BSc Business Administration Innovation Management Examiners Report Examination Date: May Introduction

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1 BSc Business Administration Innovation Management Examiners Report Examination Date: May 2016 Introduction This was a three hour paper with examinees asked to answer three questions. There was a fairly even spread of choice on questions across the discipline. General Comments The papers were produced to a good standard, and the answers were consistent with previous exams as many were able to deliver three strong answers. There was an increase in missing the focus of some questions and suffered as a result. This exam removed the practice of explicitly stressing in the questions themselves the use of theoretical frameworks but it was written along with examples at the top of the paper. This was a weakness for some students, despite it being central to the course. Some still failed to offer any theoretical basis or reference to literature in their answers. By reproducing the relevant references shows the examiner that you are aware of the key concepts of the course. It should be noted that this alone is not enough for top marks as we expect you to use the theories in answering the question along with relevant examples, but it is necessary. In this session, there was little improvement in the situation where some over failed to answer the question set. Reproducing a pre-prepared essay is not a good way to approach the exam. In particular, there is a tendency for way the latter part of some questions was missed too often. This time it was Q1 not saying if invention alone can be successful, Q2: no words on information, Q5: are there more alliances, and Q6: combining disruption and mainstream business. The area of examples was again a consistent weakness with some examinees not giving one for Q6 despite it asking for two. It is important to stress that giving examples is one of the easiest ways for students to show that they know the materials and understand their application and limitations. Try and revise examples along with your other revision. It is important to try and use examples from outside the course materials as these clearly demonstrate your grasp of the subject, whereas those who reproduce them from the text do not show this as strongly. Question by Question Comments 1. What is the difference between innovation and invention? Can a firm be successful alone by being inventive?

2 Invention is the derivation of new ideas, whereas innovation is applying these to markets. Some even say an innovation needs to be a commercial success. As a result the question seeks the difference between just having new ideas and the ability to apply those to products. Answers need to go on and classify different types of innovation. Many ways were talked of in the course, including Tidd s views: Architectural innovation defines the basic configuration of the product and process, and also sets the production and marketing agendas. Market niche innovation the application of existing technology to open new markets. This type of innovation entrenches the existing production and marketing systems. Regular innovation this type builds on established technical and production skills and is applied to existing markets and customers further entrenching existing competences. Revolutionary innovation this type of innovation disrupts and makes existing technical knowledge and production methods obsolete. However, the innovation is made available to existing customers and established market structures. Abernathy and Clark (1985) have placed these notions on a grid which allows the interaction of innovation type with the market to be assessed. Answers must note that invention alone is not a good strategy as it misses out the commercialisation step, but there are firms which make living out of inventing and then selling this to others to innovate. 2. The process of developing new products depends as much on the flow of information as it does on the flow of materials. Discuss what this statement means. Answers should define NPD and examine the various steps to lead firms through the process: stage-gate, simultaneous engineering, etc. All rely on information (internal and from the market) make the best possible decisions, and simultaneous engineering makes the information flow closer and faster between the internal parts. In essence the new product development (NPD) process involves taking the invention and developing it into a product ready to launch on the market. There are certain steps which most organizations follow to complete this process and this chapter introduces these first to show a linear model of NPD.

3 The screening model was well used and presented of a linear process with different departments in the firm having responsibility for separate sections (marketing for concepts, design engineers for the design, and production department for developing the process) has been radically challenged in recent years. The first firms to change this established product design process were Japanese car makers who were able to produce new products in half the time of their US and European counterparts, and often with fewer problems. The new process of product design which emerged and is now widely adopted has a variety of names such as simultaneous engineering, and parallel design. The best answers used Nonaka et al ideas on knowledge to discuss the value of different types of information on NPD. 3. What do you understand by the term open innovation and under what circumstances do you think firms should avoid this approach? This question needs a definition of open innovation networked development and sharing information. This is enabled by IS developments and answers can talk of Chesbrough, and is opposed to closed-innovation. The open innovation model is based on: Not all the smart people work for us. We need to work with smart people inside and outside our company. External R&D can create significant value; internal R&D is needed to claim some portion of that value. We don't have to originate the research to profit from it. Building a better business model is better than getting to market first. If we make the best use of internal and external ideas, we will win. We should profit from others' use of our innovation process, and we should buy others' intellectual property (IP) whenever it advances our own business model. Answers should tread carefully when it comes to open source, but this was sadly missed as an item for discussion in all answers. To answer the part about when it might be avoided, the model may not work well in areas where competition moves fast and so a closed model may be best. 4. Explain the benefits and problems for firms employing corporate venturing and venture capital. The answers need to define the terms and pay reference to both corporate venturing: setting up a separate entity to develop radical, risky ideas and employ alternative methods without impacting the

4 existing business. The example given and discussed in the class was European Space Agency incubator. Venture capital: an even more distant approach often used by external sponsors to generate returns. The benefits come from having the newness and break from existing routines and thinking. Problems include not being able to control the entity and also the ideas may not integrate with the product plan. 5. Discuss why firms appear to be seeking more alliances for their R&D activities. This question needs definitions of R&D, alliances and also internationalization-globalization. Traditional view was growth and market share, now view as resource and skills acquisition. There are numerous reasons for collaboration and in the classes we looked at Littler s model. Tidd offers a good classification of alliances. Examples we covered are Cisco-WIPRO and Arcelor-Mittal. More interest is perhaps resulting as IT makes collaboration easier, R&D costs getting higher so looking to reduce, markets becoming more homogenous. 6. Every company that has tried to manage mainstream and disruptive business within a single organisation has failed. Discuss, incorporating at least two examples into your answer. This question is trying to get the students to apply the enticing but often poorly defined DT model, but those who focussed on just radical disruptive methods were not penalised. Essentially answers needed to talk of paths and Schumpeter and also to define DT: idea which is at first poor in terms of performance, but finds a dimension which it can generate enough interest for its development. After a while it is developed to out perform the incumbent technology, however, the firms which have ignored it as unsuitable get caught out and can t adapt quick enough. In applying the DT model (or any way to include disruption) into existing firms, students should be aware of the difficulties of spotting the rival technologies as the firms are very good at doing the right things: scanning competitors, selecting those with best potential, etc., as well as the problems of having two styles in one organisation.

5 7. Is it always effective for firms to exploit their innovations wholly inhouse? Discuss, incorporating at least two examples into your answer. This question was quite open and could be answerd well in a number of ways. It could make use of expansion strategies, openness, disruption, and general innovation models which suggest firms link more closely with others Rothwell s five stages. Tidd has a good list of different types of innovation which includes product/process and would be a good introduction. Good industry examples used were cars Henry Ford did little innovation on the product but revolutionised the production process. A really good example extended this to the JIT system as Toyota. Another well used example was Apple which uses existing technology and concepts already developed by others, but improves them and outsources the production to innovative suppliers like Foxconn and so the ithings are dominated by process innovations rather than new to the world product innovations. There are examples where the process innovation leads to new products surface mount technology, Pilkington float glass, etc. And so the final answer should be that the statement is often true, but always so, and in most industries and firms it is the process innovation which is most prevalent and important. Rugman and Hodgetts (2001) successful multinational companies have regional focussed strategies whilst the unsuccessful ones try to adopt global strategies. 8. What is involved in effective R&D? Discuss the reasons for the inherent conflict between basic research and developing technologies for products, and give advice to a firm on how to reduce this stress. This question needs a definition of R&D. Research is the basic innovation whereas development is focussed on using ideas for products. Answers could make use of the push-pull model and others to contrast the demands and constraints available to each stage. Good answers got drawn into the notion of corporate venturing and the need to have different organisations for each stage.