Leadership & Innovation Overview

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Leadership & Innovation_Mariano Corso
Leadership & innovation (Politecnico di Milano)
Distributing prohibited | Downloaded by Antonio Martinez (antonio_1884@hotmail.com)

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Leadership & Innovation

• Styles • Strategies
• Theories • Design Driven
• Team dynamics • Market Pull
• Team management • Open Innovation
• Creativity
• Technology Push
• Whole Brain
• For change
• Smart Working
• Diversity
Prof. Mariano Corso

A.Y. 2016/2017
Gaetano Paterniti

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1. LEADERSHIP STYLES
The concept of leader is quite different from the concept of manager. In fact, a manager is
someone who gets things done through other people in organization while a leader is
someone who is able to influence a group toward the achievement of a vision or goals. For this
reason, not all managers are leaders and not all leaders are managers. But organizations need
both because:
The leadership matters are: traditional management (decision making, planning and
controlling), communication, HR management (motivating, managing conflict and training)
and networking (socializing and politicking). A successful manager (speed of promotion)
differs from an average one because SM has less traditional management but more
networking. But an effective manager (quality of performance and satisfaction of employees)
differs from a SM because has few networking but many communication and HR management.
By the historical point of view, the prescientific and classical periods were focused on the
division of labor and the basic functions of managers. Later, during the neoclassical ages and
then modern ones, the focus shifted on the cooperative systems, the work group dynamics,
the leadership style and so on.
The Organizational Behavior is the field of study that investigates the impact that
individuals, groups and structure have on behavior within organization for the purpose of
applying such knowledge toward improving an organization’s effectiveness. In other words, it
is the study of what people do in an organization and how their behavior affects the
organization’s performance.
• Individuals: measuring, explaining and changing human behaviors (Psychology);

• Groups: focus on peoples’ influence on one another (Social Psychology) and studying
people relation with their social environment (Sociology);
• Organizations: studying the society to learn about human being and their activities
(Anthropology);

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In particular, the individual behavior is characterized by personality, that give the

individual his identity and is determined by heredity and environment in which the individual
grow, and by personality traits (e.g. shy, lazy, ambitious, ..).
The Myers-Briggs type indicators are:
• Extraverted (outgoing, sociable, assertive) vs. Introverted (shy, quiet);

• Sensing (practical and focus on details) vs. Intuitive (“unconscious process”);
• Thinking (reason and logic to handle problem) vs. Feeling (rely on personal values
and emotions);
• Judging (word ordered and structured) vs. Perceiving (flexible and spontaneous);
The Big Five personality model:
1. Extraversion: comfort level with relationship person gregarious and sociable;

2. Agreeableness: individual’s propensity to defer the others  person cooperative and
trusting;
3. Conscientiousness: is a measure of reliability 
person responsible and organized;
4. Emotional Stability: is a person ability to withstand stress  person calm, self-
confident and secure;
5. Openness to experience: is the range of interests and fascination with novelty 
person creative and curious. They are more adapted to change;
There are also other three personality traits:
• Proactive: actively taking the initiative to improve their current circumstances identify opportunities, show
initiative and take action;
• Self-monitoring: individual’s ability to adjust his behavior to external factors highly sensitive to external cues;
• Self-perspective: people see themselves effective, capable and in control;
These personality traits can predict leadership and they do a better job predicting the emergence of leaders than
distinguishing between effective and ineffective leaders. The fact that a person exhibits these traits does not necessarily
mean the leader is successful at getting the group to achieve its goals.
Anyhow, there are also negative personality traits, and we can evidence the Dark Triad:
1. Machiavellianism: the degree to which an individual is pragmatic, maintains emotional

distance and believes that ends can justify means;
2. Narcissism: the tendency to be arrogant, have a grandiose sense of self-importance and have a sense
of entitlement. Often, they are selfish and exploitive;
3. Psychopathy: the lack of concern for others and of guilt or remorse when their action causes harm.

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2. LEADERSHIP IN MODERN ORGANITAZIONS
Leadership Theories
The leadership theories are divided in three categories:
1. Leader-centric perspective;
2. Interactional perspective;
3. Follower-centric perspective;
The Leader-centric perspective emphasized the personal qualities, traits and

behaviors that are most commonly in leaders. There are two main theories:
1. The first one is the Trait Theory whose focus is on personal qualities and
characteristics of the leader and it thinks that leaders naturally possess traits
that set them apart from other people. Kirkpatrick and Locke have identified
some major traits like honesty and integrity, self-confidence, personal ability and
others but also the Big Five dimensions of personality can predict the
leadership. However, we believe that traits are good in predicting the
emergence of leaders but may fail in distinguishing between effective and
ineffective leaders. The fact that an individual exhibits the traits does not
necessary mean the leader is successful at getting the group to achieve its
goals.
2. The second category are the Behavioral Theories and say that it is possible to
train people as a leader. The Ohio State Studies collected 1800 samples of
leadership behavior which were classified in 150 functions. Then, these 150
functions were summarized in two leadership styles:
• Initiating Structure: is the extent to which a leader is likely to define

and structure his role and those of his employees in the search of goals
attainment (e.g. expect workers to maintain determinate standards of
performance, emphasis on deadline, exc.);
• Consideration: is the extent to which a person’s job relationship are
characterized by mutual trust, respect for employees ideas,…;
In roughly the same time the University of Michigan identified two behavioral
dimensions:
• Employee oriented leader: they emphasized interpersonal relationships
by taking a personal interest in the needs of employees and accepting
individual differences among them;
• Production oriented leader: emphasized the technical or task aspects of
the job focusing on accomplishing the group’s task
Is evident that these two classes of dimensions are strictly related and very similar.
So according to these theories of the leader centric perspective, leaders who have
certain traits and display consideration and structuring behaviors do appear to be more
effective. But some leaders may have these traits and display the right behaviors and still
fail because the context also matters.

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The second category is the Interactional Perspective which assumes that effective
leadership results from the effective interaction of a leader with the situation and his
followers. It owns four main categories:
1. The contingency model says that a key factor in leadership success is individual’s
leadership style. In particular, the Fielder’s contingency model proposes that
effective group performance depends on the proper match between the leader’s style
and the degree to which the situation gives the leader control. Fielder created the least
preferred co-worker questionnaire to identify the leadership style by measuring
whether a person is task or relationship oriented. He also assumes that an individual’s
leadership style is fixed. This means if a situation requires a task-oriented leader and
the person in the leadership position is relationship oriented, either the situation has
to be modified or the leader has to be replaced to achieve optimal effectiveness. He
identifies three dimensions:
I. Leader-member relations: is the degree of confidence, trust and respect

members have in their leader;
II. Task Structure: is the degree to which the job assignments are procedurized;
III. Position Power: is the degree of influence a leader has over power variables
such as hiring, firing, promotions and salary increases;
Combining the three dimensions yields eight possible situations in which leaders can
find themselves:
task-oriented
leaders perform
better in situation
very favorable for
them or very
unfavorable
(1,2,3,7,8). Instead,
relationship-
oriented leaders
perform
better in
moderately
favorable
leader’s power to
control factors.
2. The Situational Leadership Theory focuses on the follower and says that successful
leadership depend on selecting the right leadership style contingent on the followers’
readiness, or the extent to which they are willing and able to accomplish a specific
task.

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So, a leader should choose

the one of four behaviors
depending on follower
readiness:
• If followers are unable and unwilling to do a task, the leader needs to give a
clear and specific directions
(leader makes decision, high task
orientation);
• If they are unable and willing,
the leader needs to display high
task orientation to compensate
for followers’ lack of ability and
high relationship orientation to
get them “to buy” into leader’s
desires (leader makes decision);
• If they are able and unwilling,
the leader needs to use a
supportive and participative
style (leader and followers make
decision, high relationship style);
• If they are both able and
willing, the leader doesn’t need
to do much (followers make
decision, low task and low
relationship style);
This theory acknowledges the importance If followers and builds on the logic that
leader can compensate for they limited ability and motivation.
3. The Path Goal Theory says that it’s the leader’s job to provide followers with the information, support or
other resources necessary to achieve their goals. In other words, effective leader clarifies the path to help
followers achieve goals. According to this theory, whether a leader should be directive or supportive or other
behavior depends on complex analysis of the situation. It includes four leadership style:
• Directive leadership: see initiative structure in Behavioral Theories (satisfaction when tasks are
ambiguous);
• Supportive leadership: see consideration in Behavioral Theories;
• Participative leadership: emphasized consultations with subordinates before decision are made;
• Achievement-oriented leadership: leader is preoccupied with setting challenging goals for the work
group;
So, if subordinates know how to do the job and the path is clear, the best style may be supportive. Instead,
when tasks are uncertain a more directive style may be welcomed by subordinates. This theory, like the
situational leadership and unlike Fielder’s contingency theory, considers that leadership style is flexible
and can be adapted to varying situations.

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4. The Transformational Leadership Theory views leaders as individuals who inspire

followers through their words, ideas and behaviors.
The precious theories describe transactional leaders who guide their followers
toward established goals by clarifying role and task requirements.
Transformational leader, instead, inspire followers to transcend their self-

interests for the good of the organization and can have an extraordinary effect on
their followers. They pay attention to the concerns and needs of individual
followers and they excite and inspire followers to put out extra effort to achieve
group goals.

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Transactional and
transformational
leadership complete each
other but, if a
transformational leader
can improve his
transactional leadership,
the reverse is not true.
Leaders are generally
more effective when they
regularly use each of the
four transformational
behaviors.
Transformational leaders
are more effective
because they are
more creative and
encourage followers to
be more creative, too.
Companies with
transformational leaders
have more decentralization
of responsibility. But we
must pay attention because
there is also a dark side of
transformational
leadership. A research
showed that narcissistic
individuals are also higher
in behaviors associated
with charismatic
leadership. It is also true
that some people are
successful in convincing
people to pursue a vision
that can be disastrous.

