innovation strategy visual mapping tool-abstract

7/29/2019 Innovation Strategy Visual Mapping Tool-Abstract

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ABSTRACT

An Innovation Strategy can be a keystone for companies to build competitive

advantage and achieve results through Innovation. In highly competitive

fast-changing environment, typical of some sectors of business like

High-Technology, this process can be even more crucial for organizational

renewal. Despite this importance, there is a shortage of structured methods and

tools to support the creation of an Innovation Strategy. This study, taking in

consideration the organizational context of companies in this type of environment:

High competition, Pressure for Continuous Product Launching, Complexity of

modern issues, Information overload and Time famine, developed a Visual

Strategy tool to facilitate the process of creating an Innovation Strategy. This

study designed this tool by, identifying and selecting, the most appropriate

Innovation and Strategy frameworks for the purpose of creating an Innovation

Strategy. These elements were integrated into Visual Map Template, developed

using Visualization techniques. Along with the Map template a process was

developed aiming to stimulate creativity and collaboration of the participants of this

strategizing process. The main focus of this process was to support the tasks of

Idea Management and Sensemaking. The process developed aims to support the

creation of a big picture scenario of the most interesting paths for innovation.

Looking, particularly, for Innovation Paths which could leverage distinctive

competences of the organization, and explore alternatives to create new markets.

Overall, this study proposes that a process of idea management and sensemaking,

supported by conversations guided by a tool, can be crucial for creating the future

of the organization through Innovation.


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1 INTRODUCTION

1.1 Defining the problem

Innovation is the most effective process to win a competitive game (Utterback

1994; Hamel&Prahalad 1994; Markides 1997; Kim&Mauborgne 1999), sometimes

it can be the only way for companies to stay in the game (Tushman&Anderson

1986, 1997; Christensen 1997; Christensen et al. 2004). But what is an innovation?

And where does it come from? Innovation is defined as the transformation of an

idea into something of value, e.g. a new product or process (Tidd&Bessant, 2009).

Does that mean that any idea has the same chances of turning into an innovation,

and thus should be pursued? How one could increase the likelihood of success of

a chosen idea? And by this, better exploit limited resources such as time and

money. One known way of having good ideas is by having a lot of them

(Rietzschel et al. 2007). Another way is by exploring new paths and the road less

travelled (Rietzschel et al. 2007).

But how can one increase the number of ideas produced? Brainstorming by

making a list of ideas is a known way of increasing the number of ideas. Another is

to be exposed to fresh stimuli, e.g. novel concepts from another area or person.

By placing together different perspectives and experiences one might increase the

chances of novel combination of ideas (Johnson, 2010).

Still, are plenty of ideas enough? How can one select the best ideas? How can

one judge ex-ante the quality of an idea? The quality of an idea is usually

measured by its novelty and usefulness, which is defined as creativity (Amabile,

1996). This assessment of quality became even more challenging when one

id th t i ti ti l l th t h l i ht t k l


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increasing the chances of success (Fuglsang&Mattsson, 2011). Imagining different

possible futures, and switching between them, might allow evaluating which idea is

more likely to be fruitful (Fahey&Randall, 1998).

Even considering one have several potentially good ideas. How these ideas are

managed to be transformed into an innovation, particularly in an organizational

context, is still a challenge. The strategizing process will influence heavily on the

results (Hamel&Prahalad 1994; Porter 1985; Mintzberg et al. 2008). Anthony et al.

(2006, p.1) nailed the point: Many companies approach innovation without agame plan [a strategy] that position them for success Their unsystematic efforts

to create growth lead to random and often disappointing results.

1.2 Motivation

There are some key drivers that motivate this study:

Idea management is the most impacting process on results coming from

innovation, such as sales of new products (Arthur D. Little, 2005);

Successful strategies, one that turns an idea into a great innovation, up to

now seems to have had serendipity as the key element (Johnston&Bate,2003). Apart from a few examples like Swatch, NEC and Komatsu there is a

shortage on creative strategy creation;

Industry is left with little help and few tools on how to create strategy, or

how to make it emerge by creating the right conditions (Hamel 1998a;

Johnston& Bate 2003).

