ch13 - organisation theory design and change gareth jones
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13- Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 1
Organizational Theory, Design, and Change
Sixth EditionGareth R. Jones
Chapter 13
Innovation, Intrapreneurship,
and Creativity
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Learning Objectives
1. Describe how innovation and technological change affect each other
2. Discuss the relationship among innovation, intrapreneurship, and creativity
3. Understand the many steps involved in creating an organizational setting that fosters innovation and creativity
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Learning Objectives (cont.)
4. Identify the ways in which information technology can be used to foster creativity and speed innovation and new product development
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Innovation and Technological Change
Innovation: process by which new goods and services or new production and operating systems are developed
Enables better response to customer needs
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Types of Innovation Quantum technological
change: a rare, fundamental shift in technology that revolutionizes products or the way they are produced
Quantum innovation: new products or operating systems that incorporate quantum technological improvement
These can cause major changes in the environment
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Types of Innovation (cont.)
Incremental technological change: technological change that represents a continual refinement of some base technology Incremental innovations:
products or operating systems that incorporate refinements of some base technology
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Types of Innovation (cont.)
Technology cycle Quantum innovations occur rarely
Technological discontinuity Dominant design emerges Era of incremental change and
innovation during which competition is based on technology
Technological discontinuity may occur again and the process starts all over
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Figure 13.1: The Technology Cycle
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Property Rights
Innovation is expensive and needs to be protected Patents Copyrights Trademarks
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Innovation, Entrepreneurship, and CreativityIntrapreneurs: leaders of
innovation and new product development in established organizations Notice opportunities Manage product development May leave organization if their ideas
are not supported Become entrepreneurs
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Innovation, Entrepreneurship, and Creativity (cont.)Creativity: ideas going beyond the
current boundaries, whether those boundaries are based on technology, knowledge, social norms, or beliefs Most people are creative at some time May involve combining and synthesizing
new thingsKnowledge-creating organization:
an organization where innovation is going on at all levels and in all areas
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Entrepreneurship as Creative Destruction
“Creative destruction”: new companies use new global and technological opportunities to make better products that drive old, inefficient companies out of business
Old inefficient companies are driven out of business
Emergence of new industries
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Innovation and the Product Life Cycle Product life cycle: the changes
in demand for a product that occur over time
Demand for most successful products passes through four stages:
The embryonic stage The growth stage The maturity stage The decline stage
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Innovation and the Product Life Cycle (cont.) Product life cycle (cont.)
Embryonic stage: a product has yet to gain widespread acceptance
Minimal demand Growth stage: a product has been
accepted by customers Demand increases
Mature stage: market demand peaks because most customers have already bought the product
Decline stage: occurs if and when demand for a product falls
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Innovation and the Product Life Cycle (cont.)
Determinants of the length of the product life cycle Rate of technological change
Faster the rate of change, the shorter the product life cycle
Role of fads and fashion Determine the attractiveness of products
to customers
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Figure 13.2: Technological Change and Length of the Product Life Cycle
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Managing the Innovation Process
Project management: the process of leading and controlling a project so that it results in the effective creation of new or improved products
Project: a subunit whose goal centers on developing the products or service on time, within budget, and in conformance with predetermined performance specifications
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Managing the Innovation Process (cont.)
Project management (cont.) Effective product management often
begins with a clearly articulated plan Takes a product through the concept,
initial test, modification, and manufacturing phases
Project manager’s tasks are different from regular managers
Manage high proportion of highly skilled and educated professionals
Plan to deal with top corporate executives Must keep project on track
Often quantitative modeling is used
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Managing the Innovation Process (cont.)
Project management (cont.) Quantitative modeling
Examples include PERT/CAM network of Gantt Chart
Flowcharts of a project that can be built with many proprietary software packages
These software packages focus on: Modeling the sequence of actions necessary to
reach a project’s goal Relating these actions to cost and time criteria Sorting out and defining the optimal path for
reaching the goal
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Managing the Innovation Process (cont.)Quantitative modeling (cont.)
