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Study on the importance of innovation management in the organization
Sheikh Talha RS1904 B25 10906035
Submitted to: Miss. Tannu Badhwar
LOVELY PROFESSIONAL UNIVERSITY
I take this opportunity to present my vote of thanks to all those guidepost who really acted as lightening pillars to enlighten our way throughout this project that has led to successful and satisfactory completion of this study. We are really grateful to our COD Mr.Devdhar shetty for providing us with an opportunity to undertake this project in this university and providing us with all the facilities. We are highly thankful to Miss.Tannu Badhwar for her active support, valuable time and advice, whole-hearted guidance, sincere cooperation and pains-taking involvement during the study and in completing the assignment of preparing the said project within the time stipulated. Lastly, We are thankful to all those, particularly the various friends , who have been instrumental in creating proper, healthy and conductive environment and including new and fresh innovative ideas for us during the project, their help, it would have been extremely difficult for us to prepare the project in a time bound framework.
HOW IDEAS GET TRANSFORMED INTO INNOVATION INTRODUCTION No distance is too far and no dream is too large because the cycle of life keeps changing. Certainly, changes bring improved lifestyle and technological progress, consecutively to keep the momentum of improvements one has to really appreciate innovation. But where does the innovation come from? An apple in Newton‘s head sparked to deliver an Idea, which plays a vital role in everyone‘s life till today. Innovation can be considered to be as creativity, i.e., to create new ideas and knowledge creation. However it goes beyond idea generation to putting those ideas into action. So it is important to evaluate the ideas in order to yield good innovation. An idea that is developed and put into action creates innovation. Moreover, ―seamless flow of new Ideas is the vital source‖ for sustained innovation. In order to gain advantage of sustainable innovation, we need to evaluate the ideas and organizations‘ need to have some metric in place to access the progress. Metrics can be customized by the managers to keep track on innovation success in their companies. These metrics can help senior executives assess their company‘s innovativeness and hence combat the insidious strategy decay that often afflicts a company‘s business. According to Hamel and Valikangas (2003) the organizations‘ strategies can be decayed mainly by four reasons. • Over time they get replicated and they lose their distinctiveness and, therefore, their power to produce above-average returns or better strategies supplant them • Strategies also get exhausted as markets become saturated • Customers get bored, or optimization programs reach the point of diminishing returns • Finally, strategies get eviscerated. Customers or suppliers become so powerful that they can dictate much lower prices than before.
INNOVATION DEFINITION - “INNOVATION” The US federal advisory committee on measuring innovation defines innovation as follows. The design, invention, development and br implementation of new or altered products, services, process, systems, organizational structure or business models for the purpose of creating new value for customers and financial returns of the firm‖. The definition of innovation can be divided into two perspectives, namely Opportunities to exploit and Opportunities to explore (Amy Wong, 2001). Let‘s try to understand both of them. First perspective, opportunities or changes to exploit are those where most of the parameters are well defined and understood. It is something like improving an ongoing process, reducing cycle time, increasing throughput or reducing cost. So these are basically incremental improvements. On the other hand, opportunities/changes to explore are those areas, where we have newly started and have little information about it. Here we have ideas and solutions which are applied in new ways to solve new problems. It creates the environment for transformational innovation. For this paper, I adopt Peter Drucker‘s (1993) definition of Innovation, who defines Innovation in business terms as the fundamental to the quest for profitable and sustainable growth. Precisely one of the important business competencies needed for the future, it implies that innovation is not all about marginal improvements on some unimportant products. OTHER CLASSICAL DEFINITIONS OF INNOVATION ABS, the Australia‘s most comprehensive Innovation Survey (1996) defines, ―An innovation is any new or substantially improved goods or services which has been commercialised or any new or substantially improved process used for the commercial production of goods and services. First at the level of an individual firm, Innovation is defined as the ―application of ideas that are new to the firm, whether the new ideas are embodied in products, processes, services or in work organization, management or marketing systems.‖
Second at the business perspective, ―Innovation is something that is new or significantly improved, done by an enterprise to create added value either directly for the enterprise or indirectly for its customers.‖ NEED FOR INNOVATION Why that innovation is playing a vital role in companies now? What is the need for innovation and how does it impact companies‘ growth? Horibe (2001) emphasizes ―What is likely to kill a company in this new economy is not somebody doing something better, it‘s somebody doing something differently.‖ So is it all about being different in the market, may be true for some industry sectors but not applicable for general industries. In today‘s fast moving economic situation, mostly category breaking business environments meet their objectives. Only such companies meet their estimate growth, gain profit, out run their competitors and show excellence in execution. They achieve by the culture of ―INNOVATION‖. In every industry, the leading companies are the innovators. However the cadre of innovators keeps changing. For example, Thomas J. Peters and Robert Waterman (1982) cited that companies like Amdahl, Texas Instruments, Eastman Kodak, and Maytag as exemplars in their business classic, In Search of Excellence. They achieved that stage by extensive innovation and market presence for years. Meanwhile, today‘s innovators such as Wal-Mart (chain of retail shops), Southwest Airlines (good service for low fare), eBay (online auctions), and the University of Phoenix (degree programs for working adults) are themselves relative newcomers. Such high turnover at the top suggests that the real problem is not with the lack of innovation, but it is ―Sustained Innovation‖. Companies may seize upon a good idea that gives them an advantage for a while, but sooner or later, they cede this advantage to a competitor who has found an even better idea. As Nicholas Stein (2000) correctly mentioned, ‗Innovation is at the heart of sustaining a company‘s competitive advantage‖. This holds very true as long as any company wants to stay on top of their competitors and win the innovation game. Innovation is very important criterion for success in the future, (Horibe, Frances Dale Emy, 2001) an important study done on the rate of return of 17 successful innovations
shows a mean return of 56% in comparison with an average Return on Investment (ROl) of 16%. It is clear that organizations need to innovate to survive and achieve good profit figures. WHAT TO INNOVATE Now we understood the importance of the role that innovation plays in an organization. The next important question now arise is where and which things to apply innovative ideas in a big organization. Suggestion and recommendation for where to apply innovations are as follows, 1. Innovation can be applied to products, services, design, invention, development, process, and systems. 2. To make a product! service compete with the new economy. This is essentially to educate organizations to move out of their traditional old habits1 to the new innovation culture. 3. To avoid high risks — Avoiding high risks involving money, staying ahead of competition and high pay off opportunities are the essence of the innovation 4. To gain long term market focus, as a result the company can save money. 2.1. KINDS OF INNOVATION Based on the way, it is implemented Innovation can be divided into two major categories namely, 1. Incremental Innovation and 2. Radical Innovation Let us discuss about how these innovation methods are applied in the industry and which are the companies adopt them. INCREMENTAL INNOVATION Incremental innovation projects are built upon an existing knowledge and resources within an organization. As a result the existing competencies of the company are being enhanced. There is a modest technological change and the 1Traditional myths & habits may change firms incompetent to the current market and it is no longer useful existing product remains competitive in the market. Literally, these organizations don‘t work against their competitors, instead build innovation groups among their own
different kind of products and be an active competitor for their products. For example, the Hewlett-Packard2 Company produces both laser and ink jet printers. These products equally compete in the market. They came up with a plan, to divide the markets of both the ink jet and laser divisions. As a result, HP has become the leader in both laser and ink jet printers. RADICAL INNOVATION On the other hand, Radical Innovation projects are developed and implemented in a completely new area of operation. So organizations require to completely acquiring new knowledge and resources. In the execution, it involves large technological advancements. As a result the existing competence of the organization might get turmoil and become obsolete. For example, Intel, one among the largest PC processor manufacturers, appreciates radical innovation. It initially developed single core processors, however as soon as it released its dual core processors, the former became obsolete and the later gained its market. This process is endless, as Intel recently released its multi core processor, which might cease the interest of dual core processors in future. Literally, Intel cannibalizes its own business by constantly bringing out better processors to replace the ones that are once market leaders. PROBLEMS WITH CHANGE As we discussed about the types of innovation, now it is important to find out which method does an organization need to select. There arise the problems with managing changes, which are the results of innovation activity. Most organizations are resistant to rapid and discontinuous change, because of many factors like its traditional values, business strategies etc.; moreover it is difficult for them to find solutions in a new direction in which their business is not focussed. The fear of chance makes many companies to stick in their standard mode of operation. They work hard to bring up existing model work better and don‘t spend time looking for a better model, or a better method of operation. Gary Hamel (2003) puts forward, ―Most companies are built for continuous improvement, rather than for discontinuous innovation. They know how to get better, but they don‘t know how to get different.‖
