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Summary O’Connor, G. C. (2008). Major Innovation as a Dynamic Capability: A Systems Approach. Journal of Product Innovation Management, 25(4), 313–330. https://doi.org/10.1111/j..2008.00304.x $6.23   Add to cart
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Summary O’Connor, G. C. (2008). Major Innovation as a Dynamic Capability: A Systems Approach. Journal of Product Innovation Management, 25(4), 313–330. https://doi.org/10.1111/j..2008.00304.x
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  • Course
  • Strategic Entrepreneurship & Organizational Renewal
  • Institution
  • Vrije Universiteit Amsterdam (VU)

Full summary of O’Connor, G. C. (2008). Major Innovation as a Dynamic Capability: A Systems Approach. Journal of Product Innovation Management, 25(4), 313–330.

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  • October 7, 2021
  • 8
  • 2021/2022
  • Summary

Subjects

  • dynamic capability
  • major innovation
  • systems

Written for

  • Vrije Universiteit Amsterdam (VU)
  • M.Sc. Business Administration - Strategy & Organization
  • Strategic Entrepreneurship & Organizational Renewal
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Major Innovation as a Dynamic Capability: A Systems Approach – O`Connor (2008)
Abstract

 Major innovation (MI, including radical & really new innovation) is important for enabling
growth and renewal of an organization

 This paper offers a framework for building an MI dynamic capability

 There are 7 elements in the framework which together form a management system rather
than a process-based approach towards dynamic capabilities:

1. An identifiable org. structure
2. Interface mechanisms with the mainstream organization (some are coupled, some
lose)
3. Exploratory processes
4. Requisite skills and talent development to establish entrepreneurial talent
5. Governance & decision-making mechanisms
6. Appropriate performance metrics
7. Appropriate culture and leadership context


Introduction

Characteristics of radical innovation (RI)

 Very promising opportunity
 Reliance on invention and innovation
 High risk and uncertainty
 Their success is often impeded by forces within established companies

Champion-centered vs. systems-centered literature

 Some scholars assign a critical role to the single-minded, visionary champion in RI
 Others argue that such champions can be critical to RI but that organizations need to move
to a dynamic capability that includes the champion as only one element of the system

Definition of RI

 Encompasses innovations that offer either new performance features or significant
improvement (5-10 times) in known features or sigifnicant reduction (e.g. 50%) in cost such
that new application domains would open up

 Often enabled by new technology

 RI transforms existing markets or industries and creates new ones



Major Innovation (MI)

 Includes RI (extremely rare) and the second category “really new innovation”
 RI and “really new innovation” only differ in terms of degree – RI might face even more
uncertain environments etc.

,  Main difference between major innovation (MI) and incremental innovations: in MI there is
high level of uncertainty
 Often, firms struggle to simultaneously manage incremental AND Major Innovation (lack of
ambidexterity)
 Systems theory might help to establish the parameters necessary for a parallel management
system

Systems Theory

Definition of System:

 “a complex of elements in mutual interaction. Each individual part depends not only on
conditions within itself but also on the conditions within the whole, or within superordinate
units of which it is a part”
 Pioneered by biologists
 Idea: the whole is greater than the sum of its parts
 The behaviour of the whole cannot be understood from the properties of its parts

Systems are integrated

 A system’s properties arise from the interfaces of its parts
 A change in one element affects the others

Systems can be open or closed

Closed system Open systems
 Clear boundaries  Semi-permeable boundaries that
escape entropy by feeding a continual
 Subject to entropy – it moves towards flux of energy and matter to stay alive
disorganization or chaos until it fails
 Necessary to have interfaces with the
 Exhibits autopoiesis (“self-making”) – it larger system it is embedded in
reproduces itself constantly by shifting
its elements  Requires self-governance and learning
through networks, interfaces and
 Homeostasis – self-regulatory feedback loops
mechanisms that allows organizations
to remain in dynamic balance  Does not exhibit entropy but rather a
movement towards orderliness


Also:

 Systems are nested (verschachtelt) one within another
 Systems are linked as networks
 Thus, systems are contextual – the relationships among parts can be only understood in
context of one system relative to other with which it is networked

Dynamic Capabilities Theory

 Arises from RBV (competitive advantage from smart configuration of firm-based assets)
 Capabilities = business processes needed to configure assets in advantageous ways
 Concept of Dynamic capabilities: puts emphasis is on the role of strategic management in
adapting, integrating and reconfiguring those assets to match the requirements of the
changing environment

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