Managing innovation within the firm

Theories about organisation & innovation

Activities within the organisation

Classical/scientificMangt perspective

Human relations approach

Contingency approach

System theory perspective

Classical/scientific Management perspective• I t took hold at the beginning of the 20th century.• It built around traditional management concept,

bureaucratic theory and scientific management.• The view of school of thought-• Org. should be designed to ensure a predictable flow

of work.• Specialisation of tasks is employed to maximised

efficiency .• According to this innovation is a series of rational

decisions leading to a clearly defined outcomes.• It contributed to the dominance of the ‘technology-

push’ model of innovation.

Human relations approach

• This new approach identified informal and non-legitimised group processes within the organization.

Contingency approach

• There is not necessarily a single best organisational structure, but the structure should be adapted to the activities being performed.

• Different activities individual do in a group for achieving organisational goal.

• It emphasis on activities rather than structure with regard to innovation

• Means the process of innovation is made up of a series of linked activities within an organisation

Contingency approach

• Contingency approach argues that tasks are defined, certain, stable, uniform, have few exception, many repetitive activities, stress formalities are compatible with bureaucratic organisation.

• At the other end of the task continuum, uncertain, unstable, non-uniform, have many exception, few repetitive activities are compatible with flexible organisation

Contingency approach

• Certainty Vs. uncertainty• Stability Vs. unstability• Uniform Vs. non-uniform

• Few exceptions Vs. many exception• Many repetitive events Vs. few repetitive event

System theory• A system is defined as any set of elements

linked in a pattern which carries information ordered according to some pre-determined rule

• So organisation is a goal directed system.• All the system have both structure and

processes.• Structures are relatively stable.• Processes are the dynamic relationship

among system element over time.

System theory• There are certain issues arises within system that has to be

managed rather than problems that can be solves• Issues identified by systems theory that need to be managed

issue characteristics

adaption The abilities to alter ways of working to meet the changing environment

Coordination Enabling the different parts of the org. to function as one

integration The ability to harmonise a diverse range of activities and people

strain Coping with friction between org. parts

output Achieving purposes and goals

maintenance Keeping elements in the system active

System theory• System theory highlights the importance of the

organisationa’s interaction with the external world.

• This interaction is an important element of the innovation process.

• In this way org. manages and captures the benefits from knowledge flows.

• It increases its ability to innovate.

Dilemma of innovation managemnt

• Managing tension bet the need for creativity and eficiency

and room to try out

The efficient day to day operations within an org. require stable routine. This usually achieved in stable and controlled environment

The development of new products and services requires creativity and room to tryout new ideas. This is usually achieved in a loose and flexible environment

EFFICIENCy

CREATIVITy

Managing uncertainty• Person’s uncertainty map

Uncertainty about processlow High

High

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t 3Applications engineering

1Exploratory research

4Combining market opportunities with technical capabilities

2Development engineering

Quadrant 1• High uncertainty about ends and means.• How to achieved the target is also not clear.• It is like ‘exploratory research’/ ‘blue sky’• This activities often involve working with

technology which is not fully understood and where potential products and market have also non identified.

• Domain of university and research laboratory.

Quadrant 2

• Target is clear. Commercial opportunity is identified, means to be established.

• They initiate about different technologies or different approaches to try to achieve desire outputs.

• Here the uncertainty about how to achieve the target.

• It follows market-pull model.• It is referred as development engineering.• It increases efficiency and way to reduce costs

Quadrant 3• Here uncertainty regarding ends/output.• It is associated with attempting to discover how

the technology can be most effectively used.• It follows technology-push model.• Many of these may prove to be ineffective due

to costs of performance but some new and improved product will emerge from this effort.

Quadrant 4• It covers innovative activities which are more

certain.• It follows interactive model/simultaneous

coupling model• Here market opportunities and technology

capabilities are known. Both the information either improve existing products or create new product.

Organisational Characteristics that facilitate the innovation process

• Growth Orientation

• Vigilance

• Commitment to technology

• Acceptance of risks

• Cross-functional co operation

• Receptivity

• ‘Slack’

• Adaptability

• Diverse range of skills

Growth Orientation• A commitment to long term growth rather than

short-term profit• Example: family business

Vigilance

• The ability of the organisation to be aware of its threats and opportunities

• Open communication system is required among different departments

Commitment to technology

• The willingness to invest in the long-term development of technology

• Long term approach• Investment in technology• Foster creativity• More emphasis on R&D

Acceptance of risks

• Willingness to consider risk opportunity• Not gamble but risk assessment decision• Balance portfolio of projects

Cross-functional co-operation

• Mutual respect among individuals and willingness to work together across function

• Inter department conflict Vs Innovation• Inter-departmental conflict is barrier to innovation• Ability to confront and resolve frustration and

conflict essential requirement for Innovation

Receptivity

• The ability to be aware of, to identify and take effective advantage of externally developed technology

• Most favored technology is the combination of several other technology in terms of joint venture and alliances

