Innovation management case study

Innovation Management
Module Tutor: Dr Rebecca De Coster
Student I:D: 0409576
Student Name: Hassan Saif
MSc Engineering Management
Brunel University, West London
1/12/2009
HSK Ltd

Innovation Management HSK Ltd
2
1.0 Data Networking Co
The data networking HSK Ltd Company was founded in 1997 and has around 800
employees with its headquarters in London and Manufacturing facilities based in
Kent. The company is committed to expanding in to different areas and has a
successful track record in developing data networking business solutions.
HSK offers various Services and its Strengths are in the following areas:
 HSK offers various data networking products including IP Routing, WAN
access, firewall and Ethernet Private Line products. The solutions are
compatible with various operating systems and standard based IP routing and
switching networks.
 Addresses today’s business challenges by providing reliable survivability,
security, high speed QoS and remote connectivity.
 At the central site, branch office or at home, a broad range of capabilities
allows network designers to build an infrastructure exactly suited to the
company’s business needs.
 Competitively priced products offer network designers an excellent
alternative that delivers the functionality and reliability customers expect and
demand.
1.1 Acquired Wireless Security Co
The wireless XYZ Ltd Company that has been acquired is based in South East with its
headquarters in Surrey. It has a workforce of approximately 100 people and is
relatively a new company offering its expertise in the commercial security sector.
It is a provider of wireless security systems which are designed to help organisations
create a secure environment and remain safe from intrusion. It provides range of
wireless security measures such as CCTV system, intrusion alarms, card swipe in
systems and movement detection devices.
The core capability lies with its technical experience as they understand business
requirements and have developed various wireless devices delivering cost effective
yet user friendly systems. It has also good business relationship with software
developers in wireless systems in India and China.

3
1.2 HVAC Market Trends
The aim is to combine and use both companies technical expertise to develop
wireless HVAC systems with optimise intelligent zone to zone interaction and
provide wireless reporting to central location. The first step in the development
process would be to develop a wireless device that integrates main control features
such as temperature set points, Air handling unit (AHU) and Fan coil unit FCU etc into
one device. This would make the system more user friendly. The zoning system
would save initial cost and energy therefore making the overall system eco-friendly.
The commercial sector should be targeted as a main market.
A recent research carried out by AMA (American Marketing Association) states that
UK HVAC industry is expected to grow by 4% over the next two years 2008-2010
despite the economic downturn. Today the overall non-domestic HVAC market is
estimated to be in the region of £1.35 billion. The industry has seen a consistent
growth of 2% and above since 2000. The recent growth of public sector and the
introduction of environmental legislation have made this sector even more lucrative.
More so at present south east would see more development programmes due to
Olympics as seen from the Figure 1.
Figure 1: Growth Rate of HVAC market

4
1.3 High Performance Approach
A proposed approach to planning is to involve everyone in the organization in the
planning process. The planning process should be decentralized such as TQM as it
involves most employees in the organization and is more suitable in this competitive
business. Moreover it allows the planning experts to work with the managers in
major departments to set their individual goals. This facilitates managers throughout
the company to become more involved in finding solutions to problems. As the
environment becomes more turbulent and competitive dynamic plans are required
to meet fast changing needs. Therefore by shifting decentralization even further
down the hierarchical order by working directly with line manager and front line
employee’s organizational goal can be achieved.
The overall vision and goal of an organization is vital in order to increase employee
motivation and commitment. During time of turbulence and uncertainty a powerful
sense of purpose and direction for the future becomes even more important. It is
also very important that an innovative culture which facilitates learning and
creativity should be created. As we are entering into new fast paced innovative
market this culture would enable us to keep ahead of our competitors and would
also help us to get the best of our employees figure 2 shows the high performance
organizational culture. Long term strategic planning is important however for high
performance organization it should be accompanied by event-drive planning, rather
than focusing entirely on a strategic goal. It is attractive to implement this technique
as it is more relevant to current market demands. The hierarchical structure of goals
on the next page shows proposed strategic, tactical and operational goals for our
company.
Figure 2: High Performance organizational culture

