Managing Innovation and Entrepreneurship - 3

Structuring Innovation through Project Management for Tangible Results

Managing Innovation and Entrepreneurship - 3

Project Approach to Innovation Management

A project approach to innovation management involves structuring innovation activities into distinct projects that are managed from inception through to completion. This approach helps in systematically developing, testing, and implementing innovative ideas within an organization.

Key Concepts

  1. Project Management Basics

    • Definition: A project is a temporary endeavor undertaken to create a unique product, service, or result.

    • Phases: Initiation, Planning, Execution, Monitoring and Controlling, Closing.

    • Objectives: Deliver specific outputs within constraints of time, cost, and quality.

  2. Innovation Projects

    • Purpose: To bring innovative ideas to fruition in a structured and manageable way.

    • Types: Product development, process improvement, organizational change, and marketing innovation.

Project Approach in Innovation Management

  1. Initiation Phase

    • Idea Generation: Collect ideas through brainstorming, market research, customer feedback, and other creative methods.

    • Feasibility Analysis: Use tools like the NUF Test to assess the novelty, usefulness, and feasibility of ideas.

  2. Planning Phase

    • Project Charter: Define the scope, objectives, stakeholders, and deliverables of the project.

    • Resource Allocation: Determine the resources (human, financial, technical) required.

    • Timeline and Milestones: Develop a detailed project plan with timelines and key milestones.

  3. Execution Phase

    • Development: Execute the project plan by developing prototypes, conducting experiments, or implementing new processes.

    • Collaboration: Foster teamwork and communication among cross-functional teams.

  4. Monitoring and Controlling Phase

    • Progress Tracking: Use project management tools to monitor progress against the plan.

    • Quality Control: Ensure that the outputs meet the defined quality standards.

    • Risk Management: Identify and mitigate risks that could impact project success.

  5. Closing Phase

    • Review and Evaluation: Assess the outcomes against the initial objectives.

    • Knowledge Transfer: Document lessons learned and best practices for future projects.

    • Closure: Formally close the project and release resources.

Methodologies and Tools

  1. Stage-Gate Process

    • Definition: A project management approach that divides the innovation process into distinct stages separated by decision points (gates).

    • Stages: Idea generation, concept development, feasibility analysis, product development, testing, launch.

    • Gates: Review points where decisions are made to continue, modify, or halt the project based on specific criteria.

  2. Lean Startup

    • Definition: An approach that emphasizes rapid iteration, validated learning, and customer feedback.

    • Build-Measure-Learn Loop: Develop a minimum viable product (MVP), gather feedback, and iterate.

    • Pivot or Persevere: Decide whether to continue with the current approach or make significant changes based on feedback.

  3. Agile Project Management

    • Definition: An iterative and incremental approach that emphasizes flexibility, collaboration, and customer feedback.

    • Sprints: Short, time-boxed periods where specific tasks are completed and reviewed.

    • Scrum: A popular framework for managing agile projects, involving roles such as Product Owner, Scrum Master, and Development Team.

Benefits of the Project Approach

  • Structured Process: Provides a clear framework for managing innovation activities.

  • Resource Management: Helps in efficient allocation and utilization of resources.

  • Risk Mitigation: Systematic planning and monitoring help in identifying and addressing risks early.

  • Measurable Outcomes: Clear objectives and milestones make it easier to track progress and measure success.

Key Points

  • Emphasizes the importance of integrating project management principles with innovation activities to enhance effectiveness and efficiency.

  • Highlights the role of structured methodologies like the Stage-Gate process and Lean Startup in managing innovation projects.

  • Provides case studies and examples of successful innovation projects across various industries.

Method - Stage Gate

Introduction to Stage Gate Method

The Stage Gate Method is a project management approach used to guide products from idea to launch. It is particularly useful in innovation management as it provides a structured process for evaluating and developing new ideas through defined stages and decision points (gates).

Essence of the Stage Gate Method

  1. Stages:

    • Conceptualization: Initial idea generation and feasibility analysis.