But successful companies deploy their managers to take responsibility for initiating and directing change in addition to their objectives. Successful companies believe that they need to do something that the world has not seen before. They change and innovate so that they are first and unique in this wild and competitive market. Let us analyse this with the scenario from software industry. Yahoo first released its popular instant messaging program Yahoo! Messenger (YM). This is a GUI based beta release of the software, which became very popular in lategO‘s3. Though YM is more popular, it had many bugs reported by the customers, so YM has to develop and release bug fix and patches. The lesson learnt is being ahead in the market and managing chance to sustain. Lately, YM introduced voice and live video messaging options, all as a result of adapting to chance and applying innovation. MISUNDERSTOOD TERMS There are few terms which are normally misunderstood in context. Perhaps this section will address those terms and avoid confusions of the same. CREATIVITY AND INNOVATION Creativity and innovation might sound similar in contextual meaning. Ofcourse, innovation typically involves creativity but it is not identical to it. Linda Naiman (2005) defines, ―Creativity is typically used to refer to the act of producing new ideas, approaches or actions, while innovation is the process of both generating and applying such creative ideas in some specific context.‖ In simpler words, innovation involves successful implementation of creative ideas. We can say that creativity is the act of producing new approaches and imaginative ideas. But, Innovation is the production or implementation of an idea in some specific context. So if we have ideas, but don‘t act on them, then it means that we are simply imaginative but not creative. INNOVATION VS INVENTION Following the above mentioned concept of creativity, the next similar misunderstood concepts are Innovation and Invention. Fagerberg (2004) distinguishes them as; ―Invention is the first occurrence of an idea for a new product or process, while innovation is the first attempt to carry it out into
practice‖. Interesting thing is that, Innovation does occur when someone uses an invention or an idea to change how the thing it works. So to make it more precise, invention is a ladder to reach the spot called ―innovation‖. GENESIS OF AN IDEA The types of innovation helped us to understand the methodology in which the innovation is applied in industry. This also helped us to understand the risks involved if the organizations resist changing. This is a business view of innovation, now let us look it from the conceptual view of innovation. The basic building blocks of innovation are IDEAS. Ideas are basically the outcomes of the thought process. The quantity and quality of idea does have a direct impact in innovation, so it is important to classify ideas. As supported by Paulo Matos (2002) that is if a company classifies a good idea it means that there is little evaluated risk involved to achieve excellence in execution. Therefore, to come up with good ideas and concepts for new products, CEOs have to encourage break through thinking. So to be innovative, the idea has to be creative and implemented. The core discussion of this paper is to analyse the ideas process and to apply suitable metrics to evaluate whether the germinated ideas is a good or not.
IDEA GENERATION PROCESS The idea generation process is nothing but the whole process from thinking to action, i.e., from the generation of first ideas to the final innovative result. Understanding these phases will helps us to review the ways of combining and creating knowledge that can relate to reality. People! team‘s role in Idea generation process The idea generation process and thereby innovations are strongly connected to people‘s attitudes. As Peter Drucker (1993) points out that in order to organise work, it is necessary to start with a specific task/problem, to then make the information input and finally develop the necessary human relations to get the work done.
But who has to take the ownership of this task? Druker (1 993) reinforces the people‘s role, according to him it is necessary that someone takes matters into his won hands and make them happen. A simple NO answer must always be confronted to get to know the underlying reasons and ease the search for answers. In other words it just means that ―people and organisations have to exceed what is predefined in their functions.‖ So people have to think that a problem is in place not to fail but as an opportunity to seize for growth. If such an attitude has to be in people, then their motivation level needs to be higher. Thus innovation should be attractive and beneficial for the owners! managers involved, for this there must be a clear definition of the innovation‘s importance and its dimension in the global setting. Human relations are based on communication. Thus effective communication between the employees and top management will certainly impact the idea generation process and to get appropriate solution in case of problems. Organisation role on innovation In this section, let us discuss about the strategies and tactics that organizations need to follow in order to gain advantage from idea generation process. According to Paulo Matos (How to improve management of ideas, 2002), One important skill that organizations‘ need for idea generation and Innovation are • The long term vision, • The ability to identify or even anticipate market tendencies and • The will and ability to gather and integrate the process. • Additionally, the EU innovation manuals states the other necessary skills that organization needs to posses are • The ability to take risk (Calculated risk) • Internal co-operation between the different functional department and • The external cooperation, with public investigation, with consulting services. Therefore, when developing new ideas it is important to understand the organizations‘ skill and it is a good idea to have a list that allows controlling the critical factors for the idea implementation. One among the critical factor is controlling the change. So to handle this change, a good method could be to inherent organisation change
process into small entities such that it does not cause any ruptures with the on going procedures, articulating, and sequencing them so that in the long term the desired result is achieved. Once the tactics are set, organizations need to employ appropriate tools and methodologies which are discussed in the later chapters. Summarizing the organizations‘ role from the strategic point of view, an organization necessarily has to define the evaluation system towards the initial set goals. The system will include the aims to be attained, manage change, and organize the skill of the company and the indicators to consider in the innovation activity analysis. PHASES OF IDEA There are many theories about the individual phases of ideas; different authors postulate different number of phases in the idea generation process. For this paper, I adopt Professors Hansen and Birkinshaw (2003) work on innovation values chain. They divide innovation process as a sequential three phases. 1. Idea Generation 2. Idea Conversion 3. Idea Diffusion Additionally, for this discussion I tried to add one more phase, 4. Idea Assessment
IDEA GENERATION ―A good start is half of the work‖4, says an old Albanian adage. Similarly a good start for an innovation/innovative product is GOOD IDEAS. But where do these good ideas come from? People who make difference in an organization are the key resource of idea generation process. So the fragments of ideas that come across the organization will influence in generating a creative idea. For the idea generation phase, the financial, practical, physical limitation and other business parameters are not considered, this is to ease seamless flow of ideas and to encourage out of box thinking. Sources of ideas Besides depending on the internal sources, organizations need to be open to gain information from external sources for idea generation. This could be from customers,
end users, competitors, universities, independent entrepreneurs, investors, inventors, scientists and suppliers who play a vital role. The common fallacy among companies‘ is that outside ideas were not good as in-house ones. IDEA CONVERSION Now we have lots of good ideas, but how are we utilize it? This is handled by this phase. The main objective of this phase is to filter out ideas, so that only feasible and refined ideas are selected. Refined ideas are the ones identified to be financially successful and technically viable. It doesn‘t mean that ideas are simply put away, but it is in this phase ideas are turned into revenue generating products, services and processes. Typical methodology that could be used in this phase is brainstorming, to analyse the feasibility and problems. The possible problems might vary from one company to the other. It has to be noted the tight budgets, conventional thinking and strict funding criteria caused many novel ideas to shut down.
Involving people with differences (can be based on lingual, cultural, geographical, ethnic etc.,) can be used in such brainstorming discussions! sessions constructively. Because this gives room to ask as many weird and challenging questions about the ideas, which involve people‘s educational, professional and cultural diversity. For instance, British Telecom, the UK telecommunications group doesn‘t lag with good ideas for its business; however its division providing services to multinational companies failed to hit targets6. We can infer such problem arise due to the inadequate commercial! business skills to tackle such projects. Significant Tools & Techniques for Idea Conversion Process According to Robert & Cordeiro (2005), the generation of high number of ideas depends on the tools & techniques that an organization adapts. Consequently, this helps to avoid strangling the innovation process for lack of ideas.
1. Market surveys According to Robert, market surveys can be done through interviews, through panels or
by monitoring the evolution of a set of demographical, economical and consumption indicators as well as others. In this paper, there is a survey appended which helps us to understand the organizations‘ perception on idea generation and innovation.
