Innovation @ Merage - UCI Paul Merage School of Business : Organization/Staffing, Innovation

Organization Innovation

Charlie Baecker — Thu, 07 Jun 2012 18:17:00 GMT

Chien-Chiang Lin and Wen-Wei Hung conduct a survey to analyze how financial practitioners view innovation in their paper, “Prioritizing Factors of Organizational Innovation: The Application of Grey Relational Analysis.”

ABSTRACT: In the past, corporations could remain competent as long as they possess valuable resources such as land, capital, or labor forces; however, facing globalization, technological advancement, and the pressure of being environmentally friendly, corporations need to cultivate innovative capabilities to stay competitive in the fast changing business arena. It is well recognized that successful innovation could improve operational performance; however, most companies could not successfully enjoy the fruit of innovation and obtain premium returns. Investing in innovative activities is always a risky decision; therefore, it is of great importance for corporations to figure out possible factors that might jeopardize the process of being innovative. The current study reviewed previous articles concerning factors that might affect the result of innovative activities; questionnaires were then formulated and distributed to practitioners in the financial industry in Taiwan to understand their opinions about the priority of those factors. Grey relational analysis was utilized to analyze the data provided by those practitioners to uncover relative importance of different factors. A comparison of the priority of these factors among practitioners at different organizational levels was conducted to figure out similarities as well as differences of among those practitioners. The results of the current study could be a reference and a starting point for practitioners to invest precious resources for pursuing excellence.

Paper

Motivating Innovation

Charlie Baecker — Tue, 17 Jan 2012 19:38:00 GMT

Motivating innovation is a critical part of designing incentives. Some previous research has shown that shareholders often must motivate managers to pursue more innovative business strategies. Gustavo Manso examines aspects of an incentive structure in his paper, “Motivating Innovation.”

Manso finds that the optimal incentive scheme motivates innovation by exhibiting substantial tolerance for early failure and reward for long-term success. Additional critical components to encourage innovation and new ideas include commitment to a long-term compensation plan, job security and timely feedback on performance. Furthermore, in regards to managerial compensation, Manso writes that this incentive program can be implemented into an organization via a combination of stock options with long vesting periods, option re-pricing, golden parachutes and managerial entrenchment.

Paper

Non-compete Covenants: Incentives to Innovate or Impediments to Growth

Charlie Baecker — Tue, 17 Jan 2012 19:33:00 GMT

Non-compete covenants are clauses written into contracts that expressly prohibit individuals from competing with former employers. Particularly for technical workers and upper-level management, they have developed to become a common feature of employment contracts. Sampsa Samila and Olav Sorenson research this issue and determine whether they encourage innovation or impede growth in their paper, “Non-compete Covenants: Incentives to Innovate or Impediments to Growth.”

They find that the enforcement of non-compete clauses significantly impedes entrepreneurship, employment growth and innovation. The authors believe that this may be due to the fact that the “value of the recombination of knowledge facilitated by the elevated mobility of individuals across firms might outweigh the greater incentives to innovate afforded by the enforcement of these non-compete covenants.” Furthermore, their results show “relative to states that enforce non-compete covenants, an increase in the local supply of venture capital in states that restrict the scope of these agreements has significantly stronger positive effects on (i) the number of patents, (ii) the number of firm starts, and (iii) employment.” Finally, their findings point to a strong interaction between financial intermediation and the legal regime in promoting entrepreneurship and economic growth.

Paper

The Innovation Dilemma: How to Innovate When the Market Is Mature

Charlie Baecker — Tue, 17 Jan 2012 19:24:00 GMT

Robert G. Cooper recently addressed a common issue in the present market in his article, “Perspective: The Innovation Dilemma: How to Innovate When the Market Is Mature.” If you are trying to grow your business wishes in the midst of mature, commoditized markets, this is a good article to read that discusses examples of bold innovation, which are breakthrough products, services and solutions that create growth engines for the future.

Cooper outlines five different vectors that can act as drivers of innovation. First, have a product innovation strategy that focuses your development efforts on opportunity-rich strategic arenas, much like Corning and Apple do. Second, foster the right climate and culture for innovation, driven by senior executives, as found at Grundfos and 3M. Third, set up a system to generate, capture and handle proactive ideas, similar to what Swarovski has done. Fourth, design a robust idea-to-launch stage-gate process to manage large and complex and development initiatives, which companies like P&G, Emerson Electric and Kennametal have done. And finally, do the necessary up-front due diligence and make the right fact-based investment decisions in riskier projects, such as portfolio management, much like Corning, Green Mountain Coffee Roasters and Grundfos do.