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The last category is the Follower-Centric Perspective with its Attribution Theory of
Individuals. According to Jeffrey Pfeffer it says that leadership has nothing to do with
exceptional qualities of some individuals, but rather with the gullibility of their
followers. People, in fact, tend to simplify the reality when they make casual inferences
and they do so in order to make predictions in the future, which gives them a
measure of control over their environment. The problem is that reality is complex
and people have limited cognitive abilities. They thus need to simplify the world
and one way is to look for salient objects, circumstances, or people in their
environment. A person (or object) is salient when he stands out in contrast to the
background. So Pfeffer concluded that because leaders are highly visible, their followers
attribute special power to them, assuming that they are the cause of organizational
performances, when they have a very modest influence on it. Leadership is a
mystification caused by the followers. In fact, leaders have an important role but their
actions are symbolic rather than real. Effective leaders are those who associate
themselves with positive organizational outcomes, pretending they caused them
more than they actually did and divest themselves from negative outcomes, blaming
them on the system or on someone else. These assertions were found to be
exaggerated but enforced the notion that leadership does not just reside with the
leader, but also involved followers and that leadership concerns both real and symbolic
actions.
Leadership in Modern Organization
There are four main drivers of change from a Traditional organization to a Modern one:
• Teams are pushing aside the individual as the primary building block of organizations;
• Command & control is giving way to participative management and empowerment;
• Ego-centered leaders replaced by customer-centered leaders;
• Employees increasingly are being viewed as internal customers;
Shared Leadership (see after)

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Leading Digital Innovation
Technology is tremendously
important. As we can see in the
graph, the worldwide population
growth with an exponential
power from the discovering of
the Watt steam engine, the
starter event of the Industrial
Revolution (1775).
Digital Leadership Matters:

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Digital Beginners do very little with advanced digital capabilities because they may be
unaware of the opportunities. Digital Fashionistas’ companies implemented many
digital applications but if some of these initiatives may create value, many do not.
Here the digital transformation is not founded on a real knowledge of how to
maximize business benefits. Digital Conservatives favor prudence over innovation and
their careful approach may cause them to miss valuable opportunities. At the end, the
Digital Masters truly understand how to drive value with digital transformation. By
investing digital initiatives, they continuously advanced their digital competitive
advantages.
There are three methods to increase the Digital Capability:
• Creating compelling costumers experience (create customer engagement);

• Exploiting the power of core operations;
• Reinventing business models (substituting products and services, creating new
digital businesses)
And four methods to increase leadership capability:
• Crafting a digital vision (identifying strategic assets, defining a clear intent and
outcome);
• Engaging the organization at scale (connecting the whole organization, crowd
sourcing of idea-generation to employees);
• Governing the transformation (establish governance committees, digital leadership
roles);
• Building technology leadership capability (focusing initial investment of developing an
enabling digital platform, building the right digital skills);
At the end, we provide some useful pointers to successfully

executing a digital transformation through the digital
transformation compass.
• First of all, you should frame the digital challenge and

ensure that senior leaders have a common vision of how
to proceed. So, you build awareness, know the starting
point also challenging the business model of the
organization and then craft a vision and align top team
identifying strategic assets and evolving the vision
overtime.
• Then you should focus the investment and ensure that
the organization is investing in the right area.
You start translating vision into action by building a “roadmap” for your digital journey,
build governance over the transformation and finally fund the transformation by managing
the digital investment portfolio.
• Later you should mobilize the organization because putting the organization in motion
early is essential. You set new behaviors and evolve culture by making visible changes to
work practices and learning to fail, and signal ambitions by explaining benefits clearly
and using all available communication channels.
• At the end, you should sustain the Digital Transformation. So, you measure, monitor and
iterate through clear KPIs because no transformation can be planned fully in advance, align
incentives and rewards (also more than financial rewards) and build foundation skills.

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3. GROUPS AND TEAM DYNAMICS
Why organizations use team? Because they are better to compete and many organizations
use cross-functional teams to lead and manage innovation processes. Typically, in a team,
since you can divide the roles, you can better exploit the characteristics and knowledge
of the individuals focusing on their talent. Within teams often you can change the role you
have because roles and jobs are not so fixed like in traditional organizations, so teams better
adapt themselves to external changes. They are designed to be not so stable and flexible in
their bandings.
Teams are not always the solution and are not always needed. We have to ask:
• Can one person do the work better? The answer depends on the level of interdependence
within a company;
• Does the work create a common goal or purpose? The team is not the sum of the
individual but it can reach goals that the single individual cannot.
There are also disadvantages working in teams; for example, there is less control for the
lack of a strong hierarchy, opportunistic behaviors, lot of coordination effort that is costly,
more conflicts for the lot of time spent together and so on.
A group is defined as two or more individuals, interactive and interdependent (for the tasks),
who have come together to achieve objectives, and that share collective norms and have a
common identity. They can be:
• Formal: defined by the organization’s structure;

• Informal: alliances that are neither formally
structured nor organizationally determined;
The key theory for the formation of group is the social

identity theory. It considers when and why people
consider themselves members of a group. According to
this theory, individuals have emotional reactions to the
failure or success of their team because they fell part of
their teams and their self-esteem gets tied into the
performance of the group. And individuals don’t care their position in the team but the
success. Social identities help us understand who we are and where we fit in with people.

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Conditions that drives the generation of social identity:
• Similarity (share the same values, concerns, same age, town);

• Distinctiveness (fell to be diverse from the other groups);
• Status (key mechanism);
• Uncertainty reduction (against situations from the outside world);
Work teams and team types
Team is a small number of people with complementary skills who are committed to a common
purpose, performance goals and approach for which they hold themselves mutually
accountable. We can distinct groups and teams on four dimensions:
• Goal: More interacting and interdependent; the goal is much more focused, common
objective that should be achieved;
• Synergy: More evidence of a positive synergy, motivation;
• Accountability: Accountability doesn’t remain at the level of individual but individual
accountable also for the team performances;
• Skills: Very specific skills that are complementary, in order to contribute positively to
the overall performance. In group, more random and variety;
Team reinforces all the characteristics of the group. Different type of teams in an organization:
• Advice: provide advice on a certain issue, problem setting and solving teams;
• Production: in manufacturing or in assembly line, share responsibility for the overall
production;
• Project: very specific objective, typically temporary they last for the duration of the project;
• Action: they ha ve o peration, i n no va te f i n di n g solutions t o unexpected problems, problem
setting and solving. A mix of the previous ones;

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The image below represents the level of autonomy of the team
Stages of group development
• Forming: understand why

they belong to the group
at individual level and the
main purpose of being a
group at group level. The
sense of identity starts to
be built. If the creation of
the group starts from the
group itself this phase is
shorter;
• Storming: people compare
each other, understand individual roles also if they are not well defined from the
beginning but they are defined as the individual show where they are better, comes out
with time and with working together;
• Norming: people get costumed to work with the other, and they know what expect
from the other. Norms are expected behaviors and what the others expect from myself;
• Performing: the group can start working;

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The more time is needed to go through the first phases and less time is left to work. There
are different leadership styles in the phases: in the earlier stages a pretty directive style, top-
down, more authority, give directions to people in particular if time constrains. In the last
part still supporting but more participative, democratic, let more freedom. Find the right
balance.
The punctuated-equilibrium model, useful

for temporary groups, states that they don’t
increase their performance overtime but by
steps. First phase is quite stable, nothing
changes for e certain time, when they are at
half time they start working as a team and
performing well. Then, there are not
improvements until the end of the time
period where the crucial decisions are taken.
Roles and Norms
Role is a set of expected behavior patterns attributed to someone occupying a given

position in a social unit. Someone is expecting to behave in a certain way. We have
different roles in the community, family and work.
• Role perception: one’s perception of how to act in given situation;

• Role expectation: how others believe one should act in a given situation;
A group works well when roles are clearly defined and expectations and perceptions
are aligned.
• Role conflict: typical of matrix situation, different managers ask me different things.
Different role senders expect divergent roles from focal person;
• Role overload: you are expected to do too many things but there is a threshold of the
maximum effort that an individual can put in. The sum of expectations from role senders
from focal person far exceed what the focal person is able to do;
• Role ambiguity: not specific enough in defining a role. Role senders fail to
communicate role expectations to the focal person;

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Looking at a group we can define two types of role that people can play.
• Task roles: related to the specific task of the group. For example, the initiator (make the
group accomplish the final goal), coordinator (pulls together ideas and suggestions) …;
• Maintenance roles: related to the dynamics go around the team, sense of coexistence.
Make the group working as a group;
If roles are what you are expected to do, norms are how are you expected to do. Norms
are acceptable standards of behaviors (attitude, opinion, feeling, action) within a group
that are shared by the group’s members. The more are the norms and the more you
can understand what to do in a group. (Hawthorne study)
There are performance norms (how to get the job done), appearance norms (dress
code), social arrangement norms (with whom to have lunch) and resource
allocation norms. They can be developed with explicit statements (the leader wants
that people behave in a certain way) or carryover behaviors from past situations.

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Team effectiveness
Why
teams fail:
The model of team effectiveness doesn’t care about the fact that team differs in
form and structure and assumes that teamwork is preferable to individual work, so
we have to use it as a guide. We can organize the key components of effective teams
into three general categories as shown in the next image.
Then we can divide the main drivers of team performance in external
performance dimensions (more organizational):
• Productivity: the extent to

which team’s output meets the
standard of those who have to
use it;
• Learning: the extent to which
team members grow and
develop as a result of team
experience;
• Integration: level of integration
achieved by the team with the other
groups, departments and units within
and outside the organization;

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And internal performance dimensions (more individual):
• Cohesion: the willingness of team members to work as a united team;

• Viability: team members’ satisfaction and continued willingness to contribute;
Design
Team size
On average made up of ten people. A large team is good for gaining diverse input,
thanks to its great and different knowledge. Unfortunately, large teams are affected by
higher cost of coordination and difficulty in communication. So, you have to face a
tradeoff between costs and knowledge.
Team composition
What competences I need in a team? Including members from multiple functions
of firms ensures greater coordination between functions. Diversity in functional
backgrounds increases breadth of knowledge base of team. Also, other types of
diversity, like gender and age, can be beneficial as well because provide broader
base of contracts and are considered
multiple perspective. As in the team size,
diversity can raise coordination costs since
individuals prefer to interact with their
similar and this may bring to low group
cohesion. If you want that a team perform
effectively, it must have the sufficient
expertise to accomplish the task. So, there
are sets of skills to consider when forming a
team, such as technical expertise, task-
management skills and interpersonal skills.
The key KSAs (knowledge, skills, abilities) are
conflict resolution, collaborative problem
solving, communication, goal setting and performance management and planning
and task coordination.
Flow is a psychological state in which a person is highly engaged in a task. Flow
occurs when there is match between the skills required for a challenging task
and the expertise of the person.
Team
structure

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Functional: the members belong to different functions and you give them
specific goals and there is a functional member responsible for the work of the
teams under his function.
Matrix: team members belong to functions but during the duration of the project
they have a project manager responsible for their work. Functional managers
have the responsibility to provide the resources. People share time between
project and other activities.
Task force: people are temporary working just for the project. The
responsibilities of the projects are completely in the hand of the project managers.
There are two types of matrix, lightweight and heavyweight:

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So, how to choose the structure? There are contingency factors:
And issue to be considered

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Team leadership
Team leader is responsible for directing team’s activity, maintaining alignment with project goals
and communicating with senior management. In fact, he impacts team performance more directly
than senior management. Obviously, different team types need different team leader: lightweight
teams need junior or middle manager; heavyweight and autonomous teams need senior manager
with high status, who are good at conflict resolution, and capable of influencing engineering,
manufacturing and marketing functions.
To correctly manage innovation team, there are some administration tools:
• Project charter encapsulates the project’s mission and provides measurable goals. May also
describe percentage of team members spend on team, team budget, reporting timeline
and so on.
• Contract book defines in detail the basic plan to achieve gals laid out in charter. It
provides a tool for monitoring and evaluating the team’s performance. Typically provides
estimates of resources required, development time schedule and results that will be achieved.
• Team members signed contract book and it helps to establish commitment and sense of
ownership over project.
Virtual Team
Typologies of virtual international R&D teams
Virtual teams are
physically dispersed
task groups that
conduct their
business primarily
through modern
information
technology. In virtual
teams, members may
be a great distance
for each other, but
are still able to
collaborate intensely
via
videoconferencing,
email and internet
chat programs. The
advantage is that it
enables people with
special skills to be
combined without disruption to their personal lives. However, may be losses of communication
due to lack of proximity and direct frequent contact. It requires members that are comfortable with
technology, have strong interpersonal skills and work ethic and can work independently. In fact,
for virtual team to be effective, management should ensure that trust is established trough
members, team progress is monitored closely and the efforts and products of the team are publicized
throughout the organization.

