Process & Dynamics of Innovation - CIOWciow.org/docsDM/InnovationDynamics.pdf · Christensen (1992)...
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Innovation and Creativity Innovation and Creativity Innovation and Creativity Innovation and Creativity in in Organizations and Work Organizations and Work Process & Dynamics of Process & Dynamics of Innovation DYNM 692 DYNM 692 November 2010 November 2010
Transcript of Process & Dynamics of Innovation - CIOWciow.org/docsDM/InnovationDynamics.pdf · Christensen (1992)...
Innovation and Creativity Innovation and Creativity Innovation and Creativity Innovation and Creativity in in Organizations and WorkOrganizations and Workgg
Process & Dynamics ofProcess & Dynamics of Innovation
DYNM 692 DYNM 692 November 2010November 2010
CreativityCreativity and and Innovation in Innovation in Organizations: Course SessionsOrganizations: Course Sessions
Core topicsCore topics
Techniques for innovating
Creativity
Innovation from within Organizations: Innovation from within Organizations:
Case INEX, Issue‐selling
Process & Dynamics of Innovation
Management of Innovation
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Management of Innovation
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Process & Dynamics of Process & Dynamics of Process & Dynamics of Process & Dynamics of InnovationInnovationInnovationInnovation
S i l St di Seminal Studies
Market Effects Market Effects
Dominant Design Dominant Design
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Seminal Studies Seminal Studies Seminal Studies Seminal Studies Morison, Gunfire at sea: A case study of innovation (1966)(1966)
Rogers, The diffusion of innovations (1974‐2010)
Hounshell, From the American system to mass production, 1800‐1932 (1984)
Mowery & Rosenberg, Paths of innovation: Techno‐logical change in 20th century America (1998)logical change in 20 century America (1998)
Tedlow, Giants of enterprise: seven business innovators and the empires they built (2001)
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innovators and the empires they built (2001)
Morison, Morison, Gunfire at sea: A case Gunfire at sea: A case study of innovation study of innovation (1966)(1966)
Continuous‐Aim Firing (keep sight and gun barrelContinuous Aim Firing (keep sight and gun barrel on target throughout ship roll)
Basic Invention vs. Combined Elements (gun,Basic Invention vs. Combined Elements (gun, elevating gear, and telescope were combined)
Bureaucratic obstacles: u eauc at c obstac es: Disbelief Protection of existing processes & skills,g p ,
Maintenance of the societal status quo
Scott ‐> Sims ‐> Teddy Roosevelt (personality / Scott > Sims > Teddy Roosevelt (personality / status / determination + innovation = adoption)
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Rogers Rogers The diffusion of The diffusion of innovationsinnovations ((197419742010)2010)
Diffusion DiffusionProcess by which an innovation is communicated through certain channels over time among the members of a social system
ProcessInnovation – idea, practice, or object perceived as newCommunication – create & share info towards understandingunderstanding
Time – first awareness, current stage, and rate of adoption
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adoptionSocial system – interrelated units engaged in solving
HounshellHounshell, , From the American system to From the American system to mass production, 1800mass production, 18001932 1932 (1984)(1984)
Mass Production (assembly lineMass Production (assembly line manufacturing techniques)
Henry Ford’s Model T
Eli Whitney’s Cotton Gin Eli Whitney s Cotton Gin
Productivity Dilemma (increase product changes = decrease productivity)
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changes = decrease productivity)
Krafcik (1988) Triumph of the Krafcik (1988) Triumph of the Lean Production SystemLean Production System
Lean production: low inventories production Lean production: low inventories, production flexibility, minimal rework, statistical quality control and a skilled dedicated work forcecontrol, and a skilled, dedicated work force
3rd major paradigm of industrial organization, succeeding mass production (which itselfsucceeding mass production (which itself replaced “craft production”
How Japanese automakers supplanted those of How Japanese automakers supplanted those of North America. Womack, Jones & Roos: The machine that changed the world (1990)
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machine that changed the world (1990)
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TedlowTedlow ‐‐‐‐Giants Giants of enterprise: seven business of enterprise: seven business f pf pinnovators and the empires they innovators and the empires they built built (2001(2001))
Founding and Building New Businesses (Americans do best) )
Innovators (Carnegie, Eastman, Ford, Watson, Revson, Walton, Noyce) , , y )
Innovators vs. Innovating Companies (business leaders who become inseparable from their firms)leaders who become inseparable from their firms)
What about all of the businesses leaders that fail?