2. Benchmarking Benchmarking is an important tool for competition analysis. Benchmarking is an ongoing process of measuring and improving business practices against the companies that can be identified as the best worldwide. It emphasizes the importance of improving, rather than maintaining the status quo. It addresses searching worldwide for the best companies. Hence, the more innovative the ideas that are discovered, the greater the potential rewards that can be gained from the adaptation of the ideas. 3. Collecting Ideas from a. Employees The collection of employee‘s ideas can be done through a specific programme or through more informal methods in smaller groups. The more ways to participate in the company the employees have, the bigger employee participation leads to a decrease in administrative staff (Paulo Matos, 2002) Stewart (1997) quotes the General Electric process, where, through series of continuous meetings in several cities, employees propose several ideas and the bossed have to approve or reject them right there on the spot. These programmes are successful as they allow people to have a safe place to share ideas without any kind of restriction.
b. Suppliers In business terms, competitive suppliers usually have a better knowledge of what they are selling and how the client can obtain better benefits. When suppliers are experts on their area, they may even present solutions for the company‘s specific needs. So collecting ideas from the suppliers is very important. c. Customers Customers are the important source of proposals concerning changes in products and
services. According to Peter Drucker (1993), building relationship with clients is also an important criterion as it creates a strong information source. However getting inputs/feedback from the end customers is not easy. For example in consumer products business like tooth paste etc., so in those cases mediums like suggestion boxes, suggestion phone lines will help the organization to address the complaints and feedback. 4. Co-operation with institutions Certain institutions like universities and industrial associations help the organization to have new ideas through co-operation settlements/agreements. Industrial forums like IEEE, NASSCOM7 etc., where organization get and provide inputs. Member organizations participate and form an ideal source for development of innovative ideas. For instance, Infosys, a multinational software services company, started a campuscompany programme by the name ―Campus Connect8‖. This is to bring up ties with the academic institutions and there by creating a platform for information sharing. However, there is a notable problem with having co-operation with academic institutions, relating to the data security. Because at the university level, there is an interest in divulging as much as possible the information obtained, while at the companies‘ level there is an important set of information that the company does not want to see in the hands of competitors. This is evident during seeking surveys/interviews for this paper, as most of the companies don‘t wish to keep their information confidential. 5. Brainstorming Brainstorming is a widely used technique, in which a group of people were put together and discuss their ideas that they can think of, even if apparently foolish. The important thumb rule of this technique is not to criticise ideas presented until the discussion ends. An advantage of this method is the fact that the association of several ideas can trigger new ones.
IDEA DIFFUSION As we have reviewed how to select ideas for funding and developing into products. Now, in this phase we diffuse those products and practices. Thus Professor Hansen (2003) added that, organizations must get the relevant constituencies within the organization to support and spread the new products, business and practices across desirable geographic locations, channels and customer groups. This phase is particularly important for the large companies who have their divisions in many geographical locations. So the biggest question that I am interested is ―what is the impact of diffusing of ideas within the organization?‖ This question is not part of any of the author‘s research paper; however it is just to quench and explore the intuitions behind. One possible negative upshot could be leaking of your idea to the competitors, as happened in case of Procter & Gamble (P&G). The company first launched Pampers diapers in Germany, and then it developed ideas to establish the product in France. However it has taken long time to do so, P&G can able to launch its product only after five years. Meanwhile, Colgate Palmolive sensed that idea and launched its line of diapers in France two years before to P&G‘s launch9. This is a typical example of improper diffusion of ideas. Idea specification is important in case there are several ideas to change a given product, service or process. Idea specification consists of choosing the idea that will have better advantages in being applied or combine existing ideas, to find a solution that is superior to each idea by itself. There are several tool and techniques for idea selection process, which an organization can avail. In this paper, two techniques are detailed.
1. Feasibility Analysis Feasibility analysis is a preliminary study undertaken to determine a project‘s viability, which helps to ensure the successful completion of specific project goals and objectives. In addition, feasibility analysis gives a clear picture, if an existing system is worth upgrading or not.
Feasibility analysis can be done in two perspectives, technical perspective and business perspective. However feasibility analysis can be done in many kinds. In the technical point of view, the feasibility study is carried out to check if it is possible to implement the idea at an acceptable cost. This involves questions such as whether the technology needed for the system exists, how difficult it will be to build, and whether the organization has prior experience using that technology In the business perspective, the feasibility study is conducted to check the factors affecting the commercial viability of the business. Also to ensure the costeffectiveness of the proposed system i.e. if the benefits of the new idea do not outweigh the costs, then it is not worth going ahead. So it could be precisely called as a cost benefit analysis. For example, car manufacturers are now greatly involved in making use of hydrogen as the fuel source (Robert Boyd, 2007). But its use in cars is highly conditioned for safely. Thus, hydrogen fuel project is stronger in the technical point of view, but weaker in the business point of view. 2. Financial and Risk Analysis In a financial analysis, there is an attempt to project all the predictable revenue in relation to the predictable costs. Then it is applied financial calculation to evaluate the process‘s profitability towards a value. From the comparison between the idea‘s profitability and the risk associated to the same, a decision can be made about the idea. With a raising number of ideas analysed and processed there is a better understanding of the risk level of several types of ideas and the costs each one brings. The study of this technique is strongly supported by a wide bibliography related to the economical and financial areas. IDEA ASSESSMENT From the previous discussion, it is clear that Innovation develops through an evolutionary, interactive process between actors and between different stages in the development of an idea into innovation. Now lets us discuss Idea assessment which is one among the core topics in this paper. So the later part of this paper is
structured to address the following questions. • What is idea assessment? • Why organizations need to adopt Idea Assessment? The word Assessrnent‘ in this context refers to Metric and Measurement of Ideas. Idea Measurement is a simplified & quantified observation of ideas. Idea Metric is a comparative measure of the performance of the ideas and product or process. By using metrics we can find the deviation i.e., what is planned against what is achieved? Idea Assessment is very important to any organizations to monitor the trends in the actual effort spent on Idea generation process. This helps to understand where does company stand and find areas of improvements. It also helps to replan or alter the ideas so that it is more technically viable. Significance of Idea Assessment The US government advisory committee‘s report on measuring Innovation, stresses the importance of measuring the innovation. They add that the outcomes of innovative activity need to be tracked and measure to determine fully the impact of innovation on the economy. This is on a macro level, simply means to evaluate the variations. Considering companies at a micro level, it is indeed important that Idea Assessment need not be made with the variations but also from customers (internal & external) survey and feedbacks. A typical feedback will help the organization to identity the areas of improvement and areas of strength. The important aims of idea assessment process are as follows, 1. Ideas need to be Optimally Quantitative, i.e. it will stretch out to the maximum possible extent to guide decision making based on measurable and quantifiable criteria 2. To help in addressing ideas submitted for the organizational perusal, minimizing the scope of escapes in estimating the organization‘s potential long term returns, i.e., to ensure some business important factors doesn‘t left unnoticed.
METRICS FOR GENERATED IDEAS Innovation metrics are important for at least two reasons as stated by Amy Muller (2001). First, metrics help managers make informed decisions based on objective data, which is especially valuable given the long-term nature and risk associated with certain innovation projects. Second, metrics affect behaviour by helping align goals and actions with the best interests of the company. Defining metrics is a bit risk and misleading task for the fact that if some of the important indicators it left unnoticed will lead to a major confusion. Such indicators can consist of measure of the intensity or quality of innovation. Innovation indicators should also be able to differentiate between innovation as adoption and innovation as a creative activity (A. Arundel, 1998). In this paper, I try to propose the metrics for IDEAS based on two majors, namely • Quality based metrics • Quantity based metrics (Metrics driven by figures)
QUALITY BASED METRICS Let‘s discuss about how to measure the quality of an idea, which leads to innovation. A single indicator cannot provide all of the information that is needed, although traditional indicators such as R&D expenditures or patents can serve a variety of purposes. There has also been some success in developing techniques to extract more information out of traditional indicators such as patents (K.Smith 1 998). Nevertheless, new indicators are required to meet policy needs and to test innovation theories.
