04 Structured Innovation Process

Question 1

Innovation (Definition)

Answer 1

An invention with market success. Innovations can be distinguished into product innovations, process innovations and market innovations.

Innovation involves – from external or internal sight – new ideas and inventions as well as their economically successful implementation.
o Degree of novelty distinguishes Basic, Key and Improvement innovations
o Fundamental attribute of an innovation: Exploit of the underlying idea

Question 2

Areas of Innovation

Answer 2

• Product Innovation
• Process Innovation
• Business Model Innovation

Further Innovation Areas: financial and marketing innovations

Question 3

Product Innovation

Answer 3

o Completely new to the market or new basic functions
o New, expanded or adjusted functionalities or properties

Question 4

Process Innovation

Answer 4

o Intra-company changes in the factor combination process for goods and services
o Focus: New technologies for production

Question 5

Business Model Innovation

Answer 5

o Creation of new markets
o New additions to existing solutions in old markets
o New or advanced business models
o Focus: Products, services and procedures

Question 6

Innovation Process (Definition)

Answer 6

The cross-functional road from the idea to the product. For product innovations also called Product Emergence Process (PEP).

-> Covers all activités from the idea to the market launch

Question 7

Phases of the Innovation Process

Answer 7

Innovation Planning
 Identify market and customer requirements (“Market Pull”)
 Compare the requirements with the technological possibilities for implementation (“Technology Push”)

Idea evaluation

Development of ideas

Question 8

Stage-Gate Process

Answer 8

Describes a conceptual and operative procedure for new product ideas from the initial product idea to the introduction of a product.

• Typically consists of 3-7 phases
• Project is broken down into defined subsets of cross-departmental parallel activities
   Each section entering through a gate
   Degree of concretization increases from section to section
   Gates serve to monitor success

Question 9

Innovation Strategy

Answer 9

Part of the business strategy, providing a guideline for innovation processes.

-Innovation Strategy is directly dependent on the higher-level corporate strategy and serves as the strategic alignment point of the innovation processes. -> Must be aligned with other company strategies (e.g. marketing or technology strategy)

Question 10

Frontloading the innovation process

Answer 10

o Frontloading: Increased efforts in the early stages of the innovation processes.

o More capacities are allocated to the activities in the early phases of the innovation process -> Well-founded approach in these phases sets the course for an efficient handling of the innovation project.

o New innovation project is compared with the existing product range and the technologies previously used in the company.

Question 11

Steps of an innovation strategy

Answer 11

o Step 1: Analysis of the strategic starting position (with regard to internal and external company conditions)

o Step 2: Strategic target position is determined (taking into account central factors such as costs, quality and time)

o Step 3: Definition of the strategic means to achieve the set innovation goals

Question 12

Aspects of an innovation strategy

Answer 12

o Results-orientated aspects: Comprise the delimination of the relevant innovation area and the innovation objects as well as basic statements on innovation types and timing strategy to be applied.

o Potential-related aspects: Identify and define core competences and establish and maintain a knowledge and technology pool.

o Process-related aspects: Identify relevant sources of information or purchase technologies or knowledge via the market.

Question 13

Incremental Innovation

Answer 13

Innovations that are based on existing technologies and address existing markets/customers

Degree of technological novelties: Low
Degree of newness to market: Low

Question 14

Technological leap

Answer 14

Innovations in form of new products or technologies for existing markets/customers

Degree of technological novelties: High
Degree of newness to market: Low

Question 15

Disruptive Innovation

Answer 15

Innovations that create new markets and address new customers, but usually use or recombine existing technologies

Degree of technological novelties: Low
Degree of newness to market: High

Question 16

Breakthrough Innovation

Answer 16

Innovations that both possess a high degree of technological novelty and address new markets/customers

Degree of technological novelties: High
Degree of newness to market: High

Question 17

Benefits of Innovation Leadership

Answer 17

 Faster market entry at higher cash flow
 Definition of standards resp. of “Dominant Design”
 Creation of market entry barriers

Question 18

Benefits of the “Early Follower”

Answer 18

 Reduced risk and development costs
 Superior marketing concepts
 Cost savings due to economies of scale
 Already established market with a known “dominant design”

Question 19

Push Strategy (technology push)

Answer 19

The innovation comes from the R&D area. The result is a technological development that is realized and introduced to the market on the basis of the company’s internal technology and performance potential, independent of customer needs identified on the market.

 Result: Often radical innovations with high earnings potential  Risk of not finding a market but potential to create new markets
 Realization associated with high expenditure of time and considerable risk

Question 20

Pull Strategy (market pull)

Answer 20

The drive comes from the market (it demands an innovation). Needs are satisfied by a new product. R&D activities are induced by customer demand.

 Prerequisite: Identification of latently unsatisfied customer needs, which takes place within the framework of market research with suitable instruments (e.g. customer surveys)
 Usually lead to incremental innovations in existing programs
 Associated with rapid implementation and relatively low risk

Question 21

Action Scheme of innovation planning

Answer 21

1. Gathering Information and ideas
2. Project proposals
3. Evaluation and selection of projects
4. Specifying the range of products
5. Project planning

Question 22

Deterministic/Classic Innovation Process

Answer 22

Characterized above all by a linear, sequential and plan-oriented process

Question 23

Empirical/Agile Innovation Process

Answer 23

Innovative and characterized by many short learning and feedback cycles in the sense of a “trial and error”

o Used above all in software development
o Agile innovation processes can be described on three levels

Principal level: Forms the common basis for all agile procedures
* Core is about a strong customer focus and simultaneous active involvement of the customer in the innovation process, a short-cycle generation of physical prototypes for the validation of partial results, a permanent response to changing requirements and framework conditions as well as a culture of trusting cooperation

Scrum Process: One possible process model. Sprints form the core of the scrum process.
* Precisely defined development runs, which must be completed with the generation of a new functionality.

