TOWARDS DEVELOPING A PROCESS

AND FRAMEWORK IN MANAGING

FRONT END OF INNOVATION

EFFECTIVELY

Mat Kamil Awang

Graduate School of Management

Universiti Putra Malaysia

Supervisors:

Dr. Yee Choy Leong

Prof. Dr. Zainal Abidin Mohamed

Dr. Kenny Teoh Guan Cheng

TABLE OF CONTENTS • Introduction

• Definition of Innovation & Front End of Innovation

• Strategic, Process, & Systems View of Innovation

• Front End of Innovation Process

• Proposed Framework

• Conclusion

• Questions & Answers

Objectives of The Paper

• Conceptual Paper

• Propose a process and framework for managing front end

of innovation

• Pre-cursor to PhD research “Developing a Process and

Framework in Managing Front End of Innovation

Effectively”

• To get feedback from the audience on the proposed

framework

Why Do We Need Research in Front End

of Innovation • Front end as the greatest weakness in product innovation

(Khurana and Rosenthal 1997).

• “the greatest differences between winners and losers

were found in the quality of execution of pre-development

activities”. (Cooper and Kleinschmidt, 1994)

• At macro/country level, Malaysian Government spending

on Innovation but with mixed result

• At micro/organization level, for example, an R&D arm of

telecommunication company (Telekom Malaysia) yearly

spending of RM60-80 million but with minimal impact on

the market.

FUNDING FOR INNOVATION 9th MP

COMPARISON OF SPENDING ON

INNOVATION

Importance of FEI

• Improving return on investment in front end activities

• Ability to develop high quality stream of ideas

• Reducing uncertainty and risk associated with projects

• Fitting ideas to the company and their context.

Defining Innovation from Technological

Perspective

• “Innovation consists of all of those scientific, technical,

commercial and financial steps necessary for the

successful development and marketing of new or

improved manufactured products, the commercial use of

new or improved process or equipment or the introduction

of a new approach to a social service” - OECD

Defining Innovation from Organization

Perspective

• Innovation . . . is generally understood as the successful

introduction of a new thing or method . . . Innovation is the

embodiment, combination, or synthesis of knowledge in

original, relevant, valued new products, processes, or

services – Luecke & Katz (2003)

Defining Innovation from Creativity

Perspective

• All innovation begins with creative ideas . . . We define

innovation as the successful implementation of creative

ideas within an organization. In this view, creativity by

individuals and teams is a starting point for innovation; the

first is necessary but not sufficient condition for the

second – Amabile (1996)

Defining Innovation from business

function perspective

• Innovation, like many business functions, is a

management process that requires specific tools, rules,

and discipline – Davila et. al. (2006)

Working Definition of Innovation

• A strategic process which:

• Consists of scientific, technical, commercial, financial steps

• Involves implementation of new ideas

• Requires tools, rules and disciplines

• Has commercial values

Definition of Front End of Innovation

• “The messy „getting started‟ period of product

development, when the product concept is still very fuzzy.

Preceding the more formal product development process,

it generally consists of three tasks: strategic planning,

concept generation, and, especially, pre-technical

evaluation. These activities are often chaotic,

unpredictable, and unstructured. In comparison, the

subsequent new product development process is typically

structured, predictable, and formal, with prescribed sets of

activities, questions to be answered, and decisions to be

made”. (PDMA)

FEI versus NPD Stages (Koen)

• FRONT END INNOVATION

• Experimental, often chaotic,

„eureka‟ moment

• Commercialization date

unpredictable

• Funding is depending on

situation. In the beginning may

be “bootlegged”

• Revenue expectation is uncertain

with great deal of speculation

• Individual or team emphasis on

minimizing risk

• Strengthen concept as measure

of progress

• NEW PRODUCT DEVELOPMENT STAGES

• Discipline, goal oriented with a project plan

• Commercialization date can be determined with high degree of certainty

• Funding is budgeted

• Revenue expectation can be reasonably determine, especially closer to the release date

• Multi-function product or process development team

• Milestone achievement as measure of progress

Strategic View on Innovation

• The motives for looking at innovation from strategic point

of views are;

• The FEI in innovation is gaining strategic importance in firms and

academia.

• Mainstream business needs to be combined with new stream

innovation (Miller & Morris 1999, Lawson & Samson 2001)

• Networking (including cooperative and collaborative arrangement

between firms) and information and knowledge sharing are

emphasized (Blomqvist et. al. 2003)

• Innovation is becoming an organization-wide issue (Miles et al

2000)

• Innovation process are becoming more open to external sources of

ideas and innovation (Chesbrough 2003)

Process View of Innovation

• The motives of looking at FEI from the innovation process

point of views are:

• The balance between systematic and flexibility in R&D

and innovation processes is difficult to manage

(MacCormack et. al. 2001) – this issue is pivotal during

the front end

• Part-whole relationships in innovation process are

difficult to manage (Van de Ven 1986)

• Different types of innovation processes are required for

different types of innovations

Systems View of Innovation

• The motives of looking at FEI from the innovation system

view are:

• Methods and tools are often difficult to use (Piippo et. al. 2002)

• Methods and tools should provide support over the activities in the

innovation process (Piippo et. al. 2002)

• Electronification of the whole innovation process is on the way

(Rothwell 1994)

• The open innovation paradigm has an effect on the innovation

systems and methods

MALAYSIAN NATIONAL INNOVATION MODEL

Source: Pusat Inovasi Negara (MOSTI)

INNOVATION PROCESS

Source: Koen

Khurana & Rosenthal‟s FEI Model

KOEN‟S NCD FEI MODEL

Source: Koen

FEI

Process

Description Applicable

Model

Linear Front end steps are relatively deterministic and tightly

coupled. Each step must be successfully completed

before obtaining management approval to proceed to

the next stage of product development based on

profitability and strategic alignment. Steps may overlap

one another to improve timelines.