First, many innovation activities are not directly measurable. Organizations use some codified knowledge to assess such activities. Codified knowledge is a kind of tacit knowledge, which is generally undefined and firms have some internal methods for determining them. So, literally codified knowledge can be indirectly measured. For example, Informal contacts between firms are more likely based on some tacit knowledge.
INDICATORS BASED QUALITY METRICS There are certain indicators which can be made used to certify how much does an idea qualifies for its succession into a product. But these indicators can‘t be standardised entities as it is affected by type of innovation, like a product innovation or a process innovation. For example, consider the case of a substantial improvement in which an organization, just want to make some minor adjustment to an existing product, in comparison with a company developing revolutionary product that is completely new. In such a scenario, A. Arundel, (1998) proposes some possible indicators one can adapt to measure. They are as follows, o Number of patents filed o R& D performance o R&D intensity o Proportion of employees who are scientists! engineers It has to be noted that categorizing a common indicator is always a difficult task. It has a serious drawback as the indicators fail to identify all firms that expend some creative effort on innovation. In brief, using R&D as an indicator is biased against firms that develop mechanical innovations, which is often based on design and complex production systems and underestimate innovative activities in small firms.
KNOWLEDGE BASED QUALITY METRICS This metrics is designated to measure the organizations‘ performance based on the knowledge they can generate and the ability to use them. The learning capacity of an individual company plays a vital role in measuring the ideas. People are assets in such metrics, because they create ideas and transform that basic knowledge into desired product. So the rate in which people learn new skills to keep
pace with chances in technology really matters.
LATEST TRENDS & FUTURE OF INNOVATION IDEA BACKUP MANAGEMENT The concept of idea backup management is to track & manage filtered out ideas. An idea which might not fit into the organization‘s context in the present scenario might reward it with unanticipated gains in future. Hence, tracking and managing filtered out ideas is equally important. In this paper, a three fold ways are proposed for handling filtered out ideas management. • R&D Support • Productl Practice Line Diversification • Sponsoring and/or sourcing All of these are much discussed topics in themselves, and if dealt with details here, might lose the relevance and context of the paper. So it is left for future work. OUTSOURCING INNOVATION Outsourcing innovation and research activities of a company might yield to long term budget savings and it is an eminent cost cutting measure. The great opportunity is that we can get multi -dimensional solution for a problem. The possible advantages that an organization might gain by outsourcing innovation include a reduction in technological and market uncertainty, cost sharing, risk spreading, and reduced duplication of research, economic of scale and an ability to combine different expertises.
Innovative culture is created and influenced by leaders. Corporate culture in return influences leadership. Furthermore, company strategy is developed by leaders based on cultural norms and values of the leaders, thus by corporate culture. Business processes are derived from business strategy. Business processes reinforce company culture.
Kick-off by leadership Companies operate between the poles of two extreme organizational The 'mechanistic' operation mode and the 'organic' innovation mode. The "conventional leader" is someone who is excellent in managing an already existing organization with defined structures and processes to fulfill its standard tasks. On the opposite side, there is the "lateral leader" which shows outstanding performance in motivating teams and driving them to their best. The balance game continues as competitive advantage challenges management: Standard performance isn't just enough to outfight competition. Thus, the demand is high for hybrid leaders; those that can equally manage people in standard mode for production and in creative mode making innovation reproducible. This idea is based on the belief that every employee is willing to follow a leader or leaders and is capable of innovation regardless of personal motivation, skills, education or specialization. Still, innovation processes can support leaders and staff, and provide skill sets for innovation, experience in implementing changes, and developing potentially beneficial concepts. The leadership ethos is reflected in the term "inventorpreneur" by 3M (Gundling 2000: 39): "An inventorpreneur is one who invents or creates a new product that fulfills a defined need; promotes the new opportunity or product; manages, organizes, and assumes many risks in establishing a new business based on that product."
The person inventing a new product has to deal with deployed innovation processes and the uncertainties that come along with the novelty. Leaders' task is to lay the foundations for innovation by identifying the challenge for continuous improvement, imagining a possibly bright future, and discussing the vision and related prospective goals along with the rest of the company. Three results of leadership communication are essential: First, corporate strategy should enable employees' acknowledgement to an environment of constant change and their willingness to challenge their default way of working. Second, employees should be empowered to innovation, and should feel responsible for successful innovation by corporate strategy. Third, employees should be ready to put their best ideas and most striving concepts in the balance. Again, 3M provides an excellent example by its human resource principles as documented by Gundling (2000: 59). The following headings are taken from the book: "[…] 1. Respect the dignity and worth of inviduals […] 2. Encourage the initiative of each employee […] 3. Challenge individual capabilities […] 4. Provide equal opportunity […]" Values and norms regarding the co-operation of people within the businesses as well as between staff and the environment are fundamental. This is done by formulating a strategy. This set of values needs to be formulated incorporating radical innovation in one or more innovation types as the must-do for economic survival.
Importance of strategy Strategy should aim at formulating key elements that drive innovative culture and the setup of innovation processes. Strategy is defined by Brache (2001: 51) as "[…] the framework of choices that determine the nature and direction of an organization."
The framework to consider when implementing an innovate corporate culture should consist of the following points: 1. Decision and commitment to innovative culture 2. Direction to innovative culture at the different organizational levels 3. Organizational setup supporting innovative culture and processes 4. Measurement of innovative results First and foremost, leaders should emphasize the need and the commitment to a corporate culture of innovation. Corporate innovation is not a choice; it is an imperative for viability. Hence, this message has to be widespread within the company and deeply embedded into corporate culture by leaders. But management should keep in mind that there is a relationship between the message and the way its value is perceived by employees through behavior of management. This is one the findings of the research project in manufacturing measuring "the impact of organizational values on process innovation" by Khazanchi et al (2007: 880). Second, corporate culture is a set of shared values, beliefs and norms. These cultural elements are learned. Thus, culture is quite stable and does not change over night. Therefore, a change of culture needs repetition over time until the members of the cultural group accept the new values, beliefs and norms. As culture is something that can be acquired,it suggests to employ so called "behavioral routines" and have the members of the organization learn to innovate. Just like exploring any new capability, innovation can be excelled. The learning process consists of studying new elements of the novel culture, putting the elements together, providing feedback to the 'students of creativity'. After a while, future innovators are to mix, redevelop, and critically assess the elements from a master's point of view until innovation becomes self-controlled.
One of the results of their study stresses that employees working in production 'confronted' with an empowering innovation culture really can make a difference when it comes to optimizations due to their vast experience in operations. Third, the company should be organized to support innovation. This is rather a question of processes and policies than of structures; e.g. learning towards innovation, fostering crossfunctional innovation teams by reward and career systems. Again, there is a tension between production and innovation which is especially true in small companies. Whereas larger companies have more personnel resources to balance 'mechanistic' and 'organic' behavior, smaller companies have to dedicate extra time and their energy for creativity parallel to standard business. Organizing a company is not necessarily setting up organizational structures as. The restructuring of reporting lines and different working groups is not of highest priority. Adequate processes and skilled people using the same are the means of results not organizational structure itself. Additionally, structure might play a subordinate role when it comes to increasing efficiency and effectiveness. Fourth, the results of innovation processes should be measured just like the results of other processes to setup or redefine objectives in relation to creativity and innovation which support the high-level objectives. Setting up metrics and measurement processes is essential because it supports an innovative company culture by getting feedback on creative efforts and keeping the employees aware to the need of innovation. Whereas the first two strategic elements, i.e. commitment and direction, need an implementation by company policy towards an innovative culture, the latter two (i.e. organizational setup and measurement) comprise the setup of business processes related to innovation.
Processes to put in place The quality of processes to be implemented largely depends on innovation strategy and the operational needs balancing the 'mechanistic' and 'organic' functions of innovation.
