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CHAPTER 3: MANAGING INNOVATION WITHIN FIRMS, Stability, Uncertain, Dynamic…
CHAPTER 3: MANAGING INNOVATION WITHIN FIRMS
3.1 The Dilemma Of Innovation Management
Fundamental tension
Creativity
Develop new ideas, new products -> to be competitive in the future.
2 organizational capabilities
Exploitation: efficiency, increasing productivity, control, certainty and variance reduction (old routines).
Exploration: search, discovery, autonomy, innovation and embracing variation (new adventures).
Ambidexterity (using both hands)
to compete
mature markets
emerging markets
dynamic capabilities
Effectively Execute
separate entity
integrate efforts (senior management)
prevent mainstream business
Undermining
Resources
voracious appetite for resource
more executives, powerful and credible (Mainstream business)
Problem, Not a Solution
Cannibalization
Distraction
Inertia
hinder efforts
different structures, systems, rewards, culture,..
convinced at every step
3.2 Managing Uncertainty
Pearson’s Uncertainty Map (Pearson, 1991)
Uncertainty
ends (unclear eventual target)
means (unclear method)
Quadrant 1 (Exploratory research)
uncertainty means (process) and ends (output)
blue-sky research
niversity research; financial and time pressure
Quadrant 2 (Development Engineering)
Different projects and approaches
Clear ends but unclear means
On-going activity, continually examining, looking for
reduce costs
Quadrant 3 (Applications Engineering)
Some new and improved products appear
Explores technology
Uncertainty ultimate goal
Many new materials
Quadrant 4 (Market + Technical Capabilities)
Highest certainty (close-tomarket)
improve or creative
Speed of development
Apply Pearson’s uncertainty map (Pearson, 1991) in practice
Four quadrants
Quadrant 3: Applications Engineering
Unclear ends, known technology → new uses (Kevlar).
Quadrant 4: Market-Tech Combination
Clear ends & means → close to market, speed matters (Samsung).
Quadrant 2: Development Engineering
Clear ends, unclear means → trial & error (Guinness).
Quadrant 1: Exploratory Research
Unclear ends & means → far from market (Xerox PARC).
Historical Example – Uncertainty in Aviation
Early 20th century aviation = extreme uncertainty.
Example of failure
Seagull-shaped aircraft
Butterfly-shaped aircraft
Umbrella-shaped aircraft
Oval-framed aircraft enclosing the engine
Examples of success
Wright Brothers → succeeded by focusing on flight control (rudder, elevator, ailerons).
Louis Blériot → first to cross the English Channel, thanks to a simple and efficient design
Technological Cycles & the S-Curve
Anderson & Tushman (2004): Three stages of technological change
Era of Ferment
Intense competition between multiple designs
Broad experimentation
Very high uncertainty
Dominant Design Emerges
A standard architecture becomes established
The industry converges on it
Era of Incremental Innovation
Focus shifts to efficiency, cost reduction, and fine-tuning
Competition is based on optimization rather than radical change
The S-Curve
Early stage
slow progress, experimentation
Growth stage
rapid improvement as the technology stabilizes
Mature stage
plateau, physical/technical limits reached → need for a new S-curve
Illustration
The Flying Cloud Clipper ship represented peak sailing technology, but was soon overtaken by steam engines
a new technological curve
Dominant Design
Definition: “The configuration or architecture that becomes the accepted standard for a new product or service.”
Characteristics
Eventually
Initially
Example
Electronics
Writing instruments
Aircraft
Young Markets
Characteristics
Managerial implications
Continued investment is required, even when markets are uncertain.
Patience is crucial → returns often come late.
Firms must keep up with new technological developments.
Examples
Ballpoint pen → initially met with skepticism, later became a global standard.
Patience is crucial → returns often come late
Stability
Static routines -> efficiently and quickly -> to compete today
E.g: the processing of millions of cheques by banks every day
Uncertain
Dynamic