Innovation is more than a buzzword. It’s a process that requires management and measurement to be successful.
Two classes on innovation strategy and analytics at MIT Sloan this year are preparing students to ask the right questions when managing innovation in a high-tech industry.
“There are three foundations of effective innovation strategy,” said Jacquelyn Pless, who is teaching the Innovation Strategy course. “First, creating something that’s actually valuable, something people are going to demand and that’s going to impact either the firm or society in some positive way. Second, how do you deliver it effectively, how do you get people to want it, beyond just early adopters? And third, how does the firm capture value from that?”
Pless said she will answer a variety of questions to help students learn how to build and manage a successful innovation strategy within a firm.
“One mistake that I commonly hear is that there is no way to manage innovation,” Pless said. “There are better strategies under certain circumstances and contexts than others, and pretty rigorous frameworks to guide strategic decision-making throughout the innovation process.”
That thinking includes how to quickly identify when a project needs to be killed, how to assess the direction of a particular technology, and how to predict potential future revenue.
Pless will also focus classes on:
- open innovation
- in-house versus outsourced research and development
- artificial intelligence and its relation to innovation and decision-making
- data privacy and intellectual property
- platforms and regulatory strategies
Innovation with a social impact is another topic that will be discussed in the class.
“Innovation obviously is something that has the potential to drive firm profits and performance and such, but not all innovations are created equally,” Pless said. “Some have more impact on society than others. In the energy and environment space [for example], innovating in clean energy over dirty energy will generate different value to society, and that could have different implications for the firm's performance and the future.”
MIT Sloan senior lecturer Adam Jaffe is teaching the measurement side of innovation in the Innovation Analytics course.
“One of the things people don't think about enough is how much imperfect measurement is still more valuable than no measurement,” Jaffe said.
That’s why Jaffe’s analytics course focuses on available metrics — think statistics, patents, mapping networks — and what can be done with them.
“It's very hard to know which are going to be the big ideas; no one's going to come in with a metric that's going to give you the answer,” Jaffe said. “But if using metrics can increase the signal-to-noise ratio by a significant factor, even if it’s still a heck of a lot of noise, from a management perspective you’re quite a bit better off.”
Jaffe said he’ll also delve into the novelty of patents and the role it plays in innovation.
“Most patents are novel enough to be granted, but not really very interesting,” Jaffe said. “So, for example, in the course we talk about using natural language processing algorithms to look at the text of patents to see whether they’re using combinations of words that have never been used before, as an indication that maybe this is something important.”