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Innovation Management B&M – summary of the textbook,research papers, pre-recorded lectures and online sessions.
Brenda Giethoorn
12-01-2020
WEEK 1
Article 1: Challenges in Innovation Management, Bessant John (chapter of a book).
Innovation represents the core renewal process in any organization, the successful exploitation of new
ideas. Managing innovation becomes one of the key strategic tasks facing organizations of all shapes,
sizes and sectors.
Innovation is not always about radical change, it includes also the utilization of even small-scale
changes in technological know-how. The challenge is how to obtain a competitive edge through
innovation - and through this, survive and grow.
Organizations have to manage four different phases in the process of turning ideas into successful
reality:
1. Scan and search their environment, internal and external;
2. Select the potential triggers for innovation;
3. Resource the chosen option;
4. Implement the innovation.
Another additional phase is the reflection.
Innovation management is about learning to find the most appropriate solution to the
problem of consistently managing this process, and doing so in the ways best suited to the particular
circumstances in which the organization finds itself.
Current challenges which are involved in trying to manage innovation are:
1. Why change?
Innovation is not a luxury item on the strategic agenda, but a survival imperative. In each case it
involves learning and unlearning.
2. What to change?
Organizations may find difficulties in framing an appropriate innovation agenda. Innovation can
take many forms, from simple to radical development. The challenge for firms is to be aware of the
extensive space within which innovation possibilities exist and to try and develop a strategic
portfolio which covers this territory effectively balancing risks and resources.
3. Understanding Innovation
Part of the problem of managing innovation is the way people think about it. There is often confusion
between ‘invention’ and ‘innovation’. Other limits to our mental models include the view that
innovation is all about science and technology creating new opportunities (technological push
model). On its own it is a weak basis for managing innovation. Also a totally marketing led approach
to innovation may miss some important tricks.
4. Building an Innovation Culture
The task of managing innovation is about creating firm specific routines, which defines a particular
approach to a problem. Routine, an established pattern, ensures that dealing with innovation is a
challenge. Innovation should become part of the routine, and these routines can’t be copied easy by
competitors.
1
,5. Continuous Learning
The distinction is between blind copying and adopting and developing a good practice, which
someone else uses. The trouble with innovation is that firms have to try and find their own particular
ways of solving puzzles and continuing to be able to do so as the puzzles shift and change.
6. High Involvement Innovation
Traditionally innovation has been the province of the specialist who often works apart from the
mainstream operations, for example R&D. Organizations then saw that they need to increase their
innovative capacity within the organization to solve problems and gain competitive advantage.
Studies of high performance organizations, especially those, which achieve significant productivity
improvements through their workforces, place considerable emphasis on involvement in innovation.
Also, much discussion has focused on the concept of ‘learning organizations’, seeing knowledge
as the basis for competition in the 21st century. High involvement innovation lies at the heart of the
‘learning curve’ theory which has had such a strong impact on strategic thinking; learning curves
only work when there is the commitment and enabling structure for participative problem-solving.
Mobilizing high levels of participation in the innovation process is unfamiliar and, for many
organizations, relatively untested and apparently risky. The challenge is thus one of building
routines— establishing and reinforcing behavior patterns.
7. Dealing with discontinuity
Most change happens as incremental developments of what is already there. The pattern of
innovation is sometimes called ‘punctuated equilibrium’, borrowing a term from the field of
evolutionary biology which explores how species emerge and develop. Its implication is that the
way in which we organize for innovation will be around keeping up a steady stream of incremental
developments within an envelope established by the original product or process concept. But there
are points at which rules change, this kind of changes/transitions poses very big management
challenges. When discontinuous changes take place the old incumbents do not usually do well and
it is at this point that new entrants become key players. The routines which well-managed firms
build up to sustain and develop their innovations in product and process within a particular
‘envelope’ are not the same as those they will need to create innovations outside that space. Radical,
‘out of the box’ thinking and the high-risk project management approaches which accompany
completely new directions in innovation do not sit well within existing and relatively highly
structured frameworks.
The challenge here is to develop what some writers have called ‘the ambidextrous organization’.
That is, to manage under one roof to operate routines for ‘doing what we do better’ innovation
(within the envelope) and simultaneously to allow space for another set of routines for ‘doing
differently’—moving beyond the envelope into new and uncharted territory.
8. Managing Connections
Characteristic of the routines developed and shared around ‘good practice’ in innovation
management is the focus on the individual firm. The challenge to business organizations is to operate
in relationships with others. Such inter-organizational networking is becoming an issue of
considerable interest amongst researchers, policy-makers and practitioners. Innovation networks of
this kind offer significant advantages in terms of assembling different knowledge sets and reducing
the time and costs of development— but are again often difficult to implement. Arguably, inter-
organizational networks will be more or less effective in the ways in which they handle these
processes.
