Managing Innovation
Summary book + Lectures
Inhoud
Lecture 1 Introduction............................................................................................................................. 2
Lecture 2 + Chapter 1 What is innovation + Chapter 3 Innovation as a core business process ............. 5
Lecture 3 + Chapter 2 Digital is Different + Chapter 4 Developing an innovation strategy .................. 19
Lecture 4 + Chapter 5 Building the innovative organization ................................................................. 31
Lecture 5 + Chapter 6 Sources of innovation + Chapter 7 Search strategies for innovation ................ 40
Lecture 6 + Chapter 8 Innovation networks .......................................................................................... 54
Lecture 7 + Chapter 9 Dealing with uncertainty ................................................................................... 62
Lecture 8 + Chapter 10 Creating new products and services ................................................................ 72
Lecture 9 + Chapter 11 Exploiting open innovation and collaboration................................................. 85
Lecture 10 + Chapter 12 Promoting entrepreneurship and new ventures ........................................... 94
Lecture 11 + Chapter 13 Capturing the business value of innovation ................................................ 105
Lecture 12 + chapter 14 creating social value + chapter 15 capturing learning from innovation ...... 114
Guestlecture Paperfoam ..................................................................................................................... 123
,Lecture 1 Introduction
Innovation is both about :
1. A Result: an innovation (noun)
2. A Process: to innovate (verb)
- ‘Most’ innovations have collateral damage, we pay a price for our innovation efforts.
o Examples: nuclear physics (Atom bomb), Medicine (side effects of cure). So, why
would society want or need innovation?
- Most innovations are done by (people in) organisations
o Leading to a combination of ‘new’: products/services/processes/organisational
structures/administrative/managerial/business model/m&a’s
- Average success rate = less than 30% = 70% fails. If the success rate is this limited, why
would organisations continue to innovate?
Societies without innovation: are poor & primitive => Western Perspective = refers to times that the
Western world thought they were the only innovators. The reasons why this may be are explained by
the book The Human web (McNeill & McNeill) -> degree to which areas of the world are linked with
other areas. Earlier, innovation was limited by geographical boundaries (Australia, Sub-Sahara
Africa); areas were isolated from rest. After 1200 this changed = more innovation
➢ Innovation improves wellbeing / gross national happiness but also burnouts
➢ We must innovate => not only focus on technological part
Organisations without innovation would continue with ‘business as usual;’. For how long would such
an organisation survive? Organisations that never (hardly) innovated: Roman Catholic Church
Organisations innovate:
Reacting to both:
1. New insights & ideas among C-suite/employees
2. Wider environment: Organizations innovate as reaction to changes in and growing demands from
(wider) environment (PESTEL)
1960 Efficiency
- Innovation is just an experiment organizations do: trying to 1970 Quality
change their environment in order to stay viable (ST) 1980 Flexibility
- See how the demands from the environment have changed 1990 Innovation
over the years in the table → 2000 Sustainable (energy/material)
2010 Socially responsible quality of work
Differences between: Research, Development, Design, 2020 Ethically justifiable
Engineering (we see these words a lot in innovation literature)
- Research = basic/fundamental, applied
- Development = close to applied research; towards introduction
- Design/engineering: either the outer appearance of the product or GUI. It is the last phase
towards introducing the innovation.
Those processes are somewhat sequential. The basic difference = time-to-market. Grafeen 2004 =>
some practical applications now + new process. Time to market from ideas are very different.
Example: raining trousers. Integrate shoes and trousers => ‘Beak pants’. Time-to-market was 4 years
because of product managers that left etc. Concept = user as innovator. See slides 39-40.
Some things from lecture 1 are mentioned in lecture 2 since they relate to chapter 1 of the book
,Innovation from a systems theory perspective
Innovation by organizations: why, what and how?
Why: remaining viable
What: implementing something new
How: depends on newness → strategy guides what (what business case is selected?), structure
enables how
Problems with this view? It treats innovation as something separate, done in another subsystem
Two main processes in organization:
1. Innovation, 2. Primary processes (what you do know)
(1) Organization: Systems Theory Abstraction by Ashby/De Sitter
Primary process = prepare + make + support
Regulation: 3 types:
1. Operational regulation
2. Regulation by design (+ implementation of this design) = innovation
structure. Linked to the other parts of the system, not isolated.
3. Strategic regulation (macro level)
Output X = main reasons for organization to exist. It is the product/service that is valued.
How are these interlinked?
(2) Innovation Structure: MIOS
Here are 12 functions to diagnose a structure or
a redesign. Extension of VSM model (Beer)
Left side = exploration = more radical, broader
Right side = exploitation = more incremental,
smaller, within organization
➢ Search (verkennen) + propose innovation
(plannen) = search
➢ Balance = select step in the Tidd & Bessant model. Balance radical - incremental.
This shows that innovation is embedded in the environment, internal environment, everything
basically.
Direction (strategic regulation)
Mission: new segment/market/purpose
And/Or extra KPI’s: sustainable, durable, circular, responsible, ethical
These criteria can select the right business projects. So it is like using MCDA.
, Core process innovation = Doing and managing innovation projects & portfolio(s)
Projects:
- Newness = different approach
- Multiple types as result
- Manage per project
Portfolio:
- One or more portfolio, depends on the size of the organization
- Projects are related (people, money)
- Operationally manage projects
Small organization (related to MIOS)
Starts with incremental innovations to grow their business. Later, we have (radical) innovation that is
leading to the creation of new BU’s. This business units will then only do innovation projects that
have to do with their own subject.
- Central level -> radical innovation, leading to a new BU. This is more about exploration.
This makes sure it is not mixed with BU-level operations.
- Existing BU’s -> incremental innovation. The search for exploitation.
- Ambidexterity: organizations need to combine incremental and radical innovation. So it
is the skill to be both good at your current operations and in your skills to be more
radical.
Innovation in collaboration
Do organizations innovate on their own? No, they can also do it together. When projects are too
huge, when other knowledge is needed, but primarily of risk sharing partners. So this is the idea of
open innovation. Thus we see that supply network partners may be(come) innovation partners in
(incremental) innovation. Can be both downstream and upstream in the supply chain.
‘Open network’; reasons to do this:
- Innovation needs other competencies than ours => collaboration
- Some innovations do not fit current business model => sell / separate venture / licensing (prevents
you from dropping a project on which you’ve spent a lot of resources) (divest, see later on)
- Innovation by others may not fit theirs but ours so: buy / buy a stake in their venture
Trends and/in innovation
Examples: crowdfunding, weconomy, crowdsourcing, innocentive, open innovation, reshoring, fuzzy
front end etc. See slides to see where these trends can be connected to in the MIOS model.
