Strategic Management of Innovation_final

Strategic Management of
Innovation
An extensive review on:
What it takes to create a
climate that encourages
creativity

Presentation Outline
• Purpose of the presentation
• Introduction
• Knowledge Worker Productivity
• Organisational Memory
• Innovation Framework
• Harnessing Knowledge Asset
• Climate for Innovation
• Case Studies
• Dealing with Change
• Lessons from Workplace Challenge
• Way-forward and Recommendations

Purpose
• The purpose of the presentation is to
introduce and share some theoretical
models about creating a conducive climate
that encourages creativity
• Provide some practical considerations in
formulating the NPI innovation strategy.
• Initiate and stimulate further debate around
the requirements for successful innovation.

Introduction
• The importance of a culture, climate,
atmosphere or ethos favourable to creativity
is widely recognised.
• For innovation: NONE OF US IS AS
GOOD AS ALL OF US

Introduction (cont
• “The creative act thrives in an environment
of mutual stimulation, feedback and
constructive criticism-in a community of
creativity” by: William T. Brady

Knowledge Worker Productivity
• The most important, and indeed truly unique,
contribution of management in the 20th
century was
the fifty-fold increase in the productivity of the
manual worker in manufacturing.
• The most important contribution management
needs to make in the 21st
century is similarly to
increase the productivity of knowledge work and
knowledge workers.

Knowledge Worker Productivity (cont
• Knowledge-worker productivity demands
that we ask the question: “What is the task”
• It demands that we impose the
responsibility for their productivity on the
individual knowledge workers themselves
• Continuing innovation has to be part of the
work, the task and the responsibility of
knowledge workers.

• Knowledge work requires continuous learning on
the part of the knowledge worker, but equally
continuous teaching on the part of the knowledge
worker to build an organizational memory
• Productivity of the knowledge worker is not-at
least primarily-a matter of the quantity of output.
Quality is at least as important

• Finally, knowledge-worker productivity
requires that the knowledge worker is both
seen and treated as an “asset” rather than a
“cost”. It requires that knowledge workers
want to work for the organization in
preference to all opportunities.

Organizational Memory
• Employees come into a job, spend a lot of energy
and time learning how to do the work well, then
move on, taking all their knowledge with them.
• There is no organizational memory to allow
people to start where their predecessors left off,
nothing that captures new methods that produce
better results. The individuals learn, but the
organization does not.

Organizational Memory (cont
EYELASH LEARNING CURVE
Ability to
Do Job
Time
New employee begins
Old employee leaves with
knowledge

Organizational Memory (cont
RAPID LEARNING CURVE
Ability to
Do Job
Time
New employee comes on;
picks up almost where
previous employee left off

Innovation Framework
YOU TEAM(S) ORGANISATION
Oyster-shell model for innovation

Innovation Framework (cont
Generating ideas Involving individuals and teams in
producing ideas for improving
existing products, processes
and services – and creating new
ones.
Harvesting ideas Again involving groups of people in
the gathering, sifting and
evaluating of ideas.
Developing and implementing
these ideas
Once more involving teams in the
work of improving and
developing the idea right up to
the first response from a
delighted customer.
3 phases of innovation

1. Going beyond the nine dots
2. Welcoming chance intrusions
3. Listening to your depth mind
4. Suspending judgement
5. Using the stepping stones of analogy
6. Tolerating ambiguity
7. Ideas banking
7 habits of successful creative thinkers

• Selecting creative people
• Encouraging group creative synergy
• Training the team
• Communicating about innovation
• Overcoming the obstacles that separate new
ideas from the market place
Innovative teamwork

• Visible commitment at top level
• A climate that encourages teamwork and
innovation
• A toleration for failure to balance risk-
taking
• Open and constructive communications
• Flexibility in organisational structure
Innovative organisation

• Recognition and appreciation
– Because the results of creative work are often
postponed for a long time (many geniuses in
history received no recognition in their
lifetimes), creative people stand in special need
of encouragement and appreciation. The
recognition of the value or worth of their
contribution is especially important to them,
particularly if it comes from those whose
opinions the respect.
Environmental Factors

• Freedom to work in areas of greatest interest
– While the predominantly analytical person concentrates
and focuses down, the creative person wanders in every
possible or feasible direction. Freedom to move is the
necessary condition of creative work. A creative person
tends to be most effective if allowed to choose the area
of work and the problems or opportunities within that
area, which arouse deep interest.

