LESSON 3: BARRIERS OF INNOVATION

KEY OBSTACLES TO INNOVATION

Obstacles that will need to be addressed if you expect to establish a sustainable culture of
innovation:

1. Lack of a shared vision, purpose and/or strategy

2. Short-term thinking/focus
3. Lack of time, resources or staff
4. Lack of ―spec time‖ to develop new ideas and opportunities
5. Innovation not articulated as a company-wide commitment
6. Lack of ownership by senior leaders
7. Leadership expects payoff sooner than is realistic
8. Lack of a systematic innovation process
9. Management incentives are not structured to reward innovation
10. No reward and recognition programs
11. Constantly shifting priorities
12. Belief that innovation is inherently risky
13. Internal process focus rather than external customer focus
14. Inadequate understanding of customers
15. Focus on successes of the past rather than the challenges of the future
16. Unwillingness to change in the absence of a burning platform
17. Unwillingness to acknowledge and learn from past ―failures‖
18. Politics – efforts to sustain the status quo to support entrenched interests
19. Rewarding crisis management rather than crisis prevention
20. Hierarchy – over-management and review of new ideas

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 21. Micromanagement
22. Under-funding of new ideas in the name of sustaining current efforts
23. Fear that criticizing current practices and commitments is a high-risk activity
24. Risk aversion
25. Addiction to left-brained, analytical thinking
26. Absence of user-friendly idea management processes
27. Innovation not part of the performance review process
28. Lack of skillful brainstorm facilitation
29. No creative thinking training

SOURCES OF INNOVATION (SCIENCE AND R&D, TECHNOLOGY TRANSFER,

PUSH AND PULL APPROACHES)

A. SCIENCE & R&D

Our Nation‘s economic growth depends on our capacity to educate, innovate, and build.
Long-term national investments in basic and applied research and development (R&D)
play an important role in the flow of market-based innovations through a complex system
that leverages the combined talents of scientists and engineers, entrepreneurs, business
managers and industrialists. These funds have led to everything from small
entrepreneurial initiatives to growth in high technology industries with the concomitant
employment of millions of workers. The large impact on employment results from innovation
impacts not only in high tech enterprises, but also other industries that benefit from increased
capabilities and productivity. Mutually reinforcing and complementary investments in
R&D by both private and public sectors work in concert to support the development,
production, and commercialization of new products and processes.

Investment in R&D is not the only factor that affects the rate of and capacity for innovation.
Public policies, including monetary policy, tax policy, standards, procurement, regulatory
policy, the availability of a skilled technical workforce, and market access are also important
in establishing an environment that fosters innovation. Given this critical time in our Nation‘s
economic trajectory, careful consideration of our portfolio of innovation policies—including
R&D investment practices and public policy—is needed to foster national prosperity and to
increase national access to the global economy.

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How R&D and science fosters innovation?

Innovation has long been recognized as an important driver of economic growth. Empirical
research and surveys of business activities show that innovation leads to new and improved
products and services, higher productivity, and lower prices. As a result, economies that
have consistently high levels of innovation also tend to have high levels of growth.

National investment in basic and applied research and development importantly contributes
to the flow of market-based innovations in ways that can be characterized as an “innovation
ecosystem.‖ Innovation is defined as the introduction of new or significantly improved products
(goods or services), processes, organizational methods, and marketing methods in internal
business practices or in the open marketplace. R&D and other intangible investments such as
investments in software, higher education, and worker training are key inputs driving
innovation. The term “ecosystem” emphasizes complexity of the innovation process – one that
is highly dynamic, has many interdependencies, and is always evolving. Transformative
innovation is more likely when basic research leads to quantum steps in expanding
knowledge or through synergies when progress in multiple areas of science or technology
complement each other to provide new composite capabilities.
These investments in basic research create the building blocks for innovation by
creating a transformative knowledge base upon which the private sector can draw.

The relationship between R&D and innovation is highly complex. Investment in R&D is
not synonymous with innovation. Many firms introduce new products without R&D.
However, it is possible to demonstrate the relationship between the amount of investment in
R&D and product and process innovation for a broad cross-section of industries.

Businesses, operating in a competitive global market system, have numerous advantages in

the creation and implementation of useful new ideas. With the rise of a technology-based
approach to the production of new goods and services, the organization of high-tech
business has changed globally.

Although pathways of innovation cannot be predicted, government policies have evolved that
support diffusion of knowledge and deployment of new technologies as well as research and
discovery. These strategies include direct and indirect investments in basic and applied
R&D and human capital development, and enacting policies that foster innovation by

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facilitating government/academic/non-profit and industry collaborations, promoting
technology transfer, and creating favorable tax, regulatory, and visa policies.