"Well-designed processes actually stimulate creativity when it is desirable, build in flexibility where it is needed, and enable talented people to make their optimum contribution." Brache Therefore, there should be business processes supporting innovation, and doing innovation. The larger number of innovation support processes are normally already in place. These standard business processes like payment schemes, career planning, educational offers, training-on-the-job and job-rotation, coaching, internal communication, controlling processes and so on should be deeply linked to innovation. To achieve this, policies need to be adapted, or existing processes need to be redefined. Examples of innovation support processes are highlighted in following three paragraphs. As mentioned in the previous chapter, measuring innovation performance is essential. The resulting controlling system should trace targets and deadlines. These targets can consists of ideas that have been identified, or even realized in products, services, businesses processes or management policies as well as financial gains from an innovation. Those can be broken down into time and furthermore into different levels like countries, markets, target groups, business processes and so forth . Another important element to a communication process is the internal marketing of new concepts and ideas. Just like the example of the Post-it® notes by 3M, the spreading of the original innovation fostered the evolution and success of the later product. Interestingly, a study by Gunn (2008) shows that rewarding successful change projects is essential if a company wants to keep hands on their talents. There is a positive correlation between the promotion of project leaders and their commitment to the company. Innovation processes themselves comprise methodologies and policies of innovation. Of course, these have to be implemented on different organizational levels. For instance, single innovation initiatives should rather be driven by individuals or groups. But innovation needs funding too. This is where management comes into play.
One possible technique towards innovation is the "problem finding/solving cycle" . It begins with identification of a problem. The problem gets defined. By exploring the problem, possible solutions might pop up. The subsequent selection (of an answer to oppose the problem) leads to implementation. The latter should be reviewed and might identify that the original problem has not been solved, or new problems have risen during implementation.
Assessing innovation culture Trust towards company staff is one of the key factors positively influencing an innovative corporate culture. This can be seen in the model of "High-Involvement Innovation" by Bessant (2003) which suggests a learning and innovation cherishing culture involving a large number of employees. Another model is about "Lateral Leadership" by Sloane (2003). Managers and other key players within a corporation lead by curiosity, inspiration and empowerment. Key characteristics of an innovative company culture in this model are (Sloane 2003: 125): "[…] 1. openness to ideas and input; 2. questioning of authority and conventional wisdom; 3. agility – ready, willing and able to change quickly; 4. goal achievement oriented; 5. entrepreneurial spirit at all levels; 6. ready to take risks and learn from failure." These are soft factors which are hard to measure objectively, and intricate to assess. That's why, this term paper will now introduce a model to judge the development of company culture by its results. As discussed earlier in this term paper, business processes create artifacts which reinforce culture; thus, all elements introduced to foster innovation represent culture as well.
Unfortunately, the tyre of the programme seems to lose air: Ideas appear to have no impact, and there are no 'big hits' advancing the company's success. So, the major point now is to keep promoting the idea of ongoing innovation, and reinforcing the innovation processes and policies. As the company reaches level 3 after a couple of month, the programme is still running smoothly. But there is a new obstacle coming up. This time, it seems that there is "a lack of a strategic focus to the problem-solving activity". The reaction of management is assessing and readjusting the strategy, and breaking down the high-level objectives to innovation objectives. On level 4, innovation is rooted in culture. There is a high level of trust amongst company members. Innovation is now deeply linked to strategic goals. Progress and success of innovation objectives are constantly monitored and measured whereas the innovation project teams largely act on their own authority. Innovation is focusing on the optimization of business processes related to quality and costs. Still, there are challenges to implement innovation on novel products, services and processes as well as additional business elements. Finally, the company achieving innovation maturity level 5 is an innovation itself. People feel supported, actually are empowered to constantly innovate, and lead their innovations to success, or learn from inherent failure of innovation. They share their experiences, invite others to join, coach innovation beginners and so on. The organization has turned into a pool of constant learning and innovation.
Turning a company into a 'high-involvement organization' is a long-term change process. It is about managing change with a clear strategic vision and commitment to innovation. A company might have invented innovation departments, processes and policies without success on a larger scale
Critical review As the research on this term paper has shown, most innovation approaches are focusing on product and service innovation. Process innovation follows from the need of quality and cost improvements in the value chain of product and service delivery. But yet, there seems to be no focus on innovating business processes or even management principles. As discussed with the model of the learning organization , this might be related to the question of innovation maturity within a company. There is also one Hamel's model (2006) which address the right ideas towards "management innovation" but it seems applicable only to large organizations that have a long track of successful innovation experience. Another question on management innovation is: Why should companies publish radical innovations of their management practices as competitors could benefit of those revolutions as well? So, maybe it is rather a question of intellectual property and protecting the competitive advantage than on developing those management innovations and bring them to a wider public space. The leadership model seems to be trend-setting since organizational practices and policies preferably see the advantages of employee involvement. Nevertheless, there are two obstacles to the notion of 'creating leaders by leaders'. One is the question whether all employees could and should become leaders to the same extent. The second is concerned with human nature. People are not working for a company for their income. They have personal motives or even character traits that might partly, temporary or constantly prevent the wish to support innovation and become leaders themselves. On the company side, there might be management behaviors that lower or prevent individual contribution to innovation. Some of these are: putting too much emphasize on 'mechanistic' production, no efficient planning of time for employees, low training opportunities, low level of trust towards staff, and so on.
Yet, there is another dimension to assess that has been discussed within the term paper: Implementation of innovation processes and an innovative corporate culture. There might some boundaries to the approach itself.
For a successful implementation of innovation, the commitment of management needs to be enormous and must be constantly reinforced. The costs of implementing can grow immense whereas returns can be expected in the long run but are not secure at all. Implementing innovation might only be advisable at certain phases of the organizational development. In turn, it might be more than threatening to the continuity of a business when applied in an already existing company crisis. In a globalizing world, the environmental culture, i.e. the culture of the country or area within a country, could negatively influence the transferability of an innovation culture and processes from the headquarter to its subsidiaries, or from one subsidiary to another – if not make transfer impossible. Of course, the way of implementing is also mission-critical. If the leadership capabilities to be developed come from outside an existing company, or if corporate strategy is something that is imposed rather than discussed with the future leaders, or if the new way of doing things differently is just 'lip service', or if there are too many exceptions to innovation rules and policies, the 'innovation dashboard' should have all warning lights blinking. Thus, looking only at one business element to invent innovation, can't be successful. Moreover, a company should be viewed from a holistic perspective. Thus, innovation needs to take place in corporate strategy, corporate culture, its business processes, and – which is the most important element – its people. Independent from the role that employees play in a corporation, these are human beings that create the artifacts that corporate culture comprise of.
This term paper has developed an understanding of innovation fundamentals like the modes of innovation, the types of innovation, and the elements of innovation from a strategic perspective. Whereas, the company management must decide upon the first two points, i.e. how should innovation be setup in the organization, and what kind of innovation the company is striving for, the latter point is more about taking a holistic view and the relations of the individual business elements. Innovation neither requires a certain type of organizational structure nor does an existing organizational structure limit the potential of a business. It is more a question of balancing the 'organic' setup of innovation project teams as new opportunities by innovations arise. Although, innovation is frequently put in context to product innovation only, it is not limited to it. Process innovation in respect to product or service delivery follows product or service development itself. Still, there is the discipline of process innovation from a management point of view. This is along with management innovation itself a new field which has just recently been stressed, and thus requires more in-depth research. When it comes to implementation of innovation processes and an innovative culture, leadership is a good starting point. This invokes strategic values which in turn results in business process supporting and doing culture. Innovation processes are artifacts of the
corporate culture and reinforces the same. This kind of self-reference is one of the intriguing points in the holistic perspective.
Leadership is role-modeling to the company's staff, provides a basic corporate culture, and formulates strategy. Strategy should address the management's commitment to innovation, provide direction and coaching in innovation, build an innovation capable organization which is flexible, and controlled by the results of innovation. The implementation of the overall innovation strategy is a long-term process. Business processes depend on strategy. Innovation supporting processes need to be streamlined and refined to support an innovative culture.
Focus should be put on the measurement, communication, and rewarding of innovation. Essential innovation processes are the problem-solving cycle as a kick-off to creativity as well as the organized assessment and selection of high-potential innovations. Corporate culture is a result of leadership, business strategy, and business processes and just as it provide reference for the same elements. Innovation culture can be measured in terms of innovative maturity which relates capabilities in and the results of innovation . Despite the variety of obstacles arising during the journey of implementing innovation, introducing it and working in an innovative enterprise should be challenging and interesting to everybody involved in micro-economics for their individual professional development and for the development of perspectives outside one's own box.
