Datta Meghe Institute of

Management Studies

Unit 2Lecture 2

INNOVATION & CREATIVITY

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Management Studies

COVERAGE :

• Defining Innovation• Types of Innovation• National Innovation System• Creating Innovative Environment• Managing Innovations

Datta Meghe Institute of

Management Studies

CREATIVITY AND INNOVATION

• How innovative are you?

Datta Meghe Institute of

Management Studies

Defining Innovation

Datta Meghe Institute of

Management Studies

Defining Innovation

Innovation comes from a Latin word INNOVATIO meaning to RENEW or CHANGE

“ New products, business processes and organic changes that create wealth or social welfare” – OECD

“ Fresh thinking that creates value”

“ Successful commercilaisation of a novel idea”“ Application of knowledge in a novel way, promarily for economic benefit” – Economic Intelligence Unit

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Management Studies

IMPORTANCE OF INNOVATION

How important is innovation to yourorgansiation’s long term success ?

• Critically important : 47 %• Important : 40 %• Somewhat important : 12 %• Somewhat unimportant : 1 % ( EIU Survey – 2006)

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Management Studies

IMPORTANCE OF INNOVATION IN INDIA

• 17 % LARGE FIRMS RANK INNOVATION AS TOP STRATEGIC PRIORITY

• 75 % RANK INNOVATION AS THE TOP 3 PRIORITIES

• 81 % STRONGLY AGREE THAT INNOVATION HAS BECOME CRITICAL TO GROWTH AND COMPETITIVENESS

• 42% LARGE FIRMS AND 17 % OF SMEs HAVE INTRODUCED NEW TO THE WORLD INNOVATIONS

( Innovation in India – National knowledge Commission 2007)

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Management Studies

MISCONCEPTIONS

1. Creativity : It is the capabilities or act of conceiving something original or unusual

2. Innovation : It is the implementation of something new

3. Invention : It is the creation of something that has never been made before and is recognised as the product of some unique insight

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MISCONCEPTIONS1. Creativity – Ideas

Invention – Novel ideasInnovation – Delivery of novel ideas

2. Every invention is innovation but every innovation is not invention3. Invention is conversion of cash into ideas. Innovation is conversion of

ideas into cash4 Creativity is thinking new things. Innovation is doing new things. 5. Innovation is applied creativity6.People are creative. Products or processes are innovative7. Creativity is small component of innovation process8.Innovation is 1 % inspiration and 99 % perspiration

( Thomas Edison)

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Defining Innovation

• “ INNOVATION IS DEFINED AS A PROCESS BY WHICH VARYING DEGREE OF MEASURABLE VALUE ENHANCEMENT IS PLANNED AND ACHIEVED , IN ANY COMMERCIAL ACTIVITY.THIS PROCESS MAY BE BREAKTHROUGH OR INCREMENTAL, AND IT MAY OCCUR SYSTEMATICALLY IN A COMPANY OR SPORADICALLY; IT MAY BE ACHIEVED BY :

• INTRODUCING NEW OR IMPROVED GOODS OR SERVICES AND/OR• IMPLEMENTING NEW OR IMPROVED OPERATIONAL PROCESSES AND/OR• IMPLEMENTING NEW OR IMPROVED ORGANISATIONAL/MANAGERIAL PROCESSES

IN ORDER TO IMPROVE MARKET SHARE, COMPETITIVENESS ANDQUALITY, WHILE REDUCING COSTS ( National Knowledge Commission)

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TYPES OF INNOVATIONS• PRODUCT INNOVATION

$3000 cars, $300 computers and $ 30 mobile phonesNano car, Chota kool refrigerator, Tata-Swach water purifier

• PROCESS INNOVATIONDell, Arvind care hospital

• INNOVATION IN BUSINESS MODELSHindustan lever ( Shakti project)

• INCREAMENTAL OR BREAKTHROUGH INNOVATIONPC, Cloud computing , Nepster

• REVERSE INNOVATION

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NATIONAL INNOVATION SYSTEM

“THE NETWORK OF INSTITUTIONS IN THE PUBLIC AND PRIVATE SECTORS WHOSE ACTIVITIES AND INTERACTIONS INITIATE, IMPORT, MODIFY AND DIFFUSE NEW TECHNOLOGIES

( Freeman, 1987)

“ THE ELEMENTS AND REALTIONSHIPS WHICH INTERACT IN THE PRODUCTION, DIFFUSION AND USE OF NEW, AND ECONOMICALLY USEFUL, KNOWLEDGE AND ARE EITHER LOCATED WITHIN OR ROOTED INSIDE BORDERS OF A NATION STATE” ( Lundvall, 1992)

“ A SET OF INSTITUIONS WHOSE INTERACTIONS DETERMINE THE INNOVATIVE PERFORMANCE OF NATIONAL FIRMS” (Nelson, 1993)

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NATIONAL INNOVATION SYSTEM

“ THE NATIONAL INSTITUIONS , THEIR INCENTIVE STRUCTURE AND THEIR COMPETENCIES, THAT DETERMINE THE RATE AND DIRECTION OF TECHNOLOGICAL LEARNING ( OR THE VOLUME AND COMPOSITION OF CHANGE GENERATING ACTIVITIES) IN A COUNTRY “ (Patel and Pavitt 1994)

