L2: Venture Team Management

L2: Venture Team Management EC10: Innovation & Commercialisation What it Takes to be a Leader and Manage Change Marcus Thompson wmt1@stir.ac.uk

Venture Team Management Outline • 1. Managing Innovations • 2. Organisations Built to Innovate • 3. The Technology Commercial Paradigm • 4. Change Management 2. Team Management

1. Managing Innovations Perspectives on Commercial & Technical Innovation

Innovation DNA • "successful organisations develop a culture of change that just keeps moving.“ Kanter 1999 • Context • Leadership • Core Values • Culture www.thinksmart.com 2. Team Management

Forms of Innovation • New products • either radically new or which extend the product lifecycle. • Process innovation • leading to reduced production costs, and affected partially by the learning and experience effect. • Marketing Innovations • increase differentiation. • Organisational Changes • reduce costs or improve, total quality. 2. Team Management

Technology Perspectives • Technology Innovations • exploitation of new ideas – incorporating new technologies, design and best practice is the key business. • Commercial Innovation • Venture management strategies and structures that bring these new technologies to market. 2. Team Management

Commercial Innovation • Commercial Innovation is about doing things new or different (from your competitors). • It is a management process that centres on being creative & visionary. • It presents itself as the ability to filter and then commercialise. • It applies to: • new products • new business practices • new market applications 2. Team Management

Commercial V Technical Innovations • These are the skills of the entrepreneur. • Are they the skills of the scientist? 2. Team Management

FORMS • Commercialisation and technology transfer takes many forms: • Licensing technology • Spinout company formation • Collaborative research and TT projects • Faculty/student/industry exchange and internship programs • Consultancy/applied research • Teaching, education and outreach programs 2. Team Management

Key Success Factors for Innovation • Sustainable Business Model • Architectural Linkages • Social, technical & commercial • An Entrepreneurial Team to balance science & commerce • Global perspective • Adaptive use of technologies & business processes to meet a specified market need. • Customer-centred players – niche rather than segment. • Exit strategies. 2. Team Management

Top Level Support Authority Key Issues Market-Guided R & D Integration & Coordination New-Product Development Management 2. Team Management

Approaches to Innovation • OLD STYLE • Physical creativity center • Focus on idea generation • Employee-oriented • A dedicated change agent’s project • Training and facilitation • Individual and monetary rewards • Small group creativity • Leaders passively supportive • NEW STYLE • Innovation resources as part of business units • Focus on business strategy and creating value • Customer-centred • A team-created innovation culture • Coaching and project team involvement • Team recognition • Tools scalable to organisation 2. Team Management

Un-innovation • Product Development & Brand management is the sole responsibility of the Chief Executive 2. Team Management

2. Organisations Built to Innovate How to manage knowledge by building a flexible organisation

The Importance of Knowledge • we live in the age of the ‘knowledge worker.’ Education, education, education - • the usefulness of any given skill set will change several times over people’s lifetimes. Therefore, the skills of ‘learning to learn’ are vital throughout an adult’s lifetime • the information explosion means that there is much more ‘information’ easily available, but little or no guidance in how to tell the good from the bad • the information explosion also means that ‘information’ need not be processed if it serves only a temporary purpose, e.g. downloading an essay for an exam 2. Team Management

Knowledge & Creativity • Depend on Diversity • If the business system becomes homogeneous, it becomes vulnerable to environmental shifts. It will no longer work in a new environment and the entire system is at risk. • Building on participation is not optional • In a turbulent environment, it is important that the founding team engage everyone who’s going to be affected by change. • Develop a sense of shared meanings and • This is a paradox. It is the unity of diversity that can be used to unify an organisation. • Meaning engages creativity • When people become interested in an issue their creativity is instantly engaged. For people to innovate they must buy into something that has meaning for what they do. • Reinvent Business Process to Match Creativity 2. Team Management