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4. TEAM BEHAVIOR, DECISION MAKING & CONFLICT MANAGEMENT
Turning individuals into team players
How can organizations create team players starting from individuals and enhance team
effectiveness?
• Selecting: Hire people with interpersonal skills that make easier working in team;
• Training: creating team players by training people in the organization with specific
skills related to team working, attending courses, supporting people in all the activities of
the formation of teams;
• Rewarding: incentives or other forms of recognition such as allowing teams to train
other teams. There also intrinsic rewards for enjoying the team work;
Effectiveness for team working
Aspects of the process that affect the team effectiveness:
1. Cooperation: means integration of efforts in order to achieve a common object. The

greater the integration, the greater the degree of cooperation;
2. Trust: reciprocal faith in others’ intentions and behavior; from a superficial experience of
other people:
3. Cohesiveness: a process whereby a sense of “ we-ness” e m e r g e s t o t r a n s c e n d

individual differences and motives, making decisions as a group;
Pitfalls of team working
Dark side of this kind of dimension, pitfalls linked to the key element just seen:
• Group polarization: tendency for group discussion to intensify group opinion,

producing extreme judgment.
Asch effect = the distortion of individual judgment by a unanimous but incorrect
opposition [conformity
pressure]. It is a threat of team
working; there should be an
environment where individuals
feel free to express themselves.
Trust the team judgment more
than I trust my own;

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• Group thinking: a model of thinking that people engage in when they are deeply
involved in a cohesive in-group. It occurs when everyone has the same mindset;
consensus is above all other priorities, including using good judgment. This
phenomenon has been observed in political failures. To avoid group thinking you need to
monitor team size and design specific processes that foster new perspectives. Identify
the symptoms of groupthink that lead to defective decision making:
• Social loafing: the greater is the

number of people who work on a
group task, the smaller the
individual contribution. This is
scientifically measured in the
rope-pulling context, if an
individual alone pulls a rope and
the same individual pulls a rope
in group, he puts less effort, he
doesn’t do his best. This is the
opposite of the cooperation; in a
team, the individual
competences should be enhanced.
• Escalations of commitments:
persisting with a losing course of action, even in the face of clear evidence on the
contrary.

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Group conflict
It is natural in every kind of inter-relational dynamic. A conflict is a process that begins when one party perceives that another
party has negatively affected, or is about to negatively affect, something that the first part cares about. The absence of
conflicts is dangerous, if a person always puts away his point of view.
Traditional view of conflict: all types of conflicts are bad and are something depending of lack of organization and
communization. They have to be avoided.
Interactional view: total absence of conflicts is bad because a peaceful, harmonious group is prone to becoming static,
apathetic and unresponsive to needs for change and innovation. Attention, not all types of conflict are good: we have
functional conflict that supports goals but also dysfunctional conflicts that hinder group performance. But which conflicts are
functional and which are dysfunctional? It depends on the type:
• Task conflict: relates to the content and goals of the work;
• Relationship conflict: focuses on interpersonal relationship;
• Process conflict: is about how the task is performed, how the work gets done; The first are functional, the
second dysfunctional, the third depends. The conflict process:
The conflict-handling styles: the Managerial Grid:
It is explained using two

dimensions:
assertiveness (the
degree to which one
party attempts to satisfy
his own concerns) and
cooperativeness (the
degree to which one
party attempts to satisfy
the other party’s
concerns). We can
identify five intensions:
1. Competing:
when one
person seeks
to satisfy his
own interests
regardless of
the impact on
the other
parties to the
conflict;
2. Collaborating: when parties in conflict each desire to fully satisfy the concerns of all parties, there is a cooperation and
a search for a mutually beneficial outcome;
3. Avoiding: a person may recognize a conflict exists and want to withdraw from or suppress it;
4. Accommodating: a party who seeks to appease an opponent may be willing to place the opponent’s interests above
his own sacrificing to maintain the relationship;
5. Compromising: no clear winner or loser. There is a willingness to ration the object of the conflict and accept a
solution that provides incomplete satisfaction of both parties’ concerns; each part intends to give up something;
Shared leadership within a team

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5. CREATIVITY FOR INNOVATION
What is creativity? What science tells us about individual creativity is that the brain itself is a
creative entity because it processes data. Creativity is a process involving imagination
and ability to develop something new and unique.
Potentially all people can produce creative ideas because is nothing neither more nor less
than a new combination of old elements. The Creative Process has different phases:
1. Preparation: collect information from the context, very first step. The larger part of
the funnel.
2. Concentration: process the material
3. Incubation: unconscious processing
4. Illumination: suddenly there is an idea
5. Verification: the idea meets reality, understand if the idea is doable and how to make
it doable.
In the organizational context, the organizational creativity has different levels:

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Creativity, most of the time, involves social interaction. Team dynamics can achieve outputs
that are much better because there are things happens at collective level. Most creative ideas
within the context of work are the outcomes of exchanges in a collective space, when
individuals interact with one another and trigger ideas from one another through dialogue,
debate and conflict.
Under certain conditions, teams seem to be more effective in producing ideas than
individuals: the pool of knowledge of the group is higher than the sum of the individual
knowledge because individuals build on others’ ideas and
produce new idea. Creativity is a function of the right idea at
the right time; it’s not in absolute. We have two phases:
divergent phase of many different ideas and then convergent
phase of selecting some problems of the teams are mostly
related to the fact that people working together for a long time
in the same place and in the same context have difficult in the
divergent phase. The threats to team creativity are:
• Conformity: apprehension to express ideas because of others’ judgment;

• Production blocking: members of a team may be prevented form generating new
ideas because they are distracted by hearing the contributions of other members while
waiting for their turn to participate;
• Performance matching: the performance of people working within a group
tends to converge over time;
Enhancing team creativity:

• Clear rules and instructions: set high quantity goals, competition, focus on categories, …
• Adopt specific techniques: brainstorming, feedback, Delphi technique, …
• Diversification and networking: finding different perspectives in the same team
Structures:
• Flatter organization, less hierarchy
• Matrix model
• Diversified management group
• Relocation of work spaces
Processes (helping communication, the circulation of info) and procedures:

• Team meeting
• Experimentation (“fail as quick as you can”)
• “Taking a back seat”, managers don’t tell you what to do, they look at people
working helping them without big intervention
Values, principles (cognitive level of mechanisms):

• Open communication
• Collaborative environment, freedom to expression
• Honest and transparent approach

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Leadership in creativity-related fields
It’s hard to find democratic leaders. On

one hand, scientific studies support the
thesis that creativity is fostered by
participative, democratic,
transformational, empowering
leadership approaches. But in reality, a
more directive style in needs.
Contingency leadership: there is no a
“one best way” leadership when
managing creativity.
Fostering creativity
We have to push new ideas but also to implement the right idea in reality. Techniques to foster the
ideas generation:
• Enlarge the scope of knowledge;

• Create new connections (see later);
• Create and understand the unexpected;
• Create a proper organizational context;

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Morphological analysis:
You have some situations, alternatives, solutions and key parameters. Cross them to
generate different products.
Some tools to create new connections are:
Brainstorming:
Some simple rules to make the brainstorming effective: clear focus, build on ideas of others,
no judgment, one conversation at time, quantity is essential (come up with more ideas as
possible).
Mind-mapping:
It is a very simple technique. Start from an idea and add other ideas thinking at different
aspects passing more levels, expand the initial idea (useful in projects).
Brain-writing:
List ideas on sheets of paper (post-it), no deadline, basically an autonomous tool, shared
periodically …
Nominal group technique:

It is a structured form of brainstorming/brainwriting. Ensure that each group member has
equal participation. It involves these steps: each group member writes down individual ideas
on the decision/problem being discussed and presents its ideas orally. After all members
present their ideas, the group discussed these ideas simultaneously. At the end, there is a
secret ballot and the most voted idea is implemented.
Six hats for thinking:

Suggest wearing a different hat, adopting a
specific mind-set. Figures and facts; emotions,
feelings; positive attitude; negative attitude;
creativity, craziness; final supervision to
connect all the hats and make doable.

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CONCEPT GENERATION TOOLS:

Concept generation tools can increase the probability to transform an idea in concept because they
force to reflect on meanings and values connected to the idea, force to analyze the new idea from
the user perspective and reduce the problem connected to internal communication. The tools are
aimed to represent, formalize and visualize, at different stages of development, a solution involving
numerous actors in a complex interaction process. The main tools are:
Personas: Tool for user profiling, identify the characteristics of the users in order to translate
these characteristics in the products. It should offer you a visually revealing, a snap shot of how a
particular user lives, how and where they shop and what brands they use, etc. Tool Description:
Personas are fictional characters created to represent the different user types within a targeted
demographic that might use product. They are useful in considering goals, desires and limitation of
the users in order to help to guide decisions about a product. In most cases, personas are
synthetized from data collected from interviews with users. They are captured in 1R2 page
descriptions that include behavior patterns, goals, skills, attitudes and environment, with a few
functional personal details to make the persona realistic character. Tool Advantages: are that
personas work because they tell stories (that communicate culture and organize information), they
spark imagination as you explore new ideas and help team members share a specific, consistent
understanding of various audience group.
Storyboard:
Tool Description: It shows the solution performance along a horizontal timeline in which the user
lives the experience. It is the translation of an event into sequence of static images and
explanatory captions that represent the significant interaction between the user(s) and the
provider(s) of a product service. In a limited sequence of pictures, it visualizes the salient product
(service) situations and the advantages that result. Only those elements that usefully communicate
and reinforce atmosphere of the situation are included.
Tool Advantages: it visualizes in a limited sequence of picture the need that the product system
satisfied, the salient product (service) situations and characteristics, the advantages from the
use/interaction of the product (service). For the construction of the storyboard, choose objects that
must be put in the story line, choose the context that best fits the future scenario and ask
friends to pose to make the scenario as realistic as possible.
Some helpful tips for the storyboard:
Keep the focus: a storyboard demonstrates one and only one service/idea. Don’t mix different
services options in the same storyboard;
Split in consistent boxes: a storyboard shows a service/idea interaction developing in time
through a series of significant service/idea actions. Each one is represented in one box. Eliminate
useless boxes;
Manage timeline: a storyboard should keep rhythm and chronology. Shows clearly interruption
and changes in rhythm;
Manage coherence of place: the same place must be recognizable in a sequence of boxes. Use
graphic signs to mark the place is different between two boxes;
Reduce noise: show the action, the context, the atmosphere but keep the image essential;
Give visibility to what matter: a service may rely on artifacts. Shows the ones that are
characteristic;
Keep it short: eliminate everything that is not necessary. Cut introduction and happy-ends and write
one sentence for each box;
Be natural: a storyboard presents user benefits of a solution but not more. It’s up to the reader to
appreciate the service qualities and say what is good or bad.
Start with the user: a storyboard is based on a user and tells a story of his interaction with the
service. Choose a real user that make use of the service and not a complaisant user illustrating each
service options. Invent a story that shows the advantage of the solution and differentiate it.

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6. WHOLE BRAIN
Stakeholder map
Tribune brain
• Model of the evolution of the vertebrate forebrain

and behaviour
• Proposed by the physician and neuroscientist Paul
MacLean in the ‘60s
Split brain model
• Two-chamber brain: left and right

• Research was pioneered by Roger Sperry, awarded the
Nobel Prize in Physiology or Medicine in 1981
• The two hemispheres control vastly different aspects of
thought and action.
• Each half has its own specialization
and thus
• its own limitations and advantages.
Whole brain model
Methodology to better benefit from all

the different thinking available in the
organization.
“how can people be so clever and dumb
in the same time?”
• Ned Hermann, former head of management development at general electric, developed the whole
brain model;
• he was interested in how the brain could help explain the clever/dumb issue;
• leveraging on previous brain researches and on his own studies, he discovered four patterns that
emerged in terms of how the brain perceives and process information.

