1. 13- Copyright 2007 Prentice Hall 1 Organizational Theory, Design, and Change Fifth Edition Gareth R. Jones Chapter 13 Innovation, Entrepreneurship, and Creativity

2. 13- Copyright 2007 Prentice Hall 2 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

3. 13- Copyright 2007 Prentice Hall 3 Learning Objectives (cont.) 4.Identify the ways in which information technology can be used to foster creativity, and speed innovation and new product development

4. 13- Copyright 2007 Prentice Hall 4 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 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

5. 13- Copyright 2007 Prentice Hall 5 Innovation and Technological Change (cont.) Incremental technological change: technological change that represents a refinement of some base technology Incremental innovations: products or operating systems that incorporate refinements of some base technology

6. 13- Copyright 2007 Prentice Hall 6 Innovation and Technological Change (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

7. 13- Copyright 2007 Prentice Hall 7 Figure 13-1: The Technology Cycle

8. 13- Copyright 2007 Prentice Hall 8 Innovation and Technological Change (cont.) 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

9. 13- Copyright 2007 Prentice Hall 9 Innovation and Technological Change (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

10. 13- Copyright 2007 Prentice Hall 10 Innovation and Technological Change (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 “Creative destruction”: new companies use new global and technological opportunities to make better products that drive old, inefficient companies out of business

11. 13- Copyright 2007 Prentice Hall 11 Figure 13-2: Technological Change and Product Life Cycle

12. 13- Copyright 2007 Prentice Hall 12 Innovation, Entrepreneurship, and Creativity Intrapreneurs: 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

13. 13- Copyright 2007 Prentice Hall 13 Innovation, Entrepreneurship, and Creativity 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 things Knowledge-creating organization: an organization where innovation is going on at all levels and in all areas

14. 13- Copyright 2007 Prentice Hall 14 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

15. 13- Copyright 2007 Prentice Hall 15 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

16. 13- Copyright 2007 Prentice Hall 16 Managing The Innovation Process (cont.) Quantitative modeling (cont.) 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

17. 13- Copyright 2007 Prentice Hall 17 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 a minimum cost Optimal sequencing of tasks is often worked out by a team Analysis is an important learning tool

18. 13- Copyright 2007 Prentice Hall 18 Figure 13-3: CPM Project Design

19. 13- Copyright 2007 Prentice Hall 19 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

20. 13- Copyright 2007 Prentice Hall 20 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

21. 13- Copyright 2007 Prentice Hall 21 Figure 13-4: A Stage-Gate Development Funnel

22. 13- Copyright 2007 Prentice Hall 22 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

23. 13- Copyright 2007 Prentice Hall 23 Figure 13-5: Innovation as a Cross-Functional Activity

24. 13- Copyright 2007 Prentice Hall 24 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

25. 13- Copyright 2007 Prentice Hall 25 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

26. 13- Copyright 2007 Prentice Hall 26 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

27. 13- Copyright 2007 Prentice Hall 27 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

28. 13- Copyright 2007 Prentice Hall 28 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

29. 13- Copyright 2007 Prentice Hall 29 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

30. 13- Copyright 2007 Prentice Hall 30 Innovation and Information Technology (cont.) Information 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

31. 13- Copyright 2007 Prentice Hall 31 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

32. 13- Copyright 2007 Prentice Hall 32 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

33. 13- Copyright 2007 Prentice Hall 33 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