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MANAGING INNOVATION WITHIN FIRMS - Coggle Diagram
MANAGING INNOVATION WITHIN FIRMS
Managing uncertainty
Pearson’s uncertainty map
Quadrant 1
(Exploratory research)
High degree of uncertainty about means (process) and ends (output).
Mostly in university research laboratories engage in exploratory research as financial and time pressure is lower compared to industry.
Science-based organizations or large organizations having necessary resources.
Blue sky research-working in the clouds (far-away from market)
Quadrant 2
(Development engineering)
Development engineering is an ongoing activity within manufacturing companies that are continually examining their production processes, looking for efficiencies and ways to reduce costs.
Several different projects and approaches are initiated to achieve the desired product.
The target is clear but how to achieve this target is unclear.
Quadrant 3
(Applications Engineering)
There is an uncertainty regarding the target.
Explores the potential uses of known technology: how the technology can be used most effectively?
Some new and improved products will emerge from this effort.
Many new materials fall into this area.
Quadrant 4
(Combining market opportunities with technical capabilities)
This area covers innovative activities where there is most certainty (close-to market).
Activities may be dominated by improving existing products or creating new products through the combination of a market opportunity and technical capability.
Speed of development is often the key to success here.
Managing innovation projects
Henderson and Clark’s Matrix of Complexity of Architectural/Component Knowledge
Modular Innovation:
High impact on component knowledge but low impact on architectural knowledge.
Architectural Innovation:
High impact on architectural knowledge but low impact on component knowledge.
Radical Innovation:
High impact on both component and architectural knowledge.
Incremental Innovation
: Low impact on both component and architectural knowledge.
Organisational characteristics that facilitate the innovation process
The several factors that organizations need to implement and develop to enhance innovation
Cross-functional cooperation and coordination within organizational structure:
Interdepartmental cooperation, especially between R&D and marketing, is essential to innovation, avoiding conflicts that hinder progress.
Receptivity:
The ability of the organization to recognize and adopt externally developed technologies plays a key role in fostering innovation.
Commitment to technology and R&D intensity:
A firm’s long-term commitment to R&D and technology is vital for attracting and retaining creative talent.
Acceptance of risks:
Innovating requires the willingness to assess and take calculated risks as part of a balanced portfolio of projects.
Vigilance and external links:
Continuous external scanning and maintaining strong external linkages with the market, competitors, and customers ensure the flow of information into the organization, aiding innovation.
Strategy towards innovation:
Long-term planning and establishing a diverse range of projects that provide future opportunities are necessary for sustained innovation.
Organizational heritage and innovation experience:
The firm’s culture and history influence its technological capabilities, cooperation among departments, and experience with past innovative projects.
Space for creativity:
Organizations should allow flexibility for individuals to think, experiment, and innovate, as this fosters creativity.
Growth orientation:
Organizations focused on growth are more likely to engage in innovation compared to those that are not growth-oriented.
Diverse range of skills:
A mix of specialized and generalist skills is required, and "hybrid" individuals who understand technical and commercial aspects are particularly valuable for innovation.
The dilemma of innovation management
Organisation
Creativity gains
Efficiency gains
How, then do firms escape from the innovation dilemma?
Ambidexterity
is about doing both; to compete simultaneously in both mature and emerging markets
(using both hands).
2 organizational capabilities
Exploitation
is about efficiency, increasing productivity, control, certainty and variance reduction
(old routines)
.
Exploration
is about search, discovery, autonomy, innovation and embracing variation
(new adventures)
.
Innovation dilemma in
low-tech
sectors is even worse than
high tech
sectors as innovations are mostly incremental and process-driven
Undermining
New Business Can Appear as a Problem, Not
a Solution
Inertia
Resources
How Do We Effectively Execute?
Organize the new business initiative as a separate
entity.
Provide senior management support to integrate efforts and prevent the mainstream business from undermining the new effort.
