to the Management of Innovation ILead: Graduate Workshop Series- Introduction to Management of Innovation Workshop – A Primer 3rd April 2014 Stephen C Armstrong University of Toronto
Topic 6:00 – 6:05 PM Welcome – Set the Stage and Scope 6:05–6:20 PM I Lecture-Introduction To Innovation – What is Innovation? What are the challenges of strategic leadership and innovation? ! 4 Types of Innovation ! 7 Critical Components of Innovation ! 4 Quadrants of Innovation Impact and Risk 6:20 - 6:40 PM I Breakout Session ! Provide examples of innovation in each of the 4 quadrants and present 6:40 –7:00 PM II Lecture – Managing Strategic Change - What is the nature of organizational change? How can organizational change be managed and “engineered”? ! Design thinking - Setting Direction and Visioning ! Managing Change – Engineering Success ! Case Study- BAE Systems 7:00 – 7:20 PM II Breakout Session ! Provide examples of resistance to change ! Provide remedies 7:20 – 7:40 PM III - Introduction Effective Organizational Teamwork - What is organization development? How can stress be managed in a change environment? ! Components of EOT ! Core Foundation Principles ! Problem Solving and Decision Making 7:40 – 8:00 PM II Breakout Session ! Provide examples you have experienced of poor EOT ! Provide Remedies Introduction to the Management of Innovation Workshop Agenda
to the Management of Innovation Study Questions To Answer……. 1. What is Innovation? 2. What are the challenges of strategic leadership and innovation? 3. What is the nature of organizational change? 4. How can organizational change be managed and “engineered”? 5. What is organization development? 6. How can stress be managed in a rapidly changing environment?
input - "Organization Change" • Organization change is the adaptation of an organization to meet the needs of its changing customer base, social trends, etc. • Organizations are forced to change to keep up with the rest of the world. • This sometimes involved rethinking the way they operate and do business. • When this happens, the same people cannot keep doing the same task over and over as their jobs might have evolved. • These changes are not easy and the challenge for leaders is to change their organization but keep its value clear. • Change in the basic ideas of the organization, as well as adapting to the changing environment Organization change is any change that affects the regular operation or culture of an organization. • That can include position changes, implementation of new procedures, or shift in operational focus. • Being willing to be dynamic and accept market changes by revising strategies and not staying comfortable. • Introducing TRUST into the organization. • Changing structure to fit function
input How -can organizations manage stress? • Introduce TRUST, where colleagues feel comfortable in their work environments. • Innovation incentives - gives the employees the opportunity to work on what they think is right • constant open communication. Due to the fact that things are always changing, deadlines can easily be missed, work changed, and people put in positions where they lack knowledge, skills, or expertise. • Instead of trying to figure things out as individuals and worrying about failure, it's important that organizations promote the vocalization of issues collaboratively • You often need to have a leader to follow, someone that will guide you in this change. • Instead, what is best to do is to have everyone attend an introduction session on the new program and teach the program in depth to one one of two workers which were chosen by management to guide and help their fellow coworkers when they have question. • Organizations can ensure that their deadlines and expectations do not exceed the capabilities of the working staff. Leaders attending to the needs of the team. • Ensuring that everyone is informed of objectives and goals. Try to strengthen the relationships between the various levels of the organization. • This can be done by introducing sports activities and inter murals within the company/ organization Always foster a creative progressive work environment. • Allowing for work at home if needed, and work activities such as exercise programs. • When in doubt look at companies which are thriving – best practices (google)
Innovation 1) What is innovation? ! 4 Types of Innovation ! 7 Critical Elements in Applying Innovation ! 4 Classifications of Technology ! Creativity and Innovation ! The 4 Quadrants of Innovation Impact ! Drivers of Innovation ! The Economic Conception of Innovation - Schumpeter ! Kondratiev Waves – Innovation at Faster Pace ! Collision of Economic waves -Toffler ! The Economic Benefits from Innovation - Productivity Gains? ! Diffusion of Innovation
in Applying Innovation AI ELEMENTS: 4) Organization: Organizational structure must be adjusted correspondingly according to the demands of innovation including new business processes, and workflow. 5) Culture: Changes in mind set and culture is the prerequisites to carry out all innovation. In Google for instance there is a strong innovative culture to encourage innovation and tolerating failures. 6) People Systems: System innovation means the innovation of rules and regulations about enterprise’s routine, performance evaluating, staff rewards and punishments, salary system, training and promotion and so on.