1.3 Context


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Mar 2012) reported results of a study indicating that: in 1937 a business that

would have been listed in the S&P 500 could have expected to spend 75 years in

that distinguished index; today, the average stay is down to about 15 years.

Samsung is a clear example of those who are winning in this fast paced game

(Strategic Direction, 2006), and Nokia is an example of those who were left behind.

Even the powerful Apple is starting to struggle to keep up with its pace of new

product launching (Financial Times, July 25 2012).

Complexity: modern products reached a level of complexity unparallel. A

commercial aircraft can have more than 25,000 different parts. Wood (2000)

reported that in 1999 a study in the Citibank showed that the bank had 150,000

different versions of a deposit account.

Time Famine: Whether because the higher competitive world made us more

multitasking on this never ending race, or this is just a consequence of our

perception of time scarcity (now intensified by the increase of economic value of

time as assessed by the opportunity cost), the general feeling is of playing catch-

up (The Wall Street Journal, 22 February 2011 based on the article "Time Is Tight"

of the Journal of Applied Psychology). Weak signals of time famine can be seen

on corporate world by the increasing demand of management pill size theory, now

on visual format, to be quickly digested (reported by Financial Times, 8 February

2012).

Information Overload

The current society lives under enormous strain to cope with the accelerating rate

of information and knowledge. The technological developments of the last 50

years have made more information, more available, to more people than at any


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application of visualization methods, meaningful visual presentation of information,

can help the limited simultaneous cognitive processing of the brain. Research has

showed that Information Visualization has proven to help the cognitive process of

identifying patterns and relations between large amounts of information (Keim et al.

2006).

We see what we believe

But despite any techniques to improve our cognitive capacity, like information

visualization, one still has to rely on a heuristic model (a mental model) to decide

where to look and what to pay to attention. Nonetheless, in an ever changing

environment the rules of the game might be changing faster than one can cope.

Thus, automatically turning to cognitive shortcuts, like mental model, to guide

attention and perception might prove a risk strategy if this mental model is

outdated. The financial crisis of 2008 proved that every model real estate is

always is a good investment has a time and context.

Seeing what others see confers no relative competitive advantage. Instead,

like Sherlock Holmes, we should strive to observe what others merely

see(Neugarten, 2006, p.895).

There is more in the world than the eye would notice. The eye is guided by the

brain on what it should see so that rather than seeing is believing, it appears that

believing is seeingwe see what we expect. (Neugarten, 2006, p.895)

After setting this scenario of interconnected elements: globalization, competition,

complexity, time famine, information-overload, mental models, innovation and

strategy an important reflection comes up:


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How can an organization make sense of this changing environment and devise

renewal strategies (organizational innovation strategies) that increase the

likelihood of success in the future?

1.4 Starting Point

To find the answer for this previous reflection requires evaluating the purpose and

conditions of this mission (as described previously) and what it is available out

there to execute this mission. It certainly there is a lot of research on innovation

(overview at Tidd&Bessant,2009), and similarly there is a well developed body of

research on Strategy mainly clustered around some paradigms (Teece et al. 1997;

Mintzberg et al. 2008; Moussetis 2011). Nonetheless, there is a shortage on the

strategy process theory, particularly on how to create or make one emerge (Hamel,

1998a). This shortage is evident on the lack of clear guidance and tools to put this

crucial task into practice.

There are two key elements that guided the beginning of this search for a more

practical strategy process:

On the conceptual level: Hamel&Prahalad (1994) book.

On the practical level: Osterwalder (2004) tool Business model canvas

1.5 Scope

The ultimate goal of this study is to help organizations to increase the likelihood of

success of innovation by facilitating the innovation strategy process through theuse a visual strategy tool.

To work towards this goal this study aims to identify the most updated methods


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Considering that idea management and sensemaking are becoming crucial tasks

for innovation, particularly in fast changing environments as discussed previously,

the core of the mission is established as:

The core of the mission:

Designing a tool for ideas management and sensemaking with the purpose

of facilitating the innovation strategy process.

