Strategic Entrepreneurship and Organizational Renewal Notes PDF

Strategic Entrepreneurship and Organizational Renewal Lecture 1.1: Why innovate and why so difficult? “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change” – Charles Darwin Different kinds of innovations: - Product innovations:...

Strategic Entrepreneurship and Organizational Renewal Lecture 1.1: Why innovate and why so difficult? “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change” – Charles Darwin Different kinds of innovations: - Product innovations: o In goods o In services - Process innovations: o Technological o Organizational 🡪 In services and technological 🡪 Digitalization 🡪 New business models Why is innovation so important? Product life cycle / S-curve Fluid Phase (Organizational implications) - Fluid Phase - Strong emphasis on: o Frequent redefinition of tasks o Limited hierarchy o High lateral communication 🡪 Organic structure 🡪 Adaptability (high environmental uncertainty) - Specific Phase – Strong emphasis on: o Stable tasks o More hierarchy: coordination and control o Top-down communication 🡪 Mechanistic structure 🡪 Predictability (low environmental uncertainty) From fluid to specific phase (key organizational changes): - Structure: from informal to formal - Organizational behavior: from flexible and responsive to rigid and predictable - Power: from entrepreneurs to managers - Orientation: from external to internal “How can firms respond to these changes?” Innovation discontinuities - 1st 🡪 2nd 🡪 3rd technology - Product performance and time - 1st Gen = trying to find content (Yahoo) 🡪 2nd Gen = Finding content (supporting humans) (Google) 🡪 3rd Gen = Creating content (replacing humans) (ChatGPT) Innovation discontinuities - Competence enhancing o Large improvements in price/performance o Build on existing knowledge o New products or new processes 🡪 “Rich get richer”: established players benefit  - Competence destroying o Large improvements in price/performance o Existing knowledge becomes obsolete o Entirely different knowledge and competencies 🡪 “Rich get poor(er)”: new entrants’ benefit Digital Disruption - Increase inventions, acceleration innovations - ‘Big no longer beautiful’ - “Rich become poorer, new entrants’ benefit” How can firms respond? Improvement vs. renewal Improvement / Incremental Renewal / Radical Evolutionary; incremental Revolutionary: “jumps” “Leitmotiv”: we can always improve (more “leitmotiv”: crisis – we have to change (first of the same; 1e order solutions) change, then improve; 2nd order) Preventive; correctable Destructive: no way back Focus: management of operations Focus: management of opportunities (efficiency) (resource leverage; NBD/NPD) Dominant role of planning & control Focus on creativity & entrepreneurship e.g.: Traditional new product development, e.g.: biotechnology, internet, cars, airplanes, improved smartphone, faster computer, etc. steam engine. But also: iPod, mobile phones, etc. Operational excellence 🡪 Digitalization BigData, IoT, AI, Robots, Nano-tech, VR 🡪 4th industrial revolution Brings you money on short term Costs you money on short term NO guarantee for long term ESSENTIAL for continuity on LT Digital is penetrating all sectors, but to varying degrees Deeper organization barriers: - Economic: sunk costs - Cognitive: no understanding o “Knowledge makes you wise in some ways, but can make you a blindfolded fool in others” o Core capabilities 🡪 core rigidities o Competency traps: use of increasingly inferior resources V Overvaluing of internal knowledge V Dismissive attitude towards external resources / capabilities 🡪 makes firms become inward-looking – not-invented-here-syndrome (NIH) - Social / Psychological o Complacency o Fear (“zones of discomfort”) Lecture 1.2: impact of AI on S&O Global economic impact – first estimates - 4.4 – 7 trillion dollar added annually to global GDP (from about 2027-2037) - Singularity: half of all work automated o Between 2040-2060 o Decade earlier than earlier estimates o Singularity = SI more intelligent than humans AI or LLM: key features 1. Surprising abilities - High performance in professional contexts  - Medicine, law, business, education, … - Strongest for creative, well-paid and highly educated workforce 2. Easy of use - No organizational or technological investment upfront - Close to zero marginal cost for individual use 3. Relative opacity and unclear failures - High performance in some cases, hallucinations in others - Difficult to predict ex-ante - Trial & error and ongoing sharing of experiences (e.g. user groups, hackathons, X, YouTube) Generic performance effects 1. Experiment at BCG (April, 2023) - 758 consultants (7% of total) - use of AI vs. control group 2. Generic effects on outputs: - 12% more tasks (volume effect) - 25% quicker (speed effect) - 40% better (quality effect) Strategy consulting at BCG Impact on legal work Impact on mid-level professional writing Occupations: - Marketeers, grant writers, consultants, data analysts, HR Professionals, managers Writing tasks: - Press releases, short reports, analysis plans, delicate