Organizational Culture for Change John M. Mason And Kathryn Jablokow Penn State University

Competition by Innovation Modern Oligopoly Continuous innovation to maintain market share Established levels of R & D

Sustaining Technological Innovation Improved Product Performance Continuous and Ongoing Budgeting, Planning, and Surveys

Disruptive Technological Innovation Changes the way people do things In their lives How they organize things How they conduct business How they relate to others

Technology and Intellectual Capital Technology—”the processes by which an organization transforms labor, capital, materials, and information into products and services of greater value…” Christensen The Innovator’s Dilemma

Technology and Intellectual Capital Intellectual Capital—”is the knowledge, applied experience, enterprise processes and technology, customer relationships, and professional skills which are valuable assets to an organization.” The Journal of Intellectual Capital

The Culture of Innovation Intellectual Capital is the major asset of the modern firm. If competition is based upon innovation, then an organization must continually increase its base of knowledge or information. Organization must invest in developing new information to add to its knowledge base.

Innovative Types Sustaining Technological Innovation—information generated is within the bounds of an existing product base. Surveys Competitor Offerings Industry Trends

Innovative Types Disruptive Technological Innovation—information generated outside the bounds of existing product base. Changes in assumptions Practical technologies Marketing questions Complementary products

Networks Information thrives in an environment in which more people have access to it. Dialogue increases Productivity rises People can use their strengths People feel better about themselves

Role of Senior Management Culture of Innovation starts at the top! Sets goals and objectives Identifies who gets hired and who gets promoted In a world of greater delegation— leaders need to support If the top does not initiate, subcultures grow up and coordination failures occur

Time Pacing Based upon the passage of time and not external events. “Time pacing relies on choreographed transitions to switch smoothly from engineering to manufacturing, from product to product, from one market to the next, from one business to the next…” Brown and Eisenhardt, 1998

Rhythm of Time Pacing Time period—short enough to make the firm competitive but long enough to be realistic. Influenced by seasonality, consumer cycles, trade show dates, and competitive pressures. Example: the integrated circuit.

Organization for Disruptive Technological Change Where do these fit into the organization? Major difference—the market served Small versus large Generally not major customers Don’t know what final use will be

Portfolio of Innovations Sustaining innovations—generally done internally. Disruptive innovations Organizational separation Subsidiaries Joint ventures, etc. Financial Investment

Disruptive innovation and Time Pacing Some need for regular introduction Can’t just let projects go on and on Real Option approach Commercialization must be realized within a reasonable time

Human Resource Management Problem-Solving Types Adaptors versus Innovators Strategic Leadership Stages of organizational evolution and renewal Executive Development The ‘right people’ for the ‘appropriate time’

Conclusions 1. Competition requires innovation that is continuous and relentless. 2. Organizations must be intentional and universal in their efforts to innovate. 3. The culture for innovation begins at the very top. 4. The culture is inclusive: management, structure, finance, human resource management, marketing, and other areas of an organization must be a part.