Figure 1.1: The core of the mission

The choice of visualization, as the interface between user and the tool, is based

mainly on two aspects:

User requirements: information overload, cognitive limitations, time famine,

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Figure 1.2: The Concept of the Tool

The concept of the tool is based on a template applied to the wall that would allow

collecting and displaying, information and ideas, on a map of context. It is

expected that the visualization would foster creativity, collaboration and also help

sensemaking the big picture by a holistic approach.

The tool is designed based on the premise of the main purpose of an innovation

strategy process being to identify and discuss possible migration paths (in this

case innovation paths) which could lead the present organization into a future

renewed organization. Innovation (e.g. a new product, new process, new

competence) is seen as a source of renewal of the competitive advantage and the

th th ti f i ti il bl t th F thi


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2 LITERATURE REVIEW

Once one take over the mission of designing a tool aimed at facilitating the

innovation strategy process, some elements to build this tool are clearly visible,

others not so much. Sometimes an element can be seen and be composed from

different bodies of research. To guide this process the ultimate goal of this study,

as established on scope section, will direct the selection of elements to compose

this tool.

Table 2.1: Ultimate goals guiding the designing process

Ultimate goalHelp organization to Increase the likelihood of success ofinnovation through the creation of innovation strategy

Goal Facilitate the innovation strategy process

Mission Designing a tool

Type Strategy tool

Channel Visualization

From Table 2.1 it is possible to see this mission involves at least following areas:

Innovation ( Innovation Strategy)

Strategy (Strategy Tools)

Visualization (Visualization Tools)

2.1 Innovation Strategy

Why is Innovation Strategy important?

As discussed in the introduction, if one understands the importance of innovation

on building competitive advantage and appropriating returns from it (Teece, 1986),

the innovation process (Tidd&Bessant, 2009) is seen through new lens. In this

view the innovation is the prize of the game, the innovation strategy is about

thinking ahead on the options of how you are going to play this game in order to

win (or if you should play at all), and innovation process is how to play once you


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Innovation Strategy Content How to combine the components? And why?

A survey conducted by management consultants Booz Allen Hamilton concluded

that there is no one size fits all best innovation strategy, however there is a best

innovation strategy specific for a company. This specific best strategy will

depend of corporate strategy and competitive environment (Jaruzelski&Dehoff,

2007). Dodgson et al. (2008) argue similarly that organizations should build an

innovation strategy that fit the company size, business life-stage and environment.

Despite the impossibility of an innovation strategy recipe, there is an agreement on

the most important drivers to create an innovation strategy, and capture value from

it, as being: Technology, Customers Needs, and Markets (Anthony et al. 2006;

Jaruzelski&Dehoff 2007; Dodgson et al. 2008; Katz et. al. 2010).

Jaruzelski&Dehoff (2007) defined these drivers as:

1) Technology drivers (scouting and developing new technology);

2) Needs seekers (identifying emerging customers needs);

3) Market readers (strong competitor analysis).

Despite a common agreement on the most important drivers of Innovation

Strategy, how to choose and combine the others components in order to increase

the chances of success, seems to be a case-by-case process. Hess (2010) after

studying several large companies described 4 main innovation strategies that led

those companies to successful results. 1) Good Recruiting and Human Capital

management; 2) Internal R&D investment; 3) Strategic Alliances; 4) Acquisitions.

Similarly, Bowonder et al. (2010), after studying the innovation strategy of 100

innovative global companies identified 3 main dimensions (areas of focus) of these

strategies: 1) Customer Excitement, 2) Competitive Leadership and 3) Portfolio


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3 RESEARCH FRAMEWORK

Before starting the definition of the research framework, it is important to clarify

some points. Despite the core of the mission of this study being to design a

strategy tool focused on supporting the idea management and sensemaking tasks,

the interconnectedness and far-reaching level these tasks will have through the

strategy creation process, required setting a clear picture of the research context.

This research context has been set through the discussions and contextualization

presented in the introduction, and is illustrated on the fig. 3.1.

