CREATIVITY AND INNOVATION

UPA 20102
(CHAPTER 7 – PROCESSING INNOVATION)

By
Faculty of Technology Management and Business
University Tun Hussein Onn Malaysia
 Introduction
01 Every organization invests in innovation in order to change.

Organizations put aside a portion of turnover to change products,

02 process, and services.

03 Particular objectives must be achieved because of this

investment.

However, a very large percentage of innovation activities fail to

04 meet these objectives.

The reasons behind the failure give us clues about how to avoid such failure in
05 the future.
 Innovation investment
• Organizations invest an average of 4% of turnover
on Innovation
• Turnover = the amount of money taken by a
business in a particular period.
• Budget typically spent across various functions e.g.
– Computer Services
– Product Design
– Process Improvements
– Training etc.
 As the innovation budget
is often based on a
First percentage of forecasted
1 Forecasts are correct, and thus the
allocated budget is also correct, allowing
turnover, three potential
outcomes are possible.
planned innovation to be undertaken;

Second
2 The actual turnover exceeds the forecasted, resulting in a budget that
allows a greater number of innovative initiatives to be undertaken;

Third
3 The actual turnover is less than that forecasted, resulting in
insufficient budget to undertake the planned innovative projects.
 Innovation investment
• The latter scenario can result in an
organization merging together,
postponing, or even abandoning
innovative projects because of the
increased financial constraints.
 Goals of Innovation
• The principal goals required by an organization in return for
their investment is different between organizations.
• The following have been found across a large number of
manufacturing and service organizations and ranked in order
of popularity, with the first goal being common to most
organizations (European Commission, 1996):
1. Improved quality
2. Creation of new markets
3. Extension of the product range
4. Reduced labor costs
5. Improved production processes
6. Reduced materials
7. Reduced environmental damage
8. Replacement of products or services
9. Reduced energy consumption
10. Conformance to regulations (pematuhan peraturan)
 Problem
• Between 50-70% of all Innovation fails to impact on
organisational goals

• Implications …
– Wasted resources – time, people and money
– Loss of morale
– Higher resistance
“I have not failed. I’ve just
found 10,000 ways that won’t
work.” - Thomas A. Edison
 Failure of Innovation

• Various reasons depending on the individual innovation

• Common reasons across all organizations (O’Sullivan, 2002):
1. Poor definition of goals
2. Poor alignment of actions to goals
3. Poor participation by employees in teams
4. Poor monitoring of results
5. Poor communication and participation in communities
 Failure of Innovation (cont’d)
1. Poor definition of goals
• Poor definition means that organizations find
it difficult to define their goals.
• Poor goal definition requires that
organizations decode on appropriate goals
for their environment and define these goals
in terms that are understandable to
everyone involved in the innovation process
 Failure of Innovation (cont’d)
2. Poor alignment of actions to goals
• Poor alignment of actions to goals means that
organizations find it difficult to continuously link the
ideas and projects they are pursuing with their goals.
• This is perhaps even more acute if goals are difficult to
define in the first place.
• It also influences effective management of the
portfolios of the project that the organization is
undertaking to ensure they are balanced appropriately.
 Failure of Innovation (cont’d)
3. Poor participation by employees in teams
• Poor participation in teams refers to the
behaviour of individuals and teams,
latent(hidden) knowledge of the organization,
and the particular skills of individuals to
contribute to the achievement of innovation.
• It also refers to the payment and reward
systems that link individuals to goals
 Failure of Innovation (cont’d)
4. Poor monitoring of results
• The poor monitoring of results refers to sharing of the status of
goals, actions, and teams involved in the innovation process
within the innovation team and its main stakeholders.

5. Poor communication and participation in communities

• Poor communication and sense of community relate to
ineffective channels of communication and collaboration that
constrain knowledge sharing and the ability of employees to
participate as a broader community in the innovation process
and make informed decisions when needed.
 Process of Innovation
• The ability to manage the innovation process is an essential
competence of any organization, but members must first
understand the workings of the process to be successful.
• The process of innovation can be described in terms of the
interactions between FIVE key sub-processes;
1. Idea generation
2. Opportunity recognition
3. Development
4. Realization (merealisasikan)
5. Learning
 Process of Innovation (cont’d)
• Two related sub-processes are associated with
opportunity recognition: organizational goals and
available resources, as shown in figure below;
• Learning is another sub process that did not shown in
figure below, but it underpins all processes from idea
generation to realization.
Organizational
Goals

Idea Opportunity
Development Realization
Generation Recognition

Available
Resources
 Process of Innovation
2. OPPORTUNITY 4. REALIZATION
RECOGNITION

1. IDEA GENERATION 3. DEVELOPMENT 5. LEARNING

 Process of Innovation (cont’d)
1. Idea generation
• Relates to the creative activity of generating an opportunistic idea.
• This stage involves the continuous scanning of the internal and
external environment for threats and opportunities that might be
developed into an innovation by the organization.
• This stage involves mining the sources of innovation for new ideas
and evaluating solutions to identified problems.
• An organizational culture that encourages creativity and
empowerment can significantly support this phase of the process.
• The input typically stems from a technical insight into a product or
processor thought about a service.
 Process of Innovation (cont’d)
2. Opportunity recognition

• The opportunity of developing the idea into a new product,

process or service is assessed and evaluated relative to other
opportunities.
• This phase of the process involves deciding which innovative
ideas will be pursued by the organization and which are
deemed outside its interest.
• The undertaking of innovative actions is both expensive and
resource intensive for any organization, so organizations
need to choose which ideas to pursue.
 Process of Innovation (cont’d)
2. Opportunity recognition (cont’d)

