Innovation @ Merage - UCI Paul Merage School of Business : Innovation, Strategy/Vision

Management Innovation and Leadership: The Moderating Role of Organizational Size

Charlie Baecker — Tue, 17 Jan 2012 19:20:00 GMT

Recent research on new managerial processes, practices and structures that can change the nature of managerial work show that this form of management innovation can be an important source of competitive advantage. Ignacio Vaccaro, Justin Jansen, Frans Van Den Bosch and Henk Volberda hone in on this research at the organization level in their paper, “Management Innovation and Leadership: The Moderating Role of Organizational Size.” Because top management has the ability to influence such management innovation within organizations, the authors investigate the role of leadership behavior.

They define two forms of leadership: transformational and transactional. They see transformational leadership as being “aimed at the followers’ identification with its purpose and common goals. It stimulates employees to attain to organizational goals by appealing to high-level needs for self-actualization.” Through its four dimensions of idealized influence, inspirational motivation, intellectual stimulation and individual consideration, transformational leadership can affect all facets of management innovation. Transactional leadership, on the other hand, involves leaders who are “primarily concerned with gaining compliance from subordinates – which they will do by targeting their self interest – by agreeing upon the conditions and rewards that will follow the fulfillment of certain requirements. With two dimensions of contingent reward and active management by exception, transactional leadership is also positively related to management innovation within an organization.

The authors further find that organizational size moderates the effectiveness of both transformational and transactional leadership on management innovation. Their results indicate that the effectiveness of transformational leadership increases with organizational size. In contrast, smaller, less complex benefit from transactional leadership when realizing management innovation.

Paper

International Business Travel: An Engine of Innovation?

Charlie Baecker — Tue, 17 Jan 2012 19:14:00 GMT

Business surveys and research have often reported that managers prefer face-to-face communication when negotiating deals and selling products. However, Nune Hovhannisyan and Wolfgang Keller go further in their paper "International Business Travel: An Engine of Innovation?" to show that face-to-face meetings are also important for the transfer of technology, reasoning that technology is tacit and usually best described and demonstrated in person. They examine the role of inward business travelers in raising a country’s rate of innovation by looking at business travel from the United States to thirty-six other countries during the years 1993-2003, using patents to measure innovation.

Their results indicate that international business travel has a significant effect on technology transfer through international trade and foreign direct investments. On average, a 10% increase in international business traveler arrivals leads to an increase in patenting by about 0.6%, which is substantial in this scope. Hovhannisyan and Keller also find evidence showing that the quality of the impact on innovation and patents is related to the quality of the technological knowledge carried by each business traveler. Furthermore, they suggest that cross-country income differences can be reduced through international air travel, issues that create the foundation for further research within labor market policies on how strongly short-term cross-border movements affect innovation.

Paper

No Exit: Failure to Exit Under Uncertainty

Charlie Baecker — Tue, 17 Jan 2012 19:10:00 GMT

For any business, delayed exits pose substantial economic problems. Even though many companies tend to hold on to their assets, studies have shown that returns would triple if VCs exited ventures at the right time and shareholder value could increase as much as 13.6% should corporations divest underperforming business units optimally.

Anne Marie Knott recently co-authored a research paper with Dan Elfenbein entitled, “No Exit: Failure to Exit Under Uncertainty.” They examine the private costs of excess entry and study whether social welfare can be improved by expediting the exit of would-be failures. As predicted, their results show that there are substantial economic gains to improving exit decisions. In essence, their research paper provides the mathematical support to prove the value of exiting the market at optimal times.

The general topic of her current paper is in entrepreneurial exit, but the problem they are trying to alleviate is actually much broader, as these types of exits occur frequently. For example, firms exit markets, business units and products, close plants and abandon R&D projects, while venture capitalists exit ventures, employees leave firms and individuals sell stock. Quite simply, exits influence much of the market, as do entrepreneurial entries.

Paper

Presentation

Making Innovation Matter

admin — Thu, 17 Mar 2011 23:42:00 GMT

Abstract: Inventions that aren't commercialized remain inventions, not innovations. Companies such as Apple are organized internally to repeatedly produce innovations in the core business as well as in new businesses. Such companies make sure that their innovations matter and their products are really valued by the customers. This article’s conclusion is that an invention should solve some job that needs to be done. The product developed in the process should matter enough that the customers are willing to pay for the same. Companies should not go too far to battle over the marginal differences but should rather focus more on creating products that are really valued by their customers.

