managing innovation_entrepreneurship and transformation
DESCRIPTION
Session 4 entrepreneurship and transformationTRANSCRIPT
www.CeTIM.orgProf. Dr. Bernhard R. Katzy
Session 4 Entrepreneurship and Transformation
Instructor
Prof. Dr. Bernhard Katzy
2012
www.CeTIM.org Prof. Dr. Bernhard Katzy 2
Innovation Management
Basic innovation concepts
Innovation TheoryDominant theory, Main issues and developments of innovation research
Introduction based on life cases
Innovation PracticeHigh tech entrepreneurship…
Innovation System
Organization of innovation
Transformation and entrepreneurship
Innovation Governance Innovation
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Session 4: An overview
• Quick Test
• Transforming Organizations
• Capturing value from technical innovation and dynamic capabilities
• Entrepreneurship in open innovation era
PRESENTATION OUTLINE
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Session 4 Reading engagement
2 questions 10 minutes
QUICK TEST
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Introductory Discussion
What is entrepreneurship for you?
“Entrepreneurship is a normal human capacity, it can be cultivated and developed” (Ludwig von Mises – Human Action)
“ The pursuit of opportunity beyond the resources you currently control” (HBR)
VIEWS ON ENTREPRENEURSHIP
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Examples of transforming organizations
How about these organizations?
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Theories for Entrepreneurship Research
However, so far, a strong theory dedicated to entrepreneurship research is till missing
Entrepreneurship Research Themes
-Opportunity
-Entrepreneurs
-Entrepreneurship Process
-Firm Creation
-Economic Dynamics
-…
Various theories employed to examine the entrepreneurship phenomenon
-Agency theory
-Social capital theory
-Resource-based view
-Dynamic capability
-Opportunity Recognition
-Creation theory
-…
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Capturing value from technical innovation and dynamic capabilities
TRADITIONAL PRODUCT DEVELOPMENT FUNNEL
Screen 1 Screen 2
Product
introductionDevelopment
ProjectsPre-development
Investigation
Source: New product development funnel, Wheelwright and Clark
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Capturing value from technical innovation and dynamic capabilities
CAPTURING TECHNICAL INNOVATION
Core Technological
Know-how In Innovation
ComplementaryTechnology
Service
Distribution
CompetitiveManufacturing
Others
Source: Capturing Value from Technological Innovation: Integration, Strategic Partnering, and Licensing Decisions by David J.Teece 1988
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Capturing value from technical innovation and dynamic capabilities
• The competitive potential embedded in new technology is not always captured by the innovator
• Channel Selection Issues (Core Capabilities)
Contractual Mode
Integrative Mode
Mixed Mode
CAPTURING TECHNICAL INNOVATION
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Dynamic Capabilities
Are what enable a firm to integrate, build, and reconfigure internal and external competencies to address rapidly changing environments (Teece et al., 1997)
Are the firm’s processes that use resources to match and even create market change.