Figure 3.1: Research Context and Research focus

This research context is crucial to clarify the goals requirements and


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Table 5.3: Tool Content - Frameworks and Methods selected

Innovation Strategy

ConstructsKey Definition required Method/Framework Selected

Framework Representative

AuthorsKey elements Selected

Where we are(position)

OrganizationsPosition

Porter 5 forcesEconomic EngineRPV (Resources-Process-Values)Core CompetencesDisruptive innovation

Porter (1985)Hamel&Prahalad(1994)Christensen et al.(2004)Hamel&Prahalad(1990)Christensen (1997)

Suppliers, Customers,Competitors, Competences,Resources, Process,Values, Technology,

Core CompetencesRBV (Resource-based-View)Dynamic Capabilities

Hamel&Prahalad (1990)Teece (1980,1982)Teece (1997)

Core competencesUnique Resources

Strategic innovation Markides(1997) Business Key QuestionsMarket vs. Resources

Environment ScanningSWOT

Aguillar(1967), Choo (2001)Ansoff, (1987)

PEST Trends,Opportunity, Threats

RPV (Resources-Process-Values) Christensen et al.(2004) Resources, Process,Values,

Present vs. future

Foresight : Scenarios Fahey& Randall(1998) Scenarios

Where to look(sources of competitive

advantage)

Internal vs. External

Sources of InnovationBest Idea SourcesPeripheral Vision

Open Innovation

Tidd&Bessant (2009)Cooper& Edgett (2008)Day&Schoemaker (2005)

Chesbrough(2006)

Best Innovation Ideasources,Peripheral Vision,

Open InnovationNew ProductBusiness Model InnovationNon-consumersCompetence Building

Cooper (1990)Teece (2010),Osterwalder(2004)

Anthony et al. (2006)Hamel&Prahalad (1990,1994)

Wherecan we go

(paths)

Innovation Paths

Innovation Process Tidd&Bessant (2009)

New Product/Process,New Business Model,New Market Segment,New Skill


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Stage-Gate process (Cooper, 1990), which is mainly aimed at new product

development. Stage gate process is based on the principle that not all ideas

should be pursued and that they should be assessed at each gate to check if theidea should go forward.

Source: Cooper (1990)

Figure 5.5: Stage-Gate process

Lately, a growing interest has been placed by organizations on the earlier phases

of new projects of Innovation. This new phase is called Fuzzy Front End of

Innovation, and it is mainly focus on ideas and concepts in scenarios of high

uncertainty (Koen&Ajamian, 2002; Frishammar&Floren, 2008). The motivation for

this new phase comes from the growing perception that after an idea gets into thenew product development phase, there is not much that can be changed

(Frishammar&Floren, 2008). One of the main tenets behind this concept is that if

an organization is able to manage properly the ideas it will increase its chance of

success.

The Innovation Strategy process, particularly if the goal is renewal of the

organizational competitive advantage which implies aiming for radical innovation,

involves assessing ideas of paths of innovation (new products, new markets, new


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The process proposed for Idea Management aims to help integrate these two

traditional perspectives in a single structured process. To clarify the underlying

strategy principles that would guide such an effort, a brief discussion is providedsince this is not the focus here. The main strategy principles that guide this

integration are Pathbreaking to Create-the-future (Hamel&Prahalad, 1994) and

Path-Creation (Garud&Karne 2010, 2011). These concepts champion that within

bounded-rationality one could act on the organization present to change the

environment and build the future. Considering that the application of these

principles are guided by the theoretical framework of Dynamic Capabilities (Teece

et al. 1997). This implies a practical effort of integration of polarized strategy

perspectives:

Internal [Resources(Teece,1982), Path-dependence(David:1985,Arthur:1996) ], and

External [Markets(Porter:1985), Foresight (Hamel&Prahalad:1994), Environment(Aguilar:1967, Ansoff:1975)

The idea generation would start from 2 directions:

From the present competences and resources to the future

From the Future scenarios to the present position


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These elements were integrated under the structure provided by the Tidd&Bessant

(2009) innovation process framework. The Figure 5.28 shows how the phases of

the innovation process are represented on map. Theses phases structure thediscussion required for the tasks of Sensemaking and Idea Management. They

provide a frame of reference to help evaluate the possible option of paths that an

organization have to build the future and what is big picture in that. The map also

provides a focal point which helps the development of common ground for

discussions. This is mainly done by categorizing and labelling issues, but alsoproviding exploration of theses issues by in different categories.