Technology • Emerging Technology – Technologies that are not widely known e.g. bio-chips • Pacing Technology - have the potential to change the entire basis of competition, but have not yet been embodied in a product or process • Key Technology - currently yielding competitive advantage • Base Technology - although necessary and essential to practice, offer little competitive advantage
in Innovation 1. Multi-Screen Thinking vs. Spot Thinking 2. Abstract Thinking vs. Specific Thinking 3. Breakthrough Thinking vs. Trade-off Thinking 4. Intensification Thinking vs. Sheltered Thinking 5. Non-linear Thinking vs. Linear Thinking 6. Diversity Thinking vs. Uniformity Thinking 7. Structured Thinking vs. Random Thinking 8. Ideality Thinking vs. Consumption Thinking 9. Ultimate Goal Thinking vs. Shallow Thinking 10. Evolutionary Thinking vs. Random Thinking 11. Long-Term Thinking vs. Short-Term Thinking 12. Wild Thinking vs. Grounded Thinking 13. Analytical Thinking vs. Jump-to-Solution Thinking 14. Problem Flow Thinking vs. Single Solution Thinking Source: Valeri Souchkov, Power Thinking Skills For Innovative Leadership
Innovation Impact • Incremental innovation: Improvements within a given frame of solutions (“doing better what we already do”); • Disruptive Innovation: (“doing what we already do in new spaces”) • Radical innovation: A change of frame (“doing what we did not do before”).
Radical Innova-on 2. It’s competence-‐enhancing because it builds upon exis-ng knowledge, resources and enters new markets 3 It’s competence-‐destroying because it needs new knowledge and resources to create new technology and markets 1. It brings about changes wherein the exis-ng products will s-ll be viable in exis-ng markets 4 It brings about very great development that push down exis-ng products into obsolescence exis-ng markets 4 Quadrants of Innovation Impact
Innovations Here are some examples pulled together from Clayton Christensen’s work and elsewhere: • The Personal computer: When first introduced, the PC did not provide the computational power or speed of existing mainframe or minicomputers. The PC created completely new segments of computer users such as home users, small office home office (SOHO) users, and students. • Low-cost airlines: When they started, low-cost airlines like Southwest did not provide many of the features that business customers expected like fixed seating, first class, meals on-board, or interline connections to other flights. Southwest, in particular, created a new market of short-haul air travelers by offering a service that competed with travelling by road. • Table-top copiers: First introduced by Japanese companies Ricoh and Canon, table-top photocopiers were much slower and offered less flexibility than the large copiers being sold by Xerox. But, these sleek copiers met the limited needs of individual managers or departments in corporations to get a few quick copies made to meet immediate needs. • Microfinance: This social innovation does not have all the sophistication of a traditional banking product but meets the financial needs of people who were traditionally outside the purview of the banking system. • Online education: While online classes sacrifice some of the rich discussions possible in a face-to-face classroom setting, they offer an opportunity for people who can’t spare the time to attend classes to educate themselves. With cheaper bandwidth and improvements in technology, they have the potential to displace classroom teaching in several contexts.
Market Pull - R&D Push • Market pull ! looking for the best way of satisfying a newly emerging customer demand ! Improvement of the existing products, extension of the existing offer or decrease of price ! Impulses for continuous, incremental product innovations or for process innovations • Research and Development Push ! looking for commercial use of new impulses resulting from the R&D results ! Generating new markets for conceptually different products
- Open Innovation ! Open Innovation is an intentional course of action for identifying and exploiting internal and external novel initiatives in order to develop new products and services. ! It involves multi-stage collaboration with other entities outside a firm, in order to value capture and optimize the standard and value of the final product.