Stage Gate™

Khurana&

Rosenthal‟s

Significant Customer

Request (SCR)

Fast Track

Compression

Recursive Front end steps are loosely coupled with multiple

feedbacks and feed forward loops between elements

that produce an iterative and integrative type of

behavior. Outcomes from each step are harder to

predict.

NCD

Integrative

Deft Product Innovation

Evolving A process where initial steps begin with vague

requirements. Emphasis is on feedback learning for the

purpose of exploiting and refining direction.

Techniques include, but not limited to, prototyping or

simulation.

Serial Experimentation -

rapid learning

Complex Adaptive System

Agile

Flexible

Selectionis

m

Front end generates multiple independent concepts for

testing and based on ex-post learning, the best

concept is picked.

Selectionism

Parallel

Trial and

Error

A process where initial steps exhibit non-linear, non-

orderly, non-predictable, non- stochastic process.

Emphasis is on either trial-and-error. Trial-and-error is

comprised of two dimensions:exploration (purpose of

discovery) and exploitation (achievement).

Serial Experimentation -

minimal learning

Chaotic

Improvisational

GENERAL PROBLEMS AND ISSUES WITH

EXISTING FEI MODELS

• Many of the process models for the FFE share similar

problems and issues:

• No formal integration of gate in some models

• Poor visual representation of cost, effort, time, and money

• Poor integration of portfolio management and company strategy

• Very poor link to idea management and idea banks

• Poor link to knowledge management

• Poor link to creativity management.

DRAWBACKS OF KOEN‟S MODEL

• the lack of a (go/no-go) gate to minimize risk

• the unclear flow of activities

• lack of a link to time, effort, and energy

• the confusion about when to eliminate or transfer ideas

weaken this model.

Proposed Framework for FEI

Characteristics of the Proposed

Framework

• Takes into consideration the strategy, systems and

process views of innovation

• Resource-Based View, Knowledge-Base View,

Dynamic Capability View, Entrepreneurship Theory,

• Combination of Linear, Recursive & Iterative

Processes

• Prescription of Tools for each sub-processes

• The Framework is to address the short-comings of

previous models

Proposed Framework to Achieve

• Reduction of uncertainty and risk associated with projects

• Fit of ideas to the company and their context.

• Ability to develop high quality stream of ideas

• Improvement on return on investment in front end

activities

Next Steps of Research

• To conduct study in accordance to Case Study

Methodology & Action Research Method

• Detail development of the tools, and process for the

framework

• Pilot test of the tools, process and framework in

companies in Malaysia

Contribution to Practice

• An Integrated process and framework for managers to

manage front end of innovation

Contribution to Knowledge

• A New Framework for Front End of Innovation

• Generation of Mode 2 Knowledge

Conclusion

• FEI is important aspect of innovation process

• Various models were proposed but suffer some

weaknesses

• New framework for managing front end of innovation is

proposed

References

• Please refer to full paper in the CD provided

The End

• Q&A

INNOVATION PROCESS

TECHNOLOGY-PUSH (FIRST GENERATION INNOVATION 50‟s – 60‟s)

MARKET-PULL (SECOND GENERATION INNOVATION 60‟s – 70‟s)

Source: Rothwell (1994)

INNOVATION PROCESS

COUPLING MODEL (THIRD GENERATION INNOVATION 70‟s – 80‟s)

Source: Rothwell (1994)

INNOVATION PROCESS

SYSTEM INTEGRATION MODEL (FOURTH GENERATION INNOVATION 80‟s – 90‟s)

Source: Rothwell (1994)

Summary of the Innovation Process (Amidon)

1st 2nd 3rd 4th 5th

Technology

as the Asset

Project

as the Asset

Enterprise

as the Asset

Customer

as the Asset

Knowledge

as the Asset

Core Strategy R&D in Isolation Link to Business Technology/Busin

ess Integration

Integration With

Customer R&D

Collaborative

Innovation System

Change Factors Unpredictable

Serendipity

Inter-dependence Systematic R&D

Management

Accelerated

Discontinuous

Global Change

Kaleidoscopic

Dynamics

Performance R&D as Overhead Cost-Sharing Balancing

Risk/Reward

'Productivity

Paradox'

Intellectual

Capacity/Impact

Structure Hierarchical;

Functionally

Driven

Matrix Distributed

Coordination

'Multi Dimensional'

Communities of

Practice

Symbiotic

Networks

People We/They

Competition

Proactive

Cooperation

Structured

Collaboration

Focus on Values

and Capacity

Self Managing

Knowledge

Workers

Process Minimal

Communication

Project to Project

Basis

Purposeful

R&D/Portfolio

Feedback Loops

and 'information

persistence'

Cross-Boundary

Learning and

Knowledge Flow

Technology Embryonic Data-Based Information-Based IT as a Competitive

Weapon

Intelligent

Knowledge

Processors

DELIVERABLES FROM FFE

• a clear product concept

• knowledge and understanding required to develop the

product concept

• selection of the right/best idea/concepts

• a strong business case

• a development plan required to managed the NPD

activities

• assets such as intellectual property or working prototypes

DRAWBACK OF KOEN‟S MODEL

• the lack of a (go/no-go) gate to minimize risk

• the unclear flow of activities

• lack of a link to time, effort, and energy

• the confusion about when to eliminate or transfer ideas

weaken this model.

Summary of Studies on FFE (Frishmmar &

Floren)