5
2.0 Innovation Management
Creativity is very important component for meeting challenges in organizations of all
types. Accordingly the leaders should take specific actions aimed at building
creativity in organizations. Innovation management requires managers to have both
technical and soft skills in people management to promote creativity. Ideas are
central in innovation process and managers need to create an organizational culture
that supports creativity both at the individual level and team level. According to
Axtell et al, (2000) innovation is critical to the long term success of any organization.
Without innovation organizations tend to become less competitive and less desirable
to customers hence continuous innovation could provide competitive advantage to
organizations. A common problem in technology based companies is the speed of
change and the difficulty of forecasting the speed of change. Therefore in fast paced
environment the organization needs to be flexible when responding to change and
should implement a strategic management approach that consists of clear sense of
direction based on a clear vision and mission.
2.1 The Innovation Process Framework
Innovation process requires high performance in all of the different disciplines.
Innovation management is made of different inter-related factors. Goffin and
Mitchell (2005) identified five key areas of innovation management.
Innovation strategy: Top management has the responsibility of setting clear vision
and mission and should focus on number of key areas. It needs to develop a strategy
which promotes and encourages innovative culture. There are lot of opportunities
New Product
Figure 3: The Innovation Process Framework

6
for us to invent new products in Eco- friendly HVAC systems and we should focus on
acquiring expertise in HVAC systems and our product strategy should focus on being
first to market. Subsequently this would require a large amount of investment in
R&D and Production departments. Therefore the top management needs to clearly
communicate the corporate vision and should also communicate the role of
innovation within the company.
Ideas: ideas are a central point of our innovation strategy, consequently managers
need to focus on creating an organizational culture that supports and facilitates
creativity at both the team level and individual level. According to Barton (1999) the
successful new ideas are delivered successfully in an integrative organization rather
than in a matrix organizational structure. Along with creating an innovative culture
the application of decentralisation is a key part in gaining competitive advantage.
This gives people the empowerment at a lower hierarchical level of organization
consequently giving them the freedom to explore new ideas.
Prioritization: An effective and efficient process is vital to make sure that the best
ideas are chosen for development into new products. A resource needs to be
carefully assigned for the implementation of innovative projects. A manager needs
to assemble the information from across the range of projects to check that the
innovation projects are appropriately balanced and matches the company’s
innovation strategy. It is important that the management teams review and learn
from previous projects.
Implementation: This phase should focus on developing new products quickly and
efficiently. For our innovative company faster development times can be achieved
through effective cross-functional teams, prototyping and testing. The next step is
the commercialization of the product hence successful market launch is essential for
our new products. The implementation process is a continuous learning process
therefore we should learn from each project, so that the future performance can be
greater.
People and organization: Creating a company culture in which employees are
motivated to be constantly innovative is fundamental to company’s success.
Effective reward and recognition programmes will need to be maintained. For us it is
important to have leaner, flatter and flexible organization structure in place which
facilitates innovation and creativity.
A company can achieve a competitive advantage over its rival by choosing one of the
three strategies commonly used. Those strategies are cost leadership, differentiation
and focus. In choosing cost leadership strategy company aims to be lowest cost

7
competitor in the market. While differentiation offers a unique dimension to its
customers. Finally, focus strategy offers its services to a particular market or group.
In our case it would be more suitable to adopt a differentiation strategy as the
products we are offering are unique to our competitors such as eco-friendly services;
wireless monitoring and control are distinctive features. In today’s environmentally
friendly world the governments are drafting in new legislations to help clean the
environment. The differentiation strategy would make us distinctive among our
competitors and help gain market share in HVAC market.
3.0 Training requirements
Leadership and commitment is absolutely necessary to drive the successful
implementation of innovation strategy. The interpersonal skills and leadership style
should reflect the innovative culture of the organisation as it mainly task orientated.
In such an environment task orientated leaders should provide a clear vision and
establish a culture in which innovation is visible and widely communicated.
Moreover the leaders must have the aptitude to understand the multiple disciplines,
processes and projects in an organisation. On the other hand, leaders may need to
adapt to different situations with different leadership styles thus flexibility is
essential. The relationship-orientated leadership structure should be adopted once
our organisation has developed familiarity with HVAC market and has established
clear structure and direction. The structure of training should be based on building
teams and improving employee performance.
By using the situational leadership model (figure 4) the current development of our
workforce can be assessed. As the development level of our workforce varies across
different department the leaders need to develop different methods and
approaches to each situation.
3.1 Leadership style
For Sales & Marketing department the workforce possesses a required level of
competency and lie in D3 quadrant hence requiring leadership style with low
directive and high supportive behaviour. The department should continue to use the
same framework of training as before and should share the feedback with all
departments. As we entering into new market the sales & marketing department
should have a greater understanding of the different HVAC products that we are
offering. It is essential to have a clear communication process between internal
departments for that reason the use of intranet communication network would

