Transcript Product Innovation

Measuring innovation:
Main definitions & indicators
Regional Workshop on Science, Technology and Innovation (STI) Indicators for Gulf countries
Doha, Qatar
15 to 17 October 2012
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Measuring Innovation
Oslo Manual:
Guidelines for collecting
and interpreting
innovation data
UIS - Annex (OM, 2005):
Innovation Surveys in
Developing Countries
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Why measure innovation?
 Innovation and economic development;
 Innovation is more than R&D;
 Innovation policy should be evidence-based;
 Innovation data…
• Understanding
of innovation and its relation to
economic growth;
• Indicators for benchmarking national performance.
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What is innovation?
 Innovation is the implementation of:
• New or significantly improved product or process;
• New marketing or organisational method.
Implementation:

A new or improved product is implemented when it is
introduced on the market;

New processes, marketing methods or organisational
methods are implemented when they are brought into
actual use in the firm’s operations.
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The innovation measurement
framework
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Types of innovation - Product (1)
 Product Innovation:
• Introduction of a good or service that is new or
significantly
improved
with
characteristics or intended uses;
respect
to
its
• New products: different characteristics or intended
uses from previous products;
• Significantly
improvements: changes in materials,
components, and other characteristics that enhance
performance.
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Types of innovation - Product (2)
 Product Innovation - examples:
• New products:
» The first microprocessors;
» The first digital cameras;
» The first portable MP3 player;
• Significantly improvements:
» Introduction of ABS braking, GPS navigational systems, or
other subsystem improvements in cars;
» The use of breathable fabrics in clothing;
» Improvements in internet banking services, such as greatly
improved speed and ease of use.
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Types of innovation - Process (1)
 Process Innovation:
• Implementation of a new or significantly improved
production or delivery method (changes in techniques,
equipment and/or software);
• Intended to: decrease unit costs of production or
delivery, increase quality, or produce or deliver new or
significantly improved products.
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Types of innovation - Process (2)
 Process Innovation - examples:
» Introduction of a bar-coded goods-tracking system;
» Introduction of GPS tracking devices for transport services;
» Implementation of computer-assisted design for product
development;
» Implementation of a new reservation system in a travel
agency.
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Types of innovation - Marketing (1)
 Marketing Innovation:
• Implementation of a new marketing method involving
significant changes in product design or packaging,
product placement, product promotion or pricing;
• Better addressing customer needs, opening up new
markets, or newly positioning a firm’s product on the
market  increasing firm’s sales;
• Marketing method NOT previously used - part of a
new marketing concept or strategy;
• For both new and existing products.
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Types of innovation - Marketing (2)
 Marketing Innovation:
• Product design or packaging: changes in form and
appearance that do not alter products’ functional or
user characteristics + changes in the packaging;
• Product placement: new sales channels;
• Product promotion: new concepts for promoting a
firm’s goods and services;
• Pricing: new pricing strategies to market the firm’s
goods or services.
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Types of innovation - Marketing (3)
 Marketing Innovation - examples:
» Development and introduction of a fundamentally new brand
symbol;
» First use of a significantly different media - product placement
in a television programme;
» Introduction for the first time of a franchising system.
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Types of innovation - Organisational (1)
 Organisational Innovation:
• Implementation of a new organisational method in the
firm’s business practices, workplace organisation or
external relations;
firm’s
performance
by
reducing
administrative/transaction costs, improving workplace
satisfaction, accessing non-tradable assets, or
reducing costs of supplies;
• Increase
• Organisational method NOT used before - result of
strategic decisions taken by management.
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Types of innovation - Organisational (2)
 Organisational Innovation:
• Business practices: implementation of new methods
for organising routines and procedures for the conduct
of work;
• Workplace organisation: new methods for distributing
responsibilities and
decision making among
employees for the division of work within and between
firm activities + new concepts for the structuring of
activities;
• External relations: new ways of organising relations
with other firms or public institutions.
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Types of innovation - Organisational (3)
 Organisational Innovation - examples:
» First implementation of a database of best practices;
» Establishment of new types of collaborations with research
organisations;
» First implementation of an organisational model that gives the
firm’s employees greater autonomy in decision making and
encourages them to contribute their ideas.
