Central Problems in the Manage-ment of Innovation

ANDREW H. VAN DE VENMANAGEMENT SCIENCE, Vol. 32, No. 5 (1986)

2011.9. 14기술경영학협동과정 고윤미 , 한상연

2011 Fall Seminar on Technological In-novation

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Contents

Introduction 1

Conclusion 3

Further discussion 4

4 factors and central problems 2

A decline in American productivity and obsolescence of its infrastructure in the 1980’s

The need for understanding and managing innovation

focus on research and scholarship about organizational mode for innovation ⇒ According to a general management perspective on innovation(Lewin

and Minton’s, 1985) this paper begins with key problems confronting gen-

eral managers.

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1. Introduction

□ Innovation is defined as the development and implementation of new ideas

by people who over time engage in transactions with others within an

institutional context.4 Facotors 4 central problems

New idea Human problem of managing attention

People Process problem in managing new ideas into good currency

Transactions Structural problem of managing part-whole relationships

Institutional context Strategic problem of institutional leadership

Innovative Ideas

• technical innovations(new technologies, products, services) • administrative innovations(new procedures, policies, organizational forms)

Management of Ideas

2. 4 factors : New Ideas /human problem of managing atten-tion

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Q1. How and why certain innovative ideas gain good currency?Q2. How and why people pay attention to only certain new ideas and ignore the rest?

Fig 1. Managing life cycle of ideas in good currency

Q3. How to trigger the action thresh-olds of individuals to appreciate and pay attention to new ideas, needs and opportunities?

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2. 4 factors : People/process problem in man-aging new ideas into good currency Management of attention • physiological limitations of human beings • group and organizational limitations • way to management attention → direct personal confrontations with problem → triggering the action thresholds of organizational participants → channeling the action toward constructive ends

2. 4 factors : Transactions/structural problem of managing part-whole relationships

Fig 2. Linear sequential coupling compared with simultane-ous Coupling of knowledge(Galbraith, 1982)

• An Innovation is a collective achievement.• The transactions are deals or exchanges which tie people together within an institutional framework.• The organizational design for a process for inte-grating all the essential functions, organizational units, and resources.

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• Four inter-related design principles about how to design holographic organizations(Morgan, 1985).

① self-organizing units The principle of operating an autonomous groups and choosing cour-ses of action to solve problems② Redundant functions The principle of developing an understanding of the innovation in ad-dition to perform their individual assignments③ Requisite variety The principle of making environmental scanning a responsibility of all unit members④ Temporal linkage The principle of integrating parts of time(past, present, and future events) into an overall chronology of the innovation process

2. 4 factors : Transactions/structural problem of managing part-whole relationships

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2. 4 factors : Institutional context/strategic problem of institutional leadership• Creating intra and extra-organizational infrastructures takes us directly to the strategic problem of innovation, which is institutional leadership.

• Within the organization, institutional leadership is critical in creating a cultural context that fosters innovation, and in establishing organizational strategy, structure, and systems that facilitate innovation.

Figure 3. Institutional and technical processes(Lodahl and Mitchell, 1980)

3. Conclusion

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• To understand the process of innovation from a managerial viewpoint1) How do innovations develop over time?2) What kinds of problems will most likely be encountered?3) What responses are appropriate for managing problems?

• Suggestion to 4 basic concepts and 4 central problems⇒ conceptual framework to conduct longitudinal research on the management of innovation

Conclu-sions

• No systematic evidence to substantiate central problem, implications and proposed solutions in the management of innovation

Limitations

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4 central problems Points for implementations

• Human problem of managing attention(new idea)

• Recognition and need of new ideas• Choice of new ideas• Going and killing decision points

• Process problem in managing new ideas into good currency (people)

• Organizational culture toward innovation• Member of organization : size, composition(career, background, number, etc)

• Structural problem of managing part-whole relationships (transactions)

• Structural dimensions : formalization, standard-ization, centralized, decentralized * Ambidextrous organization• Communication and coordination across the divi-sions• Access to external resources• Systems support

