Managing Innovation_organization of innovation

www.CeTIM.orgProf. Dr. Bernhard R. Katzy

Session 3: Organization of Innovation

Prof. Dr. Bernhard Katzy

2012

http://www.cetim.org/

www.CeTIM.org 9. April 2023

Overview of Course Content

2

Basic innovation concepts

Innovation TheoryDominant theory, Main issues and developments of innovation research

Introduction to innovation……

Innovation System

Organization of innovation

Transformation and entrepreneurship

Innovation Governance

Innovation

Prof. Dr. Bernhard Katzy


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Session 3: An Overview

● Mini-Test

● Challenges when organizations face innovation

● Understanding organization

● Organizing innovation

● Readings for session 4

AGENDA

Prof. Dr. Bernhard Katzy 9. April 2023


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Session 3: reading engagement

Mini-Test



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Challenges when organizations face innovation

Survival depends on maintaining a stream of innovations but

INNOVATION'S UNCERTAINTY

INNOVATION

Technology uncertaintyR&D capabilities to develop

new technology

Whether developed the right technology

Market uncertainty

Competition uncertainty

Demand uncertainty

Organization uncertainty

Formal structure

Culture

• Every two years almost our entire product line turns over. We can almost go out of business in two years if we don't do it right----Gordon Moore



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Challenges when organizations face innovationMODEL OF FUNCTIONAL ORGANIZATION

Operativecore Marketing

Purchasing

HumanResources

R & D

Finance

Source: [Thompson]



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Challenges when organizations face innovation

[Jay R. Galbraith 1974]

AN INFORMATION PERSPECTIVE OF ORGANIZATION DESIGNING

Stable organizationRules and programs

Hierarchy

Targets and goals

Uncertainty

Reduce the need for information processing

Increase the information processing capability

Investment in vertical information system

Creation of Lateral relations

Creation of slack resources

Creation of Self-contained tasks

Increasing planning targets

Groups created based on markets, projects…….

Create information channels, standardize information…….

Direct contact, task forceTeams …….

Difference between information required and

possessed



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Understanding organization

Comparison between organic structure and mechanistic oneTRADITIONAL ORGANIZATION STRUCTURE

Organic Mechanistic

an unclear hierarchy Follow the principle of hierarchy

unclear job responsibilities Every official is subject to an impersonal order by which he guides his actions

decision making is consultative and based on task expertise rather than being centralized in the management hierarchy and

Each incumbent of an office has a specified sphere of competence, with obligations, authority, and power to compel obedience strictly defined

communication patterns are lateral as well as vertical

The system serves as a career ladder

…….. ……

[Burns and Stalker 1961]

9. April 2023Prof. Dr. Bernhard Katzy


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Understanding organization-Architecture

ORGANIZATION ARCHITECTURE

Informal Organization

Formal Organization

Arrangements

Individual

Task

[ David A. Nadler and Michael L. Tushman, 1997]



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Understanding organization-Growth

ORGANIZATION GROWTH


Phase / Time

Size

Crisis ofAutonomy

Crisis ofLeadership

Crisis of

Control

Crisis ofRed Tape

Growth throughCreativity

Growth throughDirection

Growth throughCollaboration

Growth throughCoordination

Growth throughDelegation ???

Crisis

[Greiner Crisis and growth model]


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The Case of Siemens AG

[Siemens AG, 1999]

Fax

Video

Internet/

Email

EDV

PBX



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Understanding organization-Culture

summary from Charles A. O'Reilly and Michael L. Tushmans' idea

LINKING INNOVATION AND CULTURE

Support for risk taking & changeTolerance of mistakes

Effective group functionSpeed of action

CREATIVITY IMPLEMENTATION

INNOVATION

Unpredictability

Risk TakingNonstandard Solution



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Organizing innovation - Ambidextrous organization

THE CASE OF IBM

Horizon 1

Horizon 2

Horizon 3Growth

Time and Level of Uncertainty

Mature businesses

Major new growth businesses

Portfolios of experiments for long term growth

Profit

ROIC

Costs

Productivity

Revenue growth

Market share gains

New customer acquisition

Profit

Strategic milestones

Time to launch

In-market experiments

Operators Business Builders Portfolio Managers

IBM strives to achieve a balanced portfolio of businesses across all three horizons of growth.

Source: Baghai/Coley/White, The Alchemy of Growth, 1999.



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Organizing innovation - Virtual Organization

VIRTUAL ORGANIZATION

Network

- Co-operation

platform

- stable

Project

- Order

Processing

- Dynamic

Management

of dynamic

Co-operations

[Schuh, Katzy, Eisen, 1997]



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Organizing innovation - Virtual Organization

ROLES IN VIRTUAL ORGANIZATION

Network-coach

- construction and maintenance of

the infrastructure

- acquisition of partners

- rules for order processing

Manager

in-/ outsourcing

- coordination

- communication with the

project manager

Broker

- acquisition

- merchandising of the

network competencies

- balancing supply/ demand

Project manager

- order processing

- engineering

Auditor

- financial control (neutral)

- assessment

Competence manager

- brings partners competencies together - communication with customers

I/O

I/O

I/O

[Katzy, Schuh, Millarg, 1996]



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Organizing innovation – Virtual organization

WHEN IS VIRTUAL VIRTUOUS

CooperationSupplier

Contracts Market

Transactions

VerticalIntegration Fusion

JV

Hierarchy:

certainty and low risks

low incentives

Market:

uncertainty and high risk

high incentives

Integration

[Chesbrough, Teece, 1996]



www.CeTIM.org 179. April 2023

Readings for session 4

S4:

Transformation and Entrepreneurship

• Article 22: Dynamic capabilities and strategic management

• Article 36: Creating new ventures from Bell labs Technologies

Selective reading

<Capturing value from technological innovation: integration, strategic partnering, and licensing decisions> by David Teece 1988


Managing Innovation_organization of innovation

Technology

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