Innovation management case study

Innovation Management Module Tutor: Dr Rebecca De Coster

Student I:D: 0409576

Student Name: Hassan Saif

MSc Engineering Management

Brunel University, West London

1/12/2009

HSK Ltd

Innovation Management HSK Ltd

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1.0 Data Networking Co

The data networking HSK Ltd Company was founded in 1997 and has around 800

employees with its headquarters in London and Manufacturing facilities based in

Kent. The company is committed to expanding in to different areas and has a

successful track record in developing data networking business solutions.

HSK offers various Services and its Strengths are in the following areas:

HSK offers various data networking products including IP Routing, WAN

access, firewall and Ethernet Private Line products. The solutions are

compatible with various operating systems and standard based IP routing and

switching networks.

Addresses today’s business challenges by providing reliable survivability,

security, high speed QoS and remote connectivity.

At the central site, branch office or at home, a broad range of capabilities

allows network designers to build an infrastructure exactly suited to the

company’s business needs.

Competitively priced products offer network designers an excellent

alternative that delivers the functionality and reliability customers expect and

demand.

1.1 Acquired Wireless Security Co

The wireless XYZ Ltd Company that has been acquired is based in South East with its

headquarters in Surrey. It has a workforce of approximately 100 people and is

relatively a new company offering its expertise in the commercial security sector.

It is a provider of wireless security systems which are designed to help organisations

create a secure environment and remain safe from intrusion. It provides range of

wireless security measures such as CCTV system, intrusion alarms, card swipe in

systems and movement detection devices.

The core capability lies with its technical experience as they understand business

requirements and have developed various wireless devices delivering cost effective

yet user friendly systems. It has also good business relationship with software

developers in wireless systems in India and China.


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1.2 HVAC Market Trends

The aim is to combine and use both companies technical expertise to develop

wireless HVAC systems with optimise intelligent zone to zone interaction and

provide wireless reporting to central location. The first step in the development

process would be to develop a wireless device that integrates main control features

such as temperature set points, Air handling unit (AHU) and Fan coil unit FCU etc into

one device. This would make the system more user friendly. The zoning system

would save initial cost and energy therefore making the overall system eco-friendly.

The commercial sector should be targeted as a main market.

A recent research carried out by AMA (American Marketing Association) states that

UK HVAC industry is expected to grow by 4% over the next two years 2008-2010

despite the economic downturn. Today the overall non-domestic HVAC market is

estimated to be in the region of £1.35 billion. The industry has seen a consistent

growth of 2% and above since 2000. The recent growth of public sector and the

introduction of environmental legislation have made this sector even more lucrative.

More so at present south east would see more development programmes due to

Olympics as seen from the Figure 1.

Figure 1: Growth Rate of HVAC market


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1.3 High Performance Approach

A proposed approach to planning is to involve everyone in the organization in the

planning process. The planning process should be decentralized such as TQM as it

involves most employees in the organization and is more suitable in this competitive

business. Moreover it allows the planning experts to work with the managers in

major departments to set their individual goals. This facilitates managers throughout

the company to become more involved in finding solutions to problems. As the

environment becomes more turbulent and competitive dynamic plans are required

to meet fast changing needs. Therefore by shifting decentralization even further

down the hierarchical order by working directly with line manager and front line

employee’s organizational goal can be achieved.

The overall vision and goal of an organization is vital in order to increase employee

motivation and commitment. During time of turbulence and uncertainty a powerful

sense of purpose and direction for the future becomes even more important. It is

also very important that an innovative culture which facilitates learning and

creativity should be created. As we are entering into new fast paced innovative

market this culture would enable us to keep ahead of our competitors and would

also help us to get the best of our employees figure 2 shows the high performance

organizational culture. Long term strategic planning is important however for high

performance organization it should be accompanied by event-drive planning, rather

than focusing entirely on a strategic goal. It is attractive to implement this technique

as it is more relevant to current market demands. The hierarchical structure of goals

on the next page shows proposed strategic, tactical and operational goals for our

company.

Figure 2: High Performance organizational culture


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2.0 Innovation Management

Creativity is very important component for meeting challenges in organizations of all

types. Accordingly the leaders should take specific actions aimed at building

creativity in organizations. Innovation management requires managers to have both

technical and soft skills in people management to promote creativity. Ideas are

central in innovation process and managers need to create an organizational culture

that supports creativity both at the individual level and team level. According to

Axtell et al, (2000) innovation is critical to the long term success of any organization.

