Innovation & Entrepreneurship

Key Definitions

• Invention is creating something entirely new
• Ideas are thoughts, plans, or suggestions
• Creative ideas are novel, useful, and actionable
• Innovation is the successful implementation of a creative idea

Innovation within Organizations

• Innovation involves realizing creative work
• Creative ideas are original and appropriate and are key to innovation
• Over-focusing on productivity, coordination, and control can undermine creativity
• Innovation involves balancing seemingly paradoxical elements
• Key paradoxes include introversion and extroversion, autonomy and social coordination, flexibility and strategic intention, and divergent and convergent thinking

Corporate Innovation and Entrepreneurship

• Corporate innovation implements creative ideas in established companies
• Corporate entrepreneurship involves formal or informal activities to create new businesses within established companies
• Corporate entrepreneurship sets the stage for innovation

Impact of Innovation Management

• Innovation management results in positive financial and strategic performance
• Organizations using intrapreneurial activities are more likely to experience growth and profitability

Startups and Disruptive Innovation

• Startups are temporary organizations designed to find a scalable business model in high-uncertainty environments
• Disruptive ideas usually originate outside the industry
• Disruptive innovation takes time to penetrate markets
• Innovation's value delivery depends on its ecosystem

Disruptive Technology

• Disruptive tech alters the foundations of competition, shifting performance metrics
• Customer needs drive the pursuit of product benefits, shaping customer choices

The Need for Innovation Management

• Industries are disrupted by new entrants and startups faster than ever before
• Dynamism is fueled by entrepreneurship and innovation
• Entrepreneurial methods are on the rise

Incentives and Costs

• Incumbents face sunk costs in existing tech and replacement effects where innovation may displace their existing products
• Monopolists may have less incentive to innovate
• Expected entrant innovation incentivizes stronger monopolist innovation
• Innovation is costly, disruptive, and risky with high transaction costs for incumbents

Adapting to Change

• Incumbents are embracing environmental change to stay competitive

Disruptive Innovation Impact

• Disruptive innovation allows smaller, resource-limited companies to challenge established businesses
• They accomplish this by targeting overlooked segments and eventually attracting the incumbents' main customer base
• It fundamentally reshapes industries
• Disruptive innovation focuses on incremental improvements
• Incumbents that adapt strategically can survive disruption

Responding to Disruption

• Monoliths possess resource superiority, unique resources, and awareness of upcoming disruptions
• Resource-inferior companies can catch up or stay behind, exploiting overlooked combinations
• Exploitation depends on the uniqueness of resource combinations and focused attention

Dual Transformation Terminology

• Core companies focus on efficiency/product improvement without changing customer needs
• Adjacent companies change the customers they serve but keep product/marketing/facilities the same
• Transformation A companies change business operations without changing the product offering
• Transformation B companies change both the customer needs they address and their business structure

Intrapreneurs

• Intrapreneurs are employees who realize ideas within an organization

Big Five Personality Traits

• The "Big Five" personality traits are openness to experience, conscientiousness, extraversion, agreeableness, and neuroticism/emotional stability
• Openness, conscientiousness, and extraversion are linked to intrapreneurship.

Intrapreneurship Actions

• Key actions include being agentic, anticipatory, creating new business, and enhancing organizational response to advancements

Theory of Planned Behavior

• Attitude affects behavioral intention
• Subjective norms affect behavioral intention
• Perceived behavioral control affects behavioral intention

Organizational Preparedness for DCE

• Top management support, work discretion, rewards, time availability, and clear boundaries bolster organizational preparedness

Strategic Responses to Disruption

• Investing in traditional business by improving existing products
• Ignoring innovation if it doesn't pose a threat
• Create a new business model to disrupt the disruptor
• Adopt innovation via a separate unit to experiment
• Embrace and scale the innovation for market dominance

Key Dimensions for Corporate Entrepreneurship

• Top management support involves providing resources for initiatives
• Work discretion/autonomy empowers employees to own their work
• Rewards/reinforcement incentivize entrepreneurial behaviors
• Time availability enables creative thinking
• Organizational boundaries should be well-defined and minimize constraints

Innovation Strategy

• Clear goals are needed when aligning innovation with overall strategy
• Focus on coherence to design a system fitting the organization's context
• Identifying how innovation creates and captures customer value
• Avoid imitation as a tailored strategy is crucial for sustainability

Importance of Organic Growth

• Organic growth shows how well management uses internal resources and shows employees' abilities to innovate

Vertical Structure of Organizations

• Top-level, senior, operational-level management and individual employees make up an organizations structure
• Hierarchies represent the distribution of authority

Vertical Structures

• Hierarchies in organizations represent the asymmetric distribution of authority
• Organizational structures have become flatter with lean management
• Hierarchies and departments remain persistent

New Product Development Structures

• New product divisions, departments, product managers, committees, cross-functional project teams, and task forces
• Simplicity versus complexity, centralization versus decentralization, formality, autonomy, and time commitment are key considerations

Innovation Growth Matrix (Lecture 2 Summary)

• Core innovations are improvements, extensions, and incremental changes
• Adjacent innovations extend the business model and capabilities to new markets
• Transformational innovations involve new capabilities, businesses, and exploration