Drucker on Entrepreneurial Organisations • `Entrepreneurship is based upon the same principles, whether the entrepreneur is an existing large institution or an individual starting his or her new venture single-handed. It makes little or no difference whether the entrepreneur is a business or a non-business public-service organisation, nor even whether the entrepreneur is a government or non-government institution. The rules are pretty much the same, and so are the kinds of innovation and where to look for them. In every case there is a discipline we might call Entrepreneurial Management. 'Druker, P. F. (1985) Innovation and Entrepreneurship, New York: Harper Row. 2. Team Management

Entrepreneurial Organisations “Creating the entrepreneurial organisation is about encouraging opportunity seeking and innovation in a systematic manner, always questioning the established order, seeking ways to improve and create competitive advantage. It is about encouraging the qualities enjoyed by successful entrepreneurs such as vision and drive. It is about learning new ways to manage organisations involving relationships and culture. It is about new ways of dealing with risk, uncertainty and ambiguity so as to maintain flexibility. 2. Team Management

Organisations (continued) “It is about institutionalising a process of continuous strategising, learning from customers, competitors and the environment. It is about encouraging change and managing rapid growth. “And it is about doing these things throughout an organisation so that it reflects the entrepreneurial characteristics of its managers - responding quickly and effectively to opportunities or changes in the market place. Burns, P, The Entrepreneurial Organisation, 2002 2. Team Management

“ The power of the team • Is so great that it is often wise to violate common sense and force a team structure on almost anything…companies that do so will achieve a greater focus, stronger task orientation, more innovation and enhanced individual commitment..” Tom Peters, Thriving on Chaos. 2. Team Management

Teams • Groups of individuals • bound together by a common goal • different perceptions of that goal & how it can be delivered • different interests • conflict as dynamic tension • coordination & the big picture • task orientation • change & creativity 2. Team Management

The problem of teams • Interpretation • Mediation • Difference • Denial of difference • Conflict • Marshalling resources 2. Team Management

Teams Roles • Spectators • Participants • Spectators as participants • Participants as spectators • The performance • The spectacle 2. Team Management

Balancing Team Types • Co-ordinator (Chairperson) • Traits: Stable, Dominant, Extrovert • Shaper (social leader) • Traits: Anxious, Dominant, Extrovert. • Plant • Traits: Dominant, Very High I.Q., Introvert • Monitor Evaluator • Traits: High IQ, Stable, Introvert. • Implementer (Company Worker) • Traits: Stable and Controlled. • Resource Investigator • Traits: Stable, Dominant, Extrovert. • Team Worker • Traits: Stable, Extrovert, Low in Dominance. • Complete Finisher • Traits: Anxious, Introvert. 2. Team Management

3. The Technology Commercial Paradigm Avoiding the Valley of Death

Conceptual as well as methodological problems in devising an appropriate definition of high technology activities (Aydalot and Keeble, 1988; Goss and Vozikis, 1994). Research on ‘technological innovation’ equates the term with ‘high technology’. Technology & Innovation are closely linked by policy makers. Debate surrounds the industries that can be regarded as technologically innovative. Butchart (1987) has presented a ‘process’ based classification of high technology sectors. He identified several Standard Industrial Classification (SIC) sectors (Central Statistics Office, 1979) with: • Above average R & D intensity; and • Above average proportion of scientists, professional engineers and technicians. High-Tech Firms in UK 2. Team Management

Paradigms • An incremental evolution • progressively position an organisation and its innovation to take advantage of changes in a marketplace. This is sometimes referred to as continuous innovation. • An revolutionary paradigm • Change fundamental industry assumptions, create new solutions to solve customer problems and in so doing create a brand new product or set of applications. • Known as discontinuous innovation. 2. Team Management