Abstracts in relation with innovation management (Source:proquest.com)
Exploratory Study of Organizational Creativity in Creative OrganizationsAbstract (Summary) The creative industries represent an important and growing sector of the UK economy. This paper explores organizational creativity in firms within the creative industries. A questionnaire based on both Amabile's Organizational Creativity model and Ekvall's Creative Climate model was completed in ten firms in different sectors of the creative industries. Follow-up interviews with five firms were also conducted, to compare the outputs from each model as well as the variation in responses from firms in different sectors. The results indicate that both models of organizational creativity are complementary, although not necessarily fully applicable in the creative industries. Specific differences between firms in the graphic design/branding sector and firms in product design were also observed.
Examining the Leaders of Creative Efforts: What Do They Do, and What Do They Think About?Abstract (Summary) Due to the rapidly changing economy, innovation is becoming more and more critical for the success and survival of many organizations. Although several factors shaping innovation (e.g., strategy, climate, etc.) have been examined in the literature, the leadership of innovation has received relatively less attention. In this article, we attempt to summarize the literature on the leadership of creative efforts focusing on critical leadership behaviours. We also explore a model of core leader functions tailored for creativity and innovation, as well as a model of innovation planning. The implications of these models for the leadership of innovation are discussed. Innovation Labs: An Examination into the Use of Physical Spaces to Enhance Organizational CreativityAbstract (Summary) Recent years have seen an increase in the number of innovation labs, purpose-built physical facilities designed to enhance and support creativity and innovation in organizations. This rising phenomenon may be driven by the increasing emphasis placed on innovation as the key to the survival of modern day organizations. Innovation labs are attracting greater attention from organizations, yet little is known about their effectiveness. Using a mixed-method approach this paper aims to evaluate the effectiveness of a major UK-based facility in enhancing creativity and to explore users' attitudes towards this rising organizational phenomenon. The findings have implications for the management of existing innovation labs and those in the planning.
Towards a More Realistic Creative Problem Solving ApproachAbstract (Summary) This paper takes a closer look at the existing multi-step diamond shaped models for creative problem solving (CPS). A case history of a real-life technical problem in which CPS techniques were used is our source of inspiration for some new ideas about approaching CPS. We propose three concurrent processes: Content finding, Acceptance finding and Information finding. In concrete in-company projects, these
three processes need to be managed simultaneously, which leads to a fourth overarching process: project management. Content finding is concerned with the process the creative session members are going through based on people's own active knowledge and ideas and on sharing their mental models to get new ideas. Acceptance finding is concerned with the co-creation of new and additional mental systems that are needed for bringing new ideas into good currency within the existing organization and goes beyond agreement on implementation plans. Information finding is concerned with gathering additional knowledge on the ideas that are not readily available during the session. Finally, Project management is concerned with organizing and leading the creative session and in the embedding of the project into the larger organization. An Empirical Evaluation of R&D-Marketing NPD Integration in Chinese Firms: The Guanxi Effect Helen Perks, Kenneth Kahn, Cong Zhang. The Journal of Product Innovation Management. New York: Nov 2009. Vol. 26, Iss. 6; pg. 640 Abstract (Summary) Research examining new product development (NPD) practices recognizes the importance of research and development (R&D)-marketing integration to performance. Although a plethora of work has been carried out in the R&D-marketing domain, including Chinese firms, the study of cross-country contexts has relied on country type as the demarcation to explain country differences. In the case of China, this study introduces the cultural more of guanxi. Seen as an alternative to formal institutionalized interactions, guanxi characterizes the bond between people in Chinese society. The present study examines whether guanxi affects the nature of R&D-marketing integration in Chinese firms. Study measures were developed, and factor analysis was applied to the NPD integration items. Correlation and logistic regression analyses were employed. The findings identify particular aspects of integration practices between Chinese R&D and marketing managers that differ from the West in light of the significant effect reflected by the guanxi construct. The results show that reliance on informal social systems, through guanxi, can act as a significant support for integration in certain
activity areas and that guanxi can influence integration in mid- to late-phase activities. This study's findings suggest that guanxi can act as a unifying force in underdeveloped processes and may, paradoxically, reinforce acceptance of formalized structures. These findings suggest that where the basis for guanxi exists, traditional and culturally derived interpersonal relationships still impact the way people work together. The results of this research provide new knowledge of how guanxi positively influences the integration of R&D and marketing departments as well as successful NPD performance. Innovation management in organizations Roman Inderst. European Economic Review. Amsterdam: Nov 2009. Vol. 53, Iss. 8; pg. 871 Abstract (Summary) This paper poses the question of how a firm should optimally choose both its organization and its compensation in the pursuit of innovation. One key result is that incentive pay arises as a robust instrument of innovation management both with and without delegation, although in the present model its primary purpose is not to elicit more effort for the creation of new ideas, but to ensure that new ideas are implemented if and only if this is efficient. While without delegation, the firm may "underinvest" in innovation, with delegation the opposite bias may arise as new ideas may be implemented too often ("overinvestment"). The optimal organizational choice trades off these two biases. Financial Champions and Masters of Innovation: Analyzing the Effects of Balancing Strategic Orientations Angela Paladino. The Journal of Product Innovation Management. New York: Nov 2009. Vol. 26, Iss. 6; pg. 616 Abstract (Summary) Theory predicts that market and resource orientations can each lead to innovation and financial success. Despite this, no research has examined whether the pursuit of both resource and market orientations is feasible and, if so, the impact of this combined
effect on innovative and financial outcomes. This paper aims to address these gaps. Thus, it is the first to examine the interdependent relationship between market orientation (MO) and resource orientation (RO). Additionally, this study responds to calls for (1) cross-disciplinary research, particularly in the areas of marketing and strategic management, and (2) comparative studies of diverse strategic orientations on performance. In doing so, this paper investigates the difference in innovation performance and financial performance between firms adopting a high or low degree of market orientation or a high or low degree of resource orientation. This allows us to observe independent and interdependent effects of these orientations on the firm's performance. Data were collected from 250 senior executives in Australia. Confirmatory factor analysis and related techniques were applied to assess the robustness of the measures used. A two-way between-groups analysis of variance (ANOVA) was used to evaluate the relationships. Results show the emergence of four organizational types: unfocused imitators or followers; market-driven innovators; masters of innovation; and financial champions. From these, financial champions emerge as having the greatest impact on the financial performance of the firm, while masters of innovation are best for maximizing innovation outcomes. In fact, organizations with a high RO in the matrix (masters of innovation and financial champions) achieved a higher impact on innovation relative to the quadrants reflecting a lower MO. Results also demonstrate that pursuing a low degree of resource and market orientations leads to inferior financial performance. Therefore, a balance of resource and market orientations is important. A potential extension of this research is to assess these relationships on an industry-by-industry basis. This would contribute to our knowledge by allowing us to determine if and how these results differ between industries. Managerial and theoretical implications are also discussed. Management Control and Strategic Renewal in the Front End of Innovation Jarno Poskela, Miia Martinsuo. The Journal of Product Innovation Management. New York: Nov 2009. Vol. 26, Iss. 6; pg. 671