Innovation Framework (cont.
• Contacts with stimulating colleagues
– ‘Two heads are better than one,’ says the
ancient Greek proverb. Creative people need
conversation with colleagues in order to think,
not merely for social intercourse.

• Stimulating projects to work on
– Along with a congenial and appreciative
environment and the opportunity for
appropriate recognition by their professional
peers inside and outside the organisation,
stimulating projects or problems are especially
attractive.

• Freedom to make mistakes
– Errors are inescapable in innovative work. The
climate should be such that they are not all used
to inflict immediate and permanent damage on
one’s professional career.

TEAMS
SIEVES
NETS
NEW IDEAS
THINKING
TIME
CREATIVE PEOPLE
A CLIMATE WHICH
ENCOURAGES
CREATIVITY
MARKET
CONTACT
Successful Innovation

Harnessing Knowledge Asset
• Organisations that leapfrog their competition use
knowledge in 2 ways:
• First, they understand that a perpetual flow of great ideas
depends on people’s capacity to access knowledge freely.
• Hence, they deliberately smash barriers to the free flow of
knowledge-barriers such as multiple management layers,
narrowly focused functional silos, rigid job descriptions,
numerous sign-off requirements, obsolete technologies,
meager training, and corporate cultures marked by secrecy
and one-upmanship

Harnessing Knowledge Asset (cont
• Second, they liberate employees to harness and
use knowledge to take action-that is, to create
fresh value for customers and shareholders.
• In this environment, employees continually grow
their skills, use state-of-the-art information
technologies as their servants, take on an attitude
of “How would I act if I owned this business?”
and take full accountability for the rapid decisions
they’re encouraged to make at many times.

• Flooding the organisation does not mean
drowning people with paper and data.
• It means having an enormous wealth of
knowledge for people to access as they see fit.
• Flooding the organisation with knowledge gives
people the fodder to use intelligence to transform
corporate processes and products-and thus
transform organisations in such a way that they
can leapfrog competition.

• So what does a knowledge-based company
look like?
• Visualise an organisation with a steadily
growing “brain”, with a body structure so
light and fluid that it is no longer
constrained from jumping over competitors
whose bodies are encumbered by the weight
of fixed assets and sunk costs.

• The conventional big body/little brain
premise is represented in the omnipresent
organisational pyramid, including all of its
current “progressive” variations.
• When all said and done, knowledge is still
primarily concentrated at top management
levels and hoarded among specialised
professional staff.

• Think about where the expertise (high-end
technical, functional, strategic thinking) and
information (profit-and-loss data, policy
and systems analysis, strategy and
development) really resides.
• Think about where the decision-making
authority and accountability for initiating
innovative decisions really reside.

YESTERDAY
(still the model for
too many
organisations)
Very little brain
Very big body
Top management
Corporate staff

TODAY
(a little flatter, a
little more
decentralised)Big body
Little brain

TOMORROW
(The prototype
for today’s
winners)
Big brain
Little body
Senior
management
guidance and
coaching
Permeable boundaries
(people and knowledge
passing freely) and
constantly expanding

• These three models represent gross
stereotypes, but the point they make is real.
• Leapfrogging organisations, large and
small, move away from big body/little brain
and toward big brain/little body.