    • Development: Detailed design and development of the product or innovation.

    • Testing and Validation: Prototyping, testing, and refining the innovation.

    • Launch Preparation: Final preparations for market introduction.

    • Commercialization: Full-scale launch and market entry.

  2. Gates:

    • Decision Points: Each stage ends with a gate where the project is reviewed.

    • Criteria-Based Decisions: Gates involve go/no-go decisions based on predefined criteria such as technical feasibility, market potential, financial viability, and strategic alignment.

    • Review Panels: Typically involve senior management or cross-functional teams to ensure objective assessment.

Key Components of the Stage Gate Process

  1. Idea Generation:

    • Brainstorming Sessions: Gather a wide range of ideas.

    • Screening: Use tools like the NUF Test to filter out less promising ideas early on.

  2. Scoping and Business Case:

    • Preliminary Market Research: Assess market demand and potential.

    • Technical Feasibility: Initial evaluation of technical requirements and challenges.

    • Financial Analysis: Preliminary cost and revenue projections.

  3. Development:

    • Detailed Project Planning: Develop a comprehensive plan outlining all necessary steps, resources, and timelines.

    • Prototyping: Create prototypes or pilot versions for testing and feedback.

    • Iterative Refinement: Continuously improve based on testing results and stakeholder feedback.

  4. Testing and Validation:

    • Alpha and Beta Testing: Conduct thorough internal and external testing phases.

    • Market Testing: Pilot the product in a controlled market environment.

    • Risk Assessment: Identify and mitigate potential risks through thorough analysis.

  5. Launch Preparation and Commercialization:

    • Final Preparations: Ensure all aspects of the product and market readiness are addressed.

    • Marketing and Sales Strategy: Develop and implement comprehensive marketing and sales plans.

    • Full-Scale Launch: Officially launch the product to the market, followed by continuous monitoring and support.

Adaptation of Stage Gate to Selected Business Models

  1. Customization for Different Industries:

    • Technology Sector: Focus on rapid prototyping and iterative testing due to fast-paced technological advancements.

    • Consumer Goods: Emphasize market testing and consumer feedback to ensure product-market fit.

  2. Integration with Agile Methodologies:

    • Hybrid Approaches: Combine Stage Gate with agile practices to enhance flexibility and responsiveness. This involves shorter, iterative cycles within each stage to adapt quickly to changes and new insights.
  3. Strategic Alignment:

    • Corporate Strategy Integration: Ensure that the Stage Gate process aligns with the overall corporate strategy and goals. This involves continuous communication and alignment between project teams and strategic management.

Benefits of the Stage Gate Method

  • Structured Approach: Provides a clear and organized framework for managing innovation projects.

  • Risk Mitigation: Early identification and management of risks at each gate.

  • Resource Optimization: Efficient allocation and utilization of resources through stage-wise assessment.

  • Improved Decision Making: Informed go/no-go decisions based on comprehensive criteria and reviews.

In-house Business Development of the Innovation Process in the Company

In-house business development of the innovation process involves fostering innovation within the company using internal resources. This approach focuses on leveraging the company’s existing capabilities, culture, and employees to drive innovation from within.

Key Concepts

  1. In-house Innovation:

    • Definition: Innovation activities conducted within the organization using internal resources.

    • Objectives: Enhance competitive advantage, improve products and services, streamline processes, and foster a culture of continuous improvement.

  2. Importance:

    • Control and Integration: Better control over the innovation process and integration with existing operations.

    • Cultural Fit: Innovations are more likely to align with the company’s values and culture.

    • Resource Utilization: Efficient use of existing resources and capabilities.

In-house Innovation Process

  1. Idea Generation:

    • Employee Involvement: Encourage employees at all levels to contribute ideas through suggestion schemes, innovation contests, and brainstorming sessions.

    • Cross-functional Teams: Form teams from different departments to bring diverse perspectives and expertise.