Without innovation organizations tend to become less competitive and less desirable

to customers hence continuous innovation could provide competitive advantage to

organizations. A common problem in technology based companies is the speed of

change and the difficulty of forecasting the speed of change. Therefore in fast paced

environment the organization needs to be flexible when responding to change and

should implement a strategic management approach that consists of clear sense of

direction based on a clear vision and mission.

2.1 The Innovation Process Framework

Innovation process requires high performance in all of the different disciplines.

Innovation management is made of different inter-related factors. Goffin and

Mitchell (2005) identified five key areas of innovation management.

Innovation strategy: Top management has the responsibility of setting clear vision

and mission and should focus on number of key areas. It needs to develop a strategy

which promotes and encourages innovative culture. There are lot of opportunities

New Product

Figure 3: The Innovation Process Framework


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for us to invent new products in Eco- friendly HVAC systems and we should focus on

acquiring expertise in HVAC systems and our product strategy should focus on being

first to market. Subsequently this would require a large amount of investment in

R&D and Production departments. Therefore the top management needs to clearly

communicate the corporate vision and should also communicate the role of

innovation within the company.

Ideas: ideas are a central point of our innovation strategy, consequently managers

need to focus on creating an organizational culture that supports and facilitates

creativity at both the team level and individual level. According to Barton (1999) the

successful new ideas are delivered successfully in an integrative organization rather

than in a matrix organizational structure. Along with creating an innovative culture

the application of decentralisation is a key part in gaining competitive advantage.

This gives people the empowerment at a lower hierarchical level of organization

consequently giving them the freedom to explore new ideas.

Prioritization: An effective and efficient process is vital to make sure that the best

ideas are chosen for development into new products. A resource needs to be

carefully assigned for the implementation of innovative projects. A manager needs

to assemble the information from across the range of projects to check that the

innovation projects are appropriately balanced and matches the company’s

innovation strategy. It is important that the management teams review and learn

from previous projects.

Implementation: This phase should focus on developing new products quickly and

efficiently. For our innovative company faster development times can be achieved

through effective cross-functional teams, prototyping and testing. The next step is

the commercialization of the product hence successful market launch is essential for

our new products. The implementation process is a continuous learning process

therefore we should learn from each project, so that the future performance can be

greater.

People and organization: Creating a company culture in which employees are

motivated to be constantly innovative is fundamental to company’s success.

Effective reward and recognition programmes will need to be maintained. For us it is

important to have leaner, flatter and flexible organization structure in place which

facilitates innovation and creativity.

A company can achieve a competitive advantage over its rival by choosing one of the

three strategies commonly used. Those strategies are cost leadership, differentiation

and focus. In choosing cost leadership strategy company aims to be lowest cost


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competitor in the market. While differentiation offers a unique dimension to its

customers. Finally, focus strategy offers its services to a particular market or group.

In our case it would be more suitable to adopt a differentiation strategy as the

products we are offering are unique to our competitors such as eco-friendly services;

wireless monitoring and control are distinctive features. In today’s environmentally

friendly world the governments are drafting in new legislations to help clean the

environment. The differentiation strategy would make us distinctive among our

competitors and help gain market share in HVAC market.

3.0 Training requirements

Leadership and commitment is absolutely necessary to drive the successful

implementation of innovation strategy. The interpersonal skills and leadership style

should reflect the innovative culture of the organisation as it mainly task orientated.

In such an environment task orientated leaders should provide a clear vision and

establish a culture in which innovation is visible and widely communicated.

Moreover the leaders must have the aptitude to understand the multiple disciplines,

processes and projects in an organisation. On the other hand, leaders may need to

adapt to different situations with different leadership styles thus flexibility is

essential. The relationship-orientated leadership structure should be adopted once

our organisation has developed familiarity with HVAC market and has established

clear structure and direction. The structure of training should be based on building

teams and improving employee performance.

By using the situational leadership model (figure 4) the current development of our

workforce can be assessed. As the development level of our workforce varies across

different department the leaders need to develop different methods and

approaches to each situation.