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7. LEADERSHIP FOR CHANGE & INNOVATION
No company today is in a particularly stable environment. Even those with dominant market
share must change, sometimes radically. In
fact there are six forces that stimulate
changing and innovation, two internal and
four externals:
1. HR resource problems: they could

be problems of productivity,
absenteeism and turnover or job
dissatisfaction;
2. Management behavior: they
could be internal conflict or
structural reorganization;
3. Demographic characteristics: every organization must adjust to multicultural
environment, immigration and outsourcing;
4. Technological advancements: it is continuously changing organization and job, for
example with manufacturing automation or ICT;
5. Customer and market changes: customers meet and share product information in
chat rooms and blogs and change rapidly their preferences;
6. Social and political pressures: we have seen a major set of financial crises that have
rocked global market, but also the rise in the power and influence of China;
Change management: Integrated management of change processes through and integrated

development of people, culture, processes and management systems and technologies,
with the final aim of “making things happen “. Because innovation is: 1% Inspiration & 99%
Perspiration.

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But organization deal with change very differently. Many companies are like a frog in a pot
with water. Initially it feels good, as in its traditional
behavior. But slowly the water became warm and
when it understands the situation, it is too late.
Companies have to perceive the change, understand
and anticipate it and promptly manage it.
But people often see change as threatening and
employees who have negative feelings about a change
cope by not thinking about it and increasing their use
of seeks.
There are two kinds of sources of resistance, individual end organizational ones.
Individual sources reside in human characteristics, such as:
• Habit: to cope with life’s complexity, we rely on habits or programmed responses;

• Security: people with high need of security are likely to resist change because it
threatens their feeling of safety;
• Economic factors: change in job tasks can arouse economic fears if people are
concerned that they won’t be able to perform the new tasks;
• Fear of the unknown: ambiguity and uncertainty for the unknown;
• Selective information processes: individuals hear what they want to hear and they
ignore the information that challenges the world they’ve created;
Organizational sources, instead, reside in the structural makeup of organizations themselves:
• Structural inertia: when organizations change, the structural inertia act as a

counterbalance to sustain stability;
• Limited focus of change: organization consists in a great number of subsystems and
one can’t be changed without affecting the other. So, limited change in subsystems
tend to be nullify by the larger system;
• Group inertia: even if individuals want to change, group norm may act as constrains;
• Threat to expertise: change may threaten the expertise of specialized groups;
• Threat to establish power relationship;
Psychological dimensions for an innovative change
For an effective change, there are seven psychological

dimensions:
1. Cognitive: people have not only to understand, but

also to appreciate the reasons behind change;
2. Motivational: the target should be motivating
something that is better than the status quo;
3. Experiential: it is necessary to find practical
evidence of the positive effects associated to change;
4. Relational: change is not individualistic or
autonomous, but basically occurs through organizational relationships;
5. Emotional: the dissatisfaction for the status quo should be higher than the investment
necessary to questioning it;
6. Operational: it is necessary to translate the end goal in a logic chain of actions/targets
for day-by-day activities;
7. Strategic: the end goal and the different actions to be accomplished should be focused
and shared;

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Leading change and innovation
Approaches to change management:
Lewin argued that successful change in

organizations should follow three steps:
unfreezing the status quo, movement to
a desired end state and refreezing the
new change to make it permanent. The
status quo is an equilibrium state
between restraining forces (that have to
be decreased) and driving forces (that
have to be increased).
Built on Lewin’s three-steps model, John Kotter

creates a more detailed approach for
implementing change. He listed the common
mistakes managers make when trying to
initiate change. Then establish eight sequential
steps to overcome these problems:

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Create a sense of urgency: unfreeze the organization by creating a compelling for why
change is needed. So, leaders have to create anxiety and dissatisfaction for the status
quo, refer to ideal situations and disavow
the current operating model;
Pull together the guiding team: create a

cross functional, cross level group of
people with enough power to lead
change. There are three types of actors:
sponsors that identify the needs,
develop the vision and define the targets
and overall plan; change agents that
monitor improvements, engagement and
coordination; stakeholders that are
affected by change and have great
influence on the results by accepting or
refusing change generating constraints.
Develop a change vision

strategy: create a vision
and strategic plan to guide
the change process;
Communicate for buy in: create and implement a communication strategy that
consistently communicates the new vision and strategic plan. Provides strategic rationale
and sense of direction, defines who is involved
and how and defines expected results and
benefits for actors;
Empower others to act: eliminate barriers to

change and use target elements of change to
transform the organization (encourage risk
taking);
Provide quick wins: plan and create short-

term wins or improvements recognizing or rewarding people who contribute to these
wins;
Consolidate gains: additional people are brought into the change process as chance
cascades throughout the organization;
Create a new culture: reinforce the changes by highlighting connections between new
behaviors, process and organizational success;

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8. SMART WORKING
It is an increasing popular phenomenon among media and public opinion with growing
attention by The Government and an increasing diffusion among companies and employees.
In Italy:
Smart working is not a new word for teleworking or only a form of corporate welfare or home
working once a week. It is a new managerial philosophy characterized by higher flexibility and
autonomy in the choice of working spaces, time and tools in return for more accountability on
results.
Shared leadership in smart working
Shared leadership is a dynamic, interactive influence process among individuals in groups in

which people share responsibility for leading. It involves peer, or lateral, influence and
upward/downward hierarchical influence. Leadership is not only vertical, but also horizontal!
Shared Leadership occurs:
• Self-managed teams
• Group of people working on task or projects requiring interdependence and creativity
• Often in executive boards
It requires:
• A leader above who empowers, enables, creates the condition for the team to be self-
managed/lead
• Team design, onboarding, training and development

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Tetra Pak is considered a Smart Working Company and won the prize as best workplaces in
Europe in 2012 thanks to a physical workplace layout (transparency and acoustic isolation,
building automation) supportive digital technologies (pull print and digital archives, web or
mobile control of canteen’s queue) and HR practices and organizational model (full autonomy
on where to work, self-certification of working hours). But, what is a smart working?
Also, Plantronics is considered a smart working company because could change:

• Form hierarchy to collaboration and communication;
• From formalization and stability to improvement and empowerment;
• From rules and procedures to personalization and flexibility:
• From obedience and subordination to innovation and talent enhancement;

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9. LEADING INNOVATION IN MULTICULTURAL, DIVERSE ENVIROMENT
Culture is the set of beliefs, values and

assumptions that shapes and conditions our
perception of phenomena and therefore our
behavior. It is multi-layered, formed over time
as a product of experience at different layers of
depth. It can be represented like an onion, and
to understand it you have to unpeel layer by
layer. In fact, the layers of values and norms are
deeper within the onion and are more difficult
to identify.
Cultural influences on organizational behavior:
Hofstede and Lewis tried to analyses and classify national culture. Hofstede defines five
dimensions for classifying national cultures (power distance, uncertainty avoidance,
masculinity vs. femininity, individualism vs. collectivism, long-term vs. short-term
orientation) but he doesn’t tell us why, for examples, Germans are divers. Lewis in his
travels has found that he can segment national culture into three approximate
categories:
1. Linear Actives: these are logical thinkers who carefully plan and manage their actions.
They do things one at time, according to schedule, and so are very accurate and
efficient in their work. They can annoy the other types by their lack con consideration
for relationship (German, Switzerland, north America);

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2. Multi Actives: these are more energetic people who prioritize their work based on
feeling as much as thought. They are more social than linear actives and consider
managing relationships as an essential part of the job (Italy, Latin America, Greek);
3. Reactive: they are also interested in relationship but are cooler than multi actives
valuing courtesy and consideration. They listen carefully what the other person is
saying rather than just diving in with their view. They seek harmony and will step back
and start again if things are not working well (Finland, Japan, China);
Managing diversity in organization
Diversity represents the multitude of individual

differences and similarities that exist among
people. Diversity pertains to the host of
individual differences making all of us unique
and different from the others. We can identify
four layers of diversity: deep level, internal,
external and organizational.
If we analyze the internal level, we can find:
• Age: job performance declining with ages

and workforce is aging. But turnover and
absenteeism rate are lower among older
people and studies discovered that age is
not associated with lower productivity;
• Gender: there are only minor differences between men and women because they are
the same in problem solving ability, analytical skills, motivation or sociability. But
women earn less than men for the same positions and have fewer professional
opportunities;

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• Sexual orientation: federal law does not protect employees from discrimination
based on sexual orientation. But most Fortune 500 companies have polices covering
sexual orientation and about half now have polices on gender identity;
• Physical ability: the importance of ability at work complicates the formulation of
workplace that recognize disabilities; consider abilities relate to strength, flexibility,
body coordination, balance and stamina;
• Race and Ethnicity: employees tend to favor colleagues of their own race in term of
performance evaluation, promotion, decision and pay raises. But there are not
significant differences in race of ethnic backgrounds related to absence rate;
But effective diversity management also means working to eliminate unfair discrimination. In
fact, discrimination can lead to serious negative consequences for employers, including
reduced productivity, negative conflicts and increased turnover.

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There are both positive and negative effects of diversity:
The balance between the two forces depends on how the diversity is managed; diversity
management is the key issue. The more successful is the diversity management, the more the
business is saturated.
The surface-level diversity are differences in easily perceived characteristics that do not
necessary reflect the ways people think or feel but they may activate certain stereotypes. The
deep-level diversity are differences that become progressively more important for
determining similarity as people get to know one another better.

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Leadership in diverse environment
There are suggestions that are based on analysis of best performer, try to recognize
differences, to teach how differences.
Eight options to Diversity Barriers to Successful Diversity Programs
Management (Thomas) • Inaccurate stereotypes and prejudice
• Ethnocentrism
• Option 1: Include/Exclude
• Poor career planning
• Option 2: Deny • Negative diversity climate
• Option 3: Assimilate • Unsupportive and hostile working
• Option 4: Suppress environment
• Lack of political savvy on the part of
• Option 5: Isolate
diverse employees
• Option 6: Tolerate • Difficulty in balancing career and family
• Option 7: Build Relationships issues
• Option 8: Foster Mutual Adaptation; • Fears of reverse discrimination
• Diversity is not seen as an
organisational priority
• Necessity to revamp the reward system
• Resistance to change
Gender Discrimination and Female Leadership

There are clear positive trends that companies are going beyond gender discrimination
and female leadership is growing. Nowadays in fact, according to MBA statistics, women
moved up career ladder less and slower than men, reported lower starting salaries and
had lower career satisfaction over time than men. These are due to discrimination,
more time spent handling domestic and child care issues and periodically exit the
workforce for family or motherhood.