Overall, the map incentives the creation of a nurturing area for innovation, inside

the organization, with the proper conditions for strategy creation or emergence.


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7 CONCLUSIONS

This study started with a reflection of the importance of innovation for

organizations, and how the seed of this process lies on ideas. The success of this

process will certainly depend of exploration and hard work, as Thomas Edison

approach to innovation showed. Nonetheless, one has to find ways of increasing

the chances of success by generating creative ideas and properly assessing and

selecting the most interesting ones to follow. The tool proposed here aims to

provide some help on this challenging task.

This study was motivated by the realisation of lack of support for strategy creation.

In particular, a process that could provide the right conditions to create the future.

The search started guided by Hamel&Prahalad(1994) vision, and it is worth to end

with some of their reflection:

Hamel&Prahalad (1994,p.XIV) championing the importance of a practical approach

to management theory points out an important aspect:

Professor Drucker has never lost sight of the fact that, for a theory or

concept to be useful, it must ultimately be translated into language and

context of managers and managerial action

This vision has been the fundamental essence that drove this study: to apply

existing concepts and frameworks of innovation and strategy, in a structure that

could improve their usability, and consequently their usefulness.

In search of a Creative and Practical approach for Strategy Creation this study

proceeded. The approach taken here was to identify, in the foundation of the


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perception of the situation they can grasp, and the options available. If this

perception can find a way to be improved by this tool, at least part of the mission

of this study was accomplished.

The process of idea management and sensemaking designed here improves the

chances of making sense of the big picture, and incentives collaboration and

creativity. These elements will increase the options of paths an organization see to

build the future. This process will increase the chances of success, but will notassure results. Because, as any strategy guru would agree, the journey along the

path to the future always involves some learning and adaptation.

The real world inevitably involves some thinking ahead as well as some

adaptation en route.Mintzberg et al. (2008, p. 16)

One just increases its chances of success by thinking ahead.

The name proposed for the tool is Visual Mapping. This choice aims to emphasize

the key role visualization can play on supporting complex activities, like the

innovation strategy process on the path of creating the future. This role can be

even more crucial for organizations in information rich fast-changing environment.

The main theoretical frameworks that provided support for this study are:

A frame of Reference for Sensemaking (Weick:1995, 2012)

Creativity research findings which showed that some support and structure

for explorative thinking can lead to creative ideas (Santanen et al. 2000;

Friedman et al. 2003; Rietzschel et al. 2007; Hilliges et al. 2007).

Visual Strategy framework (Eppler&Platts,2009)

The Innovation process framework (Tidd&Bessant, 2009)


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The main research studies on innovation strategy identified by this study were:

Dodgson et al. (2008), Katz et al. (2010), Bowonder et al. (2010), Hess (2010).

Building on their work, and on the additional analyses and findings of this study,the Table 7.1 is proposed as a reference of the components, paths and important

discussions for the Innovation Strategy process. This table is the progression of

Table 2.4.

Table 7.1: Innovation Strategy: Components, Paths and Important Discussions

Components Paths&Important Discussions

GoalsRenewal, Differentiation, Growth, Profitability,

Lower Risks, Defend, Efficiency, Reaction

Objectives Leadership, Followership, Observe&Adapt,

React

Why to go

Impact Disruptive to Sustaining

Project Risks High to Low Risk

Howimportant is

to go

DriversMarkets, Resources, Technology, Regulation,

Financial, Political

Where to look

Current PositionIndustry, Customers, Suppliers, Resources,

Process, Values, Core competencesWhere we are

TypeProduct, Process, Business Model, New Mkt.

Segment, Competence building (new skill)

Where can

we go

Level Radical to Incremental

Place Internal R&D, Acquisition, Greenfield,

Collaboration Closed vs. Open Innovation, Co-creationImple

menting

Innov. Process Unsystematic, Evolving, Formalized

How to get

there


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Figure 7.1: Visual Mapping Tool Final Map Template

innovation strategy visual mapping tool-abstract

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