3.1 Leadership style

For Sales & Marketing department the workforce possesses a required level of

competency and lie in D3 quadrant hence requiring leadership style with low

directive and high supportive behaviour. The department should continue to use the

same framework of training as before and should share the feedback with all

departments. As we entering into new market the sales & marketing department

should have a greater understanding of the different HVAC products that we are

offering. It is essential to have a clear communication process between internal

departments for that reason the use of intranet communication network would


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allow effective two way communication between departments. Furthermore it

would keep all the employees informed about the company strategic position.

The Systems engineering department has a reasonable level of competency in

developing data networking solutions. Nevertheless, the development of new

product would require combining existing technology which would place them in D2

level. Therefore primarily requiring a coaching leadership style from the

management. It also might be useful to deploy a mentoring training programme

where an experienced worker woks alongside a less experienced worker offering

support and direction.

The Finance department workforce has an essential level of competence required

and lie in D3 quadrant thus requiring leadership style with low directive and high

supportive behaviour. With the purpose of developing business needs the

management should approve the membership of professional bodies such as

Chartered Institute of Management Accountants. Employees should be given the

opportunity to gain CIMA accredited training and development courses hence

allowing our employees to focus primarily on business needs. The management

should provide a comprehensive training plan which should include mentoring

systems, internal and external course to help employees achieve the professional

status.

Source: Richard Daft “The New Era of Management”

Figure 4: Situational Leadership Model


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The Production department workforce has some competency level but not in the

relevant field hence lie in the D2 quadrant. Management needs to provide clear

direction furthermore the management needs to develop comprehensive plan for a

manufacturing process for a wireless communication and monitoring devices. With

the aim of increasing productivity and reducing manufacturing costs a

comprehensive training programme should be provided compromising of practical

workshops and cross functional training. The importance of cross functional training

is highlighted by the following statement “We have great functional specialist but

not enough people who have worked in several functions and have a deep

understanding of the interfaces between functions. Therefore we need to find,

encourage and develop cross functional boundary managers” Massimo Fumarola,

Business development manager at Fiat. (Goffin & Mitchell (2005) page 328). The

comprehensive training plan would allow high utilization of resources and processes.

According to Daft (2006) one method is to introduce “Self-directed learning” training

programme. It is a wide ranging training programme which could be successfully

applied once the HVAC system has fully developed.

Finally the R&D department is at D2 stage as well. The R&D department has a very

impressive record of developing various data networking solutions however as we

are entering a new market the ability to invent is essential. Moreover we should

focus on being first to market as this would give a greater control. With the purpose

of developing the competency further the workforce of HSK Ltd and XYZ Ltd should

be fully integrated into one company. Here it is important to provide necessary

resources and direction therefore the top management should invest in a

manufacturing change programme.

To facilitate the R&D department in developing innovative products an experienced

project manager should be appointed with his expertise in HVAC market. This would

allow us to accelerate the development process of our innovative products and

would provide invaluable direction for our company. The communication between

different departments plays an important role in successful implementation of

innovative products and ideas. This is highlighted from this following statement

“Innovation is often the result of communication between people who do not have

homogenous ideas and se we need to simulate constant dialogue both internally and

externally” Torsten Hersberg, Project Manager R&D department, Vodafone Group.

(Goffin & Mitchell 2005, page 349).


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4.0 Strategic leadership

To improve innovation performance leader needs to successfully manage a wide

range of issues from ideas generation to technological changes and from culture to

organizational changes. The leader needs to take positive actions to bring about a

strategic change, the leader must work effectively to changing customer demands

and needs to support, motivate and lead its team to success. The successful

achievement of strategic goals depends on identifying opportunities and dealing

with external barriers. We need to change our organizational practice and structure

to match the strategic direction. A new cross-functional hierarchical structure for our

organization is proposed in Appendix A. It is important to use this structure as it

provides leaner, flatter and flexible composition of our organization compared to

traditional structure. This cross-functional culture compromises of smaller

networking teams which have self developed goals and objectives.

4.1 Developing the change process

Achieving high performance in an innovative organization requires good leadership.