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Diffusion and degree of novelty
 Degree of novelty:
• Firm;
• Market;
• World;
 Radical innovations:
• Significant impact on a market;
• Impact of innovations (as opposed to their novelty);
• May become apparent only long after introduction.
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Types of innovation - example
 Innovation in a restaurant:
• Product innovation: delivery (new service);
• Process innovation: new type of oven (new equipment
used in the production process);
• Organisational innovation: new delivery unit (new
organisational unit/model);
• Marketing
innovation: billposting (new media for
promoting the delivery service).
Note. Source: Adapted from Heinlo, A. (2011). Measuring R&D&I
in Estonia. Almaty, Kazakhstan S&T Indicators Workshop.
(PowerPoint Presentation)
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Innovation activities (1)
 Innovation activities: all scientific, technological,
organisational, financial and commercial steps
which (intended to) lead to the implementation of
innovations;
 Some
innovation activities are themselves
innovative, others are not novel but necessary;
 R&D not directly related to the development of a
specific innovation.
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Innovation activities (2)
 For product and process innovations:
• Intramural (in-house) R&D;
• Acquisition of (extramural) R&D;
• Acquisition of other external knowledge;
• Acquisition of machinery, equipment and other capital
goods;
• Other preparations for product and process innovations;
• Market preparations for product innovations;
• Training.
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Innovation activities (3)
 Preparations for marketing innovations:
• Activities
related
to
the
development
implementation of new marketing methods;
and
• It includes acquisition of other external knowledge and
of machinery, equipment, and other capital goods and
training;
• Expenditures for using these methods in daily business
are NOT included.
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Innovation activities (4)
 Preparations for organisational innovations:
• Activities
undertaken
for
the
planning
implementation of new organisation methods;
and
• It includes acquisition of other external knowledge and
of machinery, equipment, and other capital goods and
training.
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Kinds of innovation activities
 Successful - resulted in the implementation of a new
innovation (not necessarily commercially successful);
 Ongoing - work in progress, which has not yet
resulted in the implementation of an innovation;
 Abandoned
- before the implementation of an
innovation.
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Classifying firms by degree of
innovativeness
 Innovative firm:
• Implemented an innovation;
• Not necessarily a commercial success;
 Innovation-active firm:
• Had innovation activities - ongoing and/or abandoned;
• Regardless of implementation;
 Potentially innovative firm:
• Innovation efforts but no achieved results;
• Key element for innovation policy;
• (Annex).
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Factors influencing innovation
 Objectives: Motives for innovating;
 Effects: Observed outcomes of innovations (Table 9);
• Impacts on firm performance;
• Time lag;
 Hampering factors:
• Reasons for not starting innovation activities at all;
• Factors that slow innovation activity or have a negative
effect on expected results (Table 10).
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Linkages
 Linkages: connections with other agents;
 Source, cost, level of interaction;
 Types of external linkages:
• Open information sources;
• Acquisition of knowledge and technology;
• Innovation co-operation.
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Sources for transfers of
knowledge and technology
Open
Sources for
information purchases of
sources
knowledge
&
technology
Cooperation
partners
Internal sources within the enterprise:
R&D / Production / Marketing / Distribution
Other enterprises within the enterprise group
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External market and commercial sources:
Competitors
Other enterprises in the industry
Clients or customers
Consultants / consultancy firms
Suppliers
Commercial laboratories
Public sector sources:
Universities and other higher education institutions
Government / public research institutes
Private non profit research institutes
Specialised (semi) public innovation support services
General information sources:
Patent disclosures / Professional conferences, meetings,
literature and journals / Fairs and exhibitions /
Professional associations, trade unions / Other local
associations / Informal contacts or networks / Standards
or standardisation agencies / Public regulations
*
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Appropriability
 Ability of enterprises to appropriate gains from
innovation activities:
• Formal
methods: patents, registration of design,
trademarks, copyrights, confidentiality agreements,
trade secrecy;
• Informal methods: secrecy that is not covered by legal
agreements, complexity of product design, lead time
advantage over competitors.
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Developing countries
 Developing countries  3rd ed. OM standards,
adaptations;
 LA: the Bogota Manual (RICYT, 2001);
 UIS: Annex (A) to 3rd ed. OM;
 Innovation Surveys in Developing Countries.