Diffusion Theory • Characteristics Rogers identified in Innovators • venturesome, desire for the rash, the daring, and the risky, • control of substantial financial resources to absorb possible loss from an unprofitable innovation. • the ability to understand and apply complex technical knowledge, and • the ability to cope with a high degree of uncertainty about an innovation. • Characteristics Rogers identified in the Early Adopters: • integrated part of the local social system, • greatest degree of opinion leadership in most systems, • serve as role model for other members or society, • respected by peers, and • successful. 2. Team Management

Diffusion Theory • Characteristics Rogers (1962) identified in the Early Majority: • interact frequently with peers, • seldom hold positions of opinion leadership, • 1/3 of the members of a system, making the early majority the largest category. • deliberate before adopting a new idea. • Characteristics Rogers identified in the Late Majority: • one-third of the members of a system, • pressure from peers, • economic necessity, • sceptical and cautious. • Characteristics Rogers identified in the Laggards: • possess no opinion leadership, • isolates, • point of reference in the past, • suspicious of innovations, • innovation-decision process is lengthy, and • resources are limited. 2. Team Management

Rogers defines the diffusion process as one "which is the spread of a new idea from its source of invention or creation to its ultimate users or adopters". • Rogers differentiates the adoption process from the diffusion process in that the diffusion process occurs within society, as a group process; whereas, the adoption process is pertains to an individual. • He defines "the adoption process as the mental process through which an individual passes from first hearing about an innovation to final adoption". 2. Team Management

Adoption • awareness, • interest, • evaluation, • trial • adoption. 2. Team Management

Rejection • an innovation may be rejected during any stage of the adoption process. • disenchantment discontinuance - a decision to reject an idea as a result of dissatisfaction with it's performance, and • replacement discontinuance - a decision to reject an idea in order to adopt a better idea. 2. Team Management

Innovation Decision Process • Rogers identifies 5 Stages • from first knowledge of innovation • Awareness knowledge is information that an innovation exists. • How-to-knowledge consists of the information necessary to use an innovation properly, and • Principles knowledge consists of information dealing with the functioning principles underlying how the innovation works. • forming an attitude toward the innovation, • to a decision to adopt or reject, • to implementation of the new idea, • to confirmation of this decision. 2. Team Management

Early Knowers • Earlier knowers of an innovation have more formal education than later knowers. • Earlier knowers of an innovation have higher socioeconomic status than late knowers. • Earlier knowers of an innovation have more exposure to mass media channels of communication than later knowers. • Earlier knowers of an innovation have more exposure to interpersonal channels than later knowers.5Earlier knowers of an innovation have more change agent contact than later knowers. • Earlier knowers of an innovation have more social participation than later knowers. 2. Team Management

Success in Innovation • `success' in innovation is not simply a matter of moving a resource from A to B, but "the capability on the part of the recipient to do something useful with that resource", in other words, to innovate effectively. Mark (Dodgson and Bessant 1996) • initial recognition of opportunity or need, • search, • comparison, • selection, • acquisition, • implementation, and • long-term use (involving learning and development). 2. Team Management

4. Change Management

Traditional Approach • Develop a Mission statement. • Establish objectives. • Analyse market segments to determine. competitive advantage. • Bring capacity in line with competitive advantage. • Deliver goods and services in line with long term plan. 2. Team Management

Technological obsolescence Political and social events Increasing size and complexity of an organisation People: new leadership, new entrants to the organisation, etc Internationalisation of business Government legislation Environment Business relationships: alliances, acquisitions, etc. Strategic Drift Life cycle differences Why Organisational Change? 2. Team Management

Strategic Drift • Occurs where a firms strategy does not ‘fit’ or moves away from changes to its operating environment 2. Team Management

Watch out for . . .Strategic Drift StrategicDrift Change EnvironmentalChange OrganizationalChange Key is to “integrate internally and adapt externally”. Occurs when Resources and Value are mismatches to Environment. Time 2. Team Management

Symptoms of Strategic Drift • Highly homogenous paradigm/culture • Strong power blockages to change • Lack of market information • Little toleration of questioning/challenge • “We’ve tried this before and it didn’t work” • Deteriorating performance • Reliance on price/cost /competition 2. Team Management

