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Reddi - SMU

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Reddi - SMU

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Reddi - SMU

  1. 1. Designing a System for Disruptive Innovation Reddi Kotha Associate Professor of Strategic Management Academic Director of Master of Science in Innovation Lee Kong Chian School of Business Singapore Management University 22 November 2018 Strategy & Innovation Forum 1
  2. 2. SMU Classification: Restricted 2 Disruptive Innovation System: 3 Questions 1. Sources What are the sources of disruptive innovation and how can they be brought to the market? 2. Employee participation How to increase the proportion of employees engaged in disruptive innovation? 3. Rewards How to reward team members engaged in disruptive innovation? 2
  3. 3. SMU Classification: Restricted Paper in collaboration with Gerard George (SMU) & Srikanth Kannan (OSU) 3
  4. 4. SMU Classification: Restricted 4 Theory: Recombination as a Source of Innovation • Firm as repository of specialized knowledge and providing setting for the integration of knowledge to turn inputs into outputs (Grant, 1997). • Unique recombination of existing knowledge repositories (Basalla, 1988; Fleming and Sorenson, 2001; Henderson and Cockburn, 1994; Schumpeter, 1939). • Breakthrough innovations result from recombining non-obvious technology components (Basalla, 1988; Utterback, 1994). Firm i = (a, b, c, d) # of pairs= (ab, ac, ad, bc,bd, cd)
  5. 5. SMU Classification: Restricted Science Distance-Optimal Inventor Team? • Steve Hsu • PageRank-like algorithm • Thomson Scientific's 2004 Journal Citation Reports (JCR) • 6,128 journals connected by 6,434,916 citations into 88 modules 5 Image source - infoproc
  6. 6. SMU Classification: Restricted 6 Glow in the Dark Rabbit! Image source – KITV News
  7. 7. SMU Classification: Restricted Two Types of Inventions (Recombinant View of Innovation) • Combining proximate sciences ▫ High mutual knowledge  LOW coordination problems! • Combining distant sciences ▫ Low mutual knowledge  HIGH coordination problems! 7
  8. 8. SMU Classification: Restricted Count of Inventions Licensed by Science DistanceCount of Inventions by Science Distance Not Licensed Not Licensed Not Licensed Licensed Licensed Licensed 0 1000 2000 3000 4000 5000 6000 Proximate Moderate Distant Science Distance between Inventor Teams CountofInventions
  9. 9. SMU Classification: Restricted Science Distance 10
  10. 10. SMU Classification: Restricted How can We Get the Frown to be a Smile? • Prior joint work experience of innovators ▫ Indicator of ex-ante stocks of mutual knowledge • Prior licensing experience of innovators ▫ Indicator of competence/motivation 11
  11. 11. SMU Classification: Restricted Prior Collaborations Improve Coordination 12
  12. 12. SMU Classification: Restricted Licensing Experience 13
  13. 13. SMU Classification: Restricted 14 Summary of Study 1 14 • Recombination of distance domains as a source of disruptive innovation • Importance of mutual knowledge in the team (relationships) • Importance of market opportunities (licensing experience)
  14. 14. SMU Classification: Restricted Summary • Positive association between celebrating failure and subsequent success. • The theory model as long as the rewards for unsuccessful attempts are an anodyne then firm performance improves. • Ex post surveys of senior managers reveal perceptions consistent with the results and the model. 15
  15. 15. SMU Classification: Restricted Working paper in collaboration with Dan Lovallo (University of Sydney), Young-Choon Kim (UNIST) & Colin Camerer (Caltech) 16
  16. 16. SMU Classification: Restricted Teams as the Locus of Disruptive Innovation • The day of the solo heroic entrepreneur is over. • Most of the ‘impactful’ innovation is done in teams (Wuchty et al., 2007). • How do innovative teams share rewards? 17
  17. 17. SMU Classification: Restricted Rewards Sharing • The ubiquitous 50-50 split between artists and the gallery owners who display and sell their art (Velthius, 2011). • Equality also appears to be prevalent among entrepreneurs (Hellmann & Wasserman, 2016). • Quick Negotiation that takes the value 1 if the negotiations were concluded in one day or less and 0 otherwise. Somewhat surprisingly, 42% of all ventures concluded their negotiations in one day or less. • 18
  18. 18. SMU Classification: Restricted 19
  19. 19. SMU Classification: Restricted Samples • Sample 1 ▫ Two or more inventors from 1996 to 2014. ▫ 1,038 inventions. ▫ Average revenue $500k • Sample 2 ▫ Two or more inventors from 1990 and 2004 ▫ 415 inventions ▫ Average revenue $43.9 K 20
  20. 20. SMU Classification: Restricted Summary of Rewards • Equity principle ▫ Marginal contribution ▫ Individual’s share is equal her contribution divided by the total contribution of the team • In practice hard to isolate ▫ We all think we are better than average ▫ We all worked hard ▫ Have selective memory
  21. 21. SMU Classification: Restricted Summary of the Studies • One meta level theory of recombination as a source of disruptive innovation and its application in licensing of academic science. • Design of system for innovation in organizations to increase the number of agents engaged in disruptive innovation. • How rewards in disruptive teams are shared and what consequences such a distribution may have on performance of the teams. 22
  22. 22. SMU Classification: Restricted 23

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