Article 2: Does Management Really Work?, Nicholas Bloom, Raffaella Sadun, and John Van Reenen
(Havard Business Review)
Since Frederick Winslow Taylor published The Principles of Scientific Management in 1911,
businesses have been trying to follow formalized sets of best practices. The research studied adhere to
three practices that are generally considered to be the essential elements of good management:
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,- Targets: Does the organization support long-term goals with tough but achievable short-term
performance benchmarks?
- Incentives: Does the organization reward high performers with promotions and bonuses while
retraining or moving underperformers?
- Monitoring: Does the organization rigorously collect and analyse performance data to identify
opportunities for improvement?
The research learned three things:
1. Many organizations throughout the world are very badly managed, many firms do not set for
example targets and other parameters.
2. The indicators of better management and superior performance are strongly correlated with
measures such as productivity, return on capital employed, and firm survival.
3. Management makes a difference in shaping national performance.
Effective management conducted by using these three principles, can indeed improve performance,
even beyond the private sector. On average, firms that received the management intervention cut
defects by half, reduced inventory by 20%, and raised output by 10%.
A one-point increment on a five-point management score correlated with better performance at
manufacturers around the globe. Awareness is very low: 79% of the organizations in our study claimed
to have above-average management practices, yet no correlation existed between our scores and the
institutions’ self-scores, either in management practices or in overall performance. Much of the
opportunity for improvement is in the hands of local managers. To see how far behind their organizations
are, they must rigorously evaluate their own practices and compare themselves with others’. Managers
can quickly benchmark themselves by country and industry. But you shouldn’t expect immediate results
of effective management.
The public sector is strikingly bad at rewarding good employees and dealing with underperformers.
Another question they addressed in their research is why some organizations are motivated to change
and others aren’t. They eventually found a pattern: Leaders often initiate transformations in response to
extremely challenging conditions. A call for “better management” may sound prosaic, but given the
potential effect on incomes, productivity, and delivery of critically needed services worldwide, it’s
actually quite radical.
Chapter 1: Introduction
In many industries technological innovation is now the most important driver of competitive success.
The increasing importance of innovation is due in part to the globalization of markets. Advances in
information technology (IT) also have played a role in speeding the pace of innovation. Product
lifecycles have become shorter.
The aggregate impact of technological innovation can be observed by looking at gross domestic
product (GDP, the total annual output of an economy, measured by final purchase price). Sometimes
technological innovation results in negative externalities, costs that are borne by individuals other than
those responsible for creating them.
Study after study has revealed that successful
innovators have clearly defined innovation strategies
and management processes. Most innovative ideas do
not become successful new products. The innovation
process is thus often conceived of as a funnel, with
many new product ideas, but very few making it
through the development process.
3
, To improve innovation, a firm need:
- An in-depth understanding of the dynamics of innovation;
- A well-crafted innovation strategy;
- Well-designed processes for implementing the innovation strategy.
Chapter 2: Sources of Innovation
Innovation is the practical implementation of an idea into a
new device or process. An even more important source of
innovation does not arise from any one of these sources, but
rather the linkages between them. Networks of innovators
that leverage knowledge and other resources from multiple
sources are one of the most powerful agents of technological
advance. The sources of innovation as a system are:
Innovation begins with the generation of new ideas. The ability to generate new and useful ideas is
termed creativity. Creativity is defined as the ability to produce work that is useful and novel. The
degree to which a product is novel is a function both of how different it is from prior work and of the
audience’s prior experiences.
The personality traits deemed most important for creativity include self-efficacy, tolerance for
ambiguity, and a willingness to overcome obstacles and take reasonable risks. Intrinsic motivation has
also been shown to be very important for creativity. An environment that provides support and rewards
for creativity is also important.
An organization’s overall creativity level is not a simple aggregate of the creativity of the individuals.
The organization’s structure, routines, and incentives could thwart individuals creativity or amplify it.
Intranet is a private network, accessible only to authorized individuals.
One 10-years study of inventors concludes that the most successful inventors possess the following
traits:
1. They have mastered the basic tools and operations of the field in which they invent, but they have
not specialized solely in that field.
2. They are curious and more interested in problems than solutions.
3. They question the assumptions made in previous work in the field.
4. They often have the sense that all knowledge is unified.
While manufacturers typically create new products innovations in order to profit from the sale of the
innovation to customers, user innovations often have no initial intention to profit from the sale of their
innovation – they create the innovation for their own use.
Research can refer to both basic research and applied research. Basic research is effort directed at
increasing understanding of a topic or field without a specific immediate commercial application in
mind. Applied research is directed at increasing understanding of a topic to meet a specific need.
Development refers to activities that apply knowledge to produce useful devices, materials, or processes.
A firm’s R&D intensity has a strong correlation with its sales growth rate, sales from new products,
and profitability. There are two approaches to R&D:
- Science-push: this approach assumed that innovation proceeded linearly from scientific discovery
to invention etc.
- Demand-pull: this approach argued that innovation was driven by the perceived demand of
potential users.
Complementors are organizations that produce complementary goods.
Presuming doing in-house R&D helps to build the firm’s absorptive capacity, enabling it to better
assimilate and utilize information obtained externally.
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