emails - 20 to 30 minutes assignments, resembling real tasks in these occupations However, effects differ along frontier Technological frontier of AI Beyond the frontier: - conflicting info  - fuziness in strategic decision-making - multi-tasking Inside the frontier: - creativity - analytical reasoning - writing proficiency - persuasiveness Different effects along frontier Within technological frontier AI = increases performance 🡪 great equalizer - underperformers (bottom-half skilled participants) + 43% - overperformers (top-half skilled participants) + 17% Beyond technological frontier AI = lowers performance - beyond well-defined creative analytical or writing tasks De kernboodschap is dat AI de prestaties verlaagt voor taken die buiten goed gedefinieerde creatieve, analytische of schrijftaken vallen. Dit impliceert dat AI minder effectief is in situaties die complexer zijn of buiten de huidige capaciteiten liggen, wat leidt tot een vermindering van de prestaties in die contexten. Entrepreneurs in Kenya - Field experiment 640 SMEs - Context beyond well-defined creative, analytical or writing tasks - E.g.: manage employees, improve productivity, raise capital, pilot new initiatives develop advertising strategies, pricing strategies, respond to competition, develop new markets etc. Different context, compared to BCG Implications - Shifting attention continuously - Competing demands (Prioritizing) - Which task to ask AI? Within frontier: relatively predictable settings (e.g. consulting, law, education, medicine,…) - structured methodologies & approaches - less interconnected tasks - emphasis on more codified knowledge - focused and stable attention - … Beyond frontier: relatively unpredictable settings (e.g. start-ups, new tasks, dynamic sectors…) - open methodologies & approaches - more interconnected tasks - emphasis on more tacit knowledge - diverted and shifting attention - … Special case of creativity tasks AI generates new ideas of higher quality - Higher financial and environmental value - Higher average quality, yet lower variability But… Human ideas have higher novelty value - More creative, more out-of-the-box - Potential for ´breakthroughs Strategy & leadership Causes and challenges associated with innovation within companies, with a comparison of positive and negative aspects: Positive: - Reaction from finance people high risk & low return investment → economic causes. - Need of new initiatives → embrace the technological changes + necessity to give up on some existing routines, resources or revenues from the core business. Negative: - Cognitive causes > Distance between innovation & new business and core business → incumbent firms hesitant to inherent risks involved. - Social-emotional causes → “emergency button” → resistance to innovations that disrupt established power dynamics + In the “avoiding failures” >> Fear of losing control. Suggested solutions - Cognitive causes: Scenario planning in order to anticipate future disruptive changes and explore their potential implications on the organization's strategies and decisions. Meissner, P., Wulf, T., (2013) - Social-emotional causes: Cognitive framework by TMT > enable thinking in more than one thought world through the use of mental templates that allow managers to handle inconsistencies and non-routines, and recognize and accept the simultaneous existence of complex forces. Lecture 2.1: Structure & Systems Innovation in times of recession - Attention to innovation especially also important during a recession - Lack of innovating carries substantial impact on performance - A recession offers relatively large opportunities Deeper Organizational Barriers - Economic: sunk costs – no motivation - Cognitive: no understanding – no ability - Social / psychological – no courage o Complacency o Fear (“zones of discomfort”) 🡪 “innovation killers” Innovation killers at ToolsMed - Economic: o Lack of strategic priority o No willingness to deal with uncertainty and ambiguity o Strong focus on existing markets o Budget for innovation to be curtailed with adversity - Cognitive: o No capabilities for collecting data on new markets and on new trends o No ability to interpret ´weak signals´, foreshadowing major new trends o Inadequate skills for starting up new business and for business building o No underlying infrastructure of process and capabilities to support creation and nurturing of innovation - Social / Psychological o Cultural problem of that sees innovation as too messy and difficult o Behavior strongly geared to avoiding mistakes and reduction of risks o Emphasis on craftmanship and precision, and rewarding of flawless execution o Innovation sensitive to passion of senior managers Barriers Most important innovation barriers are all organization conditions, lack of market intelligence (# 8) is the first barrier related to execution (Arthur D. Little, 2005..) What can you do about it? Charles Darwin: - Book: “Origin of Species” - Radical (disruptive) change - Darwin’s boat: HMS “Beagle” - Five-year trip (including Galapagos Islands) - 13 species of birds from 13 