Published: Bloomberg Businessweek, March 2011

Authors: Mark W. Johnson

Link: Making Innovation Matter

How to Plan Innovation

admin — Thu, 17 Mar 2011 23:33:00 GMT

Abstract: This article articulates the proposition that innovation is about problem solving, understanding how to ask the right questions, and seeing patterns before facts. All these aspects of innovation help companies develop the right product or service for their customers. This article’s main conclusion is that all the employees in a company have the necessary skills to be innovative. The key challenge faced by most of the companies is not to develop new innovative products for the customers but to create an experience for the customers that also preserves the brand equity those companies had built in the past. It is imperative for companies to preserve their brand equity and simultaneously seek out all the innovative opportunities discovered while developing a new product.

Published: Bloomberg Businessweek, March 2011

Authors: Laura Jakobsen

Link: Innovation

Restoring American Competitiveness

admin — Sat, 12 Mar 2011 00:00:00 GMT

Abstract: This article describes that many high tech products such as fabless chips, LCD for monitors, TVs, handheld devices like mobile phones, power semiconductors for solar panels are no longer produced in United States because the industrial commons required for the manufacturing of these products have been lost through outsourcing for short term cost benefits. The article defines industrial commons as the combined capabilities of the high technology firms and the other companies in the industry such as the suppliers of advanced materials, tools, production equipment, and components.

The article’s main conclusion is that the U.S government and industry should work together to revive the country’s industrial commons and thus restore the ability to manufacture a wide array of high technology products. The article also provides a number of suggestions to the policy makers of the U.S businesses about the role that government can play to rebuild the industrial commons and thus realize continued innovation and sustainable economic growth in United States.

Published: Harvard Business Review, July–August 2009

Authors: Gary P. Pisano and Willy C. Shih

Link: Read Full Article

Hotbeds of Innovation

admin — Fri, 11 Mar 2011 23:55:00 GMT

Abstract: Many U.S multinational companies have been forced to revise their R&D budgets because of weak sales and the pressure to stay ahead from their global low-cost competitive rivals in Asia and Latin America. The article concludes that some of these companies have adopted a new approach of “ecosystem investing” in which large companies such as Johnson & Johnson, General Electric, General Motors, and Google are creating strategic partnerships with startups and small companies whose technologies and skills can help them expand their own capabilities. This approach has helped large companies to tap into new sectors such as genomics and biotechnology, advanced robotics, lithium ion batteries, semiconductor manufacturing, and nanotechnology.

Published: Strategy+Business, January 24, 2011

Authors: William J.Holstein

Link: Strategy+Business

Using Rivalry to Spur Innovation

admin — Thu, 17 Feb 2011 03:12:00 GMT

Abstract: Many of the best practices of the Renaissance have already been largely integrated into today’s R&D practices to stimulate business innovation. Some of the practices adopted from that creative period of Renaissance include -

• Promoting “collision” between engineers, scientists, and managers ultimately leads to better collaboration and ultimately produce the best ideas.

• Giving researchers their space to spend time on their own ideas and projects.

• Setting stretch goals to encourage innovators to “shoot for the stars.”

The article concludes that a friendly and healthy degree of rivalry between two or more teams working on a given project can have a strong motivational impact and can lead to new levels of creativity and more valuable, business innovation. The article conclusion is that modern R&D organizations are missing an opportunity to promote pioneering innovation by overlooking this potential of rivalry.

Published: McKinsey Quarterly, May 2010

Authors: Bernard T. Ferrari, and Jessica Goethals

Link: Using Rivalry to Promote Innovation

The Relative Impact of Marketing, Research – and- Development, and Operations Capabilities on Firm Performance

admin — Wed, 27 Jan 2010 00:57:00 GMT

Abstract: The three main core functions that are utilized to provide a strong competitive advantage are marketing, R&D, and operations. This article explores the impact of marketing on the performance of an organization relative to R&D and operations. Additionally, they analyze the overall relationships between company characteristics and organizational capabilities and performance.

Authors: Alexander Krasnikov and Satish Jayachandran

Published: July 2008

Link: Journal of Marketing

The Half-Truth of First-Mover Advantage

admin — Thu, 21 Jan 2010 00:33:00 GMT

Abstract: Early industry entrants are often thought to have the first-mover competitive advantage, whereas others believe there is no competitive advantage. Examples can be given to showcase both sides of the argument, however, Suarez and Lanzolla focus on factors that most influence the destiny of first movers. This article analyzes the affects of the pace of product evolution and market expansion on a first mover’s success. Particularly, it is important to analyze the type of environment and industry that is present, and assess the character and depth of your resources. With this information, companies can decide on the type of advantages they can leverage most. For example, is short term success, immediate success or delayed success most likely achievable.

