Summary Managing Innovation: Integrating Technological Market And Organizational Change PDF

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Managing Innovation ProcessesSummaryChapter 1: Innovation – What it is and why it matters1. IntroductionInnovation is driven by the ability to see connections, to spot opportunities and to take advantage of them. It is not only about opening new markets, it can also offer new ways of serving establi...

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Managing Innovation Processes Summary Chapter 1: Innovation – What it is and why it matters 1.1. Introduction Innovation is driven by the ability to see connections, to spot opportunities and to take advantage of them. It is not only about opening new markets, it can also offer new ways of serving established and mature ones. Innovation is about new technology, enabling radical new options. But also about improvement of old product/technology, often using old technologies in new ways. Innovation is not only confined to manufactured products: plenty of examples of growth through innovation can be found in services. The same goes for public services like healthcare, education and social security. They may not generate profits, but they do affect the quality of life for millions of people

1.2. Why innovation maters Success in organizations derive in large measure from innovation. It does not only matter at the level of the individual firm, but also for the wellspring for national economic growth. Innovation is becoming a central plank in national economic policy.

1.3. Innovation and entrepreneurship The survival/growth question poses a problem for established players ,but a huge opportunity for newcomers to rewrite the rule of the game  Entrepreneurship: a potent mixture of vision, passion, energy, enthusiasm, insight, judgment and plain hard work which enables good ideas to become reality. Also; internal entrepreneurship (intrapreneurs) or working in corporate entrepreneurship

1.4. How innovation matters Innovations contributes in several ways: - Competing in time: reflects a growing pressure on firms to introduce new products faster than others - New product development: environment is constantly changing - Process innovations: efficient systems and processes  advantage - Being able to offer better service (faster, cheaper, higher quality) Table 1.1. Strategic advantages through innovation

1.5. Old question, new context The innovation challenge isn’t new, organizations have always had to think about changing what they offer the world and the ways they create and deliver that offering if they are to survive and grow. The trouble is that innovation involves a moving target, not only is there competition amongst players in the game but the overall context in which the game is played out keeps shifting. Table 1.2. Changing context for innovation

1.6. What is innovation Difference invention-innovation: making good ideas work technically and commercially (the process of growing them into practical use).

1.7. A process view of innovation Simplified model of innovation: 1 Search: new ideas in the system by R&D, market signals, regulations, competitor behavior, etc. 2 Select: from the set of options the variants most likely to help us grow and develop 3 Implementation: converting ideas into reality 4 Capturing value: how will we ensure that the efforts have been justified (in commercial terms and social value)

1.8. Scope for/types of innovation If innovation is a process, we need to consider the output of that process. In what way scan we innovate, what kinds of opportunities exist for use to create something different and capture value from those ideas. Four categories of change: 1 Product innovation: changes in products/services which an organization offers 2 Process innovation: changes in the ways in which they are created and delivered 3 Position innovation: changes in the context in which the products/services are introduced 4 Paradigm innovation: changes in the underlying mental models which frame what the organization does Table 1.3. Examples of innovations mapped on the 4P’s model

1.9. Exploring different aspects of innovation Characteristics of innovation:  Degree of novelty: incremental or radical?  Platforms and families innovation: a way of creating stretch and space around an innovation and depends on being able to establish a strong basic platform or family which can be extended (Boing)  Discontinuous innovation: what happens when rules of game change?  Creative destruction Table 1.4. Sources of discontinuity  Level of innovation: component or architecture? - Component level: single incremental part of product/service - Architectural level: underlying knowledge about the system Figure 1.5. Component and architectural innovation  Timing: innovation life cycle. Innovation opportunities change over time. - New markets: huge scope for experimentation around new product and service concepts - Mature markets: process and/or position innovation Three phases in the innovation cycle (Figure 1.6.) - Fluid (exploration, uncertainty, flexibility) - Transitional (dominant design) - Specific (standardization, integration) Through the cycle: - Product innovation declines - Process innovation increases

Managing Innovation Processes Summary Chapter 2: innovation as a core business process 2.1. Introduction Innovation is a generic activity associated with survival and growth and at this level of abstraction we can see the underlying process as common to all firms, involving:  Searching: scanning environment for relevant signals about threats and opportunities for change  Selecting: deciding which of these signals to respond to  Implementing: translating the potential in the trigger idea into something new and launching it in an market.  Capturing value from the innovation: both in terms of sustaining adoption and diffusion and also in learning from progressing through this cycle so the organization can build it’s knowledge base and can improve the ways the process is managed.

2.2. Variations on a theme Services and innovation: although services may appear different because they are often less tangible, the same underlying innovation model applies. To the public sector, another model occurs because of different, and often conflicting, drivers and rewards. Incentives may be absent or different. Not all innovation is about making money, social entrepreneurship is about creating some form of social value, to make a difference to the world Size matters: smaller organizations possess a range of advantages/disadvantages (Table 2.2.) The do better/do different paradox is the same as the component/architectural comparison. Firms need to develop capabilities for managing both aspects of innovation. Table 2.3. highlights the differences between the two ways of thinking and operating

2.3. A contingency model of the innovation process Table 2.4. Lists some of the wide range of influences around which organizations need to configure their particular versions of the generic innovation process (sector, size, NIS, life cycle, degree of novelty and role played by external agencies as regulators).

