Innovation Strategy Management Lecture 3

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 3: Managing innovation within firms II Classification of industrial firms Classification of industrial firms Organizational structures and innovation Organizational structures and innovation The role of individual in the innovation process The role of individual in the innovation process Establishing an innovative environment Establishing an innovative environment

Managing innovation within firms Supplier – dominated Supplier – dominated Science – based Science – based Scale – intensive Scale – intensive Equipment – suppliers Equipment – suppliers Others Others servicesservices publicpublic......

Technological linkages among different types of firms

Organizational structures and innovation organicor flexible organicor flexible mechanistic mechanistic

Organic versus mechanistic organisational structures OrganicMechanistic 1 Channels of communication Open with free information flow throughout the organization 1 Channels of communication Highly structured, restricted information flow 2 Operating styles Allowed to vary freely 2 Operating styles Must be uniform and restricted 3 Authority for decisions Based on the expertise of the individual 3 Authority for decisions Based on formal line management position 4 Free adaptation By organization to changing circumstances 4 Reluctant adaptation With insistence on holding fast to tried and true management principles despite changes in business conditions

Organic versus mechanistic organisational structures OrganicMechanistic 5 Emphasis on getting thongs done Unconstrained by formally laid out procedures 5 Emphasis on formally laid down procedures Reliance on tried and true management principles 6 Loose, informal control With emphasis on norm of co-operation 6 Tight control Through sophisticated control systems 7 Flexible on-job behaviour Permitted to be shaped by the requirements of the situation and personality of the individual doing the job 7 Constrained on-job behaviour Required to conform to job descriptions 8 Participation and group consensus used frequently 8 Superiors make decisions with minimum consultation and involvement of subordinates

Formalisation Formalisation Decrease an innovative activity, but organizational planning is necessary Decrease an innovative activity, but organizational planning is necessary Complexity Complexity Several professional groups (University, Hospital) Several professional groups (University, Hospital)

Centralisation Centralisation Decision making closer to the action Decision making closer to the action Organisational size Organisational size Big > 250 employees Big > 250 employees Medium > 50 employees Medium > 50 employees Small < 50 employees Small < 50 employees Micro < 10 employees Micro < 10 employees

The role of the individual in the innovation process The role of the individual in the innovation process important! important! people process people process critical critical – The Chemical Residues Story

Key individual roles within the innovation process Key individual Role Technical Innovator Expert in one or two fields. Generates new ideas and sees new and different ways of doing things. Also referred to as the mad scientist. Technical/Commercia Scanner Acquires vast amounts of information from outside the organization, often through networking. This may include market and technical information. Gatekeeper Keeps informed of related developments that occur outside the organization through journals, conferences, colleagues and other companies. Passes information on to others, finds it easy to talk to colleagues. Serves as an information resource for others in the organization.

Key individual roles within the innovation process Key individual Role Product Champion Sells new ideas to others in the organization. Acquires resources. Aggressive in championing his or her cause. Takes risks. Project Leader Provides the team with leadership and motivation. Plans and organises the project. Ensures that administrative requirements are met. Provides necessary co-ordination among team members. Sees that the project moves forward effectively. Balances project goals with organizational needs. Sponsor Provides access to a power base within the organization: a senior person. Buffers the project team from unnecessary organisational constraints. Helps the project team to get what it needs from other parts of the organization. Provides legitimacy and organizational confidence in the project.

Establishing an innovative environment Establishing an innovative environment Propagating a virtuous circle of innovation Propagating a virtuous circle of innovation Reputation of the organization Reputation of the organization Attraction of creative people Attraction of creative people Organization encourages creativity Organization encourages creativity Development of innovative products Development of innovative products A willingness to accept new ideas A willingness to accept new ideas Increase motivation and reduced frustration Increase motivation and reduced frustration High morale of creative people High morale of creative people

Propagating a virtuous circle of innovation

The business concept