Innovation, Intrapreneurship, and Creativity PDF

§13 Innova on, intrapreneurship, and crea vity 13.1 Innova on and technological change Innova on is the process by which organizaons use their resources and competences to develop new and improved products or to nd be9er ways to make these new products and thus increase their e*ecveness. Two type...

§13 Innova on, intrapreneurship, and crea vity 13.1 Innova on and technological change Innova on is the process by which organizaons use their resources and competences to develop new and improved products or to nd be9er ways to make these new products and thus increase their e*ecveness. Two types of innova on Advances in technology are at the heart of the innovaon. In general, two principal types of technological change are: quantum change and incremental change. Quantum technological change refers to a fundamental shi2 in technology that revoluonizes products or the way in which they are produced (e.g. the rst PCs). New products or operang systems that incorporate a quantum technological improvement are referred to as quantum innova ons. These innovaons are likely to cause major changes in an environment and increase uncertainty because they force organizaons to change the way they operate. Incremental technological change refers to the improvements that are connuously made to parcular technologies over me, and incremental innova ons refer to the superior products or operang systems that incorporate and benet from those renements. Protec ng innova ons through property rights To movate entrepreneurs and companies to take risks and invent in new ventures whose payo* is unknown, laws are enacted to protect the prots that result from successful e*orts to innovate or create new products. Individual inventors and companies are given the legal property rights to own and protect their creaons by the granng of patents, copyrights, and trademarks. Patents give their owners the property right to use, control, license, and otherwise prot from their creaon for a certain period. Copyrights are typically granted to people who create intellectual property, such as wri9en or visual works. Copyrights last o2en for the lifeme of the creator and beyond. 63 Trademarks are property rights to the name of a product, any symbols or logos associated with it, and the company that produces it. 13.2 Innova on, intrapreneurship and crea vity The leaders of innovaon and new product development in established organizaons are intrapreneurs, employees who noce opportunies and are responsible for managing the product development process to obtain them. A knowledge-crea ng organiza on is one in which innovaon is going on at all hierarchical levels and across all funcons and divisions. Di*erent teams meet to share their growing informaon and insights. Entrepreneurship as ‘crea ve destruc on’ The widespread technological changes brought about by increasing global compeons that generate new innovaons are o2en referred to as the process of crea ve destruc on. This process leads older, less-forward looking companies to become uncompeve or even driven out of business by new, more innovave ones. Innova on and the product life cycle The rate of the technological change determines how important it is for managers to innovate. The product life cycle re:ects the changes in demand for a product that occur over me. Demand for the most successful, innovave, new products passes through four stages: 1. The embryonic stage: customers are unsure what the technology embedded in the product has to o*er them, so there’s li9le demand. 2. The growth stage: demand increases rapidly. 3. The mature stage: this is when the growth stage ends, and when market demand peaks because most customers have already bought the product. At this stage, incremental innovaon has resulted in a new generaon of products that have be9er features. 4. The decline stage follows the mature stage if and when demand for a product falls because quantal technological change results in the emergence of a superior alternave product (e.g. iPod replacing the Walkman). Besides the rate of technological change, fads and fashion are also an important determinant of the length of the product life cycle. 13.3 Managing the innova on process Managers can use several related methods to control the innovaon process, which also serve to overcome the resistances to change. Project management 64 One technique that has proved useful at promong quantum, but especially incremental, innovaon is project management, the process of leading and controlling a specic ongoing work program so it results in the creaon of new or improved products. A project is a subunit whose goal centres on developing a program of acvies that delivers a product or service on me, within budget, and that meets predetermined performance standards. One common modelling approach is to develop a PERT/CAM network or GANTT chart, which are essenally :owcharts of a project that can be built with many proprietary so2ware packages. These so2ware packages focus on (1) modelling the sequences of acons necessary to reach a project’s goal, and (2) relang these acons to cost and me criteria, such as per week cost of the sciensts and engineers employed in the project, to (3) sort out and dene the opmal path for reaching the goal. One of the rst, and simplest, of these modelling techniques, the crical path method (CPM), captures the essence of what these models try to achieve. The goal of CPM is to determine (1) which parcular tasks or acvies of the many that have to be performed are crical in their e*ect on project me and costs and thus (2) to determine how to sequence or schedule crical tasks so a project can meet a target data at a minimum cost. Stage-gate development funnel It is necessary for managers to develop a structured process for evaluang di*erent new product development proposals and deciding which to support. The purpose of a stage-gate funnel is to establish a structured and coherent innovaon process that both improves control over the product development e*ort and forces managers to make choices among compeng new product development projects so resources are not spread too thinly over too many projects. In stage 1, each product development proposal is reviewed in terms of its t with the goals and strategies of the organizaon and chance of success in the market. In stage 2, the prospecve project manager must dra2 a detailed new product development plan that contains the detailed informaon, such as strategic and nancial objecves, an analysis of market