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1. INNOVATION
What is innovation? According to Oslo Manual, it is “the implementation of a new or

significantly improved product (good or service), or process, a new marketing method, or a
new organizational method in business practices, workplace organization or external
relations.”
In fact, we can define innovation not only something that is new, but also that is implemented
in the real world and that creates value and progress.
There are different types of innovation. Let’s start form the first key ward, novelty:
• Incremental vs. Radical: First of all, we analyze the depth of the novelty. As we will
see later, they are two types of novelty that must be complementary in the life of a
firm because innovation is realization of novel combinations. The first one is very slow,
made of step by step. The second one, instead, is definitive and “create” a situation that
could be completely different from the previous one;
• Architecture vs. Component: it is important to underline that an innovation in
solution is not only a new “architecture” but it could be also a new component. For
instance, the architecture of automobiles is always the same (4 wheels, 1 steering
wheel, exc.) but what is new from a generation of autos to another are the components.
• Competence enhancing vs. destroying: we saw the user perspective but it originally
was defined from the company perspective. Competency-destroying discontinuities
require new skills, abilities, and knowledge in either process or product design. The
skills needed for the core technology shift, causing power and structure shifts in
organizations. They are usually initiated by new firms. Competence-enhancing
discontinuities are "order-of-magnitude improvements in price-performance that
build on existing knowhow within a product class". These discontinuities tend to
consolidate industry leadership.
• World vs. Company: Then we analyze the context. Something could be new for the
world (the creation of an object that didn’t exist in the past), new for the market (e.g.
the entry of Coca Cola Zero in the market of sodas) or new for a company (e.g. Nokia
that starts to produce smartphone to try to compete with Apple and Samsung). But a
company must be able to create value form a personal innovation, e.g. RC Cola created
the first diet cola but died because it wasn’t able to profit on this innovation, like Coca
Cola and Pepsi have done.
• People, Meaning, Solution: At the end, we see the driver.
The chain is simple: new costumers (people) buy new
products (solution: how people satisfied their needs? It can be
also a service or a process) for new reasons (meaning: why
they want, for instance, that product? Meaning can be
utilitarian, symbolic or
emotional). An example of
meaning is the evolution of
thermostat. Nest understood that
people needs were changed
because now people don’t want to control temperature
and a tool that made it for them is exactly what they want.

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Innovation strategy
ex: from GPS to navigator Car sharing, M&M, Pringles; Snowboard. Artemide, Merdolino
Why to innovate
Nowadays, in order to
survive, it’s necessary but not
sufficient to innovate
considering that the first
mover has a temporal
advantage. Not neglecting
innovation is a core
characteristic of the
differentiation strategy.

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2. CRITICAL & METAPHORICAL THINKING – INNOVATION OF MEANING – DESIGN

DRIVEN
When people buy things such a candle, they do it because there is a meaning. Yankee candle
didn’t do a candle that illuminates longer because people don’t buy candles for the
illumination factor but to make a room cozier. They changed the meaning of candle,
innovating the meaning of why people buy candles.
There are three kinds of meaning: utilitarian, symbolic and emotional.
1. Utilitarian: is a functional reason (a car to move from A to B or a pen to write);

2. Symbolic: is a method to communicate to others (buying a BMW to communicate a
wealthy status);
3. Emotional: value that is the meaning for myself, intimate (I buy a BMW because my
father always had a BMW);
How to create something which is more meaningful for people? With vision design. It’s called
Vision design because it consists in making (creating) a vision. For example, Innèov is a new
product from a joint venture between Nestlé and L’Oréal that by eating you get nicer: it
changes the meaning of creams that passes from putting cream from outside-inside to eating
and shifting from an inside-outside process. Making things meaningful for people is much more
important because there are infinite opportunities for people: there is a lot of choice. The
value when you have more than one option is how to choose. Often people don’t know the why,
we are living in a world where the problem is the why, not the how.
When does a meaning innovation happen? The drivers are:
1. When there is a misalignment between society and the object (Wikipedia which uses a
horizontal society where info comes from peers and not from a vertical society);
2. When there is a prevalent un-differentiation (a perfect example is the Cirque du Solei
which has differentiated the cirque market)
3. When there is a new technology, so the solution, and the meaning, changes from the
bottom (Nintendo Wii or Apple health care);
At the end, entering in the role of the technology, there are two different cases: technology
substitution and technology epiphany. The two differ because the first one is an
incremental change instead the
second one a radical one, both
regarding a radical improvement.
The TV evolution from black and
white to colors to 4k has been a
technological substitution; instead
what changes how technology
performance is technology
epiphany, for example the Nintendo
Wii. The latter are characterized
by an epiphany meaning.

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The principles of innovation of meaning come from the

solution, from the “how”, as shown in the on the right.
The innovation regards the bottom area. The “why”
consisted in vision design, instead here the “how” is
innovated with creative problem solving, which is:
• Closer to the user: it is a costumer view. By looking

at what users do, we learn how to design a better
product because or product is for the users;
• Outside  in: consists in finding a solution for the
company from the outside. The why, instead, was an
inside;
• Ideation: consists in the creating the idea to solve the
problem. This must be a critical process in
order to judge in an impartial way the
ideas created. Criticism doesn’t mean to
be negative towards ideas, but to go
deeper in the interpretation and
understanding;
The process of innovation of meaning is an

inside  out process. The inside is
represented from
individuals/peers/teams, then there is
the process where there is the
interpretation, and finally t he outside
which consists in reaching the user. Interprets are other experts in different industries that
interpret and judge. They are useful because they can bring some “extra vision”. An
example is the designer of Apple computer. He made bathroom so he knew how to design
something that stay at home (computer stay at home).
Metaphor is understanding
and experiencing one thing
in term of another. It can
help us extend concepts
beyond the ordinary.

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Innovation of meaning – Kano’s model

We started saying that an innovation is something new that should create value. But, value for
whom? There are two groups that receive values: users (or stakeholders) and producers.
The Kano’s model shows the

connection between performance and
value. In the most cases, this
connection is not linear. There are
some performances that a certain
product must have and don’t create
value if there are but are very negative
if there are not (e.g. if I buy a new TV
I don’t ask if it has the remote control
but if it doesn’t have I never buy that
TV). Some other performances,
instead, are delight for consumers and
if a product has them its value grow
exponentially. Of course, there are
also linear connection (the more pixel
in a TV, the better is).
Let’s suppose that a product has

only two performances (e.g. for a
car are safety and velocity). The
blue line represents the region of
trade-off between these two
performances, in other words
what I can do now with the current
technology. Let’s start from the red
point. If we move on the green
point we don’t have made an
innovation because we simply
change the position on the trade-
off region. Instead, the blue point
represents an innovation because
we go out from the classical region and we improve performance 1 more than how much we
make worse performance 2. We have enlarged the region.
The problem is that with new solutions

you create value but then you have also to
capture value or you will not succeed
(remember RC cola example). So, you
can work on: Revenue model (for
instance Gillette gives the razor for free in
order to sell you the blades), enterprise
model (Zara’s high rotation of clothes in
stores is an innovative way to organize
the process) or ecosystem (ok people
buy iPhone but other players make the
apps that are essential to sell that
smartphone).

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At the end, we have to realize this novelty that creates value. The chain is: knowledge, idea,
invention and then innovation. Innovation is different from Research (knowledge) because it
is linked with understanding while innovation must do with the consideration of use. It is
also different from an idea because the idea is not implemented. According to Accenture,
only about 5% of ideas are really developed and became real products. At the end, it’s
different from an invention because innovation is available on the market and can be used by
people.
There are two main reasons according to which a firm has to innovate: to grow or to survive.
In both cases the firm wants to differentiate itself from others and doing something better.
ATTENZIONE nel grafico accanto sono invertiti “Did innovate” e“Did not Innovate”
Also, if you are a monopolist you must innovate because if you don’t do it, sooner or later,
someone else will enter your market and maybe kill you.
All innovators are, for a starting period, as a monopolist and they make “extra profit” from
first mover advantage (temporary monopoly) because sell more and/or sell at
higher price and/or reduce costs. But they are not monopolist, as we know
from microeconomics, other firms will enter the market attracted by the extra
profit. Although other firms will enter the market and achieve the innovation,
the innovator maintain its advantage for a certain period, thanks to:
• Higher reputation to be the first innovator while the others Are
“copying” you;
• Learning economies and development of new innovation while the
others are trying to achieve the previous one;
• Economies of scale;
• You have already decided the standard and rules of game;
• Positive externalities: the more you have in the market, the more is
the value (e.g. apps makers create their products for iOS and
Android because are the most utilized smartphone software. If you
create a different software nobody would create apps for you until you have al lot of it in the market);
• Switching cost;
• Access to complementary assets (e.g. distribution channels);
With innovation company don’t know the results. Innovation is very risky but it
could be more dangerous not to innovate.
When you start with a positive innovation, sooner or later your cumulated
effort will give you grater results (incremental innovation). But at a certain
time, you will reach the limit and in spite of all your effort your performance
won’t improve. It is precisely in that time that you have to make a radical
innovation and change the curve in order to squeeze all the new potential.
Remember that every technology has a pattern of evolution.
• Incremental: the firm does what it really knows and

improve it every day (green curve);
• Radical: the firm change the curve. At the beginning, it could
be also worse than before (first part of red curve) but you
have still a great potential to develop with incremental
innovations, potential that you can’t exploit with incremental
innovation because you have achieved the limit.
“Most companies die not because they do the wrong things, but
because they keep doing what used to be the right things for too
long”.
So, why radical change is hard?

• It is risky, you don’t know what will be the results but, for sure, if you never change you will die;
• Invest in radical change is more expensive;
• Customers keep you there (smanettoni of Xbox suggested not to introduce the “Wii concept” of player because they
don’t like it. Xbox lost the opportunity to be the first one to permit people to play with all their body, before Wii did it);
• Innovation takes time to growth;
• Competitors are in your same dimension, big innovations come from outside the industry;
• Many believe that in your field innovation is impossible. It is false, no industry is immune to innovation;
• Cannibalization: fear to kill an existing business of the company. It is the proof that something has to change because
otherwise someone else will do it. It is better to kill a product internally and being successful with the new product
rather than make it killed from another company and being a second mover.
It is important to develop the capabilities to either reframe and to change. Reframe consists in having a new vision,
reinterpret and change direction; change instead is the capability to mobilize the organization.

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3. INNOVATION PROCESS – MARKET PULL
Innovation process: set of coordinated activities to create a new solution (g/s) that has value for the customer.
Now we go in details of how companies move from ideas to something ready to go on the
market. There is difference between innovation and invention. In fact, an invention is just an
idea, a concept, a new way of thinking; while innovation has some practical applications, it is
more than simply coming up with good idea; it is the process of growing them into practical
use. Meucci brought the idea of telephone but was not able to transfer the invention in an
innovation. The flow is: Ideas concepts products.
Two parts compose innovation:
• Generation of ideas, concepts, inventions which can lead to products (Value Creation);
• Conversion of new idea in business opportunity (Value Appropriation);
innovation=invention*exploitation
Innovation process starts from a broad sense, develop many ideas in order to select the best
idea with more potential. But, what can we innovate?
• What vs. how: Focus on outputs or processes;

• How new/different: Innovation can be, more or less, radical (or incremental),
how different from what existing previously?
• Object: Products, service, system, business model, organizations. Peculiarity in the
innovation process according the object of innovation;
• Scope: Referring to a product, I can innovate the structure or the components (parts);
• Source: Different sources of innovation, new technologies to solve better the problems
I have or innovation of the meaning of the product? (Candle not for the purpose to
make light but for the atmosphere, perfume);
Innovation process as a funnel
Innovation process
is about phases to
translate ideas into
products. It has
some inputs such
as markets
(considering of
some non-
answered needs or
need that
customers are not aware), society (transform the
way in which needs can be solved), technological
opportunities and changes, etc. and generates an
output that is the new solution. It can be a product
or a business process. What comes next the
innovation process is the innovation life cycle, the
life cycle of what you innovate.
Not just focus on the moment in which the product
goes in the hands of consumers but be sure that
will be good for all the duration.

