Managing the Innovation Process Module summary Managing in

The problem: Established companies often do not innovate well n Mechanistic, exploitative: set up

Solution 1: Take an Innovation Value Chain View innovation process as one whole process

Solution 2: Create hybrid structure that separates and integrates Fully integrated (in units) n

Solution 3: Develop an innovation culture n Research shows four behaviors related to an

Solution 4: Develop ambidextrous skill sets n Develop people to be good at both

Solution 5: Change metrics for new business creations n Metrics used for existing businesses

Solution 6: new business champions need to develop political skills n Innovation is a

Solutions encompass several “levers”: they need to be aligned “Hard” “Soft” Culture: Risk/Failure +

Slides: 9

Download presentation

Managing the Innovation Process: Module summary Managing in Information-Intensive Companies Prof. Morten Hansen Sep. 17 2010

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

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

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

Solution 3: Develop an innovation culture n Research shows four behaviors related to an innovation culture Creativity Implementation 1) Support for risk taking • Rewards for innovation • Management role models • Challenge the status quo 3) Teamwork • Share common goals • Open information 2) Tolerance of mistakes • Mistakes are normal • Being “safe” isn’t OK 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

Solution 4: Develop ambidextrous skill sets n Develop people to be good at both exploitation (running the existing business) and exploration (new business development) n n n 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 n n Not all can have ambidextrous skills Thus need to have it at the aggregate organizational level => Ambidextrous in top management + some specializaton below

Solution 5: Change metrics for new business creations n Metrics used for existing businesses risk killing new businesses n n 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 n n Milestones (e. g. , IBM) Depends on stage in process n n Early development: technology progress, design wins Later: sales, customer targets etc.

Solution 6: new business champions need to develop political skills n Innovation is a messy process, requiring project champions to navigate the social and political landscape in a company (e. g. , Dow Chemical case) n n n Manage higher-ups Manage larger organization Do not only use rational arguments n n 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.

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