– Creative Destruction In the Theory of Economic Development 1934, Joseph Schumpeter defined economic innovation as: 1. The introduction of a new good, or of a new quality of a good 2. The introduction of a new method of production, which does not need to be founded on new scientific discoveries, but can exist in a new way of commercially handling a commodity 3. The opening of a new market into which a particular manufacturer has not previously entered, whether or not this market has existed before The Economic Conception of Innovation
Creative Destruction In the Theory of Economic Development 1934, Joseph Schumpeter defined economic innovation as: 4. The securing of a new source of supply of raw materials or half manufactured goods, irrespective of whether this source already exists or whether it has first to be created. 5. The creation of a new organization in an industry, or a new monopoly position through trustification (monopolistic system – Oil) The Economic Conception of Innovation
The National Level Country - 2006 Labour Productivity Labour Utilization GDP MFP % Labour Productivity Explained by MFP Innovation Ranking Japan 1.1 0.9 2.0 1.1 100% 1 Germany 2.8 0.3 3.1 2.5 89% 2 France 2.7 -0.5 2.2 2.0 74% 3 UK 2.3 0.5 2.8 1.6 70% 4 USA 0.8 1.8 2.6 0.4 50% 5 Italy 0.3 1.7 2.0 0.1 33% 6 Canada 1.0 1.8 2.8 0.3 30% 7 Source: OECD Database One can reasonable conclude that Canada's lower rate of MFP (Multi Factor Productivity) growth reflects a slower pace of organizational and technological change. Canada versus G7 nations - 2006
What are the challenges of strategic innovation? " Strategic leadership creates the capacity for ongoing strategic change. " Components of strategic leadership: ! Determining the organization’s purpose or vision. ! Exploiting and maintaining the organization’s core competencies. ! Developing the organization’s human capital. ! Sustaining an effective organizational culture. ! Emphasizing and displaying ethical practices. ! Establishing balanced organizational controls.
What are the challenges of strategic innovation? ! Sustainable competitive advantage relies on creativity and innovation. ! Creativity is the generation of a novel idea or unique approach to solving problems or crafting opportunities. ! Innovation is the process of creating new ideas and putting them into practice. ! Solving Problems on existing issues is also a major innovation practice
What are the challenges of strategic leadership and innovation? In highly innovative organizations … ! Corporate strategy and culture should: • Emphasize an entrepreneurial spirit. • Expect innovation. • Accept failure. • Be willing to take risks. ! Organization structure should: • Be organic. • Have lateral communications. • Use cross-functional teams and task forces.
What are the challenges of strategic leadership and innovation? In highly innovative organizations … ! Top management should: • Understand the innovation process. • Be tolerant of criticism and differences of opinion. • Take all possible steps to keep goals clear. • Maintain the pressure to succeed. • Break down barriers to innovation. ! Staffing should fulfill five critical innovation roles: • Idea generators. • Information gatekeepers. • Product champions. • Project managers. • Innovation leaders.
What are the challenges of strategic innovation? Leadership responsibilities for the innovation process: ! Imagining ! Designing ! Experimenting ! Assessing ! Scaling
What are the challenges of strategic leadership and innovation? Four steps of the product innovation process: ! Idea creation. ! Initial experimentation. ! Feasibility determination. ! Final application.
the Process of Strategic Innovation 1. A Managed Innovation Process: Combining non-traditional and traditional approaches to business strategy. 2. Strategic Alignment: Building support. 3. Industry Foresight: Understanding articulated emerging trends. 4. Consumer/ Customer Insight: Understanding articulated and unarticulated needs. 5. Core Technologies and Competencies: Leveraging and extending corporate assets. 6. Organizational Readiness: The ability to take action. 7. Disciplined Implementation: Managing the path from inspiration to business impact. Source: Innovation Point
with concepts Opportunities Ideas Technologies Products “Inside” the corporation Trends Ideas Technologies From internal R&D From brainstorming, idea management systems Ideas Technologies Products From open innovation, crowdsourcing, suggestion systems From partners, proprietary networks, RFPs From entrepreneurs, business partners, acquisitions “Outside”” the corporation To partners or entrepreneurs “ Spin out” “ Spin in” Customers, Prospects,
Task 2 Develop Criteria Trends Research Interview Preparation interviews Key innovation Step Task 7 Creative Clustering and Screening Evolution Final Ranking " Form team " Define goal " Develop Screening and Ranking criteria " Interview Experts with broad know- ledge " Identify key Market trends " Identify target Segments to interview " Construct draft innovation map " Interview user with a good know- ledge of target consumer " Interview users from other markets facing similar challenges " Use networking to identify interviewees " Collect ideas and feeds insights into innovation map after every interview stage to refine interview scope and direction " Cluster ideas /insights into proposition for product and services " Apply screening criteria into proposition " Workshop with project team and key Experts " Evolve propositions " Rank to select most promising concepts " Further desk-based research/ interviews " Rank to select best concepts The interview step is just part of a more complex process to nurture innovation 8 - 12 Weeks The Innovation Process Work Program