Contingent Organizational Structure

• Organizational structure depends on the ideas, innovation, and ventures sought

Successful Companies

• Successful companies are ambidextrous, adaptable, and aligned

Types of Designs

• Functional designs integrate project teams into the existing organizational/management structure
• Unsupported teams operate outside established organizations
• Cross-functional teams operate within the organization but outside the management hierarchy
• Ambidextrous organizations create independent project teams integrated into the existing hierarchy

Types of Ambidexterity

• Separating exploration and exploitation structures is structural ambidexterity
• Temporal sequencing of exploitation and exploration is sequential Ambidexterity
• Demonstrating alignment and adaptability simultaneously is contextual ambidexterity

Balancing Alignment and Adaptability

• Alignment requires coordination to improve current business
• Adaptability means moving quickly towards new opportunities

Parallel Isolated Learning

• Subgroups preserve idea heterogeneity
• Organization gains wider set of ideas and knowledge

Learning Across Groups

• Enables exploitation by facilitating fast diffusion and assimilation of knowledge

Achieving Balance

• Exploration and exploitation is achieved by breaking down organizations into subunits with links

Corporate Venturing

• A company sets up a unit to invest in new technological and business opportunities, in and outside the firm, to drive growth

Competitive Advantage

• Competitive advantage rests on individual skills/expertise
• innovative firepower is constituted by star performers

Corporate Venture Spinouts

• Increasing mobility of star performers to corporate venture spinouts is increasing
• Companies should create a network of feeder firms that colonize new niches

Corporate Venturing Success Factors

• Key factors include goal clarity, capabilities, long-term commitment, and critical mass
• Ventures should focus on adjacent tech, products, and markets
• Autonomy should exist with shared linkages with parent firm

Balancing Firm Separation and Integration

• Separation means more support for agile and innovative entities and risk-taking firms
• Integration provides more synergies, resource sharing, and strategic alignment

Incubators

• Incubators create innovation ecosystems that help startups with talent, partners and knowledge.

Firm Challenges

• Firms struggle to exploit existing competencies and explore new ones

Ambidextrous Structure

• Ambidextrous structure entails keeping separate units for exploration and exploitation and integrating at the leadership level

Structural Separation

• Creating independent units is best for large firms

Contextual Ambidexterity

• Encouraging teams to explore and exploit is best for agile/smaller firms

Cyclical Ambidexterity

• Best for project-based work, alternating over time

Corporate Venturing for Innovation

• Aligning goals between corporate parent and startup is key
• Streamline approvals to enable timely investments
• Provide powerful incentives, tolerating failure, and sticking to commitments are key
• Harvest information from investments to improve strategy.

Human Resource Management Practices

• HR practices to stimulate intrapreneurship include recruitment, job design, training, appraisal, compensation, and rewards

Award Program Principles

• Public recognition, timely rewards, clear connections between rewards & accomplishments, and follow-up reinforces innovation

Supporting Employee Grief

• Focus on building self helping groups by using rituals to assist employees in failure recovery

Developing Organizational Culture

• Organizational culture includes basic beliefs and assumptions on behavior
• Subcultures transform within organizational structures

Aspects of Innovative Organizational Culture

• Honest and psychological safety are needed for an Innovative culture
• Psych safety is for feeling comfortable in sharing concerns
• Intellectual honesty is for team members to communicate in a constructive way

Culture of Innovation

• Shared purpose aligns organizational identity
• Shared values include bold ambition, collaboration, learning, and responsibility
• Rules of engagement are around how people and think

Setting Up Innovative Culture Common Issues

• Being too vague can create issues
• No support when shared purpose is defined
• Requires balancing tensions

Creative Idea Elements

• Creative idea includes novelty, feasibility, value creation, and specificity

Creative Abrasion

• Creative abrasion is the marketplace that helps ideas develop and compete

Balancing Tensions

• Individual vs group tension
• Support vs challenge tension

Key Paradoxes summary

• Innovating also means high standards
• Experimenting needs a degree of discipline
• Candor means a safe space when sharing ideas
• Innovation needs accountability and teams that operate in a flat setting

The Idea Journey

• Idea involves generation, elaboration, championing, and implementation

Agile Innovation Practices

• Teams developing projects in small increments
• small cross-functional teams make it happen
• Testing prototypes is important
• Experimentation speeds helps energize motivation.

Balancing Development

• There should be structure against improvisation, for experimentation in agile innovation.

Championing Innovative Ideas

• Commitment to ideas is a key element of success
• Social drivers, management style and the position that acts as a champion all add to the likelihood of it being selected.
• There should be the ability to make integrative selections

Addressing Biases

• Provide time and urgency for balancing tensions
• Create a diversity in panels
• Standardize the format to project requests, there is also a need to make this information available

Corporate entrepreneurship models

• Corporate entrepreneurship occurs spontaneously without a dedicated strategy or organizational ownership using project champions.
• Provides dedicated resources
• Assigns ownership that helps a dedicated group support the projects and those who want ot create them using modest budget
• Dedicated resource to help maintain the budget