different Islands - “Darwin’s Galapagos Birds” - Valley in East-Africa: Origins of mankind Pharmaceutical Biotechnology – Value chain DSM analyzing innovations – 5 C’s Positioning within the DSM Innovation Portfolio The more disruptive, the more separation Organizing for radical innovation Key mechanism: organizational separation 🡪 (radical) innovation 🡪 TEAMS Why teams for innovation? - The romantic myth of lonely genius who creates a fortune out of inventions made in his basement or garage still has a strong lobby  - However, in reality, teams are generally fare more effective and outperform individuals (Shenhar, 2001): o Both in creating new ideas and bringing them to live o One person’s idea leads to several more ideas by others o One person’s complaint may be another’s solution o A big thing for one person may be a small thing for a team Four types of teams: - Functional teams - Light weight teams - Heavy weight teams - Autonomous teams Functional team: technical, simple problems - Functional disciplines - Sequential approach - Coordination via FM’s - Pros & cons: o Task division (+) o Specialisation (+) o “Over the wall” (-) o Time-consuming (-) Light weight team: incremental innovation - Functional with light - Coordination through PL - Pros & cons: o Fast coordination (+) o “Project-owner” (+) o Lightweight PL (-) o Conflicting loyalty (-) Heavy weight team: “adjacent innovation” - One task for core team member - PL had power - Pros & cons: o Commitment (+) o Consistency (+) o Autonomy (+) o Not in-depth (-) o Status differences (-)  o Invisible C’s (-) Autonomous team: “tiger team” – radical innovation - Team members decoupled from functional disciplines - Team has “carte blanche” - PL is the boss - Pros & cons: o Focus (+) o Decision power (+) o Outside boundaries (-) o Difficult to manage (-) Radical Innovations (Stephen Raes) - Time horizon : 5 - 10 years (‘Moonshots’) - Fund : $ 5 million ($ 15 -20 later) - Strategy : - new technologies - new markets - Financially : cash flow - Decision points: milestones Lecture 3.1 Strategy and leadership Improvement vs. renewal Which one is more important? Innovation forms the engine for autonomous growth from 7 a 10 % p.a. – for both firms. AkzoNobel wants in 2018, next to its ongoing innovation programs, about 15% of its revenues to come from so-called breakthrough innovations, versus 9% now. For DSM these percentages lie at 20% in 2018 versus 12% now. Existing business and new business - On present: how to strengthen our core business? - On future: how to disrupt our core business? o What If? o How remain relevant in 5 years from now? o Sources of customer dissatisfaction? o How to disrupt ourselves? - “strategic Schizophrenia” - Embracde strategic paradox btw. Coure business & new innovations 🡪 Balance, Strategic, Contradictions “sweet spot of optionality” The innovation ambition matrix Managing paradoxes in top management teams - Two types of team roles: o Advocate = supporting a particular agenda / view o Integrator = connecting between disparate parts 🡪 Leadercentric teams Teamcentric teams Leadercentric teams - Advocate = team members allocated to different agendas, views, roles  - Integrator = sr. leader (e.g. CEO), ‘embracing the paradox’ (possibly assisted by co-leader, to alleviate cognitive burden) 🡪 High quality Leader / Member Interaction Limited Member / Member Interaction - Risk of conflict: LOW - Quality of decision: LOW Teamcentric teams - Advocate / Integrator = each team member 🡪 - High degree of Member / Member Interaction 🡪 - Risk of conflict: HIGH - Quality of decision: HIGH Key conditions: - High interpersonal skills - ‘Psychological safety’ - Common fate reward systems Uit de lecture (PP: ToolsMed & Co - versie VU): Ansoff strategy matrix INBO - Big C: close to core - Little C: distant from core o Outside tool med’s core o Incl. internet & consumer opportunities Lecture 3.3: Innovation killers – Strategy, structure & systems Fast-moving consumer – embracing digital transformation Positioning within the DSM Innovation Portfolio Organizing for radical innovation - Key mechanism: Organizational Separation 🡪 (radical) innovation What can be innovation killers for Structure? - Innovation killer: Lack of organizational separation for radical innovation. - Radical innovation requires separate structures (e.g., business incubators) to thrive. Without proper separation, the core business can suffocate innovative ideas. - Example: A company trying to innovate within the constraints of its existing business structure. Structure: innovation execution is not separated from core business activities Execution: innovation execution heavily emphasizes borrowing from the past over forgetting of the past Leadership: ‘presidential projects’: innovation teams formally separated but micro-managed by senior management - Economic barriers: Short term focus - Cognitive barriers: Cling to standing beliefs about success (= stability bias) - Social-emotional barriers: o Appetite for control by senior management o Risk aversion o Complacency o Overconfidence in own judgement by