B. TECHNOLOGY TRANSFER

There are two significant components of innovation process: knowledge and successful
diffusion of that knowledge resulting in new products or services being offered to customers
or in other more common words – invention and successful implementation. Inventions are
very often made in universities and research institutes. To turn those inventions into
successful innovations they must be transferred to organizations with adequate marketing
experience, global presence and real implementation power. This is the responsibility of
technology transfer process.

In general the concept technology transfer covers not only the technology transfer from
academia to industry. It is a broad field that ranges from internal corporate technology
transfer to international technology transfer. Technology transfer can be defined as the
process of sharing of or acquiring/providing/licensing skills, knowledge, technologies,
intellectual property, technology development personnel or entire teams, methods of
manufacturing, samples of manufacturing and facilities among governments, companies,
research institutions and other organizations to enable the accessibility of scientific and
technological developments to a wider range of users who can then further develop and
exploit the technology into new products, processes, applications, materials or services .

The ways of technology transfer depend on the involved parties and the reasons behind
technology transfer. They vary from acquisitions of companies through technology transfer in
order to release a new product or service based on the technology acquired, to collaborations
in technology transfer efforts among companies located in a cluster.

The innovation and technology transfer process tries to overcome these issues by introducing
three roles that act in the field of innovation and technology transfer: technology supplier,
technology receiver, and technology transfer facilitator. Organization can perform more
than one role in innovation and technology transfer process as well as one role can be
performed by more than one organization.

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1. Technology supplier

Technology supplier organizations focus on technology development. Primary candidates

for this role are universities and research institutes. The technology development process
can be defined as a set of few steps: basic research, applied research and other.

2. Technology receiver

Technology receiver organizations are the ones that take new technology and implement it
to improve their products, services, processes or work environment. This process is called
innovation and can be defined as consisting of five activities: maintaining new technology
awareness, selection of new technologies, preparation for infusion (the act of adding one
thing to another to make it stronger or better), infusion of new technologies and innovation
management.

3. Technology transfer facilitator

Technology transfer facilitator organizations are the ones that enable and in many cases drive
technology transfer. These might be technology transfer broker organizations, technology
transfer offices established in research institutions or collaborative university industry, consulting
companies or any organizations that facilitate and support technology transfer process. The
technology transfer support process can be defined as consisting of such activities as contacts
development; market needs identification, search for available technology, search for
industrial application and contractual support. Technology transfer broker
organizations can be defined as a bridge between technology supplier and technology
receiver. Technology transfer broker supports technology transfer process by bringing
together the ones that develop new technology and the ones that need it.

C. PUSH AND PULL APPROACHES

Just what are “push” and “pull” marketing?

Describing push marketing is easy (or at least it should be). Push marketing is the traditional
marketing and advertising seen everywhere. Push marketing starts with the product or service,
identifies the features or benefits that potential customers will find most compelling, and then

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utilizes targeting and segmentation to ―push‖ carefully crafted marketing messages out via a
variety of advertising, sales, and social media channels to the most likely potential customers.
Pull marketing is something else entirely (and should be in order to maximize your
investment in marketing). While push marketing focuses on the most likely potential
customers, pull marketing should be focused on a totally different group of people – non-
customers who are not yet ready to become customers at this time.
An effective pull marketing strategy begins with extensive research into what makes a
person evolve from someone who is disinterested and unaware of a solution area, to seeing
how it might fit into their personal or professional lives and make it better.

This usually involves the creation of content that will raise awareness, interest, inspiration,
and understanding of the whole solution area, and the need for it, not just the features
and benefits of one company‘s particular product or service. Pull marketing strategies are
very uncomfortable for most marketers, and as a result most companies have no pull to
balance their push.

So which is better for an organization – push marketing or pull marketing?

Any organization that is interested in sustained revenue and profitability growth over time should
invest in both, but most companies are seduced by the immediate payback of push marketing
and pursue only push marketing strategies. Meanwhile, pull marketing helps grow new
potential customers (or accelerates their purchase readiness timeline), so it is equally important
in the long run. Smart companies, organizations that intend to succeed in the long run, need to
invest in both push and pull marketing strategies in order to keep their sales pipeline full both
for now AND for the future. Push or pull? The answer lies in… the balance.

And what about for marketing an innovation – push or pull?

