Ch13 - Organisation theory design and change gareth jones

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Ch13 - Organisation theory design and change gareth jones

  1. 1. Organizational Theory, Design, and Change Sixth Edition Gareth R. Jones Chapter 13 Innovation, Intrapreneurship, and Creativity
  2. 2. Learning Objectives <ul><li>Describe how innovation and technological change affect each other </li></ul><ul><li>Discuss the relationship among innovation, intrapreneurship, and creativity </li></ul><ul><li>Understand the many steps involved in creating an organizational setting that fosters innovation and creativity </li></ul>
  3. 3. Learning Objectives (cont.) <ul><li>Identify the ways in which information technology can be used to foster creativity and speed innovation and new product development </li></ul>
  4. 4. Innovation and Technological Change <ul><li>Innovation: process by which new goods and services or new production and operating systems are developed </li></ul><ul><ul><li>Enables better response to customer needs </li></ul></ul>
  5. 5. Types of Innovation <ul><li>Quantum technological change: a rare, fundamental shift in technology that revolutionizes products or the way they are produced </li></ul><ul><ul><li>Quantum innovation: new products or operating systems that incorporate quantum technological improvement </li></ul></ul><ul><ul><li>These can cause major changes in the environment </li></ul></ul>
  6. 6. Types of Innovation (cont.) <ul><li>Incremental technological change: technological change that represents a continual refinement of some base technology </li></ul><ul><ul><li>Incremental innovations: products or operating systems that incorporate refinements of some base technology </li></ul></ul>
  7. 7. Types of Innovation (cont.) <ul><li>Technology cycle </li></ul><ul><ul><li>Quantum innovations occur rarely </li></ul></ul><ul><ul><ul><li>Technological discontinuity </li></ul></ul></ul><ul><ul><li>Dominant design emerges </li></ul></ul><ul><ul><li>Era of incremental change and innovation during which competition is based on technology </li></ul></ul><ul><ul><li>Technological discontinuity may occur again and the process starts all over </li></ul></ul>
  8. 8. Figure 13.1: The Technology Cycle
  9. 9. Property Rights <ul><li>Innovation is expensive and needs to be protected </li></ul><ul><ul><li>Patents </li></ul></ul><ul><ul><li>Copyrights </li></ul></ul><ul><ul><li>Trademarks </li></ul></ul>
  10. 10. Innovation, Entrepreneurship, and Creativity <ul><li>Intrapreneurs : leaders of innovation and new product development in established organizations </li></ul><ul><ul><li>Notice opportunities </li></ul></ul><ul><ul><li>Manage product development </li></ul></ul><ul><ul><li>May leave organization if their ideas are not supported </li></ul></ul><ul><ul><ul><li>Become entrepreneurs </li></ul></ul></ul>
  11. 11. Innovation, Entrepreneurship, and Creativity (cont.) <ul><li>Creativity: ideas going beyond the current boundaries, whether those boundaries are based on technology, knowledge, social norms, or beliefs </li></ul><ul><ul><li>Most people are creative at some time </li></ul></ul><ul><ul><li>May involve combining and synthesizing new things </li></ul></ul><ul><li>Knowledge-creating organization: an organization where innovation is going on at all levels and in all areas </li></ul>
  12. 12. Entrepreneurship as Creative Destruction <ul><ul><li>“ Creative destruction”: new companies use new global and technological opportunities to make better products that drive old, inefficient companies out of business </li></ul></ul><ul><ul><li>Old inefficient companies are driven out of business </li></ul></ul><ul><ul><li>Emergence of new industries </li></ul></ul>
  13. 13. Innovation and the Product Life Cycle <ul><li>Product life cycle: the changes in demand for a product that occur over time </li></ul><ul><ul><li>Demand for most successful products passes through four stages: </li></ul></ul><ul><ul><ul><li>The embryonic stage </li></ul></ul></ul><ul><ul><ul><li>The growth stage </li></ul></ul></ul><ul><ul><ul><li>The maturity stage </li></ul></ul></ul><ul><ul><ul><li>The decline stage </li></ul></ul></ul>
  14. 14. Innovation and the Product Life Cycle (cont.) <ul><li>Product life cycle (cont.) </li></ul><ul><ul><li>Embryonic stage: a product has yet to gain widespread acceptance </li></ul></ul><ul><ul><ul><li>Minimal demand </li></ul></ul></ul><ul><ul><li>Growth stage: a product has been accepted by customers </li></ul></ul><ul><ul><ul><li>Demand increases </li></ul></ul></ul><ul><ul><li>Mature stage: market demand peaks because most customers have already bought the product </li></ul></ul><ul><ul><li>Decline stage: occurs if and when demand for a product falls </li></ul></ul>