leaders What can be Innovation Killers for Strategy? - Innovation Killer: Resistance to change or lack of alignment in leadership. - Leaders may struggle to balance core business operations with new, disruptive innovations. Failing to address this "strategic paradox" can stifle innovation. - Example: A focus on maintaining current profitability at the expense of investing in long-term disruptive innovation. Strategy: Not seeing it, e.g. - TMT disinterested in how the future may differ from the past - TMT puts strong emphasis on threats to core business  - TMT has difficulty with harvest strategies Not getting it, e.g. - TMT ridicules disruptive innovations - TMT provides innovation teams with inconsistent feedback over time Not doing it, e.g. - TMT uses harsh wording about new entrants or start-ups - TMT maintains strong adherence to current identity (TMT = top management team) - Economic causes 🡪 Not seeing it: o Loss aversion bias o Bias towards threats to core business - Cognitive causes 🡪 Not getting it: o Confirmation bias o Bias against opportunities for new (radical) innovations o Lack of experience with disruptions before - Social-emotional causes 🡪 Not doing it: o Strategic paradox mental overload o Fear of identity conflict o Fear of losing control Strategic Entrepreneurship – execution process H1 Businesses - Mature, well established - Focus: Cost Control, profitability H2 Businesses - Rapidly growing, contributors of new revenues - Focus: Revenue growth and market share gains H3 Businesses - Future options, few survive - Focus: Market development, identifying potential customers confirming technical & economic feasibility - “Share of mind” What can be Innovation Killers for Systems? - Innovation Killer: Inflexible or outdated systems that prioritize efficiency over experimentation. - Established systems often focus on cost control and profitability (H1 businesses), while innovations need systems that allow for growth and experimentation (H2 and H3 businesses). - Example: Rigid systems that discourage experimentation because they are designed to minimize risks and optimize costs. Systems: One size fits all 🡪 Standardization in reporting across core business and innovations, based on future financial projections and financial ratios Systems: Carved in stone resource allocations & resistance by core business 🡪 No flexibility in resource allocation to new core business vis-a-vis innovation Leadership: One size fits all, carved in stone resource allocations & resistance by core business 🡪 New business is managed similarly, based on how well it conforms Strategy: 🡪 Discussions on withdrawal from newly emerging markets by the time lean startups bootstrap themselves successfully into the new field Economic barriers: - Economizing on management attention (one size fits all) - Anchoring bias (carved in stone resource allocations) Social-emotional barriers: - Uneven power distribution between core business and innovation teams (resistance by core business) Lecture 3.4: Innovation killers – Leadership, Culture & People What can be Innovation Killers for Leadership? "One size fits all" management approach: Leaders who apply a uniform strategy across both core business and new innovations can stifle creativity and adaptability. Rigid resource allocation: Lack of flexibility in resource distribution, especially when it heavily favors the established core business, limits opportunities for innovation. Resistance from core business: Established business units may resist the integration of new innovative projects, leading to conflicts and stagnation in the innovation process. Leadership: Not saying it, e.g. - TMT emphasizing ‘must’ in communication - TMT alluding to threats rather than to opportunities - TMT pushing the ‘urgency button’ Structure: Not doing it, e.g. - Too little love: innovations have and maintain an ‘orphan’ status - Too much love: innovations & new business are (very) early adopted by the standing organization Economic causes: Not doing it - Unclear about attractiveness of innovation & new business for core business, or vice versa - Need to give up on some existing routines, resources or revenues by the core business Cognitive causes: Not doing it - Large cognitive distance between innovation & new business, and the core business Social-emotional causes: Not saying it - Threat to personal identity of TMT members (ego-threatening) - Fear of lacking credibility - Resistance against profound change in leadership style Not doing it - Strong local identity by people in innovation & new business - Us vs. Them thinking on both sides What can be Innovation Killers for Culture? - Inflexibility in resource allocation and resistance to change: A company culture that is overly focused on preserving the status quo can prevent the allocation of resources toward innovative ideas. - Standardization over innovation: If the culture prioritizes strict adherence to existing business practices, it discourages experimentation and risk-taking necessary for innovation. - Conformity-driven decision-making: Cultures that reward compliance