• Companies as diverse as: Granite Rock,
Cemex, Buckman Labs, Chaparral Steel,
Oticon, Physician Sales & Service,
Quad/Graphics, Springfield
Remanufacturing, Sun Microsystems, and
Verifone
• Instinctively connect to this big-brain
metaphor

• Everyone has access to information, expertise,
learning opportunities, fast decision-making
authority, and accountability
• Information and data that were previously hoarded
now become dispersed; people with ideas freely
cross permeable boundaries within and beyond the
organisation
• Expert systems, electronic databases, and open
telecommunication systems proliferate

• Whoever or whatever function is in the
organisation is part of the big brain-the core
competency, knowledge-growing, value-
adding part
• Otherwise, it is sourced to outside partners
or eliminated entirely as value detracting
• Non-brain body weight is kept to a bare
minimum

• The manager in this kind of organisation is no
longer a “boss”-it is a self-defeating to put a cap
on knowledge
• Nor is he or she an “organiser”-knowledge
changes so rapidly that it quickly obsoletes any
structure or system that has the slightest whiff of
permanence
• Nor is he or she an empire builder-in a hierarchy-
less, demassed organisation, playing power
politics or even attempting to hoard talent and
information for self-aggrandizement become
downright absurd

• Likewise, employees are no longer order takers
who except good things to occur if they keep their
noses clean.
• In fact, those sorts of people are the first ones
downsized in a brain-based organisation
• Xerox declared to their people: “if you’ve got a
yes-man or yes-woman working for you, one of
you is redundant”

• Flooding your organisation with knowledge
means that you turn your organisation into a
big brain/little body entity that can more
easily vault over heavier competitors.
• In short, it means creating an organisation
where, more than anything else, mind
matters.

• Obliterating current barriers to the flow of ideas
will require courage and persistence, for these
barriers are the sacred cows of many
organisations.
• When barriers are obliterated, decisions are made
faster, better and more creatively. But there is
even greater payoff: employees become more
powerful. Knowledge is power. More
knowleadgeable employees are more powerful
employees. More powerful employees make for a
powerful organisation.

• There are many reasons to obliterate
barriers in organisations, but the main one is
that by doing so, you morph your
organisation from a hotbed of internal
politics to a hotbed of ideas.
• Knowledge is power, and people who share
knowledge can create incredible things.

• Business is about products and services
• Competitive advantage, on the other hand,
is about great ideas.
• It is no longer enough to think of
organisations as an amalgam of bricks,
capital, and bodies but rather as a
perpetually growing reservoir of ideas.

• In a brain-based economy, the leapfrogging
organisations will be those that generate the
greatest number of interesting and compelling
ideas, take rapid-fire action on them, and then
disseminate immediate feedback to everyone so as
to generate yet more ideas.
• By repeating this cycle over and over, throughout
every nook and cranny of the organisation, the
organisation’s intelligence grows, and thus its
efficiency, creativity, and competitive vigour
increase as well.

• The best predictor of a company’s future
earnings is its capacity to generate,
consolidate, and use ideas from every
possible source: employees, customers,
suppliers, partners, outside experts and
myriad databases.

Climate for Innovation
• Every manager can help to create that
climate as a by-product of practising the
seven habits of creative thinking and acting
as role model in the management of
innovation.
• If you are not part of the solution, you are
part of the problem.

Climate for Innovation (cont
• The organisational climate should be an open one,
which encourages participation
• There must also be a willingness to provide the
relevant facts and information to enable
employees to make informed contribution.
• There should be a long-term commitment to the
positive management of change on the part of
managers at all levels, together with a readiness to
provide the necessary resources for education and
training.

• These elements are all contributors to the right
climate, one in which new ideas can be hatched
and significant changes implemented.
• For apart from tending to have a fluid and organic
rather than a rigid and mechanistic form,
innovative organisations encourage participation
in decision making, problem solving and creative
thinking.

• They have policies or guidelines rather than rules,
keeping the latter to the minimum.
• They have good internal communications, more
by word of mouth than by memo or letter.
• The difficulty is to combine these ingredients in
the corporate culture which favours new ideas and
innovation with the high degree of structure,
discipline and routine that is required to
manufacture products and deliver a proper
customer service

• The essential of a team, is that it is
composed of people with complementary
temperaments, sets of qualities, interests,
knowledge and skills

• Leadership, teamwork and innovation work
in harness together. Innovation often calls
for teamwork that transcends departmental
boundaries.
• Outstanding innovative companies, such as
Digital Equipment and 3M, have led the
way in this respect.

• The whole process of commercialising a
new development is not like a relay race-in
which the scientist completes his or her lap
and passes a baton to production people,
who in turn run their lap and pass the baton
to a sales force for the final leg of the race.

