Organizational Theory,

Design, and Change

Sixth Edition
Gareth R. Jones

Chapter 13
Innovation,
Intrapreneurship,
and Creativity
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Learning Objectives
1. Describe how innovation and
technological change affect each
other
2. Discuss the relationship among
innovation, intrapreneurship, and
creativity
3. Understand the many steps involved
in creating an organizational setting
that fosters innovation and creativity
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Learning Objectives (cont.)

4. Identify the ways in which
information technology can be used
to foster creativity and speed
innovation and new product
development

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Innovation and
Technological Change
Innovation: process by which new
goods and services or new production
and operating systems are developed

Enables better response to customer

needs

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Types of Innovation
Quantum technological change:
a rare, fundamental shift in
technology that revolutionizes
products or the way they are
produced

Quantum innovation: new products

or operating systems that incorporate
quantum technological improvement
These can cause major changes in the
environment
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Types of Innovation (cont.)

Incremental technological
change: technological change that
represents a continual refinement of
some base technology

Incremental innovations: products or

operating systems that incorporate
refinements of some base technology

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Types of Innovation (cont.)

Technology cycle

Quantum innovations occur rarely

Technological discontinuity

Dominant design emerges

Era of incremental change and innovation
during which competition is based on
technology
Technological discontinuity may occur
again and the process starts all over
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Figure 13.1:
The Technology Cycle

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Property Rights
Innovation is expensive and needs to
be protected

Patents
Copyrights
Trademarks

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Innovation, Entrepreneurship,
and Creativity
Intrapreneurs: leaders of innovation
and new product development in
established organizations

Notice opportunities
Manage product development
May leave organization if their ideas are
not supported

Become entrepreneurs

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Innovation, Entrepreneurship,
and Creativity (cont.)
Creativity: ideas going beyond the
current boundaries, whether those
boundaries are based on technology,
knowledge, social norms, or beliefs

Most people are creative at some time

May involve combining and synthesizing
new things

Knowledge-creating organization:
an organization where innovation is
going on at all levels and in all areas
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Entrepreneurship as Creative
Destruction
Creative destruction: new companies
use new global and technological
opportunities to make better products that
drive old, inefficient companies out of
business
Old inefficient companies are driven out
of business
Emergence of new industries

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Innovation and the

Product Life Cycle
Product life cycle: the changes in
demand for a product that occur over
time

Demand for most successful products

passes through four stages:

The
The
The
The

embryonic stage
growth stage
maturity stage
decline stage

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Innovation and the Product

Life Cycle (cont.)
Product life cycle (cont.)

Embryonic stage: a product has yet to

gain widespread acceptance

Growth stage: a product has been

accepted by customers

Minimal demand

Demand increases

Mature stage: market demand peaks

because most customers have already
bought the product
Decline stage: occurs if and when
demand for a product falls
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Innovation and the Product

Life Cycle (cont.)
Determinants of the length of the
product life cycle

Rate of technological change

Faster the rate of change, the shorter the

product life cycle

Role of fads and fashion

Determine the attractiveness of products to

customers

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Figure 13.2: Technological Change

and Length of the Product Life Cycle

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Managing the Innovation

Process
Project management: the process
of leading and controlling a project so
that it results in the effective creation
of new or improved products

Project: a subunit whose goal centers

on developing the products or service on
time, within budget, and in conformance
with predetermined performance
specifications

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Managing the Innovation

Process (cont.)
Project management (cont.)

Effective product management often

begins with a clearly articulated plan

Project managers tasks are different from

regular managers

Takes a product through the concept, initial

test, modification, and manufacturing phases

Manage high proportion of highly skilled and

educated professionals
Plan to deal with top corporate executives

Must keep project on track

Often quantitative modeling is used

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Managing the Innovation

Process (cont.)
Project management (cont.)
Quantitative modeling

Examples include PERT/CAM network of

Gantt Chart
Flowcharts of a project that can be built
with many proprietary software packages

These software packages focus on:

Modeling the sequence of actions necessary to reach

a projects goal
Relating these actions to cost and time criteria
Sorting out and defining the optimal path for
reaching the goal
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Managing the Innovation

Process (cont.)
Quantitative modeling (cont.)