and conformity can suppress creative thinking and the willingness to challenge existing practices. Execution: - Avoiding failures 🡪 Moving too quickly: 'no time to lose' - Denying failures 🡪 Moving too slowly: 'give me more time' Leadership: Protecting sales, protecting previous investments - Ridiculing early stage innovations - Resisting later stage innovations - Procrastination on upscaling & market introduction Economic barriers - Protecting sales 🡪 Loss aversion bias - Protecting investments 🡪 Sunk costs bias Cognitive barriers - Avoiding failures o Failure myopia o Action bias - Denying failures 🡪 Escalation of commitment Social-emotional barriers - Denying failures 🡪 Fear of scapegoating - Avoiding & Denying failures 🡪 Failure is seen as 'fault' What can be Innovation Killers for People? - Lack of empowerment: Employees who are not empowered or given the autonomy to pursue innovative ideas are less likely to contribute to new ventures. - Fear of non-conformance: In organizations where innovation is judged by how well it conforms to the existing business model, employees may hesitate to propose unconventional solutions. - Inability to act swiftly: Discussions on withdrawing from emerging markets often delay necessary action, giving startups the chance to outpace established players in the innovation race​. Leadership: Not liking them, e.g.: - Core business people allocated to innovation People (Not liking them, e.g.:) - Talents leaving the organization, or facing a burnout Leadership: Not trusting them, e.g.: - Micro-managing by senior managers (i.e. substitution of ideas at innovation work-floor for their own judgments) - Missing out on weak signals in the environment People (Not trusting them, e.g.:) - Talents leaving the organization, or facing a burnout Execution (Not trusting them, e.g.:) - Lack of inspiration or fear at innovation workfloor Cognitive barriers - Not trusting them - Lack of innovation experience with senior management - Stability bias Social-emotional barriers: Not liking them - Affinity bias when allocating the 'best people' to innovation activities Not trusting them - Narcissism - Fear of losing control - Difficulty in changing leadership style Lecture 4.1 Culture & People Worldclass Innovators = Alignment of Conditions The need for alignment between three main areas: 1. Strategy & Leadership 2. Structure & Systems 3. Culture & People World-class innovators succeed because they align all these conditions properly. These factors need to work together for innovation and renewal to be successful. What kind of culture? Corporate culture & NBD – 3 key dimensions: - Willingness to cannibalize existing products/services o We sacrifice sales existing products to improve sales new products o We do not oppose new products that take away sales existing ones o We actively pursue new markets at expense of existing investments - Future Orientation o We put emphasis to customers of the future relative to current ones o Orientation is at future needs customers, less on current needs o We rapidly detect fundamental industry shifts (comp, tech, regu) - Tolerance for risk o Our managers embrace risky decisions o Relative to others, we favor high-risk / high return investments o We are willing to engage in untested new business ventures 🡪 These dimensions encourage a forward-looking and innovation-friendly culture. What kind of people? Strategic Entrepreneurship / Venturing - 3 Phases The three phases of entrepreneurship: Discovery, Incubation, and Acceleration. Each phase represents a different stage in turning an idea into a scalable business: Discovery: Experimentation and risk-taking are key here. Incubation: More experimentation with a focus on refining the product or service. Acceleration: The process of integrating the innovation into the broader business. The Hand-over to Business idea means transferring the innovation from a smaller, entrepreneurial team to the broader organization. Willingness to Fail, Learn, and Improve Experimentation is vital for innovation. The concept of “Try, Fail, Learn, Improve” emphasizes the need for companies to accept failure as part of the innovation process. Psychological safety and constructive conflict are identified as key team conditions for enabling this environment. From Living Colors Towards Scene Setting (example) This example discusses how a product evolved from LivingColors (a lighting innovation) to a more ambitious vision of Scene Setting (controlling ambiance). It illustrates how businesses pivot and grow through experimentation and risk-taking. Incubation = experimentation – 1 cycle, 4 steps Try + fail 🡪 team condition 1: psychological safety Learn + improve 🡪 team condition 2: constructive conflict Strategic Entrepreneurship / Venturing - 3 Phases (H3, H2, H1) Three phases of innovation and the roles of H3 (Creators), H2 (Intrapreneurs / Business Builders), and H1 (Managers). Each phase requires different skill sets: H3: Focused on high creativity and experimentation. H2: Focused on building a business and balancing creativity with execution. H1: More