Abstract (Summary) Should management control the front end of innovation in companies, and, if so, how? This paper examines the use of management control in the front end of innovation, how the different mechanisms of control are associated with generating strategic renewal, and what the moderating effect of technology and market uncertainty is. The front end of innovation has been characterized as highly uncertain and creative, thereby requiring high levels of freedom and independence for those executing front-end activities. However, a certain amount of control appears necessary to secure the effective use of resources and the achievement of the company's long-term objectives. The current findings of management control and its influence on performance in new product development context in general are conflicting. While many authors argue that behavioral control kills creativity, some others emphasize advantages of improved communication and coordination created by process formalization. Some authors stress the importance of setting specific and challenging strategic goals for development work, but some papers indicate that this inhibits creativity and learning. One challenge of interpreting the conflicting results of existing management control research in new product development context is that most studies treat the front-end phase simultaneously with product development projects, thereby averaging the totally different characteristics of these two innovation phases. Studies that would have investigated management control in the front end of innovation are still scarce. This study develops a framework for management control in the front end of innovation and tests hypotheses on the relationship between different control mechanisms and achieving strategic renewal. The role of technology and market uncertainty as potential moderators of this relationship is investigated. Management control is covered through seven constructs: input control; front-end process formalization; outcome-based rewarding; strategic vision; informal communication; participative planning; and intrinsic task motivation. Strategic renewal is used as a front-end performance indicator. Data from the front-end phase of 133 new product development projects from different large and medium-sized companies were collected and analyzed. A factor model was used to test the validity of the management control framework, and a moderated regression analysis was used for hypothesis testing. The results show that input control is
positively associated with achieving strategic renewal in the front-end phase. The results also confirm the importance of intrinsic task motivation of the front-end group. Under high technology uncertainty, the use of outcome-based rewarding or front-end process formalization has a negative influence on strategic renewal. What about Design Newness? Investigating the Relevance of a Neglected Dimension of Product Innovativeness Katrin Talke, Sören Salomo, Jaap E Wieringa, Antje Lutz. The Journal of Product Innovation Management. New York: Nov 2009. Vol. 26, Iss. 6; pg. 601 Abstract (Summary) In several industries, new products are very similar in functional features but compete on their unique design. Firms like Alessi, Apple, Bang & Olufsen, Dyson, or Kartell all follow a design-driven innovation approach and use their products' visual appearance as the main mean for differentiation. In spite of this, design newness is never discussed among the dimensions of product innovativeness. Instead, conceptualizations of product innovativeness mostly focus on a product's technical newness or the changes it implies for the innovating firm or for the market it enters. This paper seeks to build an argument for why design newness should be considered as a dimension of product innovativeness. In addition to providing conceptual rationale, empirical evidence is offered on the influence of design newness on sales performance across a product's life cycle. To be able to put the findings into perspective, the performance effects of design newness are compared with those of technical newness. As several products exemplify that design newness and technical newness can go hand in hand, not only direct performance effects but also interaction effects between both newness dimensions are investigated. The arguments are tested on a sample of 157 new cars launched between 1978 and 2006 in Germany. The automobile industry is selected because of the strategic role of both technical and design aspects in product innovation. Putting a focus on this industry also has the advantage that historical information on car specifics and objective sales data over time are accessible. The results emphasize that both design and technical newness are important drivers of car sales. However, the effects differ
widely across the product life cycle. While design newness has a positive impact right after the introduction and persists in strength over time, technical newness drives sales with a lagged effect and decreases toward the end of the life cycle. The test of a combined influence of design newness and technical newness on sales performance produces no significant results. These results open interesting avenues for future research on product innovativeness in general and design newness in particular. For management practice, the findings emphasize the importance of overall product innovativeness, clarify the different performance effects of design and technical newness across the product life cycle, and show the value of creating a unique visual product appearance to positively trigger product diffusion. Where Do Good Innovation Ideas Come From? Exploring the Influence of Network Connectivity on Innovation Idea Quality Jennie Björk, Mats Magnusson. The Journal of Product Innovation Management. New York: Nov 2009. Vol. 26, Iss. 6; pg. 662 Abstract (Summary) This paper aims to add to innovation management theory and practice by exploring the interrelationship between innovation idea quality and idea providers' network connectivity, using social network analysis. The study uses a database from a company that has worked systematically with idea management over a long period of time and today has a well-established information technology system that collects ideas from a large number of employees. In addition to the idea database, a number of interviews with key individuals within innovation were conducted to create rich contextual knowledge and understand more in detail how ideas are handled in the company. The analysis indicated that there is a clear interrelationship between the network connectivity and the quality of the innovation ideas created. The analysis was done for all the innovation ideas and then for ideas created by single individuals and by groups, respectively. In all three analyses the proportion of high-quality innovation ideas increased, as a step function, between the least connected group and the group thereafter. There is apparently a need for a certain amount of relations to increase the
proportion of high-quality innovation ideas generated. Regarding only ideas provided by single individuals, more connections within the network resulted in a higher proportion of high-quality ideas. A different pattern was seen for ideas provided by groups as the proportion of high-quality innovation ideas grew with some increase in the connectivity of groups but declined with a further increase in connectivity. The findings suggest a number of implications for ideation management. To increase the number of high-quality innovation ideas created by individuals, the possibility to interact with other people should be supported and facilitated. However, in these settings, where individuals work with others in different groups, the most connected groups perform worst in terms of the proportion of high-quality ideas generated, which points to the necessity to consider a multitude of factors when managing ideation. Exploring the microfoundations of external technology commercialization; A dynamic capabilities perspective Mattia Bianchi, Vittorio Chiesa, Federico Frattini. European Journal of Innovation Management. Bradford: 2009. Vol. 12, Iss. 4; pg. 444 Abstract (Summary) Purpose - External technology commercialization (ETC) refers to the firm's transfer of technological assets, disembodied from products, to another organization involving a contractual obligation for compensation. The purpose of this paper is to identify the managerial and organizational antecedents that are capable of explaining superior capabilities in ETC. Design/methodology/approach - Starting from an in-depth analysis of the literature about technology commercialization and adopting the dynamic capabilities strategic perspective, the study develops a theoretical framework that shows how a number of concepts (resources, capabilities and microfoundations) may affect performance in ETC. A case study analysis is conducted with illustrative purposes. Findings - The paper shows that adequate management and organization of ETC activities are needed to successfully undertake ETC. Combining evidence from a case study and findings from prior studies, research propositions are developed regarding key process, organizational and human resource mechanisms that lie at the
heart of superior capabilities in ETC. Practical implications - The paper provides technology and innovation managers with a number of suggestions for organizing and managing ETC that are likely to improve performance. Originality/value - Owing to the complexity of ETC related activities and the high transaction costs characterizing the markets for technologies, only few companies are reaping the gains from the commercialization of their technologies while the majority fail to realize their potential. This paper is the first attempt, to the best knowledge of the authors, which adopts the dynamic capabilities perspective to unearth the managerial levers driving superior performance in ETC.