• Strategic problem of institutional leader-ship(institutional context)

• Implementation of strategic leadership

4. Further Discussion

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4 Faco-tors 4 central probelms

New ideaHuman problem of managing

attention

PeopleProcess problem in managing new ideas into good currency

TransactionsStructural problem of managing

part-whole relationships

Institutional context

Strategic problem of institu-tional leadership

IDEO

Culture/Process

Process/Management

Process/Organization

Organization/ Management

Brainstorming, trial and error, Deep DiveFrequent prototyping, Tech Box

Frequent prototyping, Tech Box, Own 5 Phases process, Con-vergent Flat Organization, Amoeboid growth, , Deep Dive

□ How can we interpret 4 factors and 4 central problems in this pa-per with HBR-IDEO Case ?

4. Further Discussion - IDEO case

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□ Based 4 factors and 4 central problems in this paper, what are dif-ferences between IDEO, Samsung, and LG ?

IDEOCulture Process

Organization

Management

“Quality of Innova-tion”

Sam-sung

LGVs.

디자인경영센터 10 개국 약 650 명(‘11)

디자인경영센터 7 개국 약 1,000 명(‘11)2006 년 ‘제 2 의 디자인 혁명’…독창적 디자인과 유저 인터페이스 체계 구축 , 디자인 우수 인력 확보 , 창조적이고 자유로운 조직문화 조성

디자이너들이 기획자 , 엔지니어들과 같이 회의하고 좋은 발전방향을 함께 고민하면서 새로운 자극도 받아야…( 이건표 LG 디자인 센터장 , ‘11.4 월 )

• Is the Samsung and LG Innovative? If not or ambiguous, what’s the reason?

* This comparison would be just for the creativity and innovativeness

4. Further Discussion - Samsung/LG

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• The matter is Time and Culture to keep the whole process

Melissa A. Schilling(2010), Strategic Management of technical Innova-tion

The Innovation Funnel

Too Long

Too Short

Inefficient

• Time and Culture finally turn on Human

□ Based 4 factors and 4 central problems in this paper, what are dif-ferences between IDEO, Samsung, and LG ?

4. Further Discussion - Samsung/LG

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비혁신기업의 혁신저해요인 ( 중요도 4 이상 -5 기준 )

김현호 외 (2009), 2009 년도 한국의 기술혁신조사 : 서비스부문 , STEPI

□ Based 4 factors and 4 central problems in this paper, what are dif-ferences between IDEO, Samsung, and LG ?

4. Further Discussion - Samsung/LG

4. Further Discussion – Sustainability of IDEO

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□ Does the IDEO have sustainability from an innovation resource point of view?

• In this paper and HBR-IDEO, there is no consideration innovation re-source• Only focus to the internal organization and competency for innovation

Source: Report on the survey of Research and Devel-opment in Korea-Manufacturing(2002-2007)

Mil. USD Mil. USD

Internal Funding

Outsourcing Funding

CAGR (Compound Average Growth

Rate) (2002~2007)

Internal Fund-ing 16.0%

Outsourcing Funding 23.7%

R&D Expenditure ; Internal Funding Vs. Outsourcing Funding(2002-2007)

4. Further Discussion – Sustainability of IDEO

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□ Does the IDEO have sustainability from an innovation resource point of view?

Service Indus-try

Firm 1 Firm 2 Firm 3

Firm NIDEO· · · · · · · · ·

· · ·

Manufacturing IndustryFirm 1 Firm 2 Firm 3

Firm N SS/LG

· · · · · · · · ·

· · ·

• External Knowledge can be considered one of innovation resource

Univer-sityInstitute

Other industry

firmsUser Open Innova-

tion

Is there any good idea???

4. Further Discussion – Sustainability of IDEO

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□ Does the IDEO have sustainability from an innovation resource point of view?

• Need to change the Innovation Funnel of IDEO?• In an open innovation point of view, how can interpret 4 factors and 4 central problems in this paper?

Chesbrough(2003)

• Shape or length of innovation funnel for efficiency(money, time, etc.)

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Thank you