• Ideally there is a communication and
consultation among all functions at every
step. They often form what we call a
business development unit to exploit the
new product or business idea.
• Such a team may transcend the existing
organisation structure and be loosely
formed as a matrix system.

Case Study #1
• The invention of Scotch Tape in 1930 is a
highlight in the story of 3M. A salesman who
visited the auto plants noticed that workers
painting new two-toned cars were having trouble
keeping the colours from running together.
• Richard Drew, a young 3M lab technician, came
up with the answer: masking tape, the company’s
first tape

Case Study #2
• Finnish telecommunications company
Nokia launches new digital handset models
every thirty-five days.
• Without an infrastructure and mindset that
allows a firm to be first and exceptional-
over and over again-it’s likely that the gains
of any breakthrough will be short-lived

Case Study #3
• Intel’s dramatic decision to abandon the
high-volume, low-margin, commodity like
DRAM memory chip business in 1985 in
favour of microprocessor chips propelled
the company into dominant breakthroughs
in both technology and shareholder wealth.

Case Study #4
• You often hear the expression, ‘We have tried that
several times and it doesn’t work here.’ But next
time you step into an aircraft remember that the
Wright brothers tried 805 times before they
achieved sustained flight
• Edison, for his part, failed 147 times before he hit
upon the solution to the electric bulb. What
separates an idea from success is often-
perseverance

Case Study #5
• Since its birth over 30 years ago, Digital Equipment
Company has risen like a space rocket to become one of
the world’s larger computer manufacturers.
• ‘Our approach is more like a telephone network, where
everyone can call everyone else. You have freedom and it
is easy to make changes-you just plug in like a telephone’
• There were no barriers between product groups, so that a
free exchange of knowledge could take place.
• Often described as a form of ‘organised chaos’, it allowed
each manager to be genuinely entrepreneurial within the
company.

Dealing with Change
• It took Wal-Mart (itself a breakthrough
business model twenty years ago) a dozen
years and seventy-eight stores to hit $150
million in sales; it’s taken Amazon three
years and no stores to hit that milestone.
How long will it take?

Dealing with Change (cont
Adaptive
change
Innovative
change
Radically
innovative
change
Re-introducing a
familiar practice
Introducing a practice new to
the organisation
Introducing a practice new
to the industry
LOW HIGH
Degree of complexity, cost, and
uncertainty
Potential for resistance to change
3-Stage Model of Planned Change

• Establish a sense of urgency
• Create the guiding coalition
• Develop a vision and strategy
• Communicate the change vision
• Empower broad-based action
• Generate short-term wins
• Consolidate gains and produce more change
• Anchor new approaches in the culture
Steps for leading organisational transformation and change

ORGANISATIONAL
STRATEGY
Behavioural
Strategy
Structural
Strategy
Technical
Strategy
Change Attitudes &
Values
Change Org
Architecture &
Design
Change Operation
& Methods
New
Behaviours
New
Relationship
s
New
Processes
TRANSFORMED ORGANISATION AND IMPROVED PERFORMANCE
Organisational Improvement Model

Lessons from WPC
• In the experience of the Workplace Challenge Programme and its
respective WCM Partners:
• It takes 3 to 6 months to:
– To establish mini-business areas
– Conduct BOP/Supervisor/Labour training
– Clarify roles
– Agree on improvements targets
– Visual measures established and
– Management support structures put in place
• From at least 6 to 12 months, the teams are able to operate
independently by:
– Being able to facilitate daily meetings effectively
– Seeking correct assistance
– Problem solving through interactions with other teams in the value chain
– Discussing ideas and implement them, and
– Starting to implement productivity improvement toolkits

± Harari (1999)“Leapfrogging the competition”
Way-forward & Recommendations
• To set aside 6 to 12 months in order to create a
climate that encourages creativity in the NPI
that’ll cover the following aspects:
± Spread information everywhere
± Challenge sacred cows in pursuit of bold goals
± Create a permeable organisation
± Cultivate a culture of curiosity
± Insist on perpetual learning

Strategic Management of Innovation_final

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