Task 2 Develop Criteria Interview program Brainstorming session Creative Clustering & screening Task 7 Evolution and initial ranking Concept Evolution & Consumer Test Final Ranking " Define scope Agreed list of calibrated Criteria for screening and ranking " Interview with external Experts, to understand the consumer needs and requirements " 400 ideas documented " 20-25 ideas clusters, documented " Up to 10 outline concepts " 4-6 qualified concepts " 3-5 concepts ready for development These insights were used to stimulate an internal brainstorming session Case studies- Case study 1 Innovation Funnel Planning
And research interviews Task 7 Creative Clustering and Screening Concept Evolution Final Ranking " State objective " Define & agree screening & ranking criteria " Produce a draft solutions map to outline the direction of search " Target market-feet on ground practical approach to the task to identify incrementally better solutions " Interview with experts in cosmetics hair removal and user hair removal products alternative markets-blue sky " Radical approach to the task to identify unique solutions " Interview with experts in alternative markets who use similar technology-have similar needs, e.g. in medical Experts in baldness and hair removal, surgeon. Anesthesiologists, etc, etc. " Combine ideas Into value propositions " Use screening criteria to select the most promising propositions " Workshop with project team and key lead users " Evolve Proposition Towards Completed Concepts " Rank to select most promising concepts " Further desk-based research/ interviews " Rank to select best concepts Users from both the target market and alternative markets were interviewed as part of the key innovation step within the Innovation Process Product Successfully Launched Three years ago Innovation Funnel Planning
Steps 9 to 17 - Process improvement" 1 to 8 Process Analysis 9. Detail causes Level 1 Level 2 Level 3 10. Gather data on root causes and analyze (optional) 11. Select root cause to eliminate/investigate Can we define solutions ? 12. Formulate alternative solutions 13. Evaluate and select best solution 14. Conduct experiment (optional) Is root cause eliminated ? 15. Document solutions 16. Implement solutions 17. Confirm improvement and continuously monitor 9 11 12 13 7 10 2 No YES No Yes or or or
making tools • Index of tools and techniques used in problem/opportunity solving Tools and techniques Action planning Bar chart Brainstorming Cause and effect diagrams Check sheets Column charts Control charts Cost/benefit analysis Cost of quality Design of experiments Dot or scatter diagrams Flowcharts Force field analysis Gantt chart Is/is not analysis Pareto charts PERT chart Pie chart Shewhart cycle Work flow analysis ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Analyze ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Generate ✔ Select ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Effective problem solving requires the use of number of tools Plan Implement Define
making tools How to brainstorm…. ! Strive for quantity ! Ensure full participation ! Don't criticize or evaluate ! Encourage free thinking ! Combine and build upon others’ ideas ! Allow team members to pass ! Prepare ! Decide on an approach ! Review rules ! State and write topic ! Repeat and record all ideas ! Prompt additional responses ! Reinforce participation ! Don’t evaluate
making tools • Storyboarding or meta-planning ! Structured brainstorming which reinforces participation ! Useful for encouraging all members to contribute ideas ! Useful when a topic is fairly well defined
What is the nature of organizational change? Change leader……. ! A change agent who takes leadership responsibility for changing the existing pattern of behavior of another person or social system. Change leadership…… ! Forward-looking. ! Proactive. ! Embraces new ideas.
What is the nature of organizational change? Top-down change…….. ! Strategic and comprehensive change that is initiated with the goals of comprehensive impact on the organization and its performance capabilities. ! Driven by the organization’s top leadership. ! Success depends on support of middle-level and lower-level workers.
What is the nature of organizational change? Bottom-up change……. ! The initiatives for change come from any and all parts of the organization, not just top management. ! Crucial for organizational innovation. ! Made possible by: • Employee empowerment. • Employee involvement. • Employee participation. • Employee self direction
What is the nature of organizational change? Integrated change leadership…. ! Successful and enduring change combines advantages of top-down and bottom-up approaches. ! Top-down: • Breaks up traditional patterns- transformative. • Implements difficult economic adjustments. ! Bottom-up: • Builds capability for sustainable change. • Builds capability for organizational learning.