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Characteristics of innovation in
developing countries
 Size and structure;
 Instability;
 Informality;
 Particular economic and innovation environments;
 Reduced innovation decision-making powers;
 Weak innovation systems;
 Characteristics of innovation.
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Characteristics of innovation in
developing countries
 Potentially innovative firm;
 Measurement priorities - why / what / how:
• Innovation capabilities (HR, Linkages, ICTs);
• Expenditure on innovation activities;
• Organisational innovation.
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Adaptations
 ICTs in innovation surveys;
 Linkages:
• Agents + Types + Location;
 Innovation Activities:
• Hardware purchase and Software purchase (split);
• Industrial design and Engineering activities (split);
• Lease or rental of machinery, equipment and other capital goods;
• In-house software system development;
• Reverse engineering;
 Human resources and training.
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Methodological issues for developing
country contexts
 Weakness of statistical systems;
 Questionnaire design;
 Survey application;
Will be discussed
later
 Frequency;
 Publication;
 Difficulties…
• Lack of appreciation of the importance of innovation;
• Managers are secretive about finance;
• Lack of adequate legislative base.
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How do we measure innovation? (1)
 Indicators - definition:
• Statistics and data, often gathered through specialised
surveys, are the building
indicators are constructed;
blocks
from
which
• An indicator can be defined as something that helps us
understand where we are, where we are going and
how far we are from a specific goal. Therefore it can
be a sign, a number, a graphic;
• An indicator quantifies and simplifies phenomena and
helps us understand complex realities.
Source: International Institute for Sustainable Development / Adapted
from Blakley, W. (2012). Providing and calculating innovation
indicators. Cape Town, South Africa. ASTII/HSRC/UIS Workshop.
(PowerPoint Presentation)
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How do we measure innovation? (2)
 Indicators - definition:
• Basic indicators: based on “one question”;
• Composite indicators: combine answers to several
questions in order to examine a number of policyrelevant factors and better capture the diversity of
innovative firms.
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Innovation indicators - examples (1)
 Product or process innovation:
1.
% of firms that implemented product innovation
2.
% of firms that implemented process innovation
3.
% of firms that implemented product or process innovation
(innovative firms)
4.
% of firms that developed in-house product or process innovation
5.
% of firms that implemented new-to-market product innovation
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Innovation indicators - examples (2)
 Product or process innovation:
1.
(N) =
% of firms that implemented product innovation
Number of firms that implemented product innovation (in
each economic activity)
*100
(D) = Total number of firms (in each economic activity)
(N) =
Number of Manufacturing firms that implemented product
innovation
*100
(D) = Total number of Manufacturing firms
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Innovation indicators - examples (3)
 Product or process innovation:
Source: 2011 UIS Pilot Data Collection of Innovation Statistics
P ro du ct in no va tio n
P roce ss in n o vation
75
60
45
30
15
B ra z il
C h in a
C o lo m b ia
E gypt
Is ra e l
M a la y s ia
P h ilip p in e s
R u s s ia n
F e d e ra tio n
S o u th
A fric a
U ru g u a y
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Innovation indicators - examples (4)
 Marketing or organisational innovation:
1.
% of firms that implemented marketing innovation
2.
% of firms that implemented organisational innovation
3.
% of firms that implemented marketing or organisational
innovation
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Innovation indicators - examples (5)
 Marketing or organisational innovation:
3.
(N) =
% of firms that implemented marketing or organisational
innovation
Number of firms that implemented marketing
organisational innovation (in each economic activity)
or
*100
(D) = Total number of firms (in each economic activity)
(N) =
Number of firms in the Electrical machinery industry that
implemented marketing or organisational innovation
*100
(D) = Total number of firms in the Electrical machinery industry
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Innovation indicators - examples (6)
 Inputs:
1.
Total expenditures on innovation (as a % of total turnover)
2.
Expenditure on innovation by type of expenditure (as a % of total
expenditure on innovation)
3.
% of firms that performed R&D
4.
% of firms that performed R&D on a continuous basis
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Innovation indicators - examples (7)
 Inputs:
3.
