Go-No Go Decision-Making Performance in Innovation Projects: An Information Processing Perspective Prof. Dr. Allard van Riel (IMR, Radboud University Nijmegen) Wafa Hammedi MSc (University of Liege) Dr. Zuzana Sasovova (VU University, Amsterdam)

Agenda Introduction –Research context –Definition of the concepts Problem Statement Research questions Hypotheses Method Results Recommendations Conclusion

Definition of the Issue Go-No Go decisions in Innovation Projects: –Investment decisions –Assessment of project progress/feasibility against criteria that all projects must meet, and then prioritize the projects to identify which will be further developed (Cooper and Edgett, 1996). Allocation of scarce company resources. –Risky and critical

STAGE-GATE INNOVATION PROCESS (Cooper, 1990)

Definition of the Concepts (2/2) Decision-making Effectiveness: Avoiding two types of potential errors: 1.Scarce resources are wasted on failures (De Brentani and Droge, 1988) 2.Projects that might be potentially successful are killed (Baker and Albaum, 1986) Decision-making Efficiency An efficient process is expected to lead rapidly to a consensus and to generate higher levels of commitment to the decision (Baker and Albaum, 1986, De Brentani, 1986)

Research Gap Research attention so far was focused on the exploration of static resources. –Decision-making criteria that should be used –Development of methods and screening tools However: Go-No Go decision-making is ranked high in top managerial issues (Cooper et al. 2009) Few antecedents of go-no go decision-making performance in innovation projects have been explored!

Go-No Go Decision-Making Issues Information is scarce = Decision-Making is risky and ambiguous. Multitude of projects to be evaluated = various sources of information to be considered. Conceptualizing the decision-making committee as a an information processor is relevant to understand go-no go decision- making performance.

Cross-functional Distributed knowledge Senior management Risk of fragmentation Absence of cooperation Lack of information exchange and integration Committees often fail to reach their informational potential. Decision-making committee

Research Questions How can we facilitate the integration of distributed information and knowledge? How can we stimulate coordination between decision- making committee members?

B B A A C C B B D D A A C C D D Group Space What we see What we would like to see Performance

Introducing Transactive Memory Systems: Defined as a set of distributed, individual memory systems that combines the knowledge possessed by members coupled with shared awareness of “who knows what ” (Wegner, 1987). TMS: Meta-knowledge of who knows what + knowledge embodied within individuals (what individuals know personally) TMS: cooperative division of labor for learning, remembering and communicating relevant task-knowledge (Hollingshead, 2001)

Literature Review Previous Findings: TMS increases team performance TMS increases TMT information gathering TMS increases NPD performance Main issues: Laboratory settings – No field studies Used either student samples or teams in single organization. Absence of unique measure of TMS

Decision- making effectiveness Organizational Climate Decision- making efficiency TMS Transformational Leadership H1(+) H2(+) H3(+) H4(+) Theoretical Model

Hypotheses ( 1/3) TMS / Go-No Go decision-making effectiveness: 1.Emphasis on recognition of expertise increases the use of specialized rather than general information during project comparison & assessment. 2.Accentuates accountability of the team members = increase of individual contributions in terms of quantity & quality 3.Enhances individual learning = More accurate understanding of external environment 4.Knowing information locations rather than contents = Reduction of members’ cognitive load. H1: TMS positively affects decision-making effectiveness

Hypotheses ( 2/3) TMS / Screening decision-making efficiency: 1.Expertise recognition = increased acceptance of diverse and unique information 2.Decrease of conflicts during collective discussion. 3.Knowing “Who knows what” provides rapid access to information location = time and effort in information searching and retrieving are saved. H2: TMS positively affects decision making effectiveness

Hypotheses ( 3/3) Organizational Climate H3: OC positively affects TMS Transformational leadership H4:TL positively affects TMS

Method Data collection: Technology-based service industries. Cross-sectional study Online survey Senior managers 500 invitations sent out. 136 valid observations. Measures: Efficiency: 2 items Effectiveness: 6 items Dooley et al.(1999) TMS: specialization, credibility and coordination (Lewis, 2003) Transformational leadership: 8 items (Den Hartog et al., 1997, Schippers, 2003). Organizational Climate : fairness, innovativeness and affiliation ( Bock et al. 2005) Data analysis: SPSS Partial Least Squares regression technique ( PLS)

Sample IndustryGenderAgeLocation Financial Services 17,67%Male 76.4%<300%Europe42.5% IT32.2%Female 10.2% %USA42.5% Telecoms10.2% %ASIA10.2% Other29.1% %Other4.7% Unknown11%Unknown 13.4%> 567.9%

Decision- making efficiency R²=.23 Decision- making efficiency R²=.23 Organizational Climate Decision- making effectiveness R²=.35 Decision- making effectiveness R²=.35 Coordination R²=.61 Coordination R²=.61 Specialization R²=.22 Specialization R²=.22 Transfor- mational Leadership.37(3.70).30(2.49).58(9.63).45(2.75).33(2.38).47(5.47) Fairness Affiliation Innovative ness.28(10.20).52(18.47).34(16.08) ns.48(5.94) ns Antecedents TMS Decision-making performance Credibility R²=.38 Credibility R²=.38 ns.21(2.27)

Results TMS affects screening efficiency and effectiveness positively –3 components of TMS are important and highly correlated –Coordination affects the screening decision- making process performance Transformational leadership plays an important role in –Facilitating “expertise recognition” –Initiating coordination at the committee level Organizational climate affects –Credibility (trusting the others to be experts) –coordination behaviors at the decision-making committee.

Recommendations Managerial recommendations: Creation of meta-knowledge of “who knows what”: Explicit identification of “experts” within the committee. Foster a an appropriate climate characterized by fairness, innovativeness and cohesiveness. Strengthen the coordination between decision- making committee members. Team leader has to show transformational leadership to facilitate TMS and make it work.

Conclusion Suggestions for Further Research –Longitudinal study: to detect long-term benefits of TMS, e.g. learning effects –Exploration of other enablers of TMS: for instance, include other organizational antecedents. –Study of TMS effects regarding innovation types (incremental/ radical) –Etc… Thank you for your attention