1. Management and Controlling of
Innovation
1

2. Herwig R. Friedag
Born in1950, Dipl. Volkswirt, Dr. rer.pol.
Independent consultant focusing on:
 Implementation of Balanced Scorecard in
companies
 Workshops on Balanced Scorecard
Internationaler Controller Verein eV
 head of the PR committee at ICV
Visiting lecturer at
Humboldt University in Berlin and
Danube University Krems (A) Dr. Herwig R. Friedag
Friedag Consult
Beskidenstr. 33, D 14129 Berlin
Fon +49 30 80 40 40 00
Hobbies: discovering the New, travels, Fax +49 30 80 40 40 01
bicycle tours, enjoying the nature, consult @ friedag.com
www.friedag.com
volleyball, sailing
© Herwig Friedag 2011

3. Agenda
Management and Controlling of Innovation
1 What is Innovation
2 Company Structure as a Basis for Innovations
3 How do we Create Innovations
4 Innovation Controlling
© Herwig Friedag 2011 3

4. 1. What is Innovation
Innovation
Innovation is a technial or organizational novelty:
 new products,
 new markets,
 new procedures,
 new approaches,
 new processes ,
 new sales channels,
 new promotions and and much more.
source: http://de.wikipedia.org/wiki/Innovation
© Herwig Friedag 2011 4

5. 1. What is Innovation
Invention – Innovation – Renewal
We distinguish between:
Innovation: Renewal:
something new exchange of products/services
that proves its
worth on the
market
Invention: generation of an idea
source: http://de.wikipedia.org/wiki/Innovation bzw. http://de.wikipedia.org/wiki/Erneuerung
© Herwig Friedag 2011 6

6. 1. What is Innovation
Invention
 Invention is the basis of innovation
 But, it is not enough to just generate an idea:
Sale or use distinguish innovation from invention.
 da Vinci’s helicopter
 Transrapid

7. 1. What is Innovation
Invention
 Invention is the basis of innovation
 But, further developments
of existing solutions as well as
for previously unknown solutions
are also innovations
 Sea-Container
 improvement of existing and creation of
new combinations of production factors
 Nespresso

8. 1. What is Innovation
Innovation
 An innovation deals normally with something „new”, a previously
unknown solution.
 Postal service:
Packstation (parcel-station)
 This novelty has to be noticed and
become conscious.
 i-Phone

9. 1. What is Innovation
Innovation
 This combination has to prove its worth
in the market or in-house (company).
 bofrost*
frozen food delivery
 Opening up new markets
and gaining access to the markets
 Walkman

10. 1. What is Innovation
Innovations
Innovation leads to
 a short period of monopoly and therefore to
 financial benefits (pioneer advantage)

11. 1. What is Innovation
Renewal
 Renewal
It is about the exchange or replacement of products/services.
For example, a new car model that has been launched into the market.
 Platform-strategy of Volkswagen
 scheduled further development of
existing solutions
 Minicontainer

12. 1. What is Innovation
Renewals
 Renewal strengthens the existing structures and processes.
 Renewal needs open spaces for targeted improvements.

13. 1. What is Innovation
Impact of Renewal / Innovation 1
1 from: Kim / Mauborgne: der blaue Ozean, Hanser, p. 7

14. 1. What is Innovation
Why Innovation
„Thanks to innovations we are able to significantly increase our profitability“
Source: Gleich et al.: Innovations-Controlling, 2011, p. 32
© Herwig Friedag 2011 15

15. 1. What is Innovation
Why Innovation ?
 actively meet technical and economical changes
 Innovation is the central resource in the global market
source: Innovationsförderliche Organisationskultur,
Eine konzeptionelle und empirische Untersuchung radikaler Innovationsprojekte
vorgelegt von Diplom-Psychologin Jeanette Liebeherr
(http://opus.kobv.de/tuberlin/volltexte/2009/2286/pdf/liebeherr_jeanette.pdf)
Result:
 crucial significance of radical innovation
 esp. the creative potential of colleagues
is to be promoted and employed:
we need a innovative corporate cultur!
© Herwig Friedag 2011 16

16. Agenda
Management and Controlling of Innovation
1 What is Innovation
2 Corporate Culture as a Basis for Innovations
3 How do we Create Innovations
4 Innovation Controlling
© Herwig Friedag 2011 17

17. 2. Corporate Culture as a Basis for Innovation
What is Corporate Culture?
Corporate culture is a term from organizational theory and describes
the creation, development, and influence of cultural aspects within an
organization.
source: Wikipedia (http://de.wikipedia.org/wiki/Organisationskultur)
The corporate culture is closely related to the in-house structures and
centrally influences
 the innovation readiness and
 innovation capability as well as
 enthusiasm for taking risk and experimenting
among
individuals, organizational units and as a result in the entire company.
source: Schein, Edgar: Unternehmenskultur, Frankfurt/Main, New York, 1995
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18. 2. Corporate Culture as a Basis for Innovation
General Conditions for Creativity and Innovations
The most important factor is a
positive view of people:
„We have in principle a positive,
open-minded attitude towards people.“
 We have an understanding for individuality
of our colleagues.
 We accept differences among people.
 We are ready to solve problems in an active and moderate way.
 We provide appropriate requirements and support.
 We rely on our colleagues’ judgements.
 We trust in efficiency and commitment.
We respect our colleagues.
© Herwig Friedag 2011 19

19. 2. Corporate Culture as a Basis for Innovation
Innovation and Positive View of People
Conditions to motivate people are to be created:
 more self-determination
 wider areas of responsibility
 more flexible organizational structures, group work and projects etc.
 self-controlling instead of external control
 creativity will be promoted by good leadership
© Herwig Friedag 2011 20

