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Managing the Innovation Process: Module summary

Managing the Innovation Process: Module summary. Managing in Information-Intensive Companies Prof. Morten Hansen Feb 23 2009. The problem: Established companies often do not innovate well. Mechanistic, exploitative: set up to execute on existing operations

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Managing the Innovation Process: Module summary

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  1. Managing the Innovation Process:Module summary Managing in Information-Intensive Companies Prof. Morten Hansen Feb 23 2009

  2. The problem: Established companies often do not innovate well • Mechanistic, exploitative: set up to execute on existing operations • Short run, unit-focused, execution-oriented • New businesses are different • Exploratory, organic • Different markets, business models/economics • E.g., digital printing at RR Donnelley • Different people and skills required • Different metrics needed Solutions need to balance exploration and exploitation

  3. Solution 1: Take an Innovation Value Chain View • View innovation process as one whole process Idea generation => conversion => diffusion • Need to be good in all links • Need to have a process for each phase • Therefore, diagnose the weakest link • Concentrate on improving the weakest link • Understand that skills and tasks differ as move along the chain • Idea generation: creativity, dreaming, seeing opportunities • Conversion: project management, manage organization • Diffusion: “Show me the money!” E.g., RR Donnelley case exemplifies this

  4. Solution 2: Create hybrid structure that separates and integrates • Linked to units (integrates) • Access to resources (money, people, expertise, customers, distribution), commitment from line, eventual transfer to line • Separate operations (separates) • Venture unit/corporate incubator (e.g., IBM) or separate division (RR Donnelley) • Entrepreneurial freedom, entrepreneurial people, higher risk-reward incentives, different metrics. Fully integrated (in units) Hybrid (linked to units +separate operations) Stand-alone

  5. Solution 3: Develop an innovation culture • Research shows four behaviors related to an innovation culture • Creativity • 1) Support for risk taking • Rewards for innovation • Management role • models • Challenge the status • quo • 2) Tolerance of mistakes • Mistakes are normal • Being “safe” isn’t OK • Implementation • 3) Teamwork • Share common goals • Open information • 4) Sense of Urgency • Fast decision making • No red tape • Once decided, full • commitment Source: “The determinants of team-based innovation in organizations.” Small group Research, vol. 34, 2003

  6. Solution 4: Develop ambidextrous skill sets • Develop people to be good at both exploitation (running the existing business) and exploration (new business development) • Especially in sr. management teams • Hire, promote and job-rotate to create as many people with ambidextrous skills as possible • + Hire and develop people with either skill set • Not all can have ambidextrous skills • Thus need to have it at the aggregate organizational level => Ambidextrous in top management + some specializaton below

  7. Solution 5: Change metrics for new business creations • Metrics used for existing businesses risk killing new businesses • Short-term (e.g., profit within a year at RR Donnelley) • Financials, when they are not meaningful • Market share, when markets don’t even exist • But metrics needed to measure progress • Milestones (e.g., IBM) • Depends on stage in process • Early development: technology progress, design wins • Later: sales, customer targets etc.

  8. Solution 6: new business champions need to develop political skills • Innovation is a messy process, requiring project champions to navigate the social and political landscape in a company (e.g., Dow Chemical case) • Manage higher-ups • Manage larger organization • Do not only use rational arguments • i.e., do not only argue that “it’s a good project”, but understand the motives of other people and units • Use influence tactics: Build internal coalitions, build momentum, “sell” to others in the organization, enlist supporters, trade favors with others (norms of reciprocity), ingratiate, etc.

  9. Solutions encompass several “levers”: they need to be aligned “Hard” “Soft” Culture: Risk/Failure + Implementation Structure: Separate + Integrated Aligned Skills: Ambidextrous Process: Innovation Value Chain Politics/Social: Use influence tactics Metrics: Hitting milestones, Not strict financials

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