Handling Disturbance • “Strategy is first and foremost about the form of total control system which will enable the business owner to handle strategic disturbance effectively, a control system which is inevitably characterised by fundamental antithesis. • Strategy is not about a comprehensive and integrated set of actions or routes to objectives. It is about a comprehensive and integrated total control system, which will enable the owner manager to deal with unforeseeable disturbances, changes in competitive advantage and capability as they occur. The starting point is not the mission, and certainly not detailed long term objectives, but the appropriate style of control.” (Stacey, 1989). • Control is not just monitoring. It is: • Having a purpose and a route to it (planning). • Checking progress (monitoring). • Taking corrective action. 2. Team Management

Strategic Analysis • The capability (or otherwise) of the organisation to exploit present and future environmental opportunities and/or to withstand environmental threat. • The ways in which resources might be changed to create competitive advantage and to improve the organisation's wealth producing capacity. • Congruence: Environment, Values, Resources • Resources are Strengths & Weaknesses • Values are Leadership & Culture • Environment is Opportunities & Threats (Thompson J, 2002) 2. Team Management

Examples of Strategic Drift • The introduction of new technology into a business that fails to reach its stated objectives. This is due to the failure to prepare the people within the organisation for its efficient use through prior communication, training, or a system of modified rewards. • The appointment of a "today" manager who has the necessary skills, attitude and management style, but is not provided with the financial resources to exercise those talents. • Jobs redesigned around teamwork but with traditional bonus systems maintained. • Customers wanting variety and regular product modifications but technology designed to produce one standard model. • The environment demanding responsive organisation modes but the organisation is maintaining previously effective bureaucratic forms. 2. Team Management

Strategic Dilemmas Adapted from Thompson J, 2002 2. Team Management

Efficiency & Effectiveness • External growth Strategies Concentration on market penetration or specialisation (Sticking to the knitting) • Market Development • Product Development • in any of the above • Disinvestment • Consolidation • Internal Growth Strategies (Efficiency) • Pricing Structures. • Costings. • Supply chain management. • Management Information Systems. • Contracting in & out of non core operations. • Innovation/R&D. 2. Team Management

Coping with Modern Markets • Revolution • in the ways industries and markets operate and the sources of competition which become important, and consequently in the strategies that successful organizations pursue. • Reinvention • in the creation of new business models that make traditional ways of doing business obsolete as routes to delivering and sustaining superior customer value. • Renewal • in the strategies of change and repositioning by companies whose business models have become outdated, as they rebuild and respond to change. Increasingly the priority is not just short-term performance but building the robustness to bounce back, to change, to survive, to turn things around. 2. Team Management Piercey 2004, 276

The Paradox of Revolution and Evolution DISCONTINUOUS CHANGE CONTINUOUS CHANGE Emphasis on Revolution over evolution Evolution over revolution Strategic change as Disruptive innovation/turnaround Uninterrupted improvement Change process Creative destruction Organic adaptation Change magnitude Radical, comprehensive, dramatic Moderate, piecemeal, undramatic Pace of change Abrupt, unsteady, intermittent Gradual, steady, constant Change requires Sudden break with status quo Permanent learning and flexibility Environmental jolts Trigger shock therapy Require continuous adjustment Change pattern Punctuated equilibrium Gradual development 2. Team Management

Overlap of Life Cycle for Products WINDOWS 98 WINDOWS XP 2. Team Management 1991 1995 1996 1997

Early Competitive Strategy: Product Performance • In the early stages of the product life cycle, the rate of product change is rapid and the margin large. • Firms with a performance maximising strategy emphasis the unique products and performance, often in anticipation that a new capacity will expand customer requirements. • Product Performance is driven or stimulated by market needs and opportunities. • Product markets are undefined. 2. Team Management

L2: Venture Team Management