• How this decision is made can be complex and

involves trade-offs, including;
– correlation with the strategic goals and resources available
to the organization,
– the organization’s current capability,
– the mix of innovations already being developed,
– the actions of competitors,
– and the emerging signals from the external environment.
 Process of Innovation (cont’d)
3. Development
• This phase involves the development of the idea or solution into a
potential innovation that is ready for launch to its internal or
external market.
• The development of an innovation can be highly resource
intensive for any organization and constrained by the budget and
the existing portfolio of innovative actions.
• Key activities of this phase can include experimentation, design
and development, testing, market analysis, and prototyping.
• At the end of the development phase, the initial idea has been
developed into a tangible product, process or service that the
organization views as capable of meeting user needs.
 Process of Innovation (cont’d)
4. Realization
• This phase of the innovation process related to the launched to
the market, which is where the customer makes the final
evaluation of the innovation.
• Understanding customer needs is essential to ensure that the
eventual offering to the market meets these needs.
• The objective of the realization phase of the process is to develop
an innovation for the market that meets customers’ needs and
readily adopted.
• The realization phase encompasses activities such as
commissioning, validation, and training to facilitate its successful
adoption.
 Process of Innovation (cont’d)
5. Learning
• Learning is the final sub process in the innovation process.
• It requires the organization to analyse the previous phases of
the innovation process and identify areas where the process
can be improved.
• In this way, even innovative actions that are abandoned or end
in failure can be beneficial because the organization can learn
from its mistakes and avoid repeating them in the future.
• Similarly, the new knowledge acquired from undertaking the
prospective innovation can also be used as input to the idea
generation phase that may lead to future innovations.
Applying Innovation
Every organization would like to be able
01 to increase the success of its innovative
efforts in order to enhance its
competitive position for the future.
Although many leading organizations
have invested significant resources in
02 developing the culture and routines for
their innovation processes, most
organizations continue to rely on the
efforts of a handful of people and
chance.
An innovative organization is one that
03 can perfect these routines in addition to
creating an innovation culture in the
organization that engages people.
 Dooley &
01 02
O’Sullivan
Goals Actions
(2003)
introduced five
Applying key routines
05 that can
03
Communities Innovation facilitate
Teams
management of
the innovation
04 process
Results
 These mimic the five root causes of failure discussed earlier :

Better definition of goals

01 02
Goals Actions
Better alignment of actions
to goals

Greater participation of 05
individuals in teams Communities
03
Teams
Better monitoring of results.
04
Greater communications Results
and building of communities
.
 Goals 01 02
“Objective of an Effort” Goals Actions
Goals refers to the objectives that the organization wants to
achieve by engaging in innovation.
The organization needs to decide on the goals it will pursue
in the future that will enhance its competitive advantage.
05
Ways of defining goals:
Communities
03
Statements such as the mission and vision statement, Teams
Needs or Requirements of stakeholders such as
customers and shareholders
Objectives such as strategic plan
04
Results
Indicators of performance such as output and profits
 Actions 01 02
Goals Actions
 “Expenditure of Effort”
 Actions refers to the expenditure of effort on the
part of the organization in developing creative
concepts into eventual innovations.
05
 Organizations that possess routines that nurture
Communities
03
the flow of actions across the various phases can
enhance the effectiveness of their innovation
Teams
process.
 Actions include the following activities:
 Identifying problem and solutions
04
 Generating ideas Results
 Managing initiatives and projects
 Managing project portfolios
 Teams 01 02
 “Resources of Effort” Goals Actions
 Teams refers to the resources used for the innovation
action.
 Teams are made up of people who use their skills and
other organizational resources, such as finance, to 05
facilitate the development of innovative actions.
Communities
03
 The more people engaged in the process, the greater Teams
the creative capability and skills available to support the
innovative actions.
 Elements in teams are including  
 Team leadership 04
 Building structure in teams
 Improving participation by individuals
Results
 Linking the performance of individuals to
organizational goals
 01 02
Results Goals Actions

 “Outcome of an effort”
 Results refers to the outcomes of an effort to innovate.
 The importance of monitoring results allows the 05
organization to assess its ongoing progress and, if 03
necessary, alter the mix of actions it has flowing through Communities
the innovation process. Teams
 the principal results that an organization needs to
concern itself with are the following :
 Results of goals such as objectives and indicators 04
 Results of actions such as ideas and projects
Results
 Results of teams such as where individuals are
participating and how their performance review is
progressing
 01 02
Communities Goals Actions
 Communities refers to all people who share a common
purpose of supporting innovation in the organization
 This community is often motivated by the defined goals
of the organization but can also be influenced by the 05
professional goals of specific individuals.
Communities
03
 As innovation has become more complex, community Teams
has broadened to encompass people in other
organizations who are engaged in the innovation.
 Building community is a time-consuming process and
involves key issues such as organization and leadership,
04
communications, and knowledge management. Results
 CONTACT ME

+6012-7199125

fazianh@[Link]

Department of Management and Technology,

Faculty of Technology Management and Business
Universiti Tun Hussein Onn Malaysia
THANK YOU
Universiti Tun Hussein Onn Malaysia (UTHM)
86400 Parit Raja, Batu Pahat
Johor, Malaysia

Tel: +607-453 7000

Fax: +607-453 6337

[Link]

@uthmjohor

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