Paul Trott INNOVATION MANAGEMENT AND NEW PRODUCT DEVELOPMENT Sixth Edition Innovation Management and New Product Development Innovation Management and New Product Development Sixth Edition Paul Trott Portsmouth Business School Harlow, England • London • New York • Boston • San Francisco • Toronto • Sydney • Dubai • Singapore • Hong Kong Tokyo • Seoul • Taipei • New Delhi • Cape Town • Sao Paulo • Mexico City • Madrid • Amsterdam • Munich • Paris • Milan Pearson Education Limited Edinburgh Gate Harlow CM20 2JE United Kingdom Tel: +44 (0)1279 623623 Web: www.pearson.com/uk First published 1998 (print) Second edition published 2002 (print) Third edition published 2005 (print) Fourth edition published 2008 (print) Fifth edition published 2012 (print) Sixth edition published 2017 (print and electronic) © Pearson Professional Limited 1998 © Pearson Education 2002, 2005, 2008, 2012, 2017 The right of Paul Trott to be identified as author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. 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ISBN: 978-1-292-13342-3 (print) 978-1-292-16540-0 (PDF) 978-1-292-17069-5 (ePub) British Library Cataloguing-in-Publication Data A catalogue record for the print edition is available from the British Library Library of Congress Cataloging-in-Publication Data A catalog record for the print edition is available from the Library of Congress 10 9 8 7 6 5 4 3 2 1 20 19 18 17 16 Cover image: Max Margarit/Shutterstock Print edition typeset in 10/12pt Sabon LT Pro by iEnergizer Aptara® Ltd Print edition printed and bound in Slovakia by Neografia NOTE THAT ANY PAGE CROSS REFERENCES REFER TO THE PRINT EDITION Contents Preface xix Acknowledgements xxiii Plan of the book xxix Part One Innovation management 1 1 Innovation management: an introduction 2 The importance of innovation 4 The study of innovation 7 Two traditions of innovation studies: Europe and the USA 9 Recent and contemporary studies 10 The need to view innovation in an organisational context 11 Individuals in the innovation process 12 Problems of definition and vocabulary 12 Entrepreneurship 13 Design 13 Innovation and invention 15 Successful and unsuccessful innovations 16 Different types of innovation 17 Technology and science 18 Popular views of innovation 20 Models of innovation 21 Serendipity 21 Linear models 22 Simultaneous coupling model 23 Architectural innovation 24 Interactive model 24 Innovation life cycle and dominant designs 25 Open innovation and the need to share and exchange knowledge (network models) 26 Doing, using and interacting (DUI) mode of innovation 27 Discontinuous innovation – step changes 28 Innovation as a management process 30 A framework for the management of innovation 30 New skills 33 Innovation and new product development 34 Case study: Has the Apple innovation machine stalled? 35 vv Contents Chapter summary 41 Discussion questions 42 Key words and phrases 42 References 42 Further reading 46 2 National systems of innovation and entrepreneurship 48 Innovation in its wider context 50 The role of the state and national ‘systems’ of innovation 52 Why firms depend on the state for so much 52 How national states can facilitate innovation 53 National scientific capacity and R&D offshoring 56 The impact of the economic crisis on innovation 56 Fostering innovation in the United States and Japan 56 Triple Helix of university–industry–government relationships that drives innovation 57 The right business environment is key to innovation 59 Waves of innovation and growth: historical overview 59 Fostering innovation in ‘late-industrialising’ countries 62 Innovation within the 28 European Union states 63 Improving the innovation performance of the EU 65 Entrepreneurship 68 Entrepreneurship and innovation 69 Defining entrepreneurship 71 Technological entrepreneurship: a question of context 73 Science and technology policy 74 Small and medium-sized enterprise 74 Innovation policy 75 Entrepreneurship policy 76 Case study: Pizza delivery with unmanned drones 76 Chapter summary 81 Discussion questions 81 Key words and phrases 82 Websites worth visiting 82 References 82 Further reading 85 3 Market adoption and technology diffusion 86 Time lag between innovation and useable product 88 Innovation and the market 88 Innovation and market vision 89 Analysing internet search data to help adoption and forecasting sales 89 Innovative new products and consumption