Leaders need to recognize that there are three key stages; moving from current to

desired state via a transition state. Therefore to achieve this strategic leadership

needs to provide a vision which is widely communicated and rewarded. It needs to

link innovative strategy with people development programmes that facilitates

innovative projects. There are seven common roles involved in strategic leadership

as illustrated by the diagram below. Similarly there are three key functions which are

to be achieved (Maull & Brown, 2001).

Achieving the common task

Motivating and Developing the individual

Building and Maintaining the teams

Figure 5: Strategic Leadership


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To be successful in these functions the leader must follow the following steps. The

setting of a clear vision and focus from the top management is a first step. To help

plan strategic goals the top management should be personally involved this would

increase the sense of urgency. It is vital that the vision of the company is

communicated widely and is transmitted down the lower level of organization such

as operational departments. This is highlighted by the following statements “it’s

important that everyone in the organization understands their role in the innovation

process. Businesses that innovate successfully have a culture where the whole

organisations vision and strategic goals are widely communicated and is committed

to making new initiative work” Trudy Lloyd, Management consultant, Synectics.

(Goffin & Mitchell 2006, page 334).

The leaders would then need to inspire its workforce and value their input by

creating an open and innovative culture. It is important that while setting strategic

goals the concerns of its stakeholders, customers and partners are taken into

consideration. The importance of this is emphasized by the following statements.

“The strategic goal is about getting everyone involved. It’s just not the voice of the

customer. You also need to involve the suppliers, the regularities agencies and all

other stakeholders right from the beginning. I think that the best leaders of

tomorrow will be the ones that can maximize innovation process by minimizing the

interface issues” Pierre Olivier. Vice president of Cobra, Thailand. (Goffin & Mitchell

2005, page 327).

The leaders need to lead by example and adapt the learning process to stimulate

enthusiasm amongst its workforce. Participative leadership such as joint decision

making can create a positive and innovative culture. Axtell et al. (2000) found a

positive relationship between participation and employees’ innovative behaviour in

a manufacturing plant, measured using self-ratings of employees’ suggestions and

implementation efforts.

4.2 Process Theory

Strategic leadership could take advantage of well known theories such as “Process

theories” to help our employee’s motivational level high. Process theories consist of

three theories “Equity theory”, “Expectancy theory” and “Goal setting theory”. For an

innovative company like ours it would be more valuable and effective if we adapted

“Goal setting theory”. This theory would enable our employees to focus their

energies in the right direction. To challenge and encourage our employees highly

ambitious but achievable goals should be set. Locke and Latham (Daft, 2006, p708) in

their study proposed that specific challenging goals increase motivation and

performance of the employees. Ulrich, D. (2008) in his study highlighted the


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importance of challenging goals. According to his work the manufacturing employees

produced their most creative work when they felt that they working on complex,

challenging tasks. The goals needs to be explicit and clear however if the goals are

vague this would create tension and would have a direct effect on the motivation

levels. It is essential that once a goal is achieved it is fairly rewarded and is

recognized by the company. Figure 6 shows the elements of rewards.

Figure 6: Rewards and Recognition

4.3 Management by Objectives (MBO)

In today’s industry one approach which is being widely employed to improve

business performance is known as Management by Objectives (MBO). Many

companies including Siemens, Intel and Black & Decker have adopted MBO and most

managers in these organizations think that MBO is an effective management tool.

This performance management process is intended at improving organisations

performance and is based on principles of measurement, appraisal, action and

monitoring. Figure 7 illustrates the main performance parameters that must be used

to achieve a consistent and accurate business performance evaluation. There is

another illustration of performance measurement technique in Appendix B.

Certainly the most important aspect of this process is to evaluate organisations

performance based on the set goals. It must also be stressed that Performance

appraisal technique process should be based on a rating system which accurately

evaluates performance appraisal. Moreover, the managers should be trained so they

Organizational

goals

Project teams

goals

Individual A’s

goals

Individual B’s

goals

Increase revenues from

new products by 10%

Generate a market share

of 2% this year

Generate a market share

of 2% this year

Team reward & recognition

Employee reward/recognition


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can effectively use this technique and offer constructive feedback to the employees.

According to the research carried out by Buzzotta (1998) the most common errors

made while performance evaluation were stereotyping and halo effect.