What is the nature of organizational change? Transformational and Incremental change….. ! Unplanned change. • Response to unanticipated events. • Good leaders act on opportunities for reactive change. ! Planned change • Aligning the organization with anticipated future challenges. • Activated by proactive leaders who are sensitive to performance gaps. • Transformational change = major and comprehensive redirection. • Incremental change = adjusting existing systems and practices.
What is the nature of organizational change? How to lead transformational change…. ! Establish a sense of urgency for change. ! Form a powerful coalition to lead the change. ! Create and communicate a compelling change vision. ! Empower others to move change forward. ! Celebrate short-term “wins” and recognize those who help. ! Build on success; align people and systems with new ways. ! Stay with it - keep the message consistent; champion the vision.
What is the nature of organizational change? External forces for change: ! Globalization. ! Market competition. ! Local economic conditions. ! Government laws and regulations. ! Technological developments. ! Market trends. ! Social forces and values Internal forces for change: ! Arise when change in one part of the system creates the need for change in another part of the system. ! May be in response to one or more external forces.
What is the nature of organizational change? Organizational targets for change: ! Tasks and activities ! Workflow ! People competencies ! Culture ! Technology and capabilities ! Structure
Uninformed Optimism Hopeful Realism Informed Pessimism Informed Optimism • Honeymoon period • Ideas look good • Major obstacles appear to be anticipated • Problems surface • Few solutions obvious • Morale drops • Resistance from within the team • Politics within the team fragmented • Turning point occurs • Sense of accomplishment • Problems still there, but hopes based in reality • Steering group gets hands on • Optimism continues to develop • Fresh burst of energy • Increasingly positive reporting • Continued visible support from steering group • Successful change made • “Official” change complete • Things different and better • New System institutionalized Emotional Stages in the innovation Diffusion Study Question 3: What is the nature of organizational change?
commitment Source: D.R. Conner, 1993 Negative Perception Decision not to Implement Degree of Support for the Change Time Understanding Positive Perception Installation Adoption Institutionalization Internalization Commitment Threshold Disposition Threshold Acceptance Phase Commitment Phase Contact Awareness Preparation Phase Unawareness Confusion Aborted after initial Implementation Aborted after extensive Implementation Study Question 3: What is the nature of organizational change?
How can planned org change be managed? Phases of planned change……… ! Unfreezing • The phase in which a situation is prepared for change and felt needs for change are developed. ! Changing • The phase in which something new takes place in the system, and change is actually implemented. ! Refreezing • The phase of stabilizing the change and creating the conditions for its long-term continuity.
How can planned org change be managed? Force-coercion strategy of change…… ! Uses power bases of legitimacy, rewards, and punishments to induce change. ! Relies on belief that people are motivated by self-interest. ! Direct forcing and political maneuvering. ! Produces limited and temporary results. ! Most useful in the unfreezing phase – it shakes things up – usually a tough individual
How can planned org change be managed? Rational persuasion strategy of change……. ! Bringing about change through persuasion backed by special knowledge, empirical data, and rational argument. ! Relies on expert power. ! Relies on belief that reason guides people’s decisions and actions. ! Useful in the unfreezing and refreezing phases. ! Produces longer-lasting and internalized change.
How can planned org change be managed? Shared power strategy of change…… ! Engages people in a collaborative process of identifying values, assumptions, and goals from which support for change will naturally emerge. ! Time consuming but likely to yield high commitment. ! Involves others in examining socio-cultural factors related to the issue at hand. ! Relies on referent power and strong interpersonal skills in team situations. ! Relies on belief that people respond to socio- cultural norms and expectations of others.
How can planned org change be managed? Reasons for people resisting change….. ! Fear of the unknown ! Disrupted habits ! Loss of confidence ! Loss of control ! Poor timing ! Work overload ! Loss of face ! Lack of purpose
How can planned org change be managed? Methods for dealing with resistance to change……… ! Education and communication ! Participation and involvement ! Facilitation and support ! Facilitation and agreement ! Manipulation and co-optation ! Explicit and implicit coercion
What is organization development? Organization development (OD) is a……. ! comprehensive approach to planned organizational change ! that involves the application of behavioral science ! in a systematic and long-range effort ! To improve organizational effectiveness.
What is organization development? Organization development goals: ! Outcome goals focus on task accomplishments. ! Process goals focus on the way people work together. ! OD seeks to develop the organization members’ capacity