Core Course Innovation Session 2 PPT 2f

Prévia do material em texto

RCM Corinne Grenier 1
INNOVATION STRATEGY OF 
COMPETITIVE COMPANIES AND 
ENTREPRENEURSHIP
Track Two : Management of innovating projects 
PPT 2f : Evaluation criteria of innovating projects management
Professeur RCM : Corinne Grenier
RCM Corinne Grenier 
Main ideas
The more the innovation is radical or the more the innovation is complex, the more its 
process must be assessed so as to anticipate and correct any gap in delays, cost, 
technological requirements
 The assessment of the innovation process deals also with organizational structures and 
team management, as well as intangible assets such as team climate
 The assessment process takes place during every stage of the innovation process 
management, from its very starting point to the final stage just before launching products / 
services into markets ( where the Sales / marketing department is then competent for); it 
is a longitudinal process
 The assessment process is based on both quantitative and qualitative criteria
 People in charge are al least the one in charge of the innovation product development 
RCM Corinne Grenier 3
Decision criteria for innovating project management
For one project
The selection making process is determined by the following 4 questions :
. Why selecting project?
. Who should be in charge of the selection and the selection process ? 
. What are the criteria and the processes of the decision making ? 
. When ? => implementing a systematic stage gate new product process
There is no unique and /or infallible method of selection making process ! 
. Multiple criteria : more qualitative criteria are used at the beginning of the R&D process 
(controlling the degree of alignment with the strategy and the organizational competencies ), 
more quantitative (economic and financial) criteria at the end of the process
. Wide use of the Rational Decision Model (Simon) : a structured decision based on a set of 
information leading to the “right decision” according to economic and strategic criteria 
. Principle of several stages of decision during the whole development process (to avoid major 
mistake) : principle of GO / NO Go (or the Go / Kill Decision)
RCM Corinne Grenier 4
The list of criteria is related to the life cycle and the kind of 
project 
(Eg: Rhône Poulenc.) :
At the very early stage (scientific research stage) : choice criteria linked to : 
scientific validity and reliability of the project, breakthrough project or not ?, 
competencies of the scientific team, scientific papers accepted in refereed 
conference proceedings ...., 
At the pre series or development stages : ability of the team, external 
suppliers and partners, economic and technical criteria, alignment of the 
project with the firm strategy, expected market size ... 
Decision criteria for innovating project 
For one project
RCM Corinne Grenier 5
List of criteria to discriminate the projects - Industrial Research Institute 
(Cooper, 1993)
. Alignment with the strategy 
. Size and growth of the market 
. Expected Market share 
. Ability of the firm to produce and market the 
product 
. Likelihood of technical success 
. Product potential risks
. Patent
. Development duration 
. Development cost 
. Investment required 
. Profitability 
Criteria used according to the scoring model principles
Answer as : Yes / No or 
Weak / Middle / High
Decision criteria for innovating project 
For one project
RCM Corinne Grenier 6
• Feasibility studies ? 
– Use of knowledge and competencies ?
– Alignment with the strategic plan?
– Patternable? 
– Risks covered by alternative solutions?
• Objectives ?
– Leading to disruptive innovations? 
– Improving technical and economic 
capacities of the existing products?
– Improving firm branding/image?
– Increasing revenue? 
• Production : Do we know how to produce this 
new product?
– Ability to produce regarding equipment, 
access to resources, providers of raw 
materials, workforce competencies ..... 
• Marketing : what are the expected sales?
– Existing market demands?
– What level of existing or expected 
competition on this market?
– What are the size and the profitability of 
the market? (market attractiveness)
• Strategies
– Stable market on long term?
– Strong strategic advantage on the 
competitors? 
– Easy to raise funds to support the 
development?
– In case of failure, “intermediary results” 
transferable to other projects? 
More criteria examples (Vinck, 1991)
Decision criteria for innovating project 
For one project
Qualitative approach : 9 criteria for evaluating innovating project
RCM Corinne Grenier 7
Powerful 
leader 
Relevant 
team
Potential 
market
Favorable 
competing 
system
Competitive 
and relevant 
offer
Strong 
marketing ands 
commercial 
approach
Technology 
of value
Strong 
competences 
in operating 
process
Strong 
financial 
interest
Source : from Michel Santi and Véronique Nguyen, “Les piliers de l’évaluation d’un projet innovant”, 
Les Echos, 18 novembre 2004 http://www.lesechos.fr/ch/evenement/formations/management/4177580.htm
Decision criteria for innovating project 
For one project
RCM Corinne Grenier 8
Formula of Carl Pacifico (used in Alcolac Chemical’s Co) 
N =
Rc * Rt (P-C) * V * T
Ct
N => decision rule : if N > 1, then project accepted 
Rc : Probability of commercial success
Rt : Probability of technical success
P : Selling Price of the new product
C : Cost of the new product
V : volume of annual sales
T : duration of product life
Ct : total cost (R&D, tests, prototype, launching)
Selecting projects – quantitative criteria (Vinck, 1991)
Decision criteria for innovating project
For one project
RCM Corinne Grenier 9
Formula of the ROI (Return On Investment)
ROIp =
Bp
Ip-1
Decision rule : decreasing order of the ROI
Bp : profits of the invest (year p)
I : invest amount 
p : year of the calculation 
Selecting projects – quantitative criteria (Vinck, 1991)
Decision criteria for innovating project 
For one project
RCM Corinne Grenier 10
Method from the Division Chemical Activity of Monsanto 
P = Σ Ai
26
i = 1
P = the new product profile 
Ai = value of the product based on the study of 26 criteria (Finance, R&D, 
Production, Marketing, Sales ....)
Ai can take 4 values : : -2 ; -1 ; +1 ; +2
Decision rule : selecting the project which has the best profile
Decision criteria for innovating project 
For one project
RCM Corinne Grenier 11
Decision criteria for innovating project
In case of projects portfolio management
The model of the so called Competition between projects : two step decision model of Cooper 
(1993)
Evaluating one 
project
Comparing 
projects
Stop, step back, 
interruption ...
Interruption
Limits : 
. No synergy !
. This model is based on a functional approach of project management to enhance 
competition between the SBU of the firms (and the competition between projects 
without any logic of “product platform”)
12RCM Corinne Grenier 
Principle: 
Projects
reaching the 
expected level
of the criteria is
selected for the 
further stages 
First example
13
Decision criteria for innovating project
In case of projects portfolio management
Principle: 
Projects
reaching the 
expected level
of the criteria is
selected for the 
further stages 
Second example
RCM Corinne Grenier 
14
To go further: 
Video : What is Project management? 
https://www.youtube.com/watch?v=9Tchp8LljXY
RCM Corinne Grenier 
Decision criteria forinnovating project
In case of projects portfolio management