(N) =
% of firms that performed R&D
Number of product or process innovation-active firms that
performed R&D (in each economic activity)
*100
(D) =
Total number of product or process innovation-active firms
(in each economic activity)
(N) =
Number of Services product or process innovation-active
firms that performed R&D
*100
(D) =
Total number of Services product or process innovationactive firms
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Innovation indicators - examples (8)
 Outputs:
1.
% of turnover from product innovations (as a % of turnover)
2.
% of turnover from new-to-market product innovations (as a % of
turnover)
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Innovation indicators - examples (9)
 Outputs:
1.
% of turnover from product innovations (as a % of turnover)
(N) = Turnover from product innovations (in each size class)
*100
(D) = Total turnover
(N) = Turnover of Small firms from product innovations
*100
(D) = Total turnover of Small firms
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Innovation indicators - examples (10)
 Key policy-relevant characteristics:
1.
% of firms that were active on international markets
2.
% of firms that co-operated with foreign partners on innovations
3.
% of firms that co-operated with universities or other higher
education institutions
4.
% of firms that received public financial support for innovation
5.
% of firms that applied for one or more patents
6.
% of R&D-performing firms that co-operated with other institutions
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Innovation indicators - examples (11)
 Key policy-relevant characteristics:
3.
(N) =
% of firms that co-operated with universities or other higher
education institutions
Number of product or process innovation-active firms that
co-operated with a specific partner
*100
(D) = Total number of product or process innovation-active firms
Number of product or process innovation-active firms that
(N) = co-operated with universities or other higher education
institutions
*100
(D) = Total number of product or process innovation-active firms
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Innovation indicators - examples (12)
 Key policy-relevant characteristics:
Source: 2011 UIS Pilot Data Collection of Innovation Statistics
Co-operation partner
Any type of
co-operation
partner
Suppliers of
Other
equipment,
enterprises
materials,
within your
components, or
enterprise group
software
Clients or
customers
Competitors or
other
enterprises in
your sector
Consultants,
commercial
labs, or private
R&D institutes
Universities or
other higher
education
institutions
Government or
public research
institutes
Brazil
China
Colombia
9.7
n.a.
47.8
1.1
n.a.
18.3
5.0
n.a.
31.8
3.5
n.a.
24.9
1.0
n.a.
5.8
1.9
n.a.
20.7
1.9
n.a.
14.9
n.a.
n.a.
n.a.
Egypt
Ghana
7.5
n.a.
n.a.
28.1
n.a.
21.1
n.a.
31.6
n.a.
17.5
n.a.
22.8
n.a.
12.3
n.a.
8.8
Indonesia
Israel
Malaysia
n.a.
33.4
n.a.
37.8
8.3
65.5
66.3
19.6
55.1
n.a.
21.3
56.1
18.4
14.4
30.0
24.5
17.3
84.0
19.4
12.6
45.0
11.2
8.2
37.0
Philippines
Russian Federation
n.a.
37.3
91.2
12.6
92.6
16.9
94.1
10.9
67.6
3.9
64.7
5.1
47.1
9.1
50.0
15.6
South Africa
Uruguay
EU-27
33.0
n.a.
n.a.
14.2
n.a.
n.a.
30.3
n.a.
n.a.
31.7
n.a.
n.a.
18.6
n.a.
n.a.
21.1
n.a.
n.a.
16.2
n.a.
n.a.
16.2
n.a.
n.a.
Eurostat min
12.9
2.4
7.1
4.2
2.7
4.4
4.3
1.1
Eurostat max
56.2
23.0
41.5
36.0
30.8
33.9
30.8
26.3
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Innovation indicators - examples (13)
 Key policy-relevant characteristics:
3.
(N) =
% of R&D-performing firms that co-operated with other institutions
Number of R&D-performing firms that co-operated with
other institutions
*100
(D) = Total number of R&D-performing firms
(N) =
Number of R&D-performing firms that co-operated with
other institutions
*100
(D) = Total number of R&D-performing firms
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Final remarks
 Data collected with innovation surveys are a
important component of comparative studies
about countries’ competitive performance;
 Strategically important for policy-makers;
 Data confidentiality;
 Data reliability.
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Thank you!
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[email protected]
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