Managing Innovation and Fostering Corporate Entrepreneurship.pptx

innovation

1. Managing Innovation and Fostering Corporate Entrepreneurship

2. Innovation - involves using new knowledge to transform organizational processes or create commercially viable products and services. Types of Innovation Product innovation - refers to efforts to create product designs and applications of technology to develop new products for end users Process innovation - efforts to improve the efficiency of organizational processes, especially manufacturing systems and operations Another way to view the impact of an innovation is in terms of its degree of innovativeness Radical innovations - produce fundamental changes by evoking major departures from existing practices Incremental innovations - enhance existing practices or make small improvements in products and processes

3. Challenges of Innovation Innovation is difficult mainly because of uncertainty and the many choices involved. Companies face five dilemmas in pursuing innovation: 1. Seeds vs. Weeds – deciding which ideas are worth investing in 2. Experience vs. Initiative – choosing between experienced but cautious leaders or enthusiastic innovators 3. Internal vs. External Staffing – weighing the benefits of insiders’ knowledge against outsiders’ fresh perspectives 4. Building Capabilities vs. Collaborating – developing skills internally or partnering with others, while managing risks of dependency 5. Incremental vs. Preemptive Launch – deciding between a smaller, low-risk launch or a large-scale one to stay ahead of competitors

4. Cultivating Innovation Skills Innovative firms like Apple, Google, and Amazon succeed because their leaders possess an “innovative DNA,” marked by strong discovery skills that let them spot opportunities and leverage innovations. Innovators share five key traits that help them generate breakthrough ideas: Associating – Connecting unrelated ideas to spot new opportunities Questioning – Challenging assumptions with “Why not?” and “What if?” Observing – Watching customer behavior to uncover unmet needs Experimenting – Testing new possibilities, accepting failures as part of discovery Networking – Building diverse connections to exchange and test ideas

5. Defining the Scope of Innovation Firms must have a means to focus their innovation efforts. By defining the “ strategic enve lope ”—the scope of a firm’s innovation efforts—firms ensure that their innovation efforts are not wasted on projects that are outside the firm’s domain of interest. Companies must be clear about not only the kinds of innovation they are looking for but also the expected results. Each company needs to develop a set of questions to ask itself about its innovation efforts: • How much will the innovation initiative cost? • How likely is it to actually become commercially viable? • How much value will it add; that is, what will it be worth if it works? • What will be learned if it does not pan out?

6. Managing the Pace of Innovation Firms must not only define the scope of innovation but also regulate its pace . Incremental innovations may take 6 months to 2 years, while radical innovations often span a decade or more, requiring flexible timelines. Using time pacing —developing an internal rhythm for innovation—helps firms manage transitions, align with customer buying cycles, and gain an edge over competitors. For example, Intel’s 18-month chip cycle and Apple’s yearly iPhone releases matched market demand. However, not all projects can be rushed—moving too quickly can harm innovation quality and reputation. Thus, managing pace is critical for long-term success

7. Staffing to Capture Value from Innovation Types of human resource management practices that effective firms use to capture value from their innovation efforts. Four practices are especially important: • Create innovation teams with experienced players who know what it is like to deal with uncertainty and can help new staff members learn venture management skills. • Require that employees seeking to advance their career with the organization serve in the new venture group as part of their career climb. • Once people have experience with the new venture group, transfer them to mainstream management positions where they can use their skills and knowledge to revitalize the company’s core business. • Separate the performance of individuals from the performance of the innovation. Otherwise, strong players may feel stigmatized if the innovation effort they worked on fails

8. There are other staffing practices that may sound as if they would benefit a firm’s innovation activities but may, in fact, be counterproductive : • Creating a staff that consists only of strong players whose primary experience is related to the company’s core business. This provides too few people to deal with the uncertainty of innovation projects and may cause good ideas to be dismissed because they do not appear to fit with the core business. • Creating a staff that consists only of volunteers who want to work on projects they find interesting. Such players are often overzealous about new technologies or overly attached to product concepts, which can lead to poor decisions about which projects to pursue or drop. • Creating a climate where innovation team members are considered second-class citizens. In companies where achievements are rewarded, the brightest and most ambitious players may avoid innovation projects with uncertain outcomes.

9. Collaborating with Innovation Partners No single firm has all the capabilities needed to take an innovation from idea to commercialization. Innovation partners —such as universities, government, or other firms—provide the additional skills, knowledge, and insights required. For example, Intel funds university research in exchange for royalty-free rights to resulting patents. Strategic partnering requires firms to assess their strengths and weaknesses, then choose partners who can provide needed competencies like market knowledge, technology expertise, or industry contacts. Partnerships must also clearly define how rewards and intellectual property will be shared. Collaboration and networking with multiple partners are becoming central to how innovation is conducted.

10. The Value of Unsuccessful Innovation Firms often hesitate to invest in innovation because of the uncertainty of choosing the “right” technology. Conventional thinking says betting on the wrong one is costly. However, research by J.P. Eggers shows that firms that first invest in a losing technology but later switch to the winning one can actually gain a long-term advantage. This happens because they learn from mistakes, adapt quickly, and benefit from the experience of early innovators. In uncertain, fast-changing markets, firms can still succeed even if they first back the wrong technology. Key practices include: Avoid overcommitting – Don’t get locked into one option; use alliances or joint ventures to stay flexible. Don’t let failure drive exit – Avoid shame or despair; failure is common and doesn’t mean leaving the market entirely. Pivot quickly – Switch directions fast once the winning technology becomes clear, ideally as the dominant design emerges. Transfer knowledge – Use lessons from failed bets to strengthen other opportunities (e.g., IBM’s plasma display skills aiding laptop design). Beware early success – Winning at the start can lead to complacency, while “losers” often become hungrier, more adaptive, and eventually surpass the early leaders.

11. corporate entrepreneurship the creation of new value for a corporation through investments that create either new sources of competitive advantage or renewal of the value proposition. two main goals: 1. pursuing new venture opportunities 2. strategic renewal . Two distinct approaches to corporate venturing are found among firms that pursue entre preneurial aims 1. Focused corporate venturing, in which CE activities are isolated from a firm’s existing operations and worked on by independent work units. 2. Dispersed corporate venturing, in which all parts of the organization and every organization member are engaged in intrapreneurial activities.

12. Focused corporate venturing Two forms 1. new venture group (NVG) a group of individuals, or a division within a corporation, that identifies, evaluates, and cultivates venture opportunities. 2. business incubator a corporate new venture group that supports and nurtures fledgling entrepreneurial ventures until they can thrive on their own as stand-alone businesses Incubators typically provide some or all of the following five functions 1.Funding 2.Physical Space 3.Business Services 4.Mentoring 5.Networking

13. Dispersed corporate venturing Three related aspects of dispersed entrepreneurship include entrepreneurial cultures that have an overarching commitment to CE activities, resource allotments to support entrepreneurial actions, and the use of product champions in promoting entrepreneurial behaviors. entrepreneurial culture corporate culture in which change and renewal are a constant focus of attention product champion an individual working within a corporation who brings entrepreneurial ideas forward, identifies what kind of market exists for the product or service, finds resources to support the venture, and promotes the venture concept to upper management. a new venture concept must pass through two critical stages or it may never get off the ground: Project definition An opportunity has to be justified in terms of its attractiveness in the marketplace and how well it fits with the corporation’s other strategic objectives Project impetus For a project to gain impetus, its strategic and economic impact must be supported by senior managers who have experience with similar projects.