20. 2. Corporate Culture as a Basis for Innovation
Promoting Innovation through “Good Leadership“
 together prepared / supported company vision
 Company-values we are living
 we-thinking (team spirit)
 emotional intelligence (empathy, social competence)
© Herwig Friedag 2011 21

21. 2. Corporate Culture as a Basis for Innovation
Good Leadership
The behaviour of a executive manager signals
which values, attitudes and patterns of behaviour
are considered to be appropriate.
 Executive managers set essential framework
conditions for their staff members.
 Executive managers are central ”culture carriers”
and culture creators.
 An innovation-promoting corporate culture comes
into being through a cooperative and bottom up management style.
© Herwig Friedag 2011 22

22. 2. Corporate Culture as a Basis for Innovation
Further Innovation-promoting Aspects
 composition of staff/teams
 competence development within company
 appreciation
 participation and involvement
 positive approach to mistakes
 freedom
 innovation as a basis for your business model
© Herwig Friedag 2011 23

23. Agenda
Management and Controlling of Innovation
1 What is Innovation
2 Corporate Culture as a Basis for Innovation
3 How do we Create Innovations
4 Innovation Controlling
© Herwig Friedag 2011 24

24. 3. How do we Create Innovations
Innovation-promoting Corporate Culture (1)
Ideas for implementing „good“ management:
 aims and visions should be there, still better: should be together
developed and communicated
 vision as a picture of our future to inspire ourselves and our
colleagues:
 visions bring clarity and direction into our actions and thinking
 we know in which direction our company is developing
 we know what our aspirations are, what our actions and
wishes aim at
 we don´t need specific rules
 building correspondence between responsibility and competence
© Herwig Friedag 2011 25

25. 3. How do we Create Innovations
Innovation-promoting Corporate Culture (2)
Ideas for implementing „good“ management :
 controlling instead of control
 empower people, delegate responsibility and control to the staff
 bringing together many involed colleagues
 ”visiting” the workplaces
 practicing open-discussion culture across several hierarchy levels
 creating willingness to eliminate unnecessary ACTIONS
 detecting and solving chronic conflicts
 setting an example
© Herwig Friedag 2011 26

26. 3. How do we Create Innovations
Innovation-promoting Corporate Culture (3)
Ideas for implementing „good“ management :
 education of management / staff
 job-rotation
 delegating responsibility
 ideas exchange (methods of evaluating ideas)
 reorganize company into teams--> reduction of „de-part-ment"-borders
© Herwig Friedag 2011 27

27. 3. How do we Create Innovations
Innovation-promoting Corporate Culture (4)
Ideas for courage appreciation:
 team bonuses (money, incentives)
 the amount of incentives for team work has a positive effect, the
amount of incentives for individual performance has however
negative effect
 innovation culture can be directly influenced by incentive systems
 the material incentive system has a direct, positive effect on
effectiveness and the immaterial incentive system on the efficiency
of the project
 public ”praise” for the team
 responsibility delegation
© Herwig Friedag 2011 28

28. 3. How do we Create Innovations
Positive Approach to Mistakes as a Part of
Corporate Culture
 seeing mistakes as „an opportunity to learn”
Positive approach to mistakes has a considerable and direct influence on
the innovation potential as well as on the company competitiveness.
Productive mistake strategies are a central competitive factor, because
the way you see and evaluate mistakes and how you deal with them in
daily routine has a great influence on the productivity of the company
 Somebody who regularly reviews his/her mistakes, prevents their
repetition. The most valuable lessons are these which initiate self-
learning directly after a mistake has occured so that at least the same
mistake won’t occur again.
© Herwig Friedag 2011 29

29. 3. How do we Create Innovations
Positive Approach to Mistakes as a Part of
Corporate Culture
 seeing mistakes as „an opportunity to learn”
Positive approach to mistakes has a considerable and direct influence on
the innovation potential as well as on the company competitiveness.
Productive mistake strategies are a central competitive factor, because
the way you see and evaluate mistakes and how you deal with them in
daily routine has a great influence on the productivity of the company
 Somebody who regularly reviews his/her mistakes, prevents their
repetition. The most valuable lessons are these which initiate self-
learning directly after a mistake has occured so that at least the same
mistake won’t occur again.
 no mistake is the biggest mistake
© Herwig Friedag 2011 30

30. Agenda
Management and Controlling of Innovation
1 What is Innovation
2 Corporate Culture as Basis for Innovation
3 How do we Create Innovations
4 Innovation Controlling
© Herwig Friedag 2011 33

31. 4. Innovation-controlling
Innovation Phases to be Considered
© Herwig Friedag 2011 34

32. 4. Innovation-controlling
Controlling in All Innovation Phases
Quelle: ControllingWiki
© Herwig Friedag 2011 35

33. 4. Innovation-controlling
Controlling does not stop innovation
1. Discuss goals with the management
2. Try to find figures which are
 creating transparency
 relevant for the management
 simple to count / for understanding
3. Discuss the situation with the management
4. Learn and improve the situation
© Herwig Friedag 2011 36

34. 4. Innovation-controlling
Controlling in All Innovation Phases
1. Ideas generation
 number of developed or implemented ideas etc.
2. Operationalisation
 price-expectations
3. Research
 targeted production costs
4. Development
 Innovation rate
5. Market launch
 Profit-share of new products
© Herwig Friedag 2011 37

35. Conclusion
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36. 4. Innovation-controlling
Conclusion: Innovation
Sustainable development
Daily innovation Income by innovation
Figures allow discussions Ideas for innovation
Innovation
Management
Controlling needs Goals Motivation for ideas
Learning with mistakes Leadership motivates
Corporate culture
© Herwig Friedag 2011 46

37. The End?
No:
I hope the beginning of a
consequent innovation
management
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