The more disruptive an innovation is likely to be, the more important it will be for you to
craft and execute an effective pull marketing strategy. The main reason is that in every
situation, despite the popular belief among inventors, a customer already has a solution. It
may be the ―do nothing‖ solution, but they have a solution.

There are 2 processes of innovation:

1. TECHNOLOGY PUSH INNOVATION

• Technology Push is where the technology is available and the designers make
a product to use it.

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 • The best example of this is touch screen technology; this was first developed by the
Royal Radar Establishment. In the 80s Hewlett Packard picked up on this technology
and brought out a touch screen computer. Later as the technology became refined and
could recognize hand writing, Apples PDA and the Palm Pilot.Over recent years the
technology has become more and more advanced and is now found in the majority of
mobile phones, laptops and computers. Other examples; cassettes, products with
smaller components.

2. MARKET PULL INNOVATION

Market Pull is where the market is need of a product, so designers make a product to meet that need.
The best example of this is cameras; they have evolved over the years to meet the changing needs of
the user.The market needed to be able to take and store a large number of images and the size of the
camera needed to be reduced. Due to this development in the design in cameras (making them
lightweight, more compact, clearer resolution and so on) the editing software improved alongside.
Over recent years they have developed to get even smaller, and have been put into mobile phones,
then as people wants changed (people wanted to be able to take photos of themselves) the developed
to be even smaller and then moved to the front of the phone. Other examples; hybrid cars, recyclable
carrier bags, low light energy bulbs.

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MGT 314-Innovations Management Notes
Other Sources of innovation:

1. The Unexpected

The market place is the number one area to look for opportunities. A good manager should
be constantly studying the market. Is a particular product or service in greater or lesser
demand than anticipated? Why? Is there a way we can exploit this unexpected success? What
has to happen if we want to convert this success into an opportunity?

2. The Incongruity

There is a discrepancy between what is and what should be. This is a key to developing
wildly successful businesses but it‘s tricky. Face book is a company that nailed it. Prior to the
social network‘s prolific rise MySpace was the dominant player, but it had its downfalls.
Facebook wisely noted what MySpace was vs. what should be and built that platform. The
end result? A company that just had an IPO versus. One that has fallen off considerably. One
of the best places to look for incongruity is in your own customers. Their complaints and
unmet wants are all the hints you need.

3. Process Need

Process need involves identifying your company‟s process weak spots and correcting or
redesigning them. This is a task oriented solution meaning that the source of innovation comes
from within your existing capabilities and ways of doing business – not the market. An example

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might be a restaurant that identifies that people wait too long for their entrees and so decides
to hire another chef to speed up creation times. Essentially your company will want to look
for all weak links and eliminate them.

4. Industry and Market Structure Change

Your industry and the market are in continual flux. Regulations change and some product
lines expand while others shrink. Firms should continually be on the watch for this. One
example is deregulation. When a previously regulated industry becomes open there is
historical precedence for companies that enter early to be very successful. Other things to
watch out for are the convergence of multiple technologies and structural problems that occur
from time to time (often immediately following an industry boom).

5. Demographics

We constantly see changes occur in populations, income levels, human capital (education)
and age ranges. Smart firms are constantly paying attention to this. When it comes to the baby
boomers businesses have been following them constantly as they got older. At present they
are one of the largest as well as the most affluent demographic groups with high levels of
disposable income. Combining demographic data with segmentation and targeting is a
powerful method of accurately meeting a target market‘s desires.

6. Changes in Perception, Meaning, and Mood

Over time populations and people change. The way they view life changes, where they take
their meaning from, and how they feel about things also is modified over time and smart
companies must pay attention to this in order to capitalize (and avoid becoming forgotten, a
relic of ages past). Here are two really good examples. First is a principle called ―downaging‖
which refers to people who look at 50 as being 40. Industries have responded to this, most
notably in the cosmetic and personal care industry which provides plenty of solutions to help
these people look younger. Full industries are creeping up that make people feel younger.
Have you spotted any lately? Religion is another example. Across the world we‘ve seen Islam
and atheism rise. Companies should adapt as overall meaning changes in culture.

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 7. New Knowledge

As the speed of technological revolution increases there will be an ever increasing number of
opportunities that open up. The internet has been the most notable one in the last couple
decades but there have been a plethora of other industries and opportunities pop up as a result
of this technological revolution. New knowledge is about more than just technology though;
it‟s about finding better ways of doing things and improving processes. Your company
should look to this new knowledge for ways it can improve incrementally. Intel does this
constantly and it‘s a major part of why they‘re the leading processor manufacturer today.
Constantly paying attention to the latest in both academic research as well as investing
heavily in their own R&D, the company has managed to find continual sources of innovation,
driving its success.