8
allow effective two way communication between departments. Furthermore it
would keep all the employees informed about the company strategic position.
The Systems engineering department has a reasonable level of competency in
developing data networking solutions. Nevertheless, the development of new
product would require combining existing technology which would place them in D2
level. Therefore primarily requiring a coaching leadership style from the
management. It also might be useful to deploy a mentoring training programme
where an experienced worker woks alongside a less experienced worker offering
support and direction.
The Finance department workforce has an essential level of competence required
and lie in D3 quadrant thus requiring leadership style with low directive and high
supportive behaviour. With the purpose of developing business needs the
management should approve the membership of professional bodies such as
Chartered Institute of Management Accountants. Employees should be given the
opportunity to gain CIMA accredited training and development courses hence
allowing our employees to focus primarily on business needs. The management
should provide a comprehensive training plan which should include mentoring
systems, internal and external course to help employees achieve the professional
status.
Source: Richard Daft “The New Era of Management”
Figure 4: Situational Leadership Model

9
The Production department workforce has some competency level but not in the
relevant field hence lie in the D2 quadrant. Management needs to provide clear
direction furthermore the management needs to develop comprehensive plan for a
manufacturing process for a wireless communication and monitoring devices. With
the aim of increasing productivity and reducing manufacturing costs a
comprehensive training programme should be provided compromising of practical
workshops and cross functional training. The importance of cross functional training
is highlighted by the following statement “We have great functional specialist but
not enough people who have worked in several functions and have a deep
understanding of the interfaces between functions. Therefore we need to find,
encourage and develop cross functional boundary managers” Massimo Fumarola,
Business development manager at Fiat. (Goffin & Mitchell (2005) page 328). The
comprehensive training plan would allow high utilization of resources and processes.
According to Daft (2006) one method is to introduce “Self-directed learning” training
programme. It is a wide ranging training programme which could be successfully
applied once the HVAC system has fully developed.
Finally the R&D department is at D2 stage as well. The R&D department has a very
impressive record of developing various data networking solutions however as we
are entering a new market the ability to invent is essential. Moreover we should
focus on being first to market as this would give a greater control. With the purpose
of developing the competency further the workforce of HSK Ltd and XYZ Ltd should
be fully integrated into one company. Here it is important to provide necessary
resources and direction therefore the top management should invest in a
manufacturing change programme.
To facilitate the R&D department in developing innovative products an experienced
project manager should be appointed with his expertise in HVAC market. This would
allow us to accelerate the development process of our innovative products and
would provide invaluable direction for our company. The communication between
different departments plays an important role in successful implementation of
innovative products and ideas. This is highlighted from this following statement
“Innovation is often the result of communication between people who do not have
homogenous ideas and se we need to simulate constant dialogue both internally and
externally” Torsten Hersberg, Project Manager R&D department, Vodafone Group.
(Goffin & Mitchell 2005, page 349).

10
4.0 Strategic leadership
To improve innovation performance leader needs to successfully manage a wide
range of issues from ideas generation to technological changes and from culture to
organizational changes. The leader needs to take positive actions to bring about a
strategic change, the leader must work effectively to changing customer demands
and needs to support, motivate and lead its team to success. The successful
achievement of strategic goals depends on identifying opportunities and dealing
with external barriers. We need to change our organizational practice and structure
to match the strategic direction. A new cross-functional hierarchical structure for our
organization is proposed in Appendix A. It is important to use this structure as it
provides leaner, flatter and flexible composition of our organization compared to
traditional structure. This cross-functional culture compromises of smaller
networking teams which have self developed goals and objectives.
4.1 Developing the change process
Achieving high performance in an innovative organization requires good leadership.
Leaders need to recognize that there are three key stages; moving from current to
desired state via a transition state. Therefore to achieve this strategic leadership
needs to provide a vision which is widely communicated and rewarded. It needs to
link innovative strategy with people development programmes that facilitates
innovative projects. There are seven common roles involved in strategic leadership
as illustrated by the diagram below. Similarly there are three key functions which are
to be achieved (Maull & Brown, 2001).
 Achieving the common task
 Motivating and Developing the individual
 Building and Maintaining the teams
Figure 5: Strategic Leadership

