Continuous Innovation Projects In The Innovation Process Real Options Decision Analysis Method, A Preliminary Study

The importance of innovation of enterprise is sustainable, which is difficult. The process of Enterprise's Sustainable Innovation (ESI) is complicated and nonlinear, which is a dynamic and systematic composition, composed of many types of sustainable innovation ( normally, including product innovation, technology innovation, material innovation, organization innovation, techniques innovation, management innovation and market innovation and so forth), many innovation programs or groups of innovation program. From the beginning of stating up program of sustainable innovation, all the innovation programs are highly connected and affected each other. The innovation program which has been completed not only settles imbalance problem of old production and management, but also contributes to a new imbalance, which is the basic reason for developing continue innovation program, as well as the important fundament and support. Then there is a characteristic of dynamic and systematic in the process of ESI.Whether innovation of enterprise is carrying on, it is mostly depend on the enterprise develops and operates new innovation program continually, and gains profit of innovation. If a enterprise wants to achieve real sustainable and development, you must effectively manage a single innovation firstly, then different types, different innovation programs or the groups of innovation programs. The most characteristic of ESI program and enterprise program is indefinite. How to resolve the indefinite is a core issue. The method of Real Options (RO) can not eliminate, even decrease, the indefinite which is inherent in process of innovation program of enterprise. But RO, which have been trying to eliminate the indefinite, research on the definite about exploring potential advantage and try to decrease potential risk. In sum, the best advantage of exerting RO is to force manager to directly face the definite and establish a fully decision, which is beyond the assessment of RO.The innovative program of enterprise is largely uncertainly. The key of decision of innovative program is how to mitigate the uncertainty. The conventional method, Discount Cash Flow (DCF), is rather limited to evaluate innovative program. The method is based on gathering the certain information and calculating in quantify. And it ignores evaluation for the future field. It is impossible to study in the future. The more uncertain, the more inaccurate. The result of making a decision by DCF is, on the one hand, it is possible to give up many fine programs because of overestimating the uncertainty of the program, on the other hand, it is possible to imprudently startup the program on the bases of underestimating the uncertain of innovation program. When some unexpected situations appeared, the one couldn't take effective measures and would lead fail. RO can't eliminate the uncertainty which is inherent. But RO aims at the uncertainty, researching on how to exert excellence of the program or try to reduce the potential risks. The advantage of RO is to force managers to directly face the uncertainty and establish a full and valid method for decision and analyze.The paper is based on the fundamental theory of ESI, analyzed the characteristic of innovation program in process of ESI. This paper exerted the idea and method of RO, replying to how to effective manage the innovation program in process of ESI. In the light of quantify, the author came up with RO invest strategy for innovation program in process of ESI. Finally, in the paper, a case study was made. The author analyzed the sustainable innovation process for Yunnan Copper Company.