Author: Fernando Suarez and Gianvito Lanzolla

Published: April 2005

Link: Harvard Business Review

How Industries Change

admin — Tue, 12 Jan 2010 21:57:00 GMT

Abstract: In turbulent economic times it is important to take a step back and take a longer-term look at how industries change and the context in which companies conduct business. This article identifies four trajectories of industry change and the two threats of obsolescence that shape them. It is not easy to identify industry evolution; however, the payoff of strategic decision making is great.

Author: Anita M. McGahan

Published: October 2004

Link: Harvard Business Review

Blue Ocean Strategy

admin — Tue, 12 Jan 2010 21:49:00 GMT

Abstract: Within the business world, there are two different types of markets which can be identified as the blue ocean and red ocean. The red ocean refers to known markets and industries in which companies compete whereas the blue ocean refers to the unknown or industries that have not yet been established. In this article Kim and Mauborgne explore strategies through which organizations can consciously create and capture blue ocean space within the business world.

Authors: W. Chan Kim and Renee Mauborgne

Published: October 2004

Link: Harvard Business Review

The Designful Company: How to Build a Culture of Nonstop Innovation

Lynda Lawrence — Wed, 17 Jun 2009 23:24:00 GMT

By: Marty Neumeier: New Riders, 2009.

Despite its dreadful title, this little book is a gem. Neumeier explains why everyone should care about design (companies that win design awards have 100-200% higher returns, and must-have products are always because of good design). More important, he defines designers as everyone who makes something better, whether it’s an idea, a process or a product.

He also points out the difference between standard business thinking that measures “What is” and design thinking that posits “What could be.” Without the latter, he says, we’d all be driving the same cars and watching broadcast TV. As for getting these new ideas converted to reality, he has strong ideas about storytelling (good) and PowerPoint (bad).

Why should you care about design? Just substitute the words innovation or organizational change and you’ll see why his insights apply to just about everything you have on your to-do list for the next decade.

Definitely worth an hour of your time, I’d give it a 9.0 on the LL innovation meter. Recommended for managers, MBAs, and anyone interested in changing their organization’s status quo.

The Age of the Unthinkable: Why the New World Disorder Constantly Surprises Us and What We Can Do About It

Lynda Lawrence — Wed, 06 May 2009 23:49:00 GMT

By: Joshua Ramo: Little, Brown, 2009.

While it’s not strictly a business book, this is the best book for business that I’ve reviewed this year. It is, in fact, a whole new way of facing the future of any endeavor: Ramo suggests that the only way to deal with uncertainty is to accept that you can’t possibly predict anything.

He begins with an analogy from physics. When you methodically add single grains of sand to a pile, there is absolutely no way to tell which grain will cause an avalanche. Then, using examples from Google to Hizb’allah, he explains that no successful organization has a vision or strategic plan that can anticipate all the changes in a global and interconnected world. The successful ones, he says, are those that constantly adapt to change.

For most businesses, that attitude is too frightening to contemplate. Strategic planning, quarterly earnings projections, and overpaid executives are not guarantees of anything. Instead, he recommends that organizations think long-term, holistically and flexibly. It’s not innovation as a growth or survival strategy—it’s innovation as an organizational structure, a product and a philosophy.

This one gets a 9.8 on the LL innovation meter. I’d recommend it for anyone who wants to be part of a viable organization in the next few decades. And if any of our nation’s political leaders have the time, it should be on their reading lists as well.

Merage Students Apply Sustained Innovation to Global Social Issues

admin — Tue, 17 Mar 2009 22:03:00 GMT

Abstract: Merage School students are tackling problems with global implications — like poverty, global warming, school failure, childhood obesity and prison overcrowding. In the Topics in Strategic Innovation class taught by Professors Leonard Lane and Lynda Lawrence, students start with the basics: disruptive and incremental innovation, Blue Ocean Strategy which promotes a systematic approach for “making competition irrelevant,” and a framework for Business Model innovation that involves a culture of ideas, plus the people, practices and partners that can move an idea to a profitable reality.

Published: 2008/2009

Author: John Gregory