PROCESSES USED TO EXPLORE INNOVATIONS ALONG THE TECHNOLOGY

The study of technological innovation is a diverse and growing field. Terminology and
theories describing the factors influencing the production and application of new technology
differ among observers and researchers in the field and few studies specific to building
technology have been made. In the most general terms, innovation is the introduction of a
new idea (Mish, 1985). This introduction entails the production of new information and the
diffusion of that information to people who can use it to solve problems, to see the world in a
new way, or to enhance their efficiency, effectiveness, or living quality. In a more specific
application, technological innovation refers to the process in which a new idea is
embodied in tools, devices, or procedures that are of practical value to society. Typically
thought of as a new product, technological innovation may also be a new process of
production; a substitution of a cheaper material, newly developed for a given task, in an
essentially unaltered product; or the reorganization of production, internal functions, or
distribution arrangements, leading to increased efficiency, better support for a given
product, or lower costs.

Technological innovations often involve tools and procedures, products and processes,
interacting in new ways. Known drugs may be found to be successful in treating new illnesses,
or changing the production line may yield improved rates of production. Many of the construction
industry's technologies involve such combinations of hardware and software. Technological
innovation can also be an improvement in instruments or methods of making

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or doing innovation. New technology that is not used is not innovation. Paradoxically, even
technology that is well known and widely used in some industries or nations may still be new
and innovative in a different setting. Many years can sometimes be required for new ideas
and information to diffuse from one place or application to another. Such technology is still
"new" to the society that receives its benefits. Although many people have come to regard
new technology solely as the result of increasingly revolutionary discoveries in science and in
our understanding of how things work, adaptations and new applications of older knowledge
may also lead to innovation.

Successful new technology and innovation tend to be inspired by the practical needs of
individual people or enterprises, or the needs of many individuals expressed in market
demand or social policy. Technological innovation may also be initiated by scientific
invention—new discoveries and developments—but "market pull" is widely felt to be more
influential than "technology push" as a force for innovation. The time between invention and
innovation may be long.

The technological innovation process consists of a series of phases necessary to

implement improvements or develop a new production process, product or service.

There are two ideas about the origin of technological innovations. One argues that the
technological push comes from the scientific research and development sectors, with no
commercial purpose and the other (Market Pull), more accepted today, affirms that it‘s
market needs that instigate companies to develop new technologies that satisfy the demands
of consumers and businesses.

Now, we‘ll analyze the technological innovation process focused on meeting market needs
and how it applies in companies.

The 8 stages of the technological innovation process

1- Basic research

Basic research is that phase of the technological innovation process that only occurs in large
companies, usually in the pharmaceutical, energy and information technology sectors, which
keeps research and development departments continuously abreast of the state of the art
technologies that most impact their organizations.

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2- Applied research

When it detects some specific market needs that may represent an opportunity to develop a
sustainable competitive advantage for the business, the company searches among the
technologies that dominate the way to solve this problem.

At this point, you can integrate existing technologies creatively and innovatively or really
develop something totally new.

3- Development

When reaching a solution to the market need, it‘s time to develop the product, service or
process that will be marketed or employed.

For this, a prototype is developed that must be tested, preferably with the help of the public
that will use it.

Two interesting approaches to this stage of the technological innovation process can be used:

• Design thinking, which takes into account how people interact with innovative
products and services
Scrum, which promotes small iterations, incremental advances in the prototype and
the rest of the innovation process, always based on the needs of those who will use it.

4- Engineering

With the prototype set, you have to turn it into a scalable product or service that can be
mass-produced or meet the specific needs of an industry.

Materials, suppliers, appropriate forms of storage and transportation are searched, such as
connecting parts and benefiting inputs, defining which professionals will need to be hired and
trained, among other measures.

5- Manufacture

This is one of the most important aspects of the technological innovation process.

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It is time to define the best way to deliver the solution created to the final customer, with
efficiency and quality.

6- Marketing

With the product or service ready to be released, it‘s time to do concept tests, market research
and market testing to see if any adjustments are still required depending on how their
acceptance and distribution is taking place in test markets.

7- Promotion

Once the market tests are done, the product or service is launched nationally or globally,
depending on the markets the company serves.

8- Continuous improvement

Once launched, both the product or service and the process flows used to produce and deliver
them to end customers are constantly measured and analyzed, with the aim of looking for
ways to improve them even more, adding even more perceived value to the final customers.

MGT 314-Innovations Management Notes