potenal, etc. The review at gate 2 focuses on the a9racveness of the plan. Stage 3 is about developing (prototypes of) the product. Using cross-func onal teams and a product team structure 65 Establishing a cross-funconal team is a crical element in any structured new product development e*ort (e.g. R&D, manufacturing, markeng, product engineering, process engineering, and materials management). Those di*erent team usually have di*erent orientaons and a3tudes, which makes it di;cult to coordinate. Selected members of markeng, R&D, engineering, and manufacturing must be assigned to be core members of successful new product development teams to promote successful new product development. Core members are a small group of funconal experts who bear primary responsibility for the product development e*ort. They stay with the project from incepon to compleon. Product team structures and matrix structures are especially suitable for managing innovaon in high-tech organizaons. Both of these structures focus on creang cross-funconal teams to pursue new product development from the research concept stage, through the engineering design and manufacturing stage, to markeng and sales. However, a product team structure is o2en not su;cient to solve the coordinaon problem. Team leadership One important consideraon is to have team leaders who can rise above their funconal backgrounds and take a cross-funconal view. Another issue is how much power and authority should be given to the team leader. A lightweight team leader is a mid-level funconal manager who has lower status than the head of a funconal department, and has no control over human, nancial, and funconal resources. A heavyweight leader is a true project manager who has higher status within the organizaon, and is given primary control over key human, technological and nancial resources for the duraon of the project. Skunk works and new venture divisions A skunk works is a task force, a temporary team that is created to expedite new product design and to promote innovaon by coordinaon the acvies of funconal groups. The task force consists of members of the R&D, engineering, manufacturing, and markeng funcons who are assigned to a separate facility, which gives them the opportunity to engage in face-to-face interacons necessary for successful innovaon. When potenally successful new product ideas are discovered by R&D funcons, it’s also an opon to create a new venture division, a self-contained, independent division given the resources to develop a complete set of value-creang funcons to manage a project from beginning to end. A new venture division assumes full responsibility for the commercializaon of the product (unlike a skunk works). Joint venture 66 Joint ventures between two of more organizaons are another important means of managing hightech innovaon. A joint venture allows organizaons to combine their skills and technologies and pool their resources to embark on risky R&D projects. Joint venture can cause problems if the venture partners begin to come in con:ict over future development plans. Given this possibility, many joint venture agreements have clauses allowing one partner to buy the other out. Crea ng a culture for innova on Values and norms can reinforce the entrepreneurial spirit and allow an organizaon to respond quickly and creavely to a changing environment. Three factors that shape organizaonal culture and the degree to which its values and norms emphasize innovaon are: organizaonal structure, people, and property rights. - - Organizaonal structure: several factors can stunt: (1) Increasing organizaonal size may slow innovaon, (2) as organizaons age, they tend to become less :exible and innovave and so may fail to noce new opportunies to develop new products, (3) with organizaonal growth comes complexity and an increase in vercal and horizontal di*erenaon that may hurt innovaon. People: the culture of innovaon in high-tech organizaons is fostered by the characteriscs of employees themselves. Property rights: strong property rights are needed to align the interests of talented employees with those of their organizaons. An organizaon can create career paths for its highly skilled employees and project managers and demonstrate that success is closely linked to future promoon and rewards. 13.4 Innova on and informa on technology Informa on e2ciencies are the cost and me savings that occur when IT allows individual employees to perform their current tasks at a higher level, assume addional tasks, and expand their roles in the organizaon due to advances in the ability to gather and analyse data. IT facilitates the innovaon process because: - - IT facilitates creavity by improving the inial base of knowledge to draw from when employees engage in problem solving and decision making. Knowledge or informaon availability alone will not lead to innovaon; it is the ability to creavely use knowledge that is the key to promong innovaon and creang compeve advantage. A reshuVing of tasks likely will occur as new IT systems increase the ability of people or subunits to acquire and process informaon; this leads to more opportunies for creavely combining, modifying, and synthesizing informaon leading to the incremental innovaons and an increase in organizaonal knowledge. 13.5 Innova on and informa on synergies One of the most important performance gains that result from IT occur when two or more individuals or subunits pool their resources and cooperate and collaborate across role or subunit boundaries, creang informa on synergies, which occur when IT allows individuals or subunits to adjust their acons or behaviours to the needs of the other individuals or subunits on an ongoing basis and achieve gains from team-based cooperaon. 67 IT also allows for an increase in boundary-spanning ac vity, which are the interacons of people and groups across the organizaonal boundary to obtain valuable informaon and knowledge from the environment to help promote innovaon. IT and organiza onal structure and culture IT also e*ects the innovaon process through its many e*ects on organizaonal structure. To speed innovaon, IT helps in two ways: (1) IT gives lower-level employees more detailed informaon and knowledge about consumer and market trends; and (2) IT can produce informaon synergies because it facilitates increased communicaon and coordinaon between decentralized decision makers and top managers. IT means that fewer levels of managers are needed to handle problem solving and decision making, which results in a :a9er organizaon. 68