  15. 15. Innovation and the Product Life Cycle (cont.) <ul><li>Determinants of the length of the product life cycle </li></ul><ul><ul><li>Rate of technological change </li></ul></ul><ul><ul><ul><li>Faster the rate of change, the shorter the product life cycle </li></ul></ul></ul><ul><ul><li>Role of fads and fashion </li></ul></ul><ul><ul><ul><li>Determine the attractiveness of products to customers </li></ul></ul></ul>
  16. 16. Figure 13.2: Technological Change and Length of the Product Life Cycle
  17. 17. Managing the Innovation Process <ul><li>Project management: the process of leading and controlling a project so that it results in the effective creation of new or improved products </li></ul><ul><ul><li>Project: a subunit whose goal centers on developing the products or service on time, within budget, and in conformance with predetermined performance specifications </li></ul></ul>
  18. 18. Managing the Innovation Process (cont.) <ul><li>Project management (cont.) </li></ul><ul><ul><li>Effective product management often begins with a clearly articulated plan </li></ul></ul><ul><ul><ul><li>Takes a product through the concept, initial test, modification, and manufacturing phases </li></ul></ul></ul><ul><ul><li>Project manager’s tasks are different from regular managers </li></ul></ul><ul><ul><ul><li>Manage high proportion of highly skilled and educated professionals </li></ul></ul></ul><ul><ul><ul><li>Plan to deal with top corporate executives </li></ul></ul></ul><ul><ul><li>Must keep project on track </li></ul></ul><ul><ul><ul><li>Often quantitative modeling is used </li></ul></ul></ul>
  19. 19. Managing the Innovation Process (cont.) <ul><li>Project management (cont.) </li></ul><ul><li>Quantitative modeling </li></ul><ul><ul><li>Examples include PERT/CAM network of Gantt Chart </li></ul></ul><ul><ul><li>Flowcharts of a project that can be built with many proprietary software packages </li></ul></ul><ul><ul><ul><li>These software packages focus on: </li></ul></ul></ul><ul><ul><ul><ul><li>Modeling the sequence of actions necessary to reach a project’s goal </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Relating these actions to cost and time criteria </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Sorting out and defining the optimal path for reaching the goal </li></ul></ul></ul></ul>
  20. 20. Managing the Innovation Process (cont.) <ul><li>Quantitative modeling (cont.) </li></ul><ul><ul><li>Critical path method </li></ul></ul><ul><ul><ul><li>Goal is to determine: </li></ul></ul></ul><ul><ul><ul><ul><li>Which particular tasks or activities of the many that have to be performed are critical in their effect on project time and cost </li></ul></ul></ul></ul><ul><ul><ul><ul><li>How to sequence or schedule critical tasks so that a project can meet a target date at minimum cost </li></ul></ul></ul></ul><ul><ul><ul><li>Optimal sequencing of tasks is often worked out by a team </li></ul></ul></ul><ul><ul><ul><ul><li>Analysis is an important learning tool </li></ul></ul></ul></ul>
  21. 21. Figure 13.3: CPM Project Design
  22. 22. Managing the Innovation Process (cont.) <ul><li>Stage-gate development funnel </li></ul><ul><ul><li>A structured and coherent innovation process that improves control over the product development effort </li></ul></ul><ul><ul><li>Forces managers to make choices among competing new product development projects so that resources are not spread thinly over too many projects </li></ul></ul>
  23. 23. Managing the Innovation Process (cont.) <ul><li>Stage-gate development funnel (cont.) </li></ul><ul><ul><li>Stage 1: Funnel has a wide mouth to encourage as many new product ideas as possible from both new and established project managers </li></ul></ul><ul><ul><li>Stage 2: Specify all of the information required to make a decision about whether to go ahead with a full-blown product development effort </li></ul></ul><ul><ul><ul><li>Plans are either accepted, revised, or rejected </li></ul></ul></ul><ul><ul><li>Stage 3: Proceed to development phase </li></ul></ul>
  24. 24. Figure 13.4: A Stage-Gate Development Funnel
  25. 25. Managing the Innovation Process (cont.) <ul><li>Cross-functional teams </li></ul><ul><ul><li>Coordinating R&D function with other functions is critical but often difficult </li></ul></ul><ul><li>New product development teams </li></ul><ul><ul><li>Marketing, engineering, and manufacturing need to be core members of product teams </li></ul></ul><ul><ul><li>Core members: refers to a nucleus of three to six people who bear primary responsibility for the product development effort </li></ul></ul>