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The innovation process can

be seen as a funnel (Filtering
+ Tunnel). The idea of
filtering starts from a broad
set of ideas and then focus
on the more promising, first
screening since ideas are
more or less promising and
then understand which one
can be translated in
something real; check for
feasibility on different levels
on technical side and
economic side. Once you
have focus on one idea you
have to speed up the process (tunneling). The timing here is different because you have to
have quick feedback from the markets and enter as first.
In the image on the right, we can see the two phases of

filtering and the two phases of tunneling. The aim of the
entire process innovation is to lunch the product through
a set of coordinated activities to create a new product
(good or service) that has value for the customer.
Phases of the new product development process
The development process stars from the Concept Design. The input of the Concept Design is
the Product Innovation Charter, the junction between strategic objectives of the firm and the
project objectives (goals,
target market and so on).
The output is the Product
Concept Statement, that
describes the core
purpose of a product or
service, its uniqueness
and its promise to fulfil
unmet customer
expectations. A PCS
provides a factual
summary of the product’s
benefits and
differentiates it from competition. It’s the first step to influence consumer-buying behavior

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Concept
• Marketing view definition: “It is an idea of new product that defines who will
use the product, its main features and the patterns of use”
• Design view definition: “It is a description of the form, functions and feature
of the product”
• “It defines the character of the product from the customer perspective. It is the projection
of an experience, a message delivered by the new product, in the hope of satisfying the
needs of target costumers”
A concept typically is defined by:
• Who: the target customers and other stakeholders (for the sustainability);
• Why: meaning that is associated with the product, the meaning and values that the
target customer should associate;
• What: the problem which solve;
• How: the solution itself, performance and more softer issues;
So, the Concept Design is the real understanding of the customer target and customer needs
and creativity are the key parts of concept development. It is divided in:
• Concept Generation, whose phases are: definition of strategic objectives, analysis of

the context (user’s need, competition, market technology) and, at the end, concept
generation. So, it’s the process of generating new ideas. It’s supposed to be synthetic
rather than analytical. The purpose is not to judge the feasibility of solutions but instead
to keep coming up with ideas regardless of practically.
• Concept Development, whose phases are: feasibility analysis (technology, operations
and marketing strategy, analysis of the investment), definition of product specificities,
business plan and project plan. So, it’s process for deliberately creating a product to
meet a set of needs. Mobile app development requires both engineering design and
product design. The first one focuses on physics, mass and other performance
measures while product design also considers user and consumers by asking what is
wanted in a product.

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Human-centered approach to concept design
Human-centered design is a creative approach to problem solving. It’s a process that

starts with the people you’re designing for and ends with new solutions that are tailor
made to suit their needs. Human-centered design is all about building a deep empathy
with the people you’re designing for:
• Generating tons of ideas
• Building a bunch of prototypes
• Sharing what you’ve made with the people you’re designing for
• Eventually putting your innovative new solution out in the world
Phases:
Market pull innovation

Importance of external sources of innovation
Users as source of innovation
Users
Who are users

• Directly benefit from using (utility maximizers)
• NOT manufacturers/sellers (who benefit from selling – profit maximizers)
• NOT customers only
• Consumers with use experience in a specific product category
• Consumers in a specific product category, that are already customers of the company (in B2C markets)
• Consumers in a specific product category, that are (so far) not costumers of the company
• Companies (in B2B markets) who are (potential) users of the product
• Users from analogous domains

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Users tend to innovate in communities: why?

• At least some users innovate
• At least some users share their innovative solutions (free revealing)
• Exchange of innovations possible at rather low transaction costs
Free revealing
Definition: user share central information about their innovations or the entire solution. WHY?
Take into account that we are in an innovation community.
• Some aspects are related to the reputation, and I increase putting stuff free. Most of the
users are interested on reputation and leverage it;
• Encouraging others
to innovate. They
think that the whole
society has innovate
and they believe in
it. Wikipedia
• If offer stuff for free,
I become more
influential and the
stuff defuse on
higher velocity.
• Patent cost issues.
Looking for innovative users

Companies use 2 different
approaches:
• Direct: company contacts
directly a person and ask
for information of the guys
that can better fulfil the
need of the company 
pyramiding;
• Indirect: firm uses a
platform through which
the person answers to
some question 
Broadcasting.

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Needs
Now let’s focus on the users’ needs analysis. There are several kinds of user categories that we
divide in segments. Then for each segment we divide the users in:
• Representative users;
• New potential users;
• Non-users;
• Users with very specific needs (e.g. people with handicap);
• Advanced users (high requirements);
It’s not an easy process because there are interrelated factors that tend to define users’ need. In
addition, each user has a mix of factors.

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Understand form where the needs come from. There are very different sources, such
as cultural, social, personal and psychological factors, as we can see in the image above.
In the image on the left we have the

Maslow pyramid with different layers
of needs. Starting from the bottom,
there are the physiological needs (basic
needs), then, moving up on the
pyramid, we find more sophisticate
needs: safety and security, social needs,
ego needs and self-actualization.
The problem is to understand where the

users are in the pyramid, comparing with the situation for which we are developing a
new concept. For example, different kind of soap, basic soap to reduce the diseases for
infections or more sophisticated one?
To identify where you are

in the pyramid needs is
more or less explicit
because basic needs are,
for example, what people
talk about. The problem is
that the more you go
upper the more people are
not able to recognize and
tell about their needs. In
this case it is better to
look at their behavior and
when needs are latent (not
even in the mind of
customers) you need other
type of methodologies,
such as observing what people make. For needs not observable, help users to innovate
and push them to make explicit what they don’t know yet. Some types of users
anticipate the needs of the “core users” or facilitate the expression of the needs by trying
products and see what products are not fulfilling.
Move from just understand the needs outside the context of use to specific context of
use, increase level of involvement and interaction from left to right. Methods:

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The sources of information are many and very different: product feedback, competitors, our
own experience, and so on. Some methodologies based on “what people say” are:
• Questionnaires and interviews: they can be more or less formalized. Questionnaires

require less time and achieve pure information. On the other way around, the
interview requires more time but can achieve richer info. Questionnaire design is
fundamental to minimized biased information. Start with defining the section of the
questionnaire in order to make rational trade-off between the length and the necessity
of various sections, ensure all necessary information is collected, and eliminate
redundancy. Then is convenient to pre-test the questionnaire with a small group of
experts and conduct a pre-analysis to identify if the data gathering and data analysis
can be conducted as defined in the design of the questionnaire;
• Focus Group: are fundamentally different from quantitative survey/questionnaire
methods in their purpose,
dynamics, procedures and
results. Despite this technique
constitutes a notable
improvement in comparison
to the interviews, it introduces
three strong limitation: the choice of representative sample is very critical since they
have to represent all the different types of user, then the target customers must be
well defined and known, and the observations happen in a controlled context that
differs from the daily context of the single consumer;
About “what people make”, we have the ZMET. It is a technique that help people to
express their ideas. It is based on the use of metaphors because of the basic assumptions
that people think in terms of pictures so the best way to express their complex need is to
represent them through pictures. Prior to interview, try to ask people to provide images of
their feelings, situations. Then, during the interview, ask the user to tell a story (a dream)
starting from the image and create new images. At the end develop the affinity diagram.
At the end, let’s move to “what people do”, observing people in their context with the
Ethnography research. It
starts from anthropology,
not influencing people
modifying their behaviors
but only observing and
getting a lot of info. It
provides highly descriptive
and qualitative data
(interviews, artifacts)
without statistics and
without the desire to be
generalizable; the strength
of ethnography research is
to be specific and detailed.
Another tool to analyze always “what people do” is the Empathic design. It is not just
observing users but working with users in order to develop the concept itself. It is
divided
into 5
steps:

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Lead user analysis: there are groups of users that experiment the need in advance compared
to the other. They are those users that
can get the higher benefits from the
innovation because they have some
competence and creativity insight and
have a strong economic motive to
innovate, since they expect to benefit
significantly by obtaining a solution to
their needs. They are not early
adopters, because they are before the
solution is found.
You can work with lead users to understand the need of the other users.
Lead users are interesting as source of innovation but there are different roles of users in
innovation process. An example is Beta Testing whose idea is to provide users with a
preliminary version or prototype that they can test for free in order to have feedback for the
concept itself. The limits are that people have to be skilled and the data gathering of the
feedback can be articulated.
Now the problem is, when user innovation is useful? It is useful when there are homogeneous
and/or uncertain needs, when you want to share the risk or in you want a low-cost
innovation. For the latter element, we have the user toolkit that is useful in open
source software where the customer is the designer. Same problems of the Beta Testing.

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4. OPEN AND COLLABORATIVE INNOVATION

Collaboration has both positive and negative factors. Starting with the negative ones
there are:
• Loss of control;
• Sharing of the margin (financial returns that come from the collaboration with
the partner);
• Opportunism of our partner or in general of some actor;
Regarding the advantages/positive factors the collaboration allows to share costs and
risks.
Obviously, there is the other option where the company goes “solo”, determined by
several factors:
• Availability of capabilities (does firm have needed capability in house?);

• Protecting proprietary technologies (how important is to keep the exclusive control
of the technology?);
• Controlling technology development and use (how important is it for firm to
direct development process and applications?);
• Building and renewing capabilities (is the project key to renewing or developing
the firm’s capabilities?);
Collaborating can provide a firm with the needed skills or resources faster than
developing them on their own. Using the skills or resources of a partner also helps a firm
reducing the assets commitment, avoiding large investments in specified technologies, and
enable the company to be more flexible: this is an important feature in markets
characterized by rapid technological change.
Learning from partners is another very important gain from collaborating, such as
sharing costs and risks. There is also an important case where it can reduce the failure
impact (Apple R IBM – HP joint venture called Taligent which has failed in contrasting
Microsoft windows operating system).
There are
different types
of
collaborations
agreements
between
companies,
each with its
own
advantages or
costs:

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• Strategic alliances: formal or informal agreement between two or more companies to

cooperate in some way. They require a significant investment in time and resources
but in exchange firms gain access to capabilities not available in house, leverage their
capabilities by combining assets and efforts with another firm and achieve innovation
goals faster, at a lower cost and with less risks. These alliances can also provide scale
economies or give the companies higher flexibility to pursue the objectives;
• Joint ventures: a particular type of strategic alliance that entails significant equity
investments and often establishes a new legal entity;
• Licensing: is a contractual arrangement granting a licensee the right to an asset owned

by the licensor. The licensor has the advantages of licensing which include the ability
to penetrate a wider range of markets and to not make the potential competitors need
to develop their own technology. For the licensee, the advantages are lower costs and
less risk than in house development. The disadvantages for the licensor are losing
the technology as a source of competitive advantage and the potential that knowledge
can pass to the licensee making them develop their own product through reverse
engineering;
• Outsourcing: when a company procures services or products from another rather

than producing them in-house. An advantage is flexibility that enables a firm to focus
on its core competences without long-term capital investments or added labor. The
seller of service or product will be able to minimize costs achieving scale economies
and faster response time. Disadvantages are the loss of important learning
opportunities needed to develop innovation in the future, potentially high
transactional costs and the risk that the manufacturer appropriates of the buyer’s
capability;
• Collective research organizations: organizations formed to facilitate the

collaboration among a group of firms.
Some firms are more innovative than other not because they spend more in R&D, nor because
they monopolize the most talented engineers, but because they manage and organize
the innovative process. Managing innovation is internal organizational issues such as creating
the right climate, selecting the right projects and executing them, but not only: it’s also an
external activity concerning the company’s network.
There are three driving forces behind collaborative innovation:
1. Global diffuse capabilities and talent;

2. Internet and other collaborative IT systems that enable collaboration across distance;
3. Intensifying competition over the world;

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Collaborative innovation is nowadays a synonymous of open-source or crowd funding; there

are a big variety of forms with which collaborative innovation can be implemented,
reason why it’s critical to understand the trade-off between:
• How open or close should we make our network? (Innovation Only vs. Open House);
• How are decisions made? Hierarchical (there is a unique leader that has all the
decisional power) vs. Flat (every partner
takes part in decisional process, problem
solving and so on);
Innovation Mall: it is a form of collaboration in

which the firm makes public its problem and
scientists from all over the world try to solve it. The
firm chooses the best solution and the scientist receive
a “prize”.
Innovation Community: the firm develop a base

platform and the community of designers, customers,
suppliers, etc. develop extra components growing the
offer. The extra components are decided and developed by the community in an
autonomous way.
Consortia: Different selected firms share resources and expertise in order to fulfil difficult
project that require huge
investments. Sometimes, once developed the solution, the firms can start to compete
between them.
What are advantages and challenges associated to each collaborative strategy?