  2. Idea Screening and Evaluation:

    • Criteria-based Screening: Use tools like the NUF Test to evaluate ideas based on novelty, usefulness, and feasibility.

    • Innovation Committees: Establish committees to review and select the most promising ideas for further development.

  3. Development and Prototyping:

    • Project Teams: Assign dedicated project teams to develop prototypes or pilot versions of selected ideas.

    • Iterative Development: Use iterative processes like Agile to develop, test, and refine innovations.

  4. Testing and Validation:

    • Internal Testing: Conduct initial testing within the company to gather feedback and make improvements.

    • Market Testing: Pilot the innovation in a controlled market environment to validate its feasibility and acceptance.

  5. Implementation and Scaling:

    • Implementation Plan: Develop a detailed plan for rolling out the innovation across the organization.

    • Scaling Up: Gradually scale up the innovation based on feedback and performance metrics.

  6. Monitoring and Continuous Improvement:

    • Performance Metrics: Monitor the performance of the innovation using key metrics such as ROI, customer satisfaction, and operational efficiency.

    • Feedback Loops: Establish feedback mechanisms to continuously improve and refine the innovation.

Organizational Support for In-house Innovation

  1. Leadership and Culture:

    • Innovation Leadership: Strong support and commitment from top management to foster a culture of innovation.

    • Cultural Encouragement: Create an environment that encourages risk-taking, experimentation, and learning from failure.

  2. Innovation Infrastructure:

    • Innovation Labs: Establish dedicated spaces for innovation activities where employees can experiment and collaborate.

    • Resources and Tools: Provide the necessary resources, tools, and technologies to support innovation efforts.

  3. Training and Development:

    • Skill Development: Offer training programs to enhance employees’ innovation-related skills, such as creative thinking, problem-solving, and project management.

    • Innovation Workshops: Conduct regular workshops to generate ideas and foster collaboration across departments.

  4. Recognition and Rewards:

    • Incentive Programs: Implement programs to recognize and reward employees for their innovative contributions.

    • Celebration of Success: Celebrate successful innovations and the teams behind them to motivate and inspire others.

Case Studies and Examples

  1. 3M:

    • Known for its “15% rule” which allows employees to spend 15% of their time on projects of their own choosing, fostering a culture of innovation and leading to the development of successful products like Post-it Notes.
  2. Google:

    • Encourages in-house innovation through initiatives like Google’s “20% time” policy, where employees are allowed to spend 20% of their time on projects that interest them, resulting in products like Gmail and Google News.

Open Innovation as a Modern Concept

Introduction to Open Innovation

Open Innovation is a modern approach to innovation management that emphasizes the use of external ideas and paths to market, alongside internal efforts, to advance technology and products. This concept contrasts with the traditional "closed innovation" model, where innovation activities are conducted strictly within the confines of the organization.

Key Concepts of Open Innovation

  1. Definition:

    • Coined by Henry Chesbrough, Open Innovation is defined as the practice of businesses and organizations actively collaborating with external partners, sharing knowledge and resources to drive innovation.
  2. Principles:

    • External Knowledge Utilization: Leveraging ideas, technologies, and expertise from outside the organization.

    • Internal Knowledge Exportation: Sharing or licensing internally developed innovations to external entities.

    • Collaborative Development: Working with external partners, such as universities, research institutions, startups, and even competitors.

Implementing Open Innovation

  1. Inbound Open Innovation:

    • Technology Scouting: Actively searching for external technologies and ideas that can be brought into the organization.

    • Collaborative Networks: Building partnerships with universities, research institutions, and other companies.

    • Crowdsourcing: Engaging a broad community to contribute ideas and solutions to specific challenges.

  2. Outbound Open Innovation:

    • Licensing: Licensing internally developed technologies to external partners.

    • Spin-offs: Creating new companies to commercialize innovations that don't fit within the core business.

    • Joint Ventures: Forming joint ventures with other companies to co-develop and market innovations.

  3. Coupled Open Innovation:

    • A combination of inbound and outbound practices, where organizations engage in both sourcing external ideas and sharing internal innovations.