Implementation of strategic green orientation in supply chain; An empirical study of manufacturing firms Paul Hong, He-Boong Kwon, James Jungbae Roh. European Journal of Innovation Management. Bradford: 2009. Vol. 12, Iss. 4; pg. 512 Abstract (Summary) Purpose - The purpose of this paper is to present a research model that defines the inter-relationships between strategic green orientation, integrated product development, supply chain coordination, green performance outcomes and business unit performance. This paper aims to address innovation issues by integrating strategic orientation, internal business practices, supply chain coordination, and performance outcomes measures. Design/methodology/approach - The international data of 711 firms accessed through the International Manufacturing Strategy Survey (IMSS IV) are used to validate this model. Findings - A firm's strategic green orientation involves past green practices, implementation of innovative environment improvement program and future commitment for environmental practices. This strategic green orientation is supported by a set of inter-organizational innovation practices such as integrated product development practices, effective coordination of supply chain network and relevant and measurable performance outcomes. Originality/value - The model, variables, empirical tests and results in this paper suggest a new understanding about
strategic green orientation and its relationships with product development practices and supply chain coordination. The framework is intended both to explicitly inform senior executives of the importance of inter-organizational innovation practices such as strategic green orientation in terms of past, present and future practices as well as to the factors that effectively implement such strategic direction and commitment. It is also intended to provide a lens with which further research can be directed to enhance environmental reputation and outcomes of firms through new product development practices and supply chain network coordination and the sustainable long-term competitive advantages of the firms. Creativity and Its Discontents: Professional Ideology and Creativity in Architect Work Alexander Styhre, Pernilla Gluch. Creativity and Innovation Management. Oxford: Sep 2009. Vol. 18, Iss. 3; pg. 224 Abstract (Summary) Architects are a professional group that is commonly associated with creative and aesthetic work and with strong professional norms, values and identities. While such shared norms and beliefs are positive overall in terms of being constitutive of professional subject-positions, an overemphasis on specific skills and qualities may also be regarded as a burden on members of the professional community. A study of a major Scandinavian architect office suggests that the perceived lack of creative and innovative thinking and accompanying dialogues and discussions among practising architects tends to produce cynicism and, to some extent, disappointment. As a consequence, professional ideologies may in some cases be out of joint with everyday work realities, and thereby to some extent produce expectations that are complicated to fulfil. Professional ideologies are thus both what integrates and consolidates a profession while at the same time prescribing ideal future scenarios for the professional community. Embedding a Threshold Concept in Teaching and Learning of Product Development Management
Paul Coughlan, Anne Graham. Creativity and Innovation Management. Oxford: Sep 2009. Vol. 18, Iss. 3; pg. 190 Abstract (Summary) This paper uses insights from the literature on threshold concepts to develop a structure for understanding teaching and learning in the area of managing product development. The paper defines the threshold concept, outlines pedagogic principles and describes learning activities that seek to enact these principles. The paper is based upon experience of an established final-year university undergraduate course. Innovation in the Absence of Principled Knowledge: The Case of the Wright Brothers Carl Bereiter. Creativity and Innovation Management. Oxford: Sep 2009. Vol. 18, Iss. 3; pg. 234 Abstract (Summary) Although the Wright Brothers are most famous for achieving the first successful manned powered flight, their innovation that had a revolutionary effect on airplane design was a plane capable of making banked turns. Yet this appears to have been an unintended by-product of their effort to maximize control, in contrast to the efforts of competitors to maximize stability. The success of the Wright Brothers in this effort can be attributed to their taking an approach that was on one hand well adapted to the low state of aeronautical knowledge existing at the time but that on the other hand was committed to the construction and pursuit of principled knowledge. This involved the use of analogies, not as a source of problem solutions but as an aid in developing theory-like principles. It also involved sequences of increasingly realistic experiments. Their approach contrasts with that of J.P. Langley, who took what has become a traditional R&D or 'theory-intopractice' approach, dependent on a high level of principled knowledge. This history yields several suggestions, not radical in themselves, about how radical advances may be made in knowledge-poor fields, which are still common today, especially in the human sciences.
Successful Patterns of Internal SME Characteristics Leading to High Overall Innovation Performance Annemien Pullen, Petra de Weerd-Nederhof, Aard Groen, Michael Song, Olaf Fisscher. Creativity and Innovation Management. Oxford: Sep 2009. Vol. 18, Iss. 3; pg. 209 Abstract (Summary) Small and medium-sized enterprises (SMEs) struggle with the paradox of developing new products and technologies on the one hand and minimizing costs on the other. These SMEs must be innovative to survive and grow. However, compared to large firms, SMEs have several problems in their innovation process, which negatively influence their overall innovation performance. This research explores successful patterns of internal SME characteristics that lead to high overall innovation performance. Cluster analyses were conducted to find patterns in the internal characteristics of SMEs with high overall innovation performance. We find that companies that focus on incremental innovation and that achieve high overall innovation performance indeed share a pattern in their internal organization, when controlling for innovation type. The paper adds to the current body of knowledge by comparing highand low-performing companies based on competence differences. Because real-life organizations consist of multiple organizational characteristics, we also contribute to management practice by simultaneously addressing multiple organizational characteristics for the successful organization of innovation. Uppsala Creativity Day, 2 March 2009 Susan Moger, Tudor Rickards. Creativity and Innovation Management. Oxford: Sep 2009. Vol. 18, Iss. 3; pg. 242 Abstract (Summary) The University and the City of Uppsala joined forces on 2 March 2009 to explore the nature of creativity and of the creative city. Swedish participants were joined by international contributors from Europe and America. Discussions ranged from science
policy to neurological aspects of idea generation, from creative leadership of teams to the creative city. Teaching Innovation through Interdisciplinary Courses and Programmes in Product Design and Development: An Analysis at 16 US Schools Sebastian K Fixson. Creativity and Innovation Management. Oxford: Sep 2009. Vol. 18, Iss. 3; pg. 199 Abstract (Summary) If innovation is understood as a process of inventing and commercializing new products and services, as a process that incorporates activities from multiple disciplines, and as a process that follows more heuristic than algorithmic rules, then perhaps this process can be taught in an interdisciplinary setting with a strong experiential emphasis, such as product design and development. In this paper, I compare and contrast 14 courses and three programmes in interdisciplinary product development at 16 leading US schools. The overall finding is that while the courses appear similar on a high level, there exists substantial variation in the details. In particular, the way in which multiple disciplines are involved in these courses and programmes varies substantially. Similarly, while a teambased term project tends to be the common element across the courses and programmes, the degree of fidelity to which the products and services are developed varies considerably. Overall, although these courses and programmes tend to be very labour and co-ordination intensive, their success has established the legitimacy of interdisciplinary, experiential product design and development education at leading schools in the US.
Adaptation and Organizational Connectedness in Corporate Radical Innovation Programs Donna Kelley. The Journal of Product Innovation Management. New York: Sep 2009. Vol. 26, Iss. 5; pg. 487
Abstract (Summary) This research examines how established companies organize programs for fostering technology-based radical innovation. It addresses conflicts revealed in the innovation literature concerning the appropriate design of the strategic, structural, and process components of these programs. In developing innovation strategies, managers must balance the desire for strategic clarity with the need to allow for creativity and exploration. They must structure programs that ensure innovations benefit from the organization's resources while minimizing the numerous constraints that can impede these unconventional activities. Additionally, though they may favor management processes that provide accountability and effective resource allocation, managers must also ensure these do not restrict the flexibility required for successful innovation. The study is a longitudinal, comparative case analysis of interviews with managers involved in innovation programs in 12 industry-leading multinational corporations. Site visits at each company were followed by biannual interviews with key managers in each company. A total of 81 follow-up interviews were conducted over a three-year period. These interviews were aimed at identifying the changes and progress in the programs over time and internal and external impacts on the organization's innovation activity. The analysis reveals (1) distinct but evolving objectives that maintain a logical strategic connection, (2) adaptive structures that shift and transform but preserve relationships with the broader organization, and (3) flexible processes that are understandable beyond the innovation program and are modifiable, both for the context and in response to learning over time. This suggests that programs introducing high uncertainty and risk into mature corporate environments are highly flexible systems that maintain organizational connectedness as they evolve. For academics, this implies a need to understand the evolution of innovation programs as an adaptive learning process that, regardless of form and purpose, preserves its connection to the traditional organization. For practitioners, it highlights the importance of considering the process, strategic, and structural connections to the broader organization when designing innovation programs and suggests the need for feedback mechanisms to help adapt these elements over time.
The Moderating Effects of Virtuality on the Antecedents and Outcome of NPD Team Trust Paul E Bierly III, Eric M Stark, Eric H Kessler. The Journal of Product Innovation Management. New York: Sep 2009. Vol. 26, Iss. 5; pg. 551 Abstract (Summary) The fundamental dynamics of virtual and traditional face-to-face teams may be very different. The purpose of this study is to empirically examine and assess the moderating effects of virtuality on the antecedents and outcome of trust, where virtuality is measured along a continuum from face to face (no virtuality) to fully virtual rather than the more common approach of dichotomizing teams into two groups (i.e., face to face and virtual). The sample includes 116 different new product development teams from a variety of industries. The antecedents of trust that are studied are familiarity, goal clarity, training, relationship conflict, and process conflict. The outcome of trust is analyzed by determining how the impact of trust on cooperation changes as the level of virtuality changes. Primary findings are as follows: (1) Relationship conflict can be more detrimental to virtual teams than face-to-face teams because it is very difficult for team members of virtual teams to resolve their interpersonal disputes; (2) goal clarity is more important for face-to-face teams and less important for virtual teams in creating trust among team members; and (3) the impact of trust on cooperation is less for virtual teams than face-to-face teams. The primary implication for researchers and practice of these findings is that the role and importance of trust in virtual teams needs to be reevaluated. Managers using virtual teams need to realize that interpersonal relationships in virtual teams do not evolve in the same manner as face-to-face teams and may require different management techniques to be successful.
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