11
To be successful in these functions the leader must follow the following steps. The
setting of a clear vision and focus from the top management is a first step. To help
plan strategic goals the top management should be personally involved this would
increase the sense of urgency. It is vital that the vision of the company is
communicated widely and is transmitted down the lower level of organization such
as operational departments. This is highlighted by the following statements “it’s
important that everyone in the organization understands their role in the innovation
process. Businesses that innovate successfully have a culture where the whole
organisations vision and strategic goals are widely communicated and is committed
to making new initiative work” Trudy Lloyd, Management consultant, Synectics.
(Goffin & Mitchell 2006, page 334).
The leaders would then need to inspire its workforce and value their input by
creating an open and innovative culture. It is important that while setting strategic
goals the concerns of its stakeholders, customers and partners are taken into
consideration. The importance of this is emphasized by the following statements.
“The strategic goal is about getting everyone involved. It’s just not the voice of the
customer. You also need to involve the suppliers, the regularities agencies and all
other stakeholders right from the beginning. I think that the best leaders of
tomorrow will be the ones that can maximize innovation process by minimizing the
interface issues” Pierre Olivier. Vice president of Cobra, Thailand. (Goffin & Mitchell
2005, page 327).
The leaders need to lead by example and adapt the learning process to stimulate
enthusiasm amongst its workforce. Participative leadership such as joint decision
making can create a positive and innovative culture. Axtell et al. (2000) found a
positive relationship between participation and employees’ innovative behaviour in
a manufacturing plant, measured using self-ratings of employees’ suggestions and
implementation efforts.
4.2 Process Theory
Strategic leadership could take advantage of well known theories such as “Process
theories” to help our employee’s motivational level high. Process theories consist of
three theories “Equity theory”, “Expectancy theory” and “Goal setting theory”. For an
innovative company like ours it would be more valuable and effective if we adapted
“Goal setting theory”. This theory would enable our employees to focus their
energies in the right direction. To challenge and encourage our employees highly
ambitious but achievable goals should be set. Locke and Latham (Daft, 2006, p708) in
their study proposed that specific challenging goals increase motivation and
performance of the employees. Ulrich, D. (2008) in his study highlighted the

12
importance of challenging goals. According to his work the manufacturing employees
produced their most creative work when they felt that they working on complex,
challenging tasks. The goals needs to be explicit and clear however if the goals are
vague this would create tension and would have a direct effect on the motivation
levels. It is essential that once a goal is achieved it is fairly rewarded and is
recognized by the company. Figure 6 shows the elements of rewards.
Figure 6: Rewards and Recognition
4.3 Management by Objectives (MBO)
In today’s industry one approach which is being widely employed to improve
business performance is known as Management by Objectives (MBO). Many
companies including Siemens, Intel and Black & Decker have adopted MBO and most
managers in these organizations think that MBO is an effective management tool.
This performance management process is intended at improving organisations
performance and is based on principles of measurement, appraisal, action and
monitoring. Figure 7 illustrates the main performance parameters that must be used
to achieve a consistent and accurate business performance evaluation. There is
another illustration of performance measurement technique in Appendix B.
Certainly the most important aspect of this process is to evaluate organisations
performance based on the set goals. It must also be stressed that Performance
appraisal technique process should be based on a rating system which accurately
evaluates performance appraisal. Moreover, the managers should be trained so they
Organizational
goals
Project teams
goals
Individual A’s
goals
Individual B’s
goals
Increase revenues from
new products by 10%
Generate a market share
of 2% this year
Generate a market share
of 2% this year
Team reward & recognition
Employee reward/recognition