“ THAT SET OF DISTINCT INSTITUIONS WHICH JOINTLY AND INDIVIDUALLY CONTRIBUTE TO THE DEVELOPMENT AND DIFFUSION OF NEW TECHNOLOGIES AND WHICH PROVIDES THE FRAMEWORK WITHIN WHICH GOVERNMENTS FORM AND IMPLEMENT POLICIES TO INFLUENCE THE INNOVATION PROCESS. AS SUCH IT IS A SYASTEM OF INTERCONNECTED INSTITUIONS TO CREATE, STORE AND TRANSFER OF KNOWLEDGE, SKILLS AND ARTEFACTS WHICH DEFINE NEW TECHNOLOGIES “ ( Metcalfe,1995)

CHALLENGES

• The researchers in R&D per million people in 2006: India (119), China (715), South Korea (3723), US

(4628) and Japan (5300) • R&D expenditure - 0.8 per cent of GDP• Education , skill & infrastructure need new

investments• Need more productivity from the existing institutions• Linkages between academia, research and industry

need to be strengthened

CHALLENGES

• India Ranked 119 of 149 countries in the 2004 Science Citation Index

• India produces only 6,000 PhDs a year in science and 1,000 in engineering

• Less than 20 % of public support for R&D is for civilian applications• Indian Institute of Technology was granted 3-6 patents a year

compared with 64 for the Stanford and 102 for the Massachusetts Institute of Technology (McKinsey)

• According to WIPO statistics (2009) India was granted 7,539 patents while the equivalent number for Japan was 1,64,954, the US was 1,57,283, the Republic of Korea was 1,23,705, and China was 67,948

• In 2006, India had 119 researchers in R&D per million people, while China had 715, South Korea had 3723, US had 4628 and Japan had 5300

STATUS OF INNOVATION IN INDIAAs per Global Innovation Index rankings ( 2011) :

• India ranks 62 and its rank was 56 and 41 in 2010 and 2009

• Most innovative countries are Switzerland, Sweden, Singapore, Hongkong, Finland, Denmark, USA, Canada, Netherlands and UK

• India ranks after South Africa, Serbia, Oman, Argentina, Thailand

As per survey of Economic Intelligence Unit ( 2006)

• India ranks at 50 after Turkey, Jordan, Cuba, Bulgaria etc

• Finland, Denmark, USA, Switerzland, Sweden, Netherlands, Australia, Canada, Germany and France are at the top.

INNOVATION PENTAGON

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Solve the problem

• Remove three sticks to leave four

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See this figure?

• Divide the figure below into as many pieces as you can by making four straight cuts with a long knife

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2 Dimensions=11

• Cuts and pieces

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3 dimensions=14

• imagine it’s a cake

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Another Perspective

• Fold it after each cut=16

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New Challenge

• A company manufactures glassware. The last step of the process is to wrap glasses individually in used newspapers and then place them in a specially designed box. The box is then sealed. Management notices low productivity with this last step, observing that workers occasionally stop to read the newspapers? What can management do to increase productivity?

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Steps to Personal Creativity• 1. Accept that you can be creative• 2. Question traditional assumptions• 3. Expand your problem-solving styles• 4. Employ creativity techniques• 5. Practice thinking in new ways• 6. Learn when your creative thinking is best

• Adapted in part from Higgins, James M. 1997. Escape From The Maze. New York: New Management Publishing.

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Relevance to Globalization

• In a rapidly changing global world, managers must use all their abilities to anticipate opportunities and threats

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Future Visions of the Auto Industry

• Fuel injections will require much less gas• Need for lean production• There will be need for small autos to serve utilitarian

mass markets• There will be more women drivers in Europe and Asia• Emotions will be used to promote products• Increased speed limits• More roads will be needed

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Future Visions of the Food Industry

• This is a recession-proof industry with very slim profit margins

• We see segmentation of markets and niche development• Many consumers/nations leapfrog to the latest trends

rather than following a particular development process• The natural environment is increasingly important• Computer technology linking suppliers gets food to

market at a lower price• In Western countries there is a trend toward less cooking

in the home

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Management Studies

Envisioning Techniques

• Linear– step-by-step; scenario planning, etc.

• Intuitive– imagery; brainstorming; analogy

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Stimulants to Work Creativity* • 1) FREEDOM in deciding work to do or how to do it• 2) CHALLENGE to work hard on important projects• 3) RESOURCES needed to do the work• 4) ENCOURAGEMENT from a supervisor who is a good work

model, sets appropriate goals, supports and has confidence in the work group

• 5) WORK GROUP SUPPORTS such as diverse skills, people who communicate well, are open to new ideas, constructively challenge one another’s work, trust and help each other, and feel committed to their work

• 6) ORGANIZATIONAL ENCOURAGEMENT in a culture that supports creativity and communicates a shared vision of organization

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Obstacles to Work Creativity

• 1) ORGANIZATIONAL IMPEDIMENTS such as internal political problems, harsh criticism of new ideas, destructive internal competition, avoidance of risk and overemphasis on the status quo

• 2) WORKLOAD PRESSURES such as extreme time pressure, unrealistic expectations, or distractions

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Weigh the Odds

• You have 50 coins of which one is slightly heavier than all others. This weight difference can be detected on a balance scale

• What is the least number of weighings required to find the heaviest coin?

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Management Studies

SummaryInnovation comes from a Latin word INNOVATIO meaning to

RENEW or CHANGE“ New products, business processes and organic changes that

create wealth or social welfare” – OECD“ Fresh thinking that creates value”Misconceptions1. Creativity : It is the capabilities or act of conceiving

something original or unusual2. Innovation : It is the implementation of something new3. Invention : It is the creation of something that has never

been made before and is recognised as the product of some unique insight

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Management Studies

Laqs and Saqs

• Explain Innovation with Example• Explain Creativity with Example• What are the Challenges in Implementing

Innovations.