Question 24

Product Architecture (Definition)

Answer 24

The product architecture is the sum of product structure, function structure and their transformation relationship.

• Aim: Map complex products and their structure

Question 25

Elements of the Product Architecture

Answer 25

- Functional Structure - Product Structure - Linking of the functional structure and the product structure via so-called transformation relationships  These answer the questions, how and with which elements of the product structure the individual functions are fulfilled -> Determines the product architecture and thus the basic shape of a product

Question 26

Functional Structure

Answer 26

Describes the breakdown of the required function into subfunctions  Required function results from the concrete requirements that must be fulfilled by the product  Solution-neutral formulation of functions is an essential characteristic of the function structure

Question 27

Product Structure

Answer 27

Describes the physical composition of the product consisting of assemblies and subordinate components

Question 28

Key Properties of a generic function structure

Answer 28

 Generic: Composition of the overall function of a product using generic sub-functions  Customer oriented: Holistic description of a product from the customer’s point of view  Cross-portfolio: The function structure supports the cross-product series description of functions  Stability over time: Continuous fulfilment of requirements over several product generations.

Question 29

Key Impacts of a generic function structure

Answer 29

 Communality: Function-based consideration of communalities between products within similar functions  Variant diversity: Definition of necessary module variants by assigning function variants to modules  Market analysis: Defines possible need for action from a market point of view if functions are not implemented by modules  Documentation: Structuring the documentation and thus ensuring improved transparency

Question 30

Key properties of a generic product structure

Answer 30

 Generic: The generic product structure is a set of “containers” being specified when generating/deviating a product from it  Functionally oriented: Ensures the fulfillment of a product’s functionality by holistically capturing variety with distinct modules  Cross-market/variant validity: Facilitates interchangeability of modules and/or components across markets due to identical product description  Stability over time: Enables reuse of modules and/or components across generations due to identical product description

Question 31

Key impacts of a generic product structure

Answer 31

 Planning and configuration of variants: The configuration of projector variants will be based on the generic product structure by specification and combination of module variants  Development activities: Development activities will strictly follow the generic product structure in terms of project setups or module development projects  Organizational Implementation: The structure of the development organization will strictly follow the generic product structure to ensure the platform’s sustainability  Documentation: The documentation of development work will follow the generic product structure and thus enhances transparency.

Question 32

Modular Product Platforms

Answer 32

Modular product platforms share the communality-thinking with platform structures and still allow more flexibility o Consist of the combination of those components, interfaces and functions that can be standardized over an entire product family, i.e. that are stable over time o Consist of building blocks (modules), which can be assemblies or components. By defining standardized interfaces, a variety of combinability is possible, so that a multitude of variants can be efficiently generated

Question 33

Strategic Road Mapping

Answer 33

Introduction of a modular system should answer questions regarding the production technology of the modules to be produced and the location via strategic road mapping. o Coordination between product and production roadmaps  Aim is to produce core modules using core processes as far as possible -> Changeover to the core modules is planned over time and the ramp-up should be as steep as possible in order to be able to comprehensively leverage the economies of scale in a timely manner

Question 34

Shell Model

Answer 34

Methodical support for the visualization of module variants o Helps to define standardized and flexible parts of the product & the manufacturing process o Components of the generic product architecture are placed into the shell model based on their flexibility -> Evaluation of the flexibility of individual components and their subsequent integration into the shell model is based on company-specific evaluation criteria -> Possible criteria: development effort, manufacturing costs, stability of the technical solution over time, frequency of use

Question 35

Elements of the shell model

Answer 35

Core: “Stable” module variants * Determined in the analysis that they have a high internal effect, which should not be changed by constructive variants * Variation should be avoided throughout the entire construction kit and throughout the lifecycle * Constituent Features: Features that describe modules in the core * Normally standard modules that are manufactured in large quantities and are only rarely subject to change Middle Shell: “Modifiable” modules * Average modification effort * Can realize market-side requirements with limited additional costs by means of clever variation * Normally modules with higher variance and therefore a lower number of units per derived variant Outer Shell: “Easily Changeable” modules * Often offer a high differentiation potential when generating product variants * Make it possible to realize the variety demanded by the market at low cost * Normally modules that are manufactured in smaller quantities per variant  Subject to frequent changes

Question 36

Modular function deployment (MFD)

Answer 36

Descirbes a method for the systematic development of modular product structures The MFD…  Is a structured method to define the optimal modular product design  Supports the entire product development process  Consists of five steps  Should be used by interdisciplinary teams

Question 37

Steps of the MFD

Answer 37

1. Define Customer requirements -> Information derived describes the product in customer’s language 2. Select Technical solutions -> Requirements are broken down into functions and subfunctions, most suitable solution is chosen 3. Generate concepts -> e.g. with help of a design structure matrix (functions are mirrored on components 4. Evaluate concepts -> Evaluation on basis of key features with regard to development effort, mountability and customer benefit 5. Improve modules -> The steps can be performed iteratively, the starting point can vary

Question 38

Module Profiles

Answer 38

o Individual modules are documented in the form of module profiles for sustainable anchoring o Contain all information relevant to the product architecture design of the respective module