risk-averse, focused on operationalizing and scaling innovation. H1 = Managers H2 = Intrapreneurs / Business Builders H3 = Creators H2 People – Business Builders Key characters traits: - Appetite for risk-taking - Internal locus of control - Self-confidence - High energy level ‘Hybrid personalities’ - Highly adaptive (‘agile’) & Focused (‘disciplined’) - Big Dreams & Hands-on actions (‘dirty hands’) - Crave for Recognition & Handle Rejection Key skills - (very) Comfortable Managing Ambiguity - Internal networks & External networks - Socially (very) intelligent: ‘tolerated Maverick’ - Balance between ‘Cajoler’ - ‘Pick a fight’ - ‘Ambassador 🡪 There are also challenges, like their potential short attention spans and questions about their loyalty. Conclusion: It emphasizes the need to align strategy, leadership, structure, systems, culture, and people to achieve world-class innovation and entrepreneurship. 🡪 Alignment is crucial for success and that companies need the right culture, people, and structures to thrive in innovation activities. Exercise culture innovation teams – lecture 4: Means vs. goal orientation Internally vs. externally driven Loose vs. tight discipline Open vs. closed systems Lecture 5: Volvo Digital Innovation & Integration EFFECT CONDITIONS ON EXECUTION AND INTEGRATION OF (DIGITAL) INNOVATIONS Disruption introduces an incumbent to a new journey Disruption is … Detectable / Clear / Inevitable / New normal 2 Dimensions of Organizational Identity in Incumbents Facing Disruptive Innovations Facets of organizational identity surfacing in times of disruptive innovation: 1. Organizational domain identity Definition: Organizational identity claims that stem from members’ perceptions of the category of organizations to which their organization essentially belongs. Core questions: - “To which category of organizations do we essentially belong?” - “What is our competitive home turf?” 2. Organizational role identity Definition: Organizational identity claims that stem from members’ perceptions of their organization’s longstanding, central, and distinct impact on the overall development of its respective category and their organization’s essential relation to other actors in that category. Core questions: - “Who are we with regard to our central and distinctive impact on the overall development of our category?” - “What is our essential relation to other actors in our category?” Volvo’s Identity as a Shaper? 🡪 Volvo wordt gepresenteerd als een "Shaper" binnen de automotive industrie, wat inhoudt dat het bedrijf een actieve rol speelt in het vormgeven van de toekomst van de sector, vooral in tijden van disruptie. Four key concerns Volvo faces in digital innovation. This identifies patterns that are also evident in other case studies: The below discusses how Volvo integrates innovations into their business. The concept of an “Emerging Innovation Champion” emphasizes the need for discovery and incubation of new ideas, followed by their integration into the broader corporate structure. Situational influences on organization design (Lawrence & Lorsch) - Differentiation The extent to which the organization is broken down into subunits - Integration  The degree to which the various subunits must work together in a coordinated fashion Conditions for Integration of Innovations Ability to Integrate - Coordination & Exchange of Knowledge Flows = Cognitive Integration Willingness to Integrate - Reduction of Agency Conflicts between Innovation teams and Organization = Economic & Social-Emotional integration Digital innovation at Volvo – managing 4 concerns Volvo’s Connectivity Hub = Heavy weight team - “adjacent / system innovation” - One task for core team members - PL has power 🡨🡪 2) Internal vs. external collaboration Volvo’s App Dev Group = Tiger team - Radical innovation - Teammembers decoupled from functional disciplines - Team has “carte blanche” - PL is “the boss” - Part of R&D, but - substantial autonomy - independent budget - ++ Focus & Power - -- Outside boundaries & Difficult to manage Strategy & Leadership 🡪 3) product vs. process Structure & Systems 🡪 4) Control vs. flexibility Conditions for Integration of Innovations VOLVO CASE: Rotation of people – Some HR changes  - From ‘just’ a Job to a Career in Innovation 🡪 ‘Serial intrapreneur’ (H2) - Job rotation o Creators & H2 in BGs o BGs people in Innovation & Venturing 🡪 Diminishes ‘US vs. THEM’ attitude (“One Philips”) - For Senior Management Positions 🡪 ‘Blue bruises’ from innovation & venturing 🡪 Strategic Paradox This section highlights the paradox of combining existing and new business models. Volvo is trying to integrate existing business with new, innovative initiatives, which can be challenging, but essential for sustainable growth. 🡪 Shared Vision & Identity Lecture 6: Process of building an innovative organization: Digital Transformation Guest Lecture 6.1 – Eric Tinga “Lack of costs can also be a sign to radical innovation” Lecture 6: Summarize all the weeks Moeilijkste stap van Catching up 🡪 best-in-class Why is this step difficult? - Conflict of interest - Resistance