2.4. Evolving model of the process The understanding of the core process of innovation has changed over time. They started with the linear model, but new opportunities arising out of research gave rise to applications and refinements as technology push and need pull). Successful innovation requires interaction between both. Table 2.5. History of innovation models. Partial models: are most likely to be limited, so will be the capability to manage. Focus on, for example, on R&D could make the technology fail to meet user needs.

2.5. Can we manage innovation? Can we manage such uncertain process? Scope of difference is wide, innovation is multidisciplinary. Managing innovation is more like creating conditions within an organization which makes a successful resolution more likely than managing a mechanism.

Success in innovation appears to depend upon two key ingredients:  Technical resources (people, equipment, knowledge, money, etc.)  Capabilities in organization to manage technical recourses Capabilities are set in routines, particular ways of behaving which become the way they do things around the firm (patterns). This is reinforced by repeated experiments and experience (learning processes). Routines are what make one organization different from another in how they carry out the same basic activity. Routines are almost impossible to copy.

2.6. Building and developing routines across the core process Routines are firm specific because they are learned over time by trial and error. For some core capabilities see Table 2.7. The negative side of routines embodies the fact that routines can become barriers to thinking in different ways. So, it is not only important to build routines but also recognize when and how to destroy them and allow new ones to emerge.

2.7. Learning to manage innovation Successful innovation management is primarily about building and improving effective routines. This comes from recognizing and understanding effective routines and facilitating their emergence across the organization. Firms have different awareness and willingness of/to change Figure 2.3. illustrates.

2.8. Measuring innovation success Success relates to the overall innovation process and its ability to contribute consistently to growth.

2.9. What do we know about successful innovation management?  

Innovation is a process, not a single event, and needs to be managed as such The influences on the process can be manipulated to affect the outcome, that is, it can be managed. Developing an integrated set of routines is strongly associated with successful innovation management and can give rise to distinctive competitive ability.

2.10. Success in routines in innovation management More about the search, select, implement and capture model: 

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Search: detecting signals in the environment about potential for change. Organizations look at places where they expect signals, this can sometimes represent a barrier to more radical forms of innovation. Key factor: understanding of what factors the shape of the selection environment and the development of strategies to ensure their boundaries are stretched. Selection: choices have to fit with the overall business strategy of the firm and build upon established areas and technical and marketing competence. Key questions in select phase: - Possible technological and market opportunities: what could we do? - Distinctive competencies: can we build on our knowledge base? - Do we want to do it: does it fit with overall business? Figure 2.5. Implement: turning potential ideas into some kind of reality like a new product or service, change in process or business model, etc. Begin of implementation phase there is high uncertainty which declines over time. Financial assets increase over time. Key questions:

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- Acquire knowledge - Execute project - Launch and sustain innovation (diffusion) Capture value: commercial success, market share, cost reduction or social innovation. Innovation cycle restarts. Re-innovation and learning occurs.

Managing Innovation Processes Chapter 3: building the innovative organization 3.1. Shared vision, leadership and the will to innovate The status quo: routines make production more efficient and cost-effective, but can also form a barrier and narrow focus which exclude upcoming innovations. Changing mindset and refocusing organizational energies requires the articulation of a new vision, and there are many cases where this kind of leadership is credited with starting or turning round organizations. Top management commitment is a common prescription associated with successful innovation; the challenge is to translate the concept into reality by finding mechanisms which demonstrate and reinforce the sense of management involvement, commitment, enthusiasm and support. Interaction board and workers:  Leader-member exchange (LMX)  Brainstorm  Stratified system theory (SST): a need to integrate complex information and think abstractly in order to assess the environment.

3.2. Appropriate organization structure Goal: trying to create organizational structures and processes which enable technological change to thrive. Top-down hierarchy is unfavourable for innovation because it is not supportive for smooth information flows and cross-functional cooperation, which are recognized as important success factors. Organization form depends on nature of tasks to be performed within organization (routines versus dynamic, flexible decisions). Table 3.2. Structural archetypes  Simple structure: centralized organic type  dynamic  Machine bureaucracy: centralized mechanistic organization  static systems  Divisionalized form: decentralized organic form to adapt to local environmental challenges  Professional bureaucracy: decentralized mechanistic form with power located with individuals but coordination via standards.  Adhocracy: project type of organization designed to deal with instability and complexity  Mission-orientated: emergent model associated with shard common values (altruistic purpose  charity, voluntary).

3.3. Key individuals Another important element is the presence of key enabling figures (champions).  Expert promoter: high integrated regulation which is more significant than intrinsic motivation  Strong affective occupational commitment  Power promoter: high need for autonomy, which is in line with the role specification of enforcing his decisions without justifying to others.

