment of the future, a set of predications about what’s going to happen, followed by the development of initiatives that align with that future to assure survivaland growth of the organization. Future is entirely risky and it makes much more sense to prepare for a multitude of possible futures by developing a strategic portfolio of initiatives and innovations.

The astute innovation strategy thus defines a range of initiatives that could become important under many different future states; in other words, a portfolio. The elements of such a portfolio - products, services, processes and  organizational approaches,  etc. -  will be applicable in a variety of different
future conditions,  and as events unfold some will prove to be invaluable while others will be irrelevant, remaining forever on the shelf. With many projects under way at the same time, the typical, large R&D group is naturally managing a portfolio by default, so the for these organizations the question is not the existence of the portfolio, but its composition. The idea that the portfolio must be closely linked to the organization’s strategy, however, is a surprisingly recent one, and has been labeled as the third generation practice in the long history of professional R&D.

The first generation, starting at the very beginnings of systematic R&D in the early decades of industrialism through the mid-1800s, was largely a randomized process of exploring basic science in the hunt for commercial opportunities. Thomas Edison had a more focused approach and it was the prototype for the highly systematized process that was then perfected during World Wars I and II, mission-driven R&D.

Third generation methodology focuses on R&D portfolio management as a key element of organizational strategy, and it is recognized as a standard practice in the world of R&D management. It’s described in the  “Third Generation R&D,” published in 1991, and includes a number of very sophisticated portfolio analysis techniques.

A fourth generation practice of R&D management has also been defined, which expands the scope of the third generation approach with a much greater focus on specific processes for creating breakthrough innovations.

Stages of Innovation Methodology

Every idea is born in its own distinctive moment of inspiration. Many are immediately discarded, while some go through further development pathways.

Effective innovation methodology shapes the pathways by which individual ideas will be developed, and just as important, it’s a broader process which improves the odds that good and great ideas actually do arrive with regularity and that they are developed to their full potential.

Methodology must have means of systematically filtering multitudes of new ideas, applying processes for turning the best ones into candidates for innovations, and using tools to help bring them to market.

So innovation management has five stages at least in converting ideas into successful businesses.

1. Creating or finding great ideas;
2. Targeting, or choosing those worth developing further;
3. Innovation development, transforming great ideas into potential innovations;
4. Applying potential innovations to develop markets and create businesses.
5. Support business till it becomes a success. The innovation team has to debug issues that surface during the actual business transactions.

From Permanent Innovation - Langdon Morris

Permanent Innovation
The Definitive Guide to the Principles, Strategies, and Methods of
Successful Innovators
Langdon Morris

Langdon Morris is a co-founder and principal of InnovationLabs LLC and Senior Practice Scholar at the Ackoff Center of the University of Pennsylvania and Senior Fellow of the Economic Opportunities Program of the Aspen Institute.

Third Generation R&D Management

Third Generation R&D: Managing the Link to Corporate Strategy

Philip A. Roussel, Kamal N. Saad, Tamara J. Erickson
Harvard Business Press, 1991 - 192 pages

Written by three senior consultants from Arthur D. Little,  This book relates how R&D management has evolved from the naive "strategy of hope" approach of the 1950s and 1960s, when companies spent lavishly in the vague expectation that something good would result, to the more systematic approach of the past two decades. The third generation of R&D is a pragmatic method for linking R&D to long-term business planning. It shows managers how to: integrate technology and research capabilities with overall management and strategy; break down organizational barriers that isolate R&D from the rest of the company; foster a spirit of partnership and trust between R&D and other units; and create managed portfolios of R&D projects that match corporate goals.

A Summary from Arthur D Little

MBA Core Management Knowledge - One Year Revision Schedule

Updated 26 May 2017, 27 November 2014

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