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What about all of the businesses leaders that fail?
Technology, Market Technology, Market gy,gy,Change and InnovationsChange and Innovations
Innovation through architecture is distinct
Innovation can be radical and discontinuous
Innovation follows cycles of technological changeInnovation follows cycles of technological change
Innovation maps onto a technology S‐curve
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Henderson & Clark, Henderson & Clark, Architectural Architectural innovation: The reconfiguration of existinginnovation: The reconfiguration of existinginnovation: The reconfiguration of existing innovation: The reconfiguration of existing product technologies and the failure of product technologies and the failure of
established firms (established firms (1990)1990)established firms (established firms (1990)1990) Architectural Innovation
not incremental or radical, but rather changes in the architecture of a product without changing the components
l Example semiconductor photolithographic alignment equipment industry
I li ti Implication architectural changes are difficult for firms to recognize/correct
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UtterbackUtterback ((19941994) ) Mastering the Mastering the D i f I tiD i f I tiDynamics of InnovationDynamics of Innovation
Chapter 7: Invasion of a stable business by Chapter 7: Invasion of a stable business by radical innovationradical innovation
Radical Technological Innovation Technology that invades – and eventually overwhelms –the established technology
Example America’s ice industry: machine‐made replaced harvested
S C S‐Curve Development slow at first, and then accelerates with a dominant design and then slows again as efforts shift to
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dominant design, and then slows again as efforts shift to new technology
Anderson & Anderson & TushmanTushman (1991) (1991) Managing through cycles ofManaging through cycles ofManaging through cycles of Managing through cycles of
technological changetechnological change
Cycles of Technological Change Technology progresses in cycles that hinge on discontinuities and emergence of dominant designs
Creative Destruction Fundamental to capitalist progress – Schumpeterp p g p
Competency‐Destroying Obsolete existing know‐how nullify mastery of old
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Obsolete existing know‐how, nullify mastery of old
Foster (1986) Foster (1986) Innovation: The Innovation: The tt k ' d ttt k ' d tattacker's advantage. attacker's advantage.
Chapter Chapter 4: The S4: The Scurve: A new forecasting toolcurve: A new forecasting tool
S‐Curves Learning followed by diminishing returns; Learning followed by diminishing returns; repeated
Examples Examples Artificial hearts, pocket watches
Forecasting Tool Forecasting Tool Competitive analysis of effort put in and results achieved
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achieved
Christensen (1992) Christensen (1992) Exploring the Exploring the limits of the technology Slimits of the technology Scurve.curve. Part I:Part I:limits of the technology Slimits of the technology S curve. curve. Part I: Part I:
ComponentComponent technologiestechnologies • S‐Curve Scope
More applicable at the industry level than firm level
Reverse Causality lack of technological progress may be the result,
th th f f t th t t h l irather than cause, of a forecast that a technology is maturing
Component Innovation Component Innovation attacking firms have a disadvantage with new components
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components
Christensen: Innovator’s Christensen: Innovator’s Dilemma (1997), Innovator’s Dilemma (1997), Innovator’s
Solution (2004)Solution (2004)Solution (2004)Solution (2004)
Keeping close to customers – sometimes to the Keeping close to customers sometimes to the fatal end
Sustaining vs Disruptive Technologies (increased Sustaining vs. Disruptive Technologies (increased rate vs. redefined performance trajectory)
(f f Established vs. Entrant Firms (founded before vs. after advent of the technology)
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Dominant DesignDominant DesignDominant DesignDominant Design A product or service with a clear identity, a
d d h k f d d hstandard that we take for granted and has become widely diffused Car
Windows
Pizza
Currency Swap
Endoscopy
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Patterns of Technological/Market Patterns of Technological/Market EvolutionEvolution
ost
orm
ance
/co
perf
o
time
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Strategic Focus Evolves with the SStrategic Focus Evolves with the Scurvecurve
Compare “product life cycle” Compare product life cycle
Emergence of dominant design
d i i From product to process innovation
From functionality to volume and standardization
From flexibility to controly
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Creativity, organization, and innovation
Management3
46
R&D5
21 6Production
5
Other
InnovationsCreativity Marketing5
departments
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Technological SubstitutionTechnological SubstitutionTechnological SubstitutionTechnological Substitutionco
stfo
rman
ce/c
perf
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Innovation:Innovation:a matter of a matter of life life andand deathdeath
Think of a product that got pushed out of Think of a product that got pushed out of existence?