Figure 7: Management by Objectives Source: 1000ventures .com

4.4 Motivational theory’s

Using Marlow Hierarchy of Needs theory the workforce of the two companies are at

Safety Needs category. As we have just acquired another company the employees at

that company would be bit doubtful of how they would be considered by another

administration. However, they have the assurance that their jobs would be safe as

we would be using their expertise in order to move forward as a company. Once the

groups are formed into teams and the transition period is completed “Belongings

Needs” category would be achieved. The integration of the employees by using a

cross-training programme and by sharing the vision with everyone at the company

would make this process a lot quicker. Once we have met our goals using

performance methods such as MBO the motivational category would move up to

“Esteem Needs” for our workforce. Depending on the company’s success and human

relation approach the highest category of needs can be achieved in a near future.

There are other well known techniques adapted by companies for decades that have

helped keeping its employees motivated these are discussed in Appendix C.


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5.0 References

Axtell, C. & Harrington, E. (2000). Shop floor innovation: facilitating the suggestion

and implementation of ideas. Journal of Organizational Psychology, Vol. 73, pp. 265-

85.

Barton, D. (1995). Wellsprings of Knowledge: Building and Sustaining the Sources of

Innovation. Harvard Business Press, Boston, MA..

Buzzotta, V.R (1988). Improve your performance Appraisals. Management Review

(August 1988), P 40-43

Goffin and Mitchell (2005). Innovation Management: Strategy and Implementation

Using the Pentathlon Framework. Palgrave Macmillan. ISBN: 1-4039-1260-2

Maull, R. and Brown, P. (2001). Organisational culture and quality improvement.

International Journal of Operations & Productions Management, Vol. 21 No. 3, 2001,

pp 303-326, © MCB University Press

Olham, G.R. and Cummings (1996), A. Employee creativity: personal and contextual

factors at work. Academy of Management Journal, Vol., Vol. 39 No. 3, pp. 607-34

Richard L. Daft (2006). The New Era of Management. International Edition, Thomas

south western, ISBN: 0-324-32331-X.

Ulrich, D. (2008). The Twenty-First Century HR Organisation. Human Resource

Management, winter 2008, Vol. 47, No. 4, Pp. 829–850. © 2008 Wiley Periodicals,

Inc.

Case studies

Massimo Fumarola, Business development manager at Fiat. Fiat Iveco - Identifying

innovation challenges. (Goffin & Mitchell (2005) page 328).

Torsten Hersberg, Project Manager R&D department, Vodafone Group Plc - future

innovation. (Goffin & Mitchell 2005, page 349).

Trudy Lloyd, Management consultant, Synectics. Synectics- driving client’s

innovation products and processes. (Goffin & Mitchell 2006, page 334).

Pierre Olivier. Vice president of Cobra, Thailand. Case study on Cobra, Thailand-

leadership. (Goffin & Mitchell 2005, page 327).

www.1000ventures.com (accessed 20th December 2008)

http://www.1000ventures.com/


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Appendix A: Cross-departmental structure


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Appendix B: Performance Measurement Strategy


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Appendix C: Motivational techniques

Table 1: Motivational Techniques

Recognition&

Rewards

In terms of idea generation it is essential that all the ideas are

actively listened to and appreciated thus creating an

encouraging atmosphere. At the same time approving any

innovative idea which may lead to a future contribution.

Recognition could be in any form compliments, and awards.

Empowering

Employees

It works on the principle of power sharing. This method

includes everyone in the organisation’s decision making

process. This gives workforce the feeling of belonging and of

achieving company’s success. As well encouraging them to

work creatively and in a task orientated culture.

Jo Rotation &

Enrichment

The employees could develop skills further if they are given

opportunity to rotate jobs and get a direct experience of

different projects. By promoting this approach flexible

workforce could be built hence increasing our company’s

competitiveness.

Monitoring

This is another important aspect in keeping in touch with the

progress being made by the employee. However excessive

monitoring should be avoided as it could act as a barrier to

employee’s idea generation and make them feel insecure.

Providing

resources

Once a decision is made to go ahead with the innovative ideas

it is essential that the required resources such as

manufacturing facilities and money are available. There is

positive connection between the availability of resources and

innovative results (Goffin & Mitchell 2005. Pg 284). One such

example of providing resources for employees is that of 3M,

where R&D staff is encouraged to spend 15% of their working

hours on their own chosen project.

Innovation management case study

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