Critical path method

Goal is to determine:

Which particular tasks or activities of the many that

have to be performed are critical in their effect on
project time and cost
How to sequence or schedule critical tasks so that
a project can meet a target date at minimum cost

Optimal sequencing of tasks is often worked

out by a team

Analysis is an important learning tool

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Figure 13.3: CPM Project Design

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Managing the Innovation

Process (cont.)
Stage-gate development funnel

A structured and coherent innovation

process that improves control over the
product development effort
Forces managers to make choices among
competing new product development
projects so that resources are not spread
thinly over too many projects

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Managing the
Innovation Process (cont.)
Stage-gate development funnel (cont.)

Stage 1: Funnel has a wide mouth to

encourage as many new product ideas as
possible from both new and established
project managers
Stage 2: Specify all of the information
required to make a decision about
whether to go ahead with a full-blown
product development effort

Plans are either accepted, revised, or rejected

Stage 3: Proceed to development phase

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Figure 13.4: A Stage-Gate

Development Funnel

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Managing the Innovation

Process (cont.)
Cross-functional teams

Coordinating R&D function with other

functions is critical but often difficult

New product development teams

Marketing, engineering, and

manufacturing need to be core members
of product teams
Core members: refers to a nucleus of
three to six people who bear primary
responsibility for the product
development effort
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Figure 13.5: Innovation as a

Cross-Functional Activity

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Managing the
Innovation Process (cont.)
Team leadership

Having cross-functional teams is not

sufficient for innovation they have to be
managed properly
Lightweight team leader: a mid-level
functional manager who has lower status
than the head of a functional department
Heavyweight team leader: a true
project manager who has higher status
within the organization
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Managing the Innovation

Process (cont.)
Skunk works: a temporary task force
that is created to expedite new
product design and to promote
innovation by coordinating the
activities of functional groups

An island of innovation located away from

the organization
Dissolved when the product is brought to
market
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Managing the Innovation

Process (cont.)
New venture divisions: a new
division that is allocated a complete
set of value-creating functions to
manage a project from beginning to
end

Assumes full responsibility for the

commercialization of the product
Normally an independent division
Balance of control between the division
and the corporate center is problematic
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Managing the Innovation

Process (cont.)
Joint venture: a strategic alliance
among two or more organizations that
agree to jointly establish and share
the ownership of a new business

Allows organizations to combine their

skills and technologies and pool their
resources to embark on risky projects
Partners may disagree over future
development plans

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Managing the Innovation

Process (cont.)
Creating a culture for innovation

Organizational structure
Creating the right setting is important to
fostering innovation
Increasing organization size, age, and
complexity may slow innovation
Organic structures tend to promote innovation

People organizations need to guard

against too much similarity
Property rights create career paths to
show that success is closely linked with
future promotion and rewards
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Innovation and Information

Technology
Information efficiencies: the cost
and time savings that occur when IT
allows employees to perform current
tasks at a higher level

Enables employees to assume additional

tasks
Enables employees to expand their roles
in the organization due to advances in
the ability to gather and analyze data
also allows information efficiencies
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Innovation and
Information Synergies
Information synergies: the
knowledge building created when
individuals or subunits pool their
resources and collaborate across
boundaries
Boundary-spanning activity: the
interactions of people/groups across
the organizational boundary to obtain
valuable information and knowledge
from the environment
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IT and Organizational
Structure and Culture
IT affects the innovation process
through its many effects on
organizational structure
IT gives lower-level employees more
detailed and current knowledge of
consumer and market trends and
opportunities
IT can produce information synergies

Facilitates increased communication and

coordination between decentralized
decision makers and top managers
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IT and Organizational
Structure and Culture (cont.)
IT means that fewer levels of
managers are needed to handle
problem solving and decision making
IT provides lower-level employees
with more freedom to coordinate
their actions

Information synergies may emerge as

employees experiment and find better
ways of performing their tasks
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IT and Organizational
Structure and Culture (cont.)
IT facilitates the sharing of beliefs,
values, and norms

Allows for the quick transmission of rich

and detailed information between
people and subunits

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