patterns 89 vvii Contents Marketing insights to facilitate innovation 91 Lead users 93 Users as innovators in the virtual world 95 Crowdsourcing for new product ideas 95 Frugal innovation and ideas from everywhere 97 Innovation diffusion theories 98 Beacon products 100 Seasonality in innovation diffusion 102 The Bass Diffusion Model 102 Adopting new products and embracing change 102 Market adoption theories 104 Case study: How three students built a business that could affect world trade 104 Chapter summary 110 Discussion questions 111 Key words and phrases 111 References 111 Further reading 113 4 Managing innovation within firms 116 Organisations and innovation 118 The dilemma of innovation management 118 Innovation dilemma in low technology sectors 119 Dynamic capabilities 120 Managing uncertainty 120 Pearson’s uncertainty map 121 Applying the uncertainty map in practice 123 Managing innovation projects 124 Organisational characteristics that facilitate the innovation process 126 Growth orientation 129 Organisational heritage and innovation experience 130 Vigilance and external links 130 Commitment to technology and R&D intensity 130 Acceptance of risks 131 Cross-functional cooperation and coordination within organisational structure 131 Receptivity 131 Space for creativity 131 Strategy towards innovation 132 Diverse range of skills 132 Industrial firms are different: a classification 133 Organisational structures and innovation 135 Formalisation 136 Complexity 136 Centralisation 137 Organisational size 137 The role of the individual in the innovation process 137 IT systems and their impact on innovation 138 vviiii Contents Management tools for innovation 141 Innovation management tools and techniques 141 Applying the tools and guidelines 144 Innovation audit 144 Case study: Gore-Tex® and W.L. Gore & Associates: an innovative company and a contemporary culture 145 Chapter summary 149 Discussion questions 150 Key words and phrases 150 References 150 Further reading 153 5 Operations and process innovation 154 Operations management 156 The nature of design and innovation in the context of operations 157 Design requirements 158 Design and volumes 160 Craft-based products 162 Design simplification 163 Reverse engineering 163 Process design 164 Process design and innovation 166 The relationship between product and process innovation 168 Managing the manufacturing: R&D interface in process industries 168 Stretch: how innovation continues once investment is made 168 Innovation in the management of the operations process 169 Triggers for innovation 170 Design of the organisation and its suppliers: supply chain management 175 Business process re-engineering (BPR) 178 Lean innovation 179 Case study: Innovation on the production line 180 Chapter summary 184 Discussion questions 184 Key words and phrases 185 References 185 Further reading 186 6 Managing intellectual property 188 Intellectual property 190 Trade secrets 193 An introduction to patents 193 Novelty 195 Inventive step 195 Industrial applications 195 viii Contents Exclusions from patents 196 The patenting of life 196 The configuration of a patent 198 Patent harmonisation: first to file and first to invent 198 Some famous patent cases 199 Patents in practice 200 Expiry of a patent and patent extensions 201 Patent extensions 202 The use of patents in innovation management 203 Patent trolls 203 Do patents hinder or encourage innovation? 204 Alternatives to patenting 205 Trademarks 207 Satisfy the requirements of section 1(1) 208 Be distinctive 209 Not be deceptive 209 Not cause confusion 210 Brand names 210 Using brands to protect intellectual property 210 Exploiting new opportunities 211 Brands, trademarks and the internet 212 Duration of registration, infringement and passing off 212 Registered designs 213 Copyright 214 Remedy against infringement 216 Damages 216 Injunction 216 Accounts 216 Counterfeit goods and IP 216 Case study: Pricing, patents and profits in the pharmaceutical industry 218 Chapter summary 221 Discussion questions 222 Key words and phrases 222 References 222 Further reading 224 Part Two Turning technology into business 225 7 Managing organisational knowledge 226 The Battle of Trafalgar 228 Technology trajectories 229 The acquisition of firm-specific knowledge 230 The resource-based perspective 230 Dynamic competence-based theory of the firm 231 Developing firm-specific competencies 233 ix