Understanding and managing innovation processes

The lecture was delivered at the Prize ceremony during the 19th International Conference of the System Dynamics Society in Atlanta, Georgia. It summarizes the Award winning article, published in the 1996 issue of System Dynamics Review, and discusses subsequent work. Comprehensive citations and quotations are found in the original publications. Shortened product life cycles, tight competition, and resource intensive research and development are some of the parameters that make innovation management a highly challenging endeavor. To succeed in such an environment, a solid understanding of the observed and the expected behavior is indispensable and can effectively be supported by modeling the object under investigation. The article analyzes strategies for new products, especially price strategies, and includes the processes of research and development in a comprehensive model, which then is disaggregated to explicitly take into consideration the actions of different competitors, Finally, a multi-person gaming version is presented. The article concludes with some thoughts about complexity, its dimensions and its challenges for system dynamics. Copyright (C) 2002 John Wiley Sons, Ltd.