• Ex. IBM and apple formed joint venture to work on mutually beneficial technology in PC market

‘Slack’• An ability to manage the innovation dilemma

and provide room for creativity• ‘Slack’ allow individuals room to think,

experiment, discuss ideas and be creative

Adaptability

• A readiness to accept change• The organisation must be ready to disruptions

to established organisational activities• Because major innovations may result from

significant changes in existing one

Diverse range of skills

• A combination of specialisation and diversity of knowledge and skill

• A combination of specialist skill that facilitate cross-fertilisation of the special knowledge science, marketing, accountancy etc

• Hybrid managers who have technical and commercial knowledge are useful in area of product development

Organic Vs. Mechanistic Organisational Structure And Innovation characteristics organics mechanisticChannel of communication

Open with free information flow

Highly structured, restricted information flow

Operating style Allowed to vary freely Must be uniform and restricted

Authority for decision Based on expertise Based on formal position

Adaption To changing circumstances

With instance on holding fast to tried & true mangt principles despite change in business conditions

Organic Vs. Mechanistic Organisational Structure And Innovation

Emphasis on getting things done

Unconstrained Reliance on tried and true mangt principles

control Loose, informal control, Emphasis on norms of cooperation

Tight control through sophisticated control system

On-job behaviour Flexible, permit to share requirement and personality

Constrained, require to conform to job descriptions

Decision making Participation & group consensus used frequently

Superiors make decisions with minimum consultation & involvement of subordinates

Formalisation

• There is inverse relationship between innovation and formalisation

• An increase in formlisation of procedures will result in decreased in process of innovation

Complexity• Complexity in terms of large no professionals

groups or diversity of specialists

Centralisation• There is inverse relationship between innovation

and Centralisation

• Centralisation refers decision making activities and location of power

• The more decentralised an organisation the fewer level of hierarchy usually required.

Organisational Size

• There is positive relationship between innovation and Organisation size

• Resources

• No of employees

• Scale of operation

Role of individual in innovation

1. Technical innovator2. Technical/commercial scanner3. Gatekeeper4. Product champion5. Project leader6. Sponsor

Technical innovator

• He /she is expert in one or two fields.• Generate new ideas and sees new and

different ways of doing things.• Also referred to as the ‘mad scientist’

Technical/commercial scanner• Acquires vast amounts of information from

outside the organisation• Often through networking• This may include market and technical

information

Gatekeeper• Keeps information of related developments

that occurs outside the organisation through journals, conference, colleagues and other companies

• Passes these information on to others, finds it easy to talk to colleagues

• Serves as an information resource for other in the organisation

Product champion

• Sells new ideas to others in the organisation• Acquires resources• Aggressive in championing in his/her cause• Takes risk

Project leader

• Provides the team with leadership and motivation.

• Plans and organises the project

• Ensures that administrative requirements are met.

• Provides necessary co-ordination among team members.

• Sees that the project moves forward effectively

• Balances project goals with organisational needs

Sponsor

• A senior person; provides access to a power base within the organisation

• Buffers the project team from unnecessary organisational constraints

• Helps the project team to get what it needs from other parts of the organisation

• Provides legitimacy and organisational confidence in the project

Establishing an innovative environment

the organisation’s reputation for innovation

The organisation’s reputation for innovation

Attraction of creative people

Organisational encouragement of creativity & innovation

High morale and retention of creative people

Motivates people within the organisation and reduce frustration

Development of innovative products

A willingness within the organisation to accept new idea

Organisation’s reputation for innovation

• Development of reputation of organisation takes many years and its linked with the performance.

• It includes recent product launches, recent successful programme of research, high expenditure in R&D.

• Depending on topical media events at the time, co is able to achieve wide explore of new product or research.

• This exposure depends on effective publicity and also serendipity.

Attraction of creative people• Creative people will be attracted to those Cos.

Which viewed as creative• The fresh graduates apply for the employment in

those Cos. Which is successful.• The top scientist will seek employment from those

Cos. Which have a reputation for innovation and scientific excellence.

Organisation encourages creativity & innovation• Many organisation support creativity with actions

and resources.• The organisation should try to build an environment

that tolerates errors and mistakes. It will encourage people to try new ideas and put forward suggestion

• Creative ideas need to be rewarded in terms of publicity & recognition and monetary incentives.

Development of innovative products• The ability to develop product with the help

of latest technology.• Means developing new products that are

genuine improvement in existing one.• The success in marketplace that very often

leads to further success.

A willingness to accept new idea

• Many organisations suffer from an inability to implement changes and new ideas even after rewarding the people involve in developing the new idea.

• Once a new product idea has been accepted it is important that is carried through to completion.

Increased motivation and reduce frustration• If individuals within the organisation can see

their ideas and efforts contributing to performance of the business, they will encourage.

• If good ideas are overlooked, it will increased frustration.

High morale and retention of creative people

• Innovation activity will help to increased morale within the organisation.

• A rewarding and enjoyable working environment will help to retain creative people

• It will reinforce Co.s innovative capabilities.