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Process promoter: high altruism, which reflects his position as a mediator between all involved persons facilitating contacts as well providing knowledge to others Relationship promoter: foster his relationships which he is pursuing due to satisfaction he takes from interaction with other people and bringing them together Champion: high need for autonomy, which he depends on to comprehensively support the innovation endeavour.

3.4. High involvement in innovation: Although each individual may only be able to develop limited, incremental innovations, the sum of these efforts can have far-reaching impacts. Employee involvement saves lots of money and brings lots of potential idea’s. Implementing HII goes by several stages, each taking time to move through and giving no guarantees to move on to the next stage. Figure 3.1. 1. Background HII: little activity going on, random nature 2. Structured HII: first serious attempt to mobilize HII, setting up formal processes for finding and solving problems in a structured way 3. Goal-orientated HII: coupling HII habit to the strategic goals of the organization 4. Empowered HII: individuals get empowered 5. Full HII capability: the learning organization: dominant way of life, automatic capture and sharing of learning, everyone actively involved in innovation process. Everyone fully involved in experimenting and improving.

3.5. Effective team working Experiments show that teams have more to offer than individuals in terms of both fluency of idea generation and in flexibility of solutions developed. Teams are more seeing as a mechanism for bridging boundaries within the firm and dealing with inter-organizational issues. Teams go through four stages of development: 1. Forming 2. Storming 3. Norming 4. Performing

3.6. Creative climate Many great inventions came about as the result of lucky accidental discoveries. Conditions need to be set within such accidents can take place.  Creativity is an attribute which everyone possesses, but their preferred style of expressing it varies widely  Organizational structures are the visible artefacts of what can be termed an innovative culture, one in which innovation can thrive. It equates to the pattern of shared values, beliefs and agreed norms which shape behaviour. Climate is defined as the recurring patterns of behaviour, attitudes and feelings that characterizes life in an organization. Climate is distinct from culture in that it is more observable at a surface level within the organization and more amenable to change and improvement efforts. Climate Psychology Normative Easy observable

Culture Anthropology Descriptive Difficult observable

Other factors:  Trust and openness: emotional safety in relationships

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Challenge and involvement: the degree in which people are involved in daily operations, longterm goals and visions. Support and space for ideas Conflict and debate: presence of personal, interpersonal or emotional tensions Risk taking: risk loving versus risk averse Freedom: the independence in behaviour exerted by the people in the organization (autonomy)

3.7. Boundary-spanning Is about the idea of boundary expanding to, for example, customers and end-users. Open innovation requires building relationships with an extend cast of characters such as suppliers, collaborators, competitors, regulators and multiple other players. Enabling effects to sustain effective network effects:  Key individuals: putting energy into their formation and operation (champions, sponsors, etc.)  Facilitation: providing support to the process of networking but not necessarily acting as members of the network. Neutral and catalytic role.  Key organizational roles: key institutions, mirroring individual roles.

Managing Innovation Processes Chapter 4: developing an innovation strategy 4.1. Rationalist or incrementalist strategies for innovation? Rationalist strategy has been heavily influence by military experience, where strategy consists of the following steps:  Describe  Understand and analyse environment  Determine a course of action in the light of the analysis  Carry out the decided course of action Difficult to appraise the real situation because of two reasons: 1. External environment is complex, involving competitors, customers, regulators, etc. It is dynamic and fast changing, including technical, economic, social and political change 2. Managers in large firms disagree on their firms’ strengths and weaknesses in part because their knowledge of what goes on inside the firm is imperfect. Incrementalist strategy Complete understanding of complexity and change is impossible. Our ability both to comprehend the present and to predict the future is therefore inevitably limited. The procedure: 1. Make deliberate steps towards the stated objective 2. Measure and evaluate the effects of the steps 3. Adjust the objective and decide on the next step Firms must also decide between two market strategies: Innovation leadership: where firms aim at being first to market, based on technological leadership

 First mover advantage: monopoly profits Innovation followership: where firms aim at being late to market, based on imitating (learning) from the experience of technological leaders.  Less R&D cost

4.2. Dynamic capabilities Dynamic capabilities refers to the shifting character of the environment and it emphasizes the key role of strategic management in appropriately adapting, integrating and re-configuring internal and external organizational skills, resources and functional competencies towards a changing environment. Different patterns in national system of corporate governance influences patterns of investment and innovation:  Anglo-Saxon: short term investment from individuals, pension funds and insurers. Dispersed management with more often radical technological opportunities than incremental.  Nippon-Reinland: long term investment from companies, individuals and banks. Concentrated, close and direct management with more often incremental technologies than radical ones.

4.3. Appropriating the benefits form innovation Capacity of the firm to appropriate the benefits of its investment depends of:  The firm’s capacity to translate its technological advantage into commercially viable products or processes  The firm’s capacity to defend its advantage against imitators (patent protection) Factors which influence the firm’s capacity to benefit commercially from technology: 1. Secrecy Form of protection by industrial managers, especially for process innovation 2. Accumulated tacit knowledge Very particular skills which can’t be imitated 3. Lead times and after-sales service Short lead times can reduce imitation. After-sales service can increase consumer commitment 4. L...