13
can effectively use this technique and offer constructive feedback to the employees.
According to the research carried out by Buzzotta (1998) the most common errors
made while performance evaluation were stereotyping and halo effect.
Figure 7: Management by Objectives Source: 1000ventures .com
4.4 Motivational theory’s
Using Marlow Hierarchy of Needs theory the workforce of the two companies are at
Safety Needs category. As we have just acquired another company the employees at
that company would be bit doubtful of how they would be considered by another
administration. However, they have the assurance that their jobs would be safe as
we would be using their expertise in order to move forward as a company. Once the
groups are formed into teams and the transition period is completed “Belongings
Needs” category would be achieved. The integration of the employees by using a
cross-training programme and by sharing the vision with everyone at the company
would make this process a lot quicker. Once we have met our goals using
performance methods such as MBO the motivational category would move up to
“Esteem Needs” for our workforce. Depending on the company’s success and human
relation approach the highest category of needs can be achieved in a near future.
There are other well known techniques adapted by companies for decades that have
helped keeping its employees motivated these are discussed in Appendix C.

14
5.0 References
Axtell, C. & Harrington, E. (2000). Shop floor innovation: facilitating the suggestion
and implementation of ideas. Journal of Organizational Psychology, Vol. 73, pp. 265-
85.
Barton, D. (1995). Wellsprings of Knowledge: Building and Sustaining the Sources of
Innovation. Harvard Business Press, Boston, MA..
Buzzotta, V.R (1988). Improve your performance Appraisals. Management Review
(August 1988), P 40-43
Goffin and Mitchell (2005). Innovation Management: Strategy and Implementation
Using the Pentathlon Framework. Palgrave Macmillan. ISBN: 1-4039-1260-2
Maull, R. and Brown, P. (2001). Organisational culture and quality improvement.
International Journal of Operations & Productions Management, Vol. 21 No. 3, 2001,
pp 303-326, © MCB University Press
Olham, G.R. and Cummings (1996), A. Employee creativity: personal and contextual
factors at work. Academy of Management Journal, Vol., Vol. 39 No. 3, pp. 607-34
Richard L. Daft (2006). The New Era of Management. International Edition, Thomas
south western, ISBN: 0-324-32331-X.
Ulrich, D. (2008). The Twenty-First Century HR Organisation. Human Resource
Management, winter 2008, Vol. 47, No. 4, Pp. 829–850. © 2008 Wiley Periodicals,
Inc.
Case studies
Massimo Fumarola, Business development manager at Fiat. Fiat Iveco - Identifying
innovation challenges. (Goffin & Mitchell (2005) page 328).
Torsten Hersberg, Project Manager R&D department, Vodafone Group Plc - future
innovation. (Goffin & Mitchell 2005, page 349).
Trudy Lloyd, Management consultant, Synectics. Synectics- driving client’s
innovation products and processes. (Goffin & Mitchell 2006, page 334).
Pierre Olivier. Vice president of Cobra, Thailand. Case study on Cobra, Thailand-
leadership. (Goffin & Mitchell 2005, page 327).
www.1000ventures.com (accessed 20th December 2008)

15
Appendix A: Cross-departmental structure

16
Appendix B: Performance Measurement Strategy

17
Appendix C: Motivational techniques
Table 1: Motivational Techniques
Recognition&
Rewards
In terms of idea generation it is essential that all the ideas are
actively listened to and appreciated thus creating an
encouraging atmosphere. At the same time approving any
innovative idea which may lead to a future contribution.
Recognition could be in any form compliments, and awards.
Empowering
Employees
It works on the principle of power sharing. This method
includes everyone in the organisation’s decision making
process. This gives workforce the feeling of belonging and of
achieving company’s success. As well encouraging them to
work creatively and in a task orientated culture.
Jo Rotation &
Enrichment
The employees could develop skills further if they are given
opportunity to rotate jobs and get a direct experience of
different projects. By promoting this approach flexible
workforce could be built hence increasing our company’s
competitiveness.
Monitoring This is another important aspect in keeping in touch with the
progress being made by the employee. However excessive
monitoring should be avoided as it could act as a barrier to
employee’s idea generation and make them feel insecure.
Providing
resources
Once a decision is made to go ahead with the innovative ideas
it is essential that the required resources such as
manufacturing facilities and money are available. There is
positive connection between the availability of resources and
innovative results (Goffin & Mitchell 2005. Pg 284). One such
example of providing resources for employees is that of 3M,
where R&D staff is encouraged to spend 15% of their working
hours on their own chosen project.

Innovation management case study

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to Innovation management case study

Similar to Innovation management case study (20)

Innovation management case study