Examples of Open Innovation

  1. Procter & Gamble (P&G):

    • P&G’s Connect + Develop program, which seeks ideas from external sources to complement its internal R&D efforts. This approach has led to the development of successful products like the Swiffer and Crest Whitestrips.
  2. IBM:

    • IBM’s use of Open Innovation through its collaboration with external partners and the open-source community to develop new technologies and solutions.
  3. LEGO:

    • LEGO Ideas platform, where fans can submit and vote on new product ideas, some of which are then developed and sold by LEGO.

Limits of Open Innovation

  1. Intellectual Property (IP) Risks:

    • Complex IP Management: Managing IP rights when collaborating with external partners can be challenging. There is a risk of IP leakage, where proprietary knowledge may be unintentionally shared or misused by partners.

    • Negotiation Complexities: Establishing clear agreements on IP ownership and usage rights can be time-consuming and complex.

  2. Cultural and Organizational Barriers:

    • Internal Resistance: Employees and managers accustomed to closed innovation models may resist the adoption of Open Innovation practices.

    • Alignment Issues: Ensuring that external ideas align with the company’s culture and strategic goals can be difficult.

  3. Coordination and Integration Challenges:

    • Integration Difficulties: Integrating external innovations with internal processes, systems, and technologies can be complex and resource-intensive.

    • Coordination Costs: Managing collaborations with multiple external partners requires significant coordination and can increase administrative costs.

  4. Trust and Relationship Management:

    • Trust Issues: Building and maintaining trust with external partners is crucial. Without trust, collaborations may falter.

    • Partner Dependence: Over-reliance on external partners for innovation can lead to dependency, which may be problematic if the partner relationship deteriorates.

  5. Quality and Relevance of External Ideas:

    • Quality Control: Not all external ideas will be of high quality or relevant to the company's needs. Filtering and selecting the right ideas can be challenging.

    • Alignment with Business Goals: External ideas must align with the company’s strategic objectives to be useful, which is not always guaranteed.

Benefits of Open Innovation

  1. Access to a Larger Pool of Ideas:

    • Enhanced Creativity: Collaborating with external partners brings diverse perspectives and expertise, leading to more creative and innovative solutions.

    • Broader Knowledge Base: Leveraging external knowledge expands the company’s intellectual resources beyond its internal capabilities.

  2. Accelerated Innovation Process:

    • Speed to Market: By tapping into external innovations, companies can accelerate the development and commercialization of new products and services.

    • Reduced Time-to-Market: External collaborations can help shorten development cycles and reduce time-to-market for new innovations.

  3. Cost Efficiency:

    • Shared Costs: Collaborating with external partners allows for cost-sharing in research and development (R&D), reducing the financial burden on any single organization.

    • Resource Optimization: Efficient use of both internal and external resources can lead to more cost-effective innovation processes.

  4. Risk Mitigation:

    • Shared Risk: Spreading innovation risks across multiple partners reduces the potential impact on any one organization.

    • Diversified Risk Portfolio: Engaging in multiple external collaborations diversifies the risk associated with innovation projects.

  5. Market Expansion:

    • New Market Opportunities: Collaborating with external partners can open up new markets and customer segments that were previously inaccessible.

    • Enhanced Market Reach: Leveraging partners' distribution channels and market knowledge can enhance the reach and impact of new innovations.

  6. Strategic Flexibility:

    • Adaptive Capability: Open Innovation provides the flexibility to adapt quickly to changing market conditions and technological advancements.

    • Dynamic Capabilities: Companies can develop dynamic capabilities to reconfigure their innovation strategies in response to external changes.


  1. Explain the Stage Gate method and its essence in managing the innovation process. How can this method be adapted to selected business models?

  2. Discuss the concept of in-house business development of the innovation process. What are its advantages and challenges?

  3. Define Open Innovation and discuss its limits and benefits for business development. Provide examples of companies successfully implementing Open Innovation.