Management Criteria for Effective Innovation 1978

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Management Criteria for Effective Innovation1978

• George R. White MIT

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Introduction

• Early corporate era Technological stability was
  normal. Technological innovation was the
  occasional fortuitous balm
• Since WW II, innovation has been norm and seen as
  the panacea
• Innovation tools as compared to finance,
  marketing and production, are rudimentary
• Case study to generate tools on two fully
  completed innovations were studied
• the transistor and the jet engine

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Article Discussion

• Goal is to identify management criteria to
• evaluate viability and likely outcomes of
  innovation in relation to business outcomes
  (profits)
• apply the criteria in a wide variety of cases
• Three major areas addressed
• The Determinants of Success
• Putting the Determinants to the Test of History
• Forecasting Future Innovation

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Determinants of Success

• Apply to both technological and business contexts
• In technology, determinants depend on
• Quality and Significance of Innovative Concept
• Embodiment for new device leads to profitability
• Operational Consequences must be considered
• Market Dynamics important and often complex

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Determinants of Success or How can we more
accurately Understand the Hurdles

• Balancing Old and New Constraints
• What fundamental technical constraints limiting
  the prior art are lifted?
• What new technical constraints are inherent in
  the new art?
• How favorable is relief of the former weighted
  against the stringencies of the latter?

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Determinants of Success

• Putting Innovation in Context
• Is the end product enhanced by additional
  technology and components required to make use of
  the innovation?
• Is the inventive product itself diluted or
  enhanced by the embodiment required
• Does the additional embodiment offer opportunity
  for further inventive enhancement?

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Determinants of Success

• Balance Sheet on Financing Business Operations
• What previously emplaced business operations are
  displaced or weakened by the new innovation?
• What new business operations are needed or wisely
  provided to support the new innovation?
• How favorable is cessation of the former
  practices weighed against provision of the latter?

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Determinants of SuccessNice to Have or Got to
Have ?

• What Will Sell and What Wont
• Does the product incorporating the new technology
  provide enhanced effectiveness in the marketplace
  serving the final user?
• Does the operation reduce the cost of delivering
  the product or service?
• Does latent demand expansion or price elasticity
  expansion determine the characteristics of the
  new market?

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Putting the Determinants to the Test of History

• The Japanese Portable Radio Game
• Transistor innovation plus additional innovation
  i.e. tuning capacitors, loudspeakers, battery
  supplies and antennas
• See Intel case
• Auto Radios and TV Who Needs Transistors?
• Auto radios and production of autos
• Very slow due to cathode ray tube

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Putting the Determinants to the Test of History

• Summing a Transistorized Balance
• Three different transistor innovations
  technically similar but dramatically different
  business outcomes
• On basis of management criteria, different rates
  of applications
• Complete and rapid (portable radio)
• Quite rapid (auto radio-hybrid vs. full
  transistorized)
• Quite slow (Color television)

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Putting the Determinants to the Test of History

• The Battle of the Turbines
• Wide bodied jets (Boeing 707 and Douglas DC-8)
• Lockheed Electra
• Boeing 727
• Inventions similar but business outcomes different

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Forecasting Future Innovation

• Automotive Microprocessors Everything Up
• Promise precision of control of automotive
  engines
• Manufacturers need to avoid fines
• The Fundamental Problem of the S.S.T.
• Supersonic transport and limits

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Conclusion

• Historically, management criteria (determinants
  of success) can largely account for
  differentiated outcomes in high-tech businesses
• When applied to future potential innovations,
• likely future course for business