Innovation Strategy Management Lecture 2

Programme Part 1 – The basis of Innovation Part 1 – The basis of Innovation Part 2 – Innovation and New Product Development Part 2 – Innovation and New Product Development Part 3 – Innovation and Technology development Part 3 – Innovation and Technology development Part 4 – Innovation and Intellectual Property Part 4 – Innovation and Intellectual Property Part 5 – EU Green paper of Innovation Part 5 – EU Green paper of Innovation Part 6 – Innovation policies in different countries Part 6 – Innovation policies in different countries

Part 1 The Basis of innovation

Lecture 2: Managing innovation within firms I Theories about organization and innovations Theories about organization and innovations The dilemma of innovation management The dilemma of innovation management Managing uncertainty Managing uncertainty Organization characteristics that facilitate the innovation process Organization characteristics that facilitate the innovation process

Theories about organization and innovations The emphasized the need to view innovation as a management process within the context of the organization was shown to be the case especially in a modern industrialized society where innovation is increasingly viewed as an organizational activity.

The importance of a multiple- perspective approach Activities within the organization: Activities within the organization: Classical management theory perspective Classical management theory perspective Contingency theory perspective Contingency theory perspective Human relations theory perspective Human relations theory perspective Systems theory perspective Systems theory perspective

Classical or scientific management perspective Hold after the industrial revolution and the huge increase in world trade at the beginning of the 20 th century Hold after the industrial revolution and the huge increase in world trade at the beginning of the 20 th century Bureaucratic theory (Weber, 1964) Bureaucratic theory (Weber, 1964) Scientific management (Taylor, 1947) Scientific management (Taylor, 1947) The organization as an instrument for achieving established goals The organization as an instrument for achieving established goals

Human relations approach New approaches (provided by Hawthorn Studies at Western Electric – Roethlisberger and Dickinson, 1939) identified informal and non- legitimized group processes within the organization New approaches (provided by Hawthorn Studies at Western Electric – Roethlisberger and Dickinson, 1939) identified informal and non- legitimized group processes within the organization Innovative solutions will only be imposed when the organization is in a higher stress-threat situation, which is more likely to demand innovative behavior if the organization is to adapt. Innovative solutions will only be imposed when the organization is in a higher stress-threat situation, which is more likely to demand innovative behavior if the organization is to adapt.

Contingency approach Organizational activities or tasks are the things that individuals do as part of groups in order for the organization to achieve its purposes. Organizational activities or tasks are the things that individuals do as part of groups in order for the organization to achieve its purposes. This emphasis on internal activities rather than structure is an important factor with regard innovation. This emphasis on internal activities rather than structure is an important factor with regard innovation.

A topology of characteristics that have been identified within certain organizations: certainty vs uncertainty certainty vs uncertainty stability vs instability stability vs instability uniform vs non-uniform uniform vs non-uniform few exceptions vs many exceptions few exceptions vs many exceptions many repetitive events vs few repetitive events many repetitive events vs few repetitive events

Systems theory Systems theorists analyze the commercial organization from the perspective of complex organic systems. Systems theorists analyze the commercial organization from the perspective of complex organic systems. Organizations are seen as goal-directed systems. Organizations are seen as goal-directed systems. All systems have both structures and processes: structures are the relatively stable elements, whereas processes are the dynamic relationships among system elements over time All systems have both structures and processes: structures are the relatively stable elements, whereas processes are the dynamic relationships among system elements over time

Issues identified by systems theory that need to be managed IssueCharacteristics Adaptation The ability to alter way of working to meet the changing environment Co-ordination Enabling the different parts of the organization to function as one Integration The ability to harmonise a diverse range of activities and people Strain Coping with friction between organisational parts Output Achieving purposes and goals Maintenance Keeping elements in the system active

Organizational characteristics that facilitate the innovation process

Systems theory has also highlighted the importance of the organizations interaction with the external world. Indeed, this interaction is identified as an important element of the innovation process.

The dilemma of innovation management Within organizations there is a fundamental tension between the need for stability and the need for creativity. Within organizations there is a fundamental tension between the need for stability and the need for creativity. Companies require stability and static routines to accomplish daily tasks efficiently and quickly. Companies require stability and static routines to accomplish daily tasks efficiently and quickly. Companies also need to develop new ideas and new products to be competitive in the future. Companies also need to develop new ideas and new products to be competitive in the future.

Managing the tension between the need for creativity and efficiency

Managing uncertainty Product innovation is a complex process. Product innovation is a complex process. Innovation involves numerous factors acting separately but often influencing one another. Innovation involves numerous factors acting separately but often influencing one another. Organizations have to respond to internal and external events, some of with are beyond their control. Organizations have to respond to internal and external events, some of with are beyond their control.

The management of the innovation process: developing the creative potential of the organization developing the creative potential of the organization fostering new ideas fostering new ideas generating creativity generating creativity Managing uncertainty is a central feature of managing the innovation process. Managing uncertainty is a central feature of managing the innovation process.

Pearsons uncertainty map

Pearsons framework divides uncertainty into two separate dimensions: uncertainty about ends (what is eventual target of the activity or project) uncertainty about ends (what is eventual target of the activity or project) uncertainty about means (how to achieve this target). uncertainty about means (how to achieve this target).

Quadrant 1 exploratory researchor blue sky research exploratory researchor blue sky research this is largely the domain of university research laboratories, which are usually removed from the financial and time pressures associated with industry. this is largely the domain of university research laboratories, which are usually removed from the financial and time pressures associated with industry.

Quadrant 2 this type of activity is often is often referred to as development engineering and is an on- going activity within manufacturing companies which are continually examining their production processes, looking for efficiencies and ways to reduce costs. this type of activity is often is often referred to as development engineering and is an on- going activity within manufacturing companies which are continually examining their production processes, looking for efficiencies and ways to reduce costs.

Quadrant 3 uncertainty regarding ends uncertainty regarding ends usually associated with attempting to discover how the technology can be most effectively used usually associated with attempting to discover how the technology can be most effectively used arguably many new materials fall into this area. arguably many new materials fall into this area.

Quadrant 4 this area covers innovative activities where there is most certainty this area covers innovative activities where there is most certainty speed of development is often the key to success here speed of development is often the key to success here new product designs that use minimal new technology but improve. new product designs that use minimal new technology but improve.

Organizational characteristics that facilitate the innovation process: growth orientation growth orientation vigilance vigilance commitment to technology commitment to technology acceptance of risks acceptance of risks cross-functional co-operation cross-functional co-operation receptivity receptivity slack slack adaptability adaptability diverse range of skills. diverse range of skills.