Why did substitution occur? Why did substitution occur?
What happened to the “Owners” of that d i d i ?dominant design?
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Two racket designs that did not become a dominant design
A d k tA modern racket design that might
b lli h thembellish the dominant design
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D i t D i I d t Eff tD i t D i I d t Eff tDominant Design Industry EffectsDominant Design Industry Effects
Products and process culminate in a dominant design
Dominant designs become replaced by new onesDominant designs become replaced by new ones
Dominant designs entail product/service attributes, but also legal, institutional, cultural, marketing conditionsalso legal, institutional, cultural, marketing conditions
Firms co‐evolve with dominant design and might face inertia problemsp
Death of dominant design comes often with flood of “chapter 11s”
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Dominant DesignDominant DesignDominant DesignDominant Design
Components and architecture Components and architecture
Role of politics, regulation, markets, fashion, collusioncollusion
Tension between Environment (technology, k d h f h l d )market and other aspects of the landscape)
and Firm
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Dominant Design and StrategicDominant Design and StrategicDominant Design and Strategic Dominant Design and Strategic ChallengesChallenges
Components and architecture e.g., speakers, turntable,etc. (stereo “system”)g p ( y )
Role of science, politics, regulation, marketsmarkets
Additional examples
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Dominant Dominant AirplaneAirplane DesignDesignDominant Dominant AirplaneAirplane DesignDesign
Propulsion: propellers to jets Propulsion: propellers to jets
Landing Function: 4 steps
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Dominant Dominant AirplaneAirplane DesignDesignpp gg
Landing GearLanding Gear System Architecture.
In 1936 DC3 became dominant design [the In 1936 DC3 became dominant design [the “standard”]
In 1959 Boeing 707 replaced it In 1959, Boeing 707 replaced it. Not simply technology, but also regulation,
politics value chains networks and otherpolitics, value chains, networks, and other socio-economic factors effect dominant design
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design
Same technology, new dominant design, i diff d i di i h lmeeting different needs is disruptive technology
Capacity
3 1/4 inch disk drive
Capacity demands for desktop users
5 1/2 disk drive
disk drive
Capacity demands forl tlap top users
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Year
GM: A firm struggling GM: A firm struggling GM: A firm struggling GM: A firm struggling with problem architecturewith problem architecture
Why does GM want to stick to one‐key car?car?
Could the firm share ‘key template’ i i i d b dacross ignition and body SUBs
Why can’t GM change? Have inertia y gproblems?
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GM Two carkey problemGM Two car key problem
Internal: Internal: Lack of overlap between units
Design of firm matches product’s architecture
Organizational Culture and attitudes
External: Needs of c stomers Needs of customers
Role of competition
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Change in Dominant DesignChange in Dominant Design Something new, but how new is new?
R di l I ti Radical Innovations
Incremental Innovations, but also:A hi l I i dl i l b Architectural Innovations; supposedly incremental, but radically different in architecture:• from propellers to jet engines
• from ceiling fan to table fan
• from big car to small car
• from personal computer to networked computer?• from personal computer to networked computer?
• From offset printing to digital printing
• from personal tellers to automated tellers
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Dominant Design issues?
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Dominant Design Dominant Design matchesmatches Firm and Firm and l hl hValue Chain DesignValue Chain Design
Product ArchitectureProduct ArchitectureOrganization Structure &Interaction Patterns
Blue print VP R&D
Component A Group A
Group 3
Component 3
Group 3
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Creativity: New FirmCreativity: New FirmCreativity: New FirmCreativity: New Firm
New firms start with a clean slateNew firms start with a clean slate New firms have structures that fit the emerging dominant design, new paradigmemerging dominant design, new paradigm
New firms sneak into the playing field whose players are blinded by their paradigmplayers are blinded by their paradigm
Only firms endowed with dynamic capabilitiesmight survive the onslaught ofcapabilitiesmight survive the onslaught of new entrants!
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Dominant design SummaryDominant design Summary Dominant design (technology&market) involves components and architecturep
Existing firms are often saddled with a product design that fits their organization, and become afflicted with North‐east bias.
New firms are flexible and can create new design template and new organization
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