Click here for the paper to read more about these examples

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

Using Network Analysis to Build a New Business

admin — Thu, 28 Jan 2010 19:52:00 GMT

Abstract: As organizations become more global, it is important to explore network connectivity internally and externally. Often employees collaborate with those that they already know and feel comfortable with; however, it is essential to build value-added ties effectively and efficiently to reap maximum benefits. This article explores ways in which employees can create and leverage networks as a means to promote collaboration and innovation. For example, it suggests that well connected people in the organization who are seen as opinion leaders for specific topics should be publicized as experts throughout the organization. By organizing a bi-weekly status call and encouraging members to make connections with at least one peripheral partner, an organization can improve cohesion by 20% within the network.

Authors: Rob Cross, Ana Dutra, Bob Thomas, and Carrie Newberry

Published: 2007

Link: Science Direct

Consequential Strangers: The Power of People Who Don’t Seem to Matter…But Really Do.

admin — Tue, 20 Oct 2009 19:53:00 GMT

By Melinda Blau and Karen L. Fingerman, W.W. Norton (2009). While this book builds on the established notion of weak ties being valuable information sources, it also offers a handful of insights into how those weak ties work in innovation. It starts with a simple self test: a list of 22 occupations. You check off whether you’re related to someone in that field, are friends with someone, or just know them as what you might call acquaintances—someone you could talk to. Most people know people in about six or seven of the occupations—the best performer could check off 19. According to Blau and Fingerman, the more of them you know, the more likely you are to get diverse experience, ideas, and more tools for solving problems. It even works virtually. When InnoCentive posted scientific inquiries, within four years 80,000 people had signed up—and the best solutions came from diverse groups of scientists in a variety of fields. This book is eye-opening on a personal level (you’re more likely to find a new job through these consequential strangers in your network than through friends and family), and it offers a number of examples that reinforce the importance of diverse opinions in creating breakthrough ideas. I’d give it an 8.5 on the LL Innovation Meter for anyone who wants to increase your own effectiveness or that of your team.

Key Drivers for Management Innovation

admin — Tue, 17 Mar 2009 21:47:00 GMT

Abstract: The Wall Street Journal recently pronounced Gary Hamel, author of Leading the Revolution and Competing for the Future, the world's most influential business thinker. In this short video, Hamel identifies some of the key drivers that necessitate management innovation.

Published: March 2009

Link: HSM

When Service Means Survival

admin — Tue, 17 Mar 2009 20:30:00 GMT

Abstract: In a series of articles BusinessWeek explores innovative and pragmatic ways to maintain customer service in these uncertain times.

Published: March 9, 2009

Link: BusinessWeek

P&G's Innovation Culture

admin — Thu, 23 Oct 2008 21:22:00 GMT

Abstract: How we built a world-class organic growth engine by investing in people.

Published: Autumn 2008

Authors: A.G. Lafley with Ram Charan

Link: strategy+business

Disrupting Class: How Disruptive Innovation Will Change the Way the World Learns

admin — Mon, 28 Jul 2008 22:03:00 GMT

By Clayton M. Christensen, Michael B. Horn and Curtis W. Johnson; McGraw Hill 2008

Innovation guru Christensen has taken his principles of innovation and applied them to one of the most intractable systems in the country—our public schools. And while this specific topic won’t appeal much to people outside the educational system, plus active parents, some of his thoughts have broad application in change management for any organization.

First, he concludes that disruptive change never comes from within an established and successful organization: only those that can afford to create totally separate entities with totally different rules can hope to innovate. Second, unless everyone in an organization has the same goals, self-interest, language, and agreement on how to achieve those goals, the traditional leadership tools—vision statements, charismatic leadership, incentives—more often result in eye-rolling than significant progress.

Finally, because everyone has different learning styles, people with expertise in a topic may the least able to teach others who don’t have the expertise (think about programmers teaching computer-phobic English majors). If you’re attempting innovation that requires new learning, this should help you design different teaching tools for different people.

On the LL Innovation Meter, I’d give it a 7 for general audiences, an 8 for people in education or training.

Lynda Lawrence is an innovation consultant with Ideaworks Consulting. She teaches Strategic Innovation and Design Management at the Merage School at UCI, and is an advisor to the Beall Center.