Critical path method Goal is to determine:
Which particular tasks or activities of the many that have to be performed are critical in their effect on project time and cost
How to sequence or schedule critical tasks so that a project can meet a target date at minimum cost
Optimal sequencing of tasks is often worked out by a team
Analysis is an important learning tool
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Figure 13.3: CPM Project Design
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Managing the Innovation Process (cont.)
Stage-gate development funnel A structured and coherent innovation
process that improves control over the product development effort
Forces managers to make choices among competing new product development projects so that resources are not spread thinly over too many projects
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Managing the Innovation Process (cont.) Stage-gate development funnel
(cont.) Stage 1: Funnel has a wide mouth to
encourage as many new product ideas as possible from both new and established project managers
Stage 2: Specify all of the information required to make a decision about whether to go ahead with a full-blown product development effort
Plans are either accepted, revised, or rejected
Stage 3: Proceed to development phase
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Figure 13.4: A Stage-Gate Development Funnel
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Managing the Innovation Process (cont.)
Cross-functional teams Coordinating R&D function with
other functions is critical but often difficult
New product development teams Marketing, engineering, and
manufacturing need to be core members of product teams
Core members: refers to a nucleus of three to six people who bear primary responsibility for the product development effort
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Figure 13.5: Innovation as a Cross-Functional Activity
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Managing the Innovation Process (cont.) Team leadership
Having cross-functional teams is not sufficient for innovation – they have to be managed properly
Lightweight team leader: a mid-level functional manager who has lower status than the head of a functional department
Heavyweight team leader: a true project manager who has higher status within the organization
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Managing the Innovation Process (cont.)
Skunk works: a temporary task force that is created to expedite new product design and to promote innovation by coordinating the activities of functional groups
An island of innovation located away from the organization
Dissolved when the product is brought to market
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Managing the Innovation Process (cont.)
New venture divisions: a new division that is allocated a complete set of value-creating functions to manage a project from beginning to end
Assumes full responsibility for the commercialization of the product
Normally an independent division Balance of control between the
division and the corporate center is problematic
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Managing the Innovation Process (cont.) Joint venture: a strategic alliance
among two or more organizations that agree to jointly establish and share the ownership of a new business
Allows organizations to combine their skills and technologies and pool their resources to embark on risky projects
Partners may disagree over future development plans
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Managing the Innovation Process (cont.)
Creating a culture for innovation
Organizational structure Creating the right setting is important to
fostering innovation Increasing organization size, age, and
complexity may slow innovation Organic structures tend to promote
innovation People – organizations need to guard
against too much similarity Property rights – create career paths to
show that success is closely linked with future promotion and rewards
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Innovation and Information Technology
Information efficiencies: the cost and time savings that occur when IT allows employees to perform current tasks at a higher level
Enables employees to assume additional tasks
Enables employees to expand their roles in the organization due to advances in the ability to gather and analyze data also allows information efficiencies
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Innovation and Information SynergiesInformation synergies: the
knowledge building created when individuals or subunits pool their resources and collaborate across boundaries
Boundary-spanning activity: the interactions of people/groups across the organizational boundary to obtain valuable information and knowledge from the environment
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IT and Organizational Structure and Culture
IT affects the innovation process through its many effects on organizational structure
IT gives lower-level employees more detailed and current knowledge of consumer and market trends and opportunities
IT can produce information synergies
Facilitates increased communication and coordination between decentralized decision makers and top managers
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IT and Organizational Structure and Culture (cont.) IT means that fewer levels of
managers are needed to handle problem solving and decision making
IT provides lower-level employees with more freedom to coordinate their actions
Information synergies may emerge as employees experiment and find better ways of performing their tasks
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IT and Organizational Structure and Culture (cont.) IT facilitates the sharing of
beliefs, values, and norms Allows for the quick transmission of
rich and detailed information between people and subunits
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