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Traditional approaches to innovation management
Companies pursue
innovation within their
boundaries;
They invest heavily in
internal R&D and hired the
best people, enabling them
to develop the most
innovative ideas and to
protect them with IP rights;
The generated profit was
used to reinvest in internal
R&D in a virtuous (but
closed) circle of innovation.

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INSIGHTS:
TECHNOLOGY STRATEGY (L8)
Industry Dynamic
Why do many markets coalesce around a single dominant design rather than supporting a
variety of technological option? Dominant design around a standard exist because complex
technologies are usually characterized by the rule where the more the technology is used, the
more is improved. Moreover, a technology that is adopted can generate revenues to reinvest
in the further development of the technology itself. Another reason is as the technology is
used, greater knowledge and understanding of the technology accrue and complementary
assets are developed.
There are two primary sources in order to increase revenues:
• Learning effects: are shown by the learning curves, which consist in a function where
costs per unit decrease with the increasing of the cumulative output and at the same
time performance on each unit
increase. Prior learning and
absorptive capacity are very
important in the learning effects.
Absorptive capacity: a firm’s
prior experience influences its
ability to recognize and utilize
new information. The use of a
particular technology builds
knowledge base about that
technology and this knowledge
base helps firms use and improve of the technology itself. Firms that don’t invest in
technology development may not develop the absorptive capacity need to recognize a
new technology in the future.
• Network externalities: In markets with network externalities, the benefit from using
a good increase with the number of other users of the same good. Network
externalities are common in industries that are physically connected. They also arise
when there is high compatibility
between products and the
installed base. Superiority of
technology is not enough, the
compatibility with the installed
base and the extent of
complementary goods’ diffusion
are fundamental. There is the
circle of cycle, which resumes
what just said.
In many increasing returns industries, the value of a technology is strongly influenced by

multiple dimensions:
• Technology’s stand-alone value: which may be the functions the technology enables,
the aesthetic qualities or its ease to use;
• Network externality value: the value created by technologies installed based or
availability of complementary goods;

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A new technology that has significantly more stand-alone functionality than the incumbent
technology, may offer less overall value because it has a smaller installed base or poor
availability of complementary goods.
To successfully overthrow an existing dominant technology, new ones must often offer:
• Dramatic technological improvement: e.g. in videogames consoles, it has taken

t hree times performance of incumbent;
• Compatibility with existing installed based and complements;
There is also a distinction between superiority of a technology, which can be caused either
from subjective information (perceptions and expectations) or objective information (actual
numbers). The problem is that the value attributed to each dimension may be disproportional
between each either.
Competing for design dominance in markets with

network externalities we can graph the value the
technology offers in both stand-alone value and
network externality value.
We can then compare the graphs of two competing technologies, and identify cumulative
market share levels (installed based) that determine which technology yields more value.
Sometimes the customer

welfare benefits of having a
single dominant design prompts
government organizations to
intervene, imposing a standard
(e.g. Natural Monopolies).
Winner-take-all markets can have
very different competitive
dynamics: in fact, technologically
superior products do not always
win.

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There is a point with the increasing of the

market share of a technology A, where having a
monopoly with the technology A is costlier
than having network externalities for the
technology A. This because curve shapes are
different: network externality benefits likely to
grow logistically, while potential monopoly
costs likely to grow exponentially. Where
monopoly costs exceed network externalities
benefits, intervention may be warranted.
Optimal market share is at point where lines
cross.
Core competencies and capabilities
A coherent technological innovation strategy leverages the firms’ existing competitive

position and provides direction for future development. In order to formulate this strategy is
important to understand the environments, the company’s strength, weaknesses, competitive
advantages and core competences and finally articulate an ambitious strategic intent.
Core competences are a set of integrated and harmonized abilities that distinguish the firm in
the marketplace. They should be a significant source of competitive differentiation, cover a
range of business and be hard for competitors to imitate.
But there are risks of core rigidities when a company excels in a core activity: this because
incentives and culture may reward current competences while limiting development of new
ones. Also, dynamic capabilities are competencies that enable a firm to respond to change, and
these need to be strong in order to be innovative and don’t make the company too
concentrated in its core business.
Implementing Strategy
Size is an important issue to keep in mind, is bigger better? Large firms are better to obtain
financing and spread R&D costs for sure, and also enables to scale and learning economies
and allowing spreading over the greater scale risk. But a huge size may also bring to
disadvantages such as a decreasing of R&D efficiency due to loss of managerial control,
bureaucratic inertia might increase and strategic commitments tie the firm to current
technologies in a greater way. Small firms often are considered more flexible and
entrepreneurial. For these reason, large firms have tried to find some ways to feel small by
creating subunits or having different culture and controls in different units. Size and
structures of the firm matter and there are three measures that are generated from them:
• Formalization: is the degree to which the firm utilizes rules and procedures to
structure the behavior of employees. Can substitute for managerial oversight but can
also make firm rigid;
• Standardization: is the degree to which activities are performed in a uniform manner.
Facilitates smooth and reliable outcomes but can stifle innovation;
• Centralization: is the degree to which decision- m a k i n g authority is kept at the
top levels of the firm or is left the degree to which activities are performed at a
central location (low degree of centralization);

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Then there is a distinction between mechanistic and organic structures:
• Mechanistic structures have high formalization and standardization: good for

operational efficiency and reliability minimizing variation. They could stifle creativity;
• Organic structures have low formalization and standardization, described as free
flowing: encourages creativity and experimentation, but may yield low consistency and
reliability in manufacturing;
But what if we want both creativity and flexibility, but

also efficiency and reliability? An innovative method
to structure the company is using autonomous
teams. There are part time and full-time team
members and a project manager who is given full
control over resources contributed from functional
departments and has exclusive authority over
evaluation and reward of members. Attention, could
be difficult to fold back into the organization.
Modularity refers to the degree to which a system’s

components can be separated and recombined.
Products may be modular at a different level, for
example at user level (Ikea shelving system),
manufacturing level and other levels. A standard
interface enables simple combinations to be achieved
from a given set of components.
Modular products can enable the use of modular organizations, typically termed “loosely
coupled” organizational form. In this kind of organization, activities are not tightly integrated
but achieve coordination through adherence to shared objectives and standards. So, less need
for integration enable firms to pursue more flexible configurations. It may not be good when
very close coordination is needed or when there is high potential for conflict.

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It is important to manage innovation along borders; there are four different situations:
1. Center for Global: all R&D activities centralized a single hub. It enables tight
coordination, economies of scale, avoids redundancy, develops core competencies,
standardizes and implements innovation throughout firms;
2. Local for local: each division does own R&D for local market. It enables accesses
diverse resources and customized products for local need;
3. Locally leveraged: each division does its own R&D, which is then leveraged (the most
innovative ideas) by the company. It enables accesses diverse resources and customized
products for local need but also improve diffusion of innovation throughout firm and
markets;
4. Globally linked: decentralized R&D where different locations play different roles in
the company’s strategy as a whole (coordinate centrally). It enables accesses diverse
resources, improve diffusion of innovation throughout firm and markets and may help
develop core competences;
Crafting a deployment strategy means “strategic timing of entry the market”. In fact, firms
can use timing of entry to take advantage of business cycle of products or seasonal events (e.g.
video game consoles are always launched just before Christmas). Timing is also a signal to
customer about the generation of technology the product represents (if too early it may not
be seen as next generation).
It is important to optimize cash flows and return on investment from the integration of the old
product with the introduction of the new one, trying to avoid cannibalization effects (do not
introduce the new generation if the old one is doing well). Cannibalization is when the sales of
one product diminish the sales of another one.
However, in industries with increasing returns this is risky. Often better for firms to invest in
continuous innovation willing cannibalize its own products to make it difficult to competitors
to gain a technological lead.
Protecting a technology too little can result in copies, low quality complements or clones.
Protecting too much may impede development of complements. It’s a matter of compatibility:
• With competitors’ products: if the firm is dominant, it generally prefers

incompatibility (see apple thunderbolt charger vs. micro USB); instead if the firm is at
installed base disadvantage, it generally prefers some compatibility with others;
• With own previous generation (“Backward compatibility”): if installed base and
components are important, backward compatibility usually best – leverages installed
base and complements of previous generation and links generation together (PS1 R
PS2);
Price is fundamental in product positioning, rate of adoption and cash flows. There are
different pricing strategies for new innovation:
• Market skimming pricing (high initial prices) in order to signal markets that the
innovation is significant, enables the company to recoup the development expenses
and attracts competitors even though it slows customer’s adoption and diffusion;
• Penetration pricing (very low initial price) in order to enlarge market-share,
accelerate adoption and drive volumes up fast. It requires large production capacity
from the early stages. It is risky for this reason and also because in short run it might
not be able to recover costs. It’s the typical strategy if competing in dominant design;
What can manipulate customer’s perception of price are: free initial trial or introductory
price, initial product free but monthly payments or bait and hood model (razor blades) when
platform is cheap but complements are expansive.

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DEVELOPEMENT PROCESSES
Development means combining new and existing knowledge (available within and outside the
organization) to offer a solution to the problem of innovation. It is the phase of making things
happen, transform the idea in something that could be sold on the market. We need to have
measures in order to understand if the process is going on correctly.
While the concept phase within the funnel activity is to generate many ideas as possible, the
real funneling activity is in the development process. The key challenge of the funneling is the
balance between cost of continuing with projects that eventually might not succeed, and the
risk of closing down too soon potentially fruitful options.
Measuring innovation and development success
We have different drivers to measure the

innovation success at process level:
• Quality: maximizing product’s fit with

customer requirements. There are
technical functionalities, the perception of
the value-price rate, the image of
products or services, and sustainability;
• Time: two typical times that are
measured: time to market (the time that
lapsed between the moment that an
idea comes out and the moment in which it goes on the market) and the cycle
time (the time between the beginning and the end of a project). Sometimes you
develop a project but you can postpone the launch on the market because it is not
ready yet. Once you plan a project, it is also important the on-time development
(check if you are on time according the planning);
• Development Costs: the amount of resources that are spent for the projects (cost of
resources, budget met, payback time and break-even point).
At a project level:
• Customer acceptance measurements: customer satisfaction and purchases repeat

target of market share to gain (volume to sell or revenues), product longevity (how
long the product can stay on the market, maybe this could be not a key success factor
but the ability to continuously develop new products);
Financial performances: profitability, break-even time, ROI (gain/loss as % of
investments) and IRR (rate of return for which NPV = 0);
• Asset creation: knowledge creation and experience for future innovation for the
company about specific technologies or the value of the brand;
At a firm level:
• % Sales and % profit from new products (< 3 years);

• Success-failure rate;
• A portfolio with a balance of the profitability of the different projects;
• Opening of future opportunities (strategic option);

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Development as a set of problem solving cycles
Identify objectives or causes, generate alternative solutions, understand how these

alternatives are related to the variables, evaluate and decide the best alternative.
The issue is that it is not a linear process and maybe you are at the test phase but you have to
revise some steps before. We are dealing with an uncertain environment with many sources
of uncertainties (how the market could respond to us? Customer perceptions? If we use a new
technology or use much different technology together, how they interact each other?). In
particular if the project takes a long time there is a higher possibility of changes and variation.
Specific issue of product development in comparison to a normal decision-making is that the

development goes through steps and any phase has problems, variables and objectives.
Concept design: focus on the technologies.

