Innovation Processes in Transition by Erkki Ormala Professor

Innovation Processes in Transition by Erkki Ormala Professor of Practice, Innovation Management Aalto University, Business School

Learning outcomes • A general understanding of innovation, innovation processes and innovation management, in different contexts, and their role in society and in business strategy. • Understand how innovation can (and cannot) be fostered, managed or steered, and which policies, processes and tools are needed, offering case-based insights in what works and what does not. • Understand how innovation is related to other functional business areas such as finance, marketing, buying, customer relations and to the over-all business design. • Understand specific issues and topics in fostering and managing innovation, e. g. technology platforms and innovation strategies, innovation in inter-organizational networks, service innovation, user driven innovation, collaboration in innovation, open innovation arrangements such as IP management, business model innovation, etc.

Course content 2016 03 November: External speaker: Hannu Talvitie, Vaisala; introduction to the course, review of innovation process and policy, key findings from a Finnish study, lecturer: Erkki Ormala 10 November: External speaker: Kai Husso, TEM; innovation policy; systemic approaches; lecturer: Erkki Ormala 17 November: External speaker: Pia Erkinheimo, Fingertip; best practice of innovation process, lecturer: Erkki Ormala 24 November: External speaker: Leo Kärkkäinen, Nokia; Platform economy; lecturer: Erkki Ormala 1 December: External speaker, Heli Anttila, Fortum; Innovation in SMEs; lecturer: Erkki Ormala 8 December: External speaker: Jussi Impiö, Fuzu; Industrial innovation in transition, Horizon project review, instructions for essay writing, lecturer: Erkki Ormala

Workload • 18 h participating in course sessions (mandatory) • 60 h reading the background material • 82 h writing a 5 page essay on a selected and approved topic (2000 words) by 15 December 2016

Innovation networks enable new ways of knowledge creation and utilization with orchestration capability to extended enterprise From traditional large enterprise Demand orchestration Architecture orchestration Supply orchestration Innovation orchestration Demand orchestration Partners Demand orchestration Architecture orchestration Core Architecture orchestration Supply orchestration Innovation orchestration Demand orchestration Architecture orchestration Supply orchestration Demand orchestration Innovation orchestration Architecture orchestration Supply orchestration Demand orchestration Architecture orchestration Innovation orchestration Supply orchestration

Crowdsourcing Open Innovation Co-Creation User Innovation Social media Source: Modified from Schenk and Guittard, 2009

Open Innovation Engaging the World’s Leading Institutions • Access and drive global intellectual vision and insight • Form strategic collaborations with world-leading institutions to multiply our efforts • Build global test beds to learn from broader audiences

The Pilot Study in Finland • Innovation process – – Mapping the future business environment Innovation strategy Implementation of the strategy Expanding the markets and ecosystems http: //urn. fi/URN: ISBN: 978 -952 -60 -5927 -3

Innovation process 1. Mapping the future business environment – Extensive mapping covering key areas, but not integrated into the innovation process 2. Innovation strategy/business strategy – Business strategy dominates leading to incremantal improvements – Very few ’bridgehead’ innovations

Innovation process (continued): 3. Implementation of the strategy – Stage gate model dominates – Very few customer driven, crowd sourcing, open innovation and internal incubator based solutions 4. Expanding the markets and ecosystems – Limited understanding of the ecosystem and value chain – Big data seen as an opportunity, but not used extensively – Market and competition perspective conservative not reflecting the business environment vision

Challenges to innovation activity on the level of products/technology • Ownership of innovations seems to disperse among business units • In the stage-gate model, there is internal bureaucracy and personal reflections • The stage-gate model seems to serve short-sighted innovation • Innovations requiring risk and courage, about which it is difficult to evaluate the anticipated revenue accurately, are often discarded when defining final development programs

Challenges to Innovation activity at the company level • A need for more creativity, experimenting and entrepreneurship in order to create breakthrough innovations • The focus of management is on emphasizing incremental development of existing activities • New initiatives and actively changing the business environment were not emphasized in the interviews, even if changes in the business environment were actively monitored in the strategy process • It is often possible to promote new openings and radical innovations only outside the current organizational structure and the existing strategy • The development logic followed by companies causes an innovation gap at the level of society

Innovation policy conclusions: • Innovation policy should help the natural integration of the new innovation instruments into the innovation processes in companies • Improving conditions for public/private partnerships • Increasing the understanding of the role of innovation in economic and social development as well as in job creation • In Finland the most important issue in reforming innovation policy is to strengthen the part of the innovation system that genuinely supports the development of new and internationally competitive business – Understanding of business concepts, emerging value domains and the ways of capturing the value – Improving systems integration in the innovation system – Funding of growth companies – Developing company spin-offs and business incupators

Any Questions Thank you