  26. 26. Figure 13.5: Innovation as a Cross-Functional Activity
  27. 27. Managing the Innovation Process (cont.) <ul><li>Team leadership </li></ul><ul><ul><li>Having cross-functional teams is not sufficient for innovation – they have to be managed properly </li></ul></ul><ul><ul><li>Lightweight team leader: a mid-level functional manager who has lower status than the head of a functional department </li></ul></ul><ul><ul><li>Heavyweight team leader: a true project manager who has higher status within the organization </li></ul></ul>
  28. 28. Managing the Innovation Process (cont.) <ul><li>Skunk works: a temporary task force that is created to expedite new product design and to promote innovation by coordinating the activities of functional groups </li></ul><ul><ul><li>An island of innovation located away from the organization </li></ul></ul><ul><ul><li>Dissolved when the product is brought to market </li></ul></ul>
  29. 29. Managing the Innovation Process (cont.) <ul><li>New venture divisions: a new division that is allocated a complete set of value-creating functions to manage a project from beginning to end </li></ul><ul><ul><li>Assumes full responsibility for the commercialization of the product </li></ul></ul><ul><ul><li>Normally an independent division </li></ul></ul><ul><ul><li>Balance of control between the division and the corporate center is problematic </li></ul></ul>
  30. 30. Managing the Innovation Process (cont.) <ul><li>Joint venture: a strategic alliance among two or more organizations that agree to jointly establish and share the ownership of a new business </li></ul><ul><ul><li>Allows organizations to combine their skills and technologies and pool their resources to embark on risky projects </li></ul></ul><ul><ul><li>Partners may disagree over future development plans </li></ul></ul>
  31. 31. Managing the Innovation Process (cont.) <ul><li>Creating a culture for innovation </li></ul><ul><ul><li>Organizational structure </li></ul></ul><ul><ul><ul><li>Creating the right setting is important to fostering innovation </li></ul></ul></ul><ul><ul><ul><li>Increasing organization size, age, and complexity may slow innovation </li></ul></ul></ul><ul><ul><ul><li>Organic structures tend to promote innovation </li></ul></ul></ul><ul><ul><li>People – organizations need to guard against too much similarity </li></ul></ul><ul><ul><li>Property rights – create career paths to show that success is closely linked with future promotion and rewards </li></ul></ul>
  32. 32. Innovation and Information Technology <ul><li>Information efficiencies: the cost and time savings that occur when IT allows employees to perform current tasks at a higher level </li></ul><ul><ul><li>Enables employees to assume additional tasks </li></ul></ul><ul><ul><li>Enables employees to expand their roles in the organization due to advances in the ability to gather and analyze data also allows information efficiencies </li></ul></ul>
  33. 33. Innovation and Information Synergies <ul><li>Information synergies: the knowledge building created when individuals or subunits pool their resources and collaborate across boundaries </li></ul><ul><li>Boundary-spanning activity: the interactions of people/groups across the organizational boundary to obtain valuable information and knowledge from the environment </li></ul>
  34. 34. IT and Organizational Structure and Culture <ul><li>IT affects the innovation process through its many effects on organizational structure </li></ul><ul><li>IT gives lower-level employees more detailed and current knowledge of consumer and market trends and opportunities </li></ul><ul><li>IT can produce information synergies </li></ul><ul><ul><li>Facilitates increased communication and coordination between decentralized decision makers and top managers </li></ul></ul>
  35. 35. IT and Organizational Structure and Culture (cont.) <ul><li>IT means that fewer levels of managers are needed to handle problem solving and decision making </li></ul><ul><li>IT provides lower-level employees with more freedom to coordinate their actions </li></ul><ul><ul><li>Information synergies may emerge as employees experiment and find better ways of performing their tasks </li></ul></ul>
  36. 36. IT and Organizational Structure and Culture (cont.) <ul><li>IT facilitates the sharing of beliefs, values, and norms </li></ul><ul><ul><li>Allows for the quick transmission of rich and detailed information between people and subunits </li></ul></ul>

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