Are the organisational and strategic routines to learn routines (Einsenhardt et al. 2000)
DYNAMIC CAPABILITY
Process-Coordination/Integration-Learning-Reconfiguration and transformation
Position-Technological assets-Financial assets-Structural assets-……
PathPath dependency-Current position is shaped by the path it travelled-Routines constrain its future behavior
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Dynamic capabilities in details
DYNAMIC CAPABILITIES VARY IN DIFFERENT CONTEXT
Dynamic capabilities integrate resources Product development routines for profitable product and
services Strategic decision making …
Dynamic capabilities on reconfiguration resources replication and brokering routines used to copy, transfer, and
recombine resources for new products Scarce Resource allocation routines Patching routines to changing market …
others Knowledge creating routines in industries where cutting-
edge knowledge is essential Alliance and acquisition routines which bring external
resources into the firm, like BIO-TECH firms, or CISCO Exit routines as market undergo changes
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Capturing value from technical innovation and dynamic capabilities
ENTREPRENEURIAL DYNAMICS AND DYNAMIC CAPABILITIES
Source: Strehle, Katzy, Davila, Learning Capabilities and the Growth of Technology-based new ventures
Financial resources
Foundational technology, business
idea
Humanresources
Initial resource base
Research institutes, high-tech companies
Entrepreneur
Venture capital, corporate venture
capital
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Growth is driven by learning, not “more of the same”
LEARNING, DYNAMIC CAPABILITIES ANDTHE OPERATING CORE
Dynamic capabilities• Creation, integration, and
adaptation of routines• Path dependency
Management control system• Information-based• Documented• Tool-supported
Single-looplearning
Double-looplearning
Economic rents
Resources
Primary processes and operating routines• Execution of known procedures (e.g. order
processing)• Assurance of current profit
Source: Zollo and Winter (2002), Lant and Mezias (1992), Fiol and Lyles (1985), Argyris and Schön (1978)
LEARNING, CAPABILITIES, AND THE OPERATING CORE
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KNOWLEDGE CODIFICATION IN MANANGEMENT SYSTEMS
MCS are suited to observe organizational learning in new ventures
Budgeting with IT Toole.g. “SAP”
Frequent budgeting, self- made on Excel
Loose bundle of bank slips
Archive of costs, revenues, bank slips, and notes
ProcessNo process
Learning increase
Evolution of routinesMCS1
Budgeting example
1MCS are ”formal, information-based routines and procedures used by managers to maintain or alter patterns in organizational activities’’ (Simons, Strategic Management Journal, 1994)
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The study setting
• Questionnaire and interview with 1 to 3 top managers
• Participating companies must be: – Technology-based– In a range of 10 to 150 employees– Founded 1992 or later– Private and independent or publicly-owned– Located in regions with high entrepreneurial
activity, here Silicon Valley and Munich
Munich(44+2* STBNV)Silicon Valley
(72 STBNV)
* 2 TBNV went bankrupt during the observation
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PATH DEPENDENCY OF GROWTH
0
500
1000
1500
2000
2500
3000
3500
Year 0 Year 1 Year 2 Year 3 Year 4
Cluster 1 Cluster 2 Cluster 3
Rev
enu
e (E
UR
'0
00)
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Entrepreneurship in Open Innovation Era
OPEN INNOVATION
licensing
External Technology Base
Spin-off New Market
Other firms’ Market
Current Market
Technology insourcing
Internal Technology Base
Labor mobility/ Venture Capital/ Numerous Start-ups/ research conducted at Universities/……
Research Development
Source: The era of open innovation by Henry Chesbrough 2003
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Entrepreneurship in Open Innovation Era
-Till the end of 1999, The NVG of Lucent had invested in 19 ventures which are located in 4 areas in the left.
-The objectives: uncover new vehicles for increasing its growth; develop new mechanisms for leveraging its unparalled technology; increasing comercialisation rate of its technology.
-Focus on internal ideas
THE CASE OF BELL LABCorporate investment objective
Lin
k to
op
era
tion
al c
ap
ab
ility
DrivingAdvances strategy
of current business
EnablingComplements strate-
gy of current business
EmergentExploration of poten
-tial new business
PassiveProvides financial
returns only
Tight
Loose
Strategic Financial
Source: Henry W.Chesbrough 2002
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Entrepreneurship in Open Innovation Era
LUCENT NVG'S OPERATING MODEL
Source: Henry W.Chesbrough and Stephen J.Socolof
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Readings for session 5: Innovation System
S5 Innovation System
Article 1: Michael E. Porter. Clusters and The New Economics of Competition. Harvard Business Review, November- December, 1998.
Article 2: Anna L. Saxenian. Comment on Kenney and von BURG, "Technology, Entrepreneurship and Path dependence: Industrial Clustering in Silicon Valley and Route 128". Industrial and corporate change, Volume8, Number1, 1999.
Available on Blackboard