MCS And Innovation<br />Mike, Robert, Noel, Kefen<br />July 13, 2009<br />
AGENDA<br />What is Innovation?<br />Literature Review<br />Types and effects of MCS on Innovation<br />Strategy and MCS<b...
WHAT IS INNOVATION?<br />Innovation: the practical implementation of an idea into a new device or process<br />Radical Inn...
What the literature says..<br />It depends on who you ask<br />Relationship is irrelevant<br />MCS and innovation are inco...
ACTION CONTROLS<br />Reduce individual and procedural autonomy <br />Discourage creativity, innovation and adaptation<br /...
STAGE-GATE REVIEW PROCESS<br />Each step is programmed to ensure energy is focused<br />
GOOGLE<br />20% of technical staff time devoted to self interest projects<br />Estimated 50% of new product launches in 20...
RESULTS CONTROLS<br />Typically reward repeated tasks<br />Creates core rigidities<br />Need to look for ways to reward cr...
CULTURAL CONTROLS<br />Senior managers must adhere to detailed processes and customs of an innovation culture<br />MCS mus...
ORGANIZING FOR INNOVATION<br />Large Firms<br />Better ability to obtain R&D financing<br />Higher sales to spread out fix...
R&D FINANCIAL RESPONSIBILITY CENTERS<br />Centralized R&D<br />Maximize economies of scale and learning curve<br />Better ...
BUDGETING AND PLANNING<br />Lead beyond current market requirements<br />Choose investments to develop strategic technolog...
SIMONS’ LEVERS OF CONTROL<br />Internal controls<br />Belief systems<br />Boundary systems<br />Diagnostic control systems...
STRATEGY AND MCS<br />Choice of interactive MCS depends on strategy<br />Use diagnostic systems for current strategy criti...
CONCLUSIONS<br />MCS are important for innovative organizations<br />Action controls should be used to clearly set project...
QUESTIONS / FEEDBACK<br />
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  • Rob
  • Rob
  • Rob
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  • Kefen
  • Kefen
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  • Kefen
  • Noel
  • Noel
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  • Mike
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  • MCS And Innovation

    1. 1. MCS And Innovation<br />Mike, Robert, Noel, Kefen<br />July 13, 2009<br />
    2. 2. AGENDA<br />What is Innovation?<br />Literature Review<br />Types and effects of MCS on Innovation<br />Strategy and MCS<br />Conclusion<br />
    3. 3. WHAT IS INNOVATION?<br />Innovation: the practical implementation of an idea into a new device or process<br />Radical Innovation: an innovation that is very new and different from prior solutions<br />Incremental Innovation: an innovation that makes a relatively minor change from existing practices<br />Innovation is essential for maintaining competitive advantage<br />Do management control systems stifle innovation?<br />
    4. 4. What the literature says..<br />It depends on who you ask<br />Relationship is irrelevant<br />MCS and innovation are incompatible<br />Informal systems foster innovation and formal systems block innovation excesses<br />Intensive use of MCS focuses and improves innovation<br />Objective: develop an understanding of the effects of various MCS on innovation<br />Literature is contradictory and inconsistent<br />
    5. 5. ACTION CONTROLS<br />Reduce individual and procedural autonomy <br />Discourage creativity, innovation and adaptation<br />Individual action controls hamper innovation<br />But too much freedom leads to lack of focus or discipline<br />Apply action controls to clearly set overall goals<br />Allow procedural autonomy<br />
    6. 6. STAGE-GATE REVIEW PROCESS<br />Each step is programmed to ensure energy is focused<br />
    7. 7. GOOGLE<br />20% of technical staff time devoted to self interest projects<br />Estimated 50% of new product launches in 2005 came from 20% free time<br />
    8. 8. RESULTS CONTROLS<br />Typically reward repeated tasks<br />Creates core rigidities<br />Need to look for ways to reward creative behaviour<br />Need a fair evaluation of work<br />Examples<br />Dual-ladder approach for employee progression<br />Group rewards to encourage idea sharing<br />Employee suggestion systems based on expectancy theory<br />
    9. 9. CULTURAL CONTROLS<br />Senior managers must adhere to detailed processes and customs of an innovation culture<br />MCS must encourage open communication and continual development<br />Elements of innovation culture<br />Trust and openness<br />Conflict and debate<br />Challenge and involvement<br />Risk taking<br />
    10. 10. ORGANIZING FOR INNOVATION<br />Large Firms<br />Better ability to obtain R&D financing<br />Higher sales to spread out fixed R&D costs<br />R&D economies of scale and learning curve advantage<br />Less responsive to change<br />Small Firms<br />More flexible and entrepreneurial<br />Funding spent more carefully<br />Shorter product development cycles<br />Generally outperform larger companies in innovation<br />Both large and small companies are innovative<br />
    11. 11. R&D FINANCIAL RESPONSIBILITY CENTERS<br />Centralized R&D<br />Maximize economies of scale and learning curve<br />Better manage technological deployment<br />Better able to manage bold changes in direction<br />Decentralized R&D<br />Innovations meet division and customer specific needs<br />Redundant R&D activities<br />More agile, but also resistant to directed change<br />Ambidextrous Organization<br />Utilizes different structures and control systems across firm<br />Non-programmed decision making requires a loose and flexible structure<br />
    12. 12. BUDGETING AND PLANNING<br />Lead beyond current market requirements<br />Choose investments to develop strategic technologies<br />Learning perspective of balanced scorecard<br />Short and long term, capital and operational budgeting<br />Usually use capital rationing to fix R&D budget<br />Quantitative methods (NPV, IRR, real options)<br />Qualitative methods (screening, frameworks, Q-sort)<br />Combined approaches (conjoint, data envelopment)<br />
    13. 13. SIMONS’ LEVERS OF CONTROL<br />Internal controls<br />Belief systems<br />Boundary systems<br />Diagnostic control systems<br />Interactive control systems<br />Tracking new ideas<br />Triggering new learning<br />Positioning the organization for new opportunities<br />Innovative companies use interactive control systems<br />
    14. 14. STRATEGY AND MCS<br />Choice of interactive MCS depends on strategy<br />Use diagnostic systems for current strategy critical success factors<br />Well understood within the organization<br />Use interactive controls to organize attention towards future direction of the firm<br />Sense when conditions are right for new directions<br />Systems should be adaptive and generative<br />
    15. 15. CONCLUSIONS<br />MCS are important for innovative organizations<br />Action controls should be used to clearly set project goals and maintain procedural autonomy<br />Results controls must encourage creativity<br />Use cultural controls to maintain a balanced environment<br />Use loose and flexible structures<br />Innovative companies use interactive controls<br />
    16. 16. QUESTIONS / FEEDBACK<br />

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