Development phase: manufacturability of the product (continuous interaction between the
phases, once you have solved a problem you have to revise the solution).
Products are made up of components and this creates complexity in the development process.
So develop the design of the overall system (the architecture) and split the problem in
different sub-problems in order to work on the components. The components are not
independent so, we can standardize the interface between the each other. Remember, every
time you take a decision you have to think at the effects in the future. The key to solve this
problem is knowledge.

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Anticipation in product development
At the beginning of the project the

uncertainty in very high in particular if
you want to be very innovative. This
model states that there is a development
of the knowledge, the more we are close
to the moment of the launch on the
market and the more we know.
Unfortunately, there is a moment in
which it is too late to make changes and
you need to take most of the decision in
the early phase but it is when there is
the higher uncertainty.
Sometimes there is a trade-off between changing, that means to spend a lot of money and
time to make the change, or to continue with the solution found but the final quality will
be much lower than the expectation.
On the other side, it is dangerous working very early and freezing the decision too early
in an environment that is very uncertain. Uncertainty, in fact, means that not all
alternatives or opportunities are known from the beginning because new ideas and
technology opportunities may rise up during the development process. The real effect,
both local and systemic (compatibility of the product, functionalities, customer
satisfaction, security and so on), will appear in the late stages of the development
process.
So, you have an opportunity window, that

is the time in which you take the most
important decision of the development
process. This window could be shorter or
longer. A big issue is to understand if the
window is long enough to have the
development process within it.
The first solution is anticipation: try to

use techniques to shift down the
uncertainty in the early phases when
the cost and time required are still low.
How to anticipate knowledge
1. Early identification and involvement of project stakeholder: there are different

stakeholders that somehow affect the development process, generating constrains,
problems, opportunities and goals. Some are involved in the process and some others
arrive later in the life cycles. In the development process, there are the top
management, engineering, critical suppliers, partners. In the life cycle there are the
purchasing, production and so on. Since every single stakeholder has his goals
and constrains, earlier I involve them and lower is the uncertainty. There is a trade
off if you enlarge too much the people involved in the project. In fact, it is difficult to
converge to an idea because of many point of view, longer time and higher cost, but
on the other hand you reduce uncertainty;

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2. Bringing experience in the early phases: Involve early those who already
have experience in similar projects. Use knowledge management system in
order to standardize knowledge that can help me to solve possible problems in
the future with some databases. Spend time once you have finished the project
to accumulate the knowledge for the next one. This is the very important
moment, understand the mistakes and go through the phases to maintain the
positive procedures. Analysis of failures. Design rules: kind of golden rules to
design certain products that can be used by everyone (e.g. Design for
manufacturing and design for assembly, very easy rules that help to make things
easier);
3. Process Model: Simultaneous Engineering/Overlapping; Stage Gate Process:

It is the way you manage the process. From traditional process, there are
phases run in sequence and they don’t talk with each other. The idea is that the
phases are the same but I start the subsequent phase before I have finished the
previous one. It is a concurrent development because I overlap the activities of
the phases. When I start design I start to check if there are problems with the
concept, and if I start before I can make easier changes to what appears wrong.
The issue is that each phase will be probably longer since I have incomplete
information and I have to revise different time of the activities.
Interaction occurs in the overlapping. Stage-gate: when there is a very specific

issue, there are certain moments (gates) to decide if go on with the projects or not
and how. Not functional but
transversal. The basic
principle is that cost and time
of late design change are high,
so you have to avoid late
changes and anticipate
problem solving. The gate
may be passed only if
implications of design choices
have been fully anticipated. It
is required a low uncertainty;
4. Early prototyping : not just to test the final

product but to generate feedback from the
customers on their expectations. Maybe also
in the concept developments in order to check
the validity of the concept. This changes the
traditional use of prototypes. A traditional
use, called validative test, is the crush test: it

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is useful for the validation of the products

when the costs of change are very high.
Maybe in the past, build a prototype took
a very long time but now it is used in an
explorative way as check of customers’
expectation. Now you can test many
issues with explorative test, such as
virtual prototyping, with simulation
software, or early prototyping;
5. Tools and Techniques: We can divide tools into two groups: Generic tools, like
Cash Flow Analysis (NPV), Business Plan and Project Plan, and Specific tools
such as the Quality Function
Deployment. It considers
not only the quality of the
development process, but
also the knowledge coming
from the market. Starting
from requirements of the
customers and giving an
importance to each, it moves
to technical specifications
that can have an impact on
those requirements. The next
step is to fill the matrix. Here
an example:
Why the anticipation is not always

applied? It is seldom use because of loss of
time, cost and time per late changes are
underestimated, early phases are
considered less important because they do
not consume much money and it is
difficult and uncertain.
There are also situations in which

anticipation is not suitable. For example, when the uncertainty is continuously going up
and down anticipation is not a good choice because you are not able to shift down the
curve with anticipation. In this case, the second solution is to work on flexibility; it
reduces cost and time required for changes. It is a method that allows you to make
changes also at the last minutes because postpones the “too late moment”, the moment
in which is too costly to make changes.

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Flexibility in new product development
How to design superior products and be highly efficient when market, technology and
competition are extremely uncertain? General idea of flexibility principle: design a
process in which you plan a very big overlapping; keep open the phases for a long time
and continuing go through concept design, production design and process design,
taking in consideration market and technology evolution. So, the Flexible Innovation
Process is useful in situation of high uncertainty in which you have to adapt to the
acquisition of new knowledge during development. Concept design and implementation
are overlapped (creativity and innovation are distributed throughout the process).
Iterations are the “engines” of the entire process. You learn during the process since
problem solving is based on experimentation.
Drivers of flexibility
• Experimentation Based Process:
experience is necessary but not sufficient
because the uncertainty is high.
Continuously test the products on the
market and very early integration of all the
features in a prototype. The early
prototypes are not functional; they are not
working but are useful to show the product
to the market. Correlation between the
functionality added after the first beta
release and the product quality;
• Direct customer involvement in design cycles: since one of the sources of
uncertainty is the
market, you have to
treat customers as
members of project
team. Adapt and align
overtime to the changing
needs;

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• Rapid iterations: in terms of organization, it is important to work in team in order to

integrate the knowledge of the different phases. Technologies can facilitate the
experimentation (e.g. virtual prototyping and simulation);
• Flexible product technologies: modular and scalable product architecture. Define the
overall architecture and redefine only the components. There is evidence that more the co
use and architecture design and the higher is the final product quality;
(e.g. For software take open the detailed design until the 99% of the project is completed.
For products is should happen before).
Anticipation or Flexibility?
We have two key variables that are

complexity and uncertainty. The
higher is the uncertainty, the
higher is the convenience of a
flexible approach. Instead, for low
level of uncertainty, anticipation is
much better because with a higher
complexity is more difficult to use a
flexible approach, so build
architecture and separate the
different part. If there is not
complex product and environment,
there is not uncertain and so
anticipation work well.
What has been tested is both the organization of the team and the process, but there is
no clear relation between the two so you cannot understand what the failure is due to. You
need to separate the organizational from the process part during the evaluation.
Planned flexibility is the capability to early and clearly identify the specific critical areas of
a given project, and early and explicitly plan reaction measures to manage those critical
areas.

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COACHING OTHERS TO LEAD (L5)
Empowerment: recognizing and releasing into the Organization the power that people
already have in their wealth of useful knowledge, experience and internal motivation.
In fact, power is not a zero-sum situation where one person’s gain is another’s loss. It is
naïve and counterproductive to hand power over to unwilling or unprepared employees.
During the years there has been a “power evolution” from domination to delegation:
So, we can recognize three pillars for effective empowerment process:
1. Share information: sharing company people information helps people understand

the business, build trust and create self-monitoring possibilities;
2. Create autonomy through structure: it helps to create a clear vision and new
decision-making rules supporting empowerment and also clarify goals and roles;
3. Let team become the hierarchy: provide direction and training for new skills,
and provide encouragement and support for change;
Mentoring
Mentoring is defined as the process of forming and maintaining intensive and lasting
developmental between a mentor and a junior person (protégé if male, protégée if female). It
can serve to embed an organization’s culture for two reasons: contributes to create a sense of
oneness by promoting the acceptance of organization’s core values; the socialization of aspect
of mentoring also promotes a sense of membership.

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There are differences among Tutor, Coach and Mentor:
The mentorship phases:
There are five mentoring techniques:
1. Accompanying: making a commitment in a caring way, which involve taking part in

the learning process side-by-side with the learner;
2. Sowing: when you know that what you say may not be learners at first but will make
sense and have value to the mentee when the situation requires it;
3. Catalyzing: plunge the learner right into change, provoking a different way of thinking,
a change in identity or a re-ordering of values;
4. Showing: making something understandable, or using own examples to demonstrate
skills or activity;
5. Harvesting: create awareness o f what was learned by experience and to draw
conclusions;

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Myriad of benefits of mentoring exists not only for protégés but also for mentors and
organizations. In fact, protégés benefit in a number of ways beyond immediate skill
development and knowledge acquisition (increase visibility, accelerated socialization and then
grater promotions and income). But mentors benefit from having a protégés as well.
Mentors are often people who, having reached midcareer and achieved a certain degree of
success, desire to help other achieve success (heightened personal satisfaction, higher
compensation, faster promotion rates and grater organizational commitment). At the end, also
the organizations benefit because mentors can teach protégés about the organization
culture, polices and procedure, can introduce them to people and help them to understand
their role within the organization.
Historically, it was
thought that
mentoring was
primarily provided by
one person who was
called a mentor.
Today, the changing
nature of technology,
organizational
structures and
marketplace dynamics
require that people
seek career
information and
support from many
sources, the
developmental
network. Mentoring is
currently viewed as a
process in which protégés seek developmental guidance from a network of people, the
developers.
A Receptive developmental network

is composed of a few weak ties from
one social system. The single oval
around D1 and D2 is indicative of
two developers who come from one
social system. In contrast, a
Traditional network contains a few
strong ties between an employee
and developers that all come from
one social system.
An Entrepreneurial network, which

is the strongest type of
developmental network, is made up
of strong ties among
several developers who come from different social systems. Finally, Opportunistic network is
associated with having weak ties with multiple developers from different social systems.
Shared leadership and Smart Working

Leadership & Innovation Overview

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lOMoARcPSD|2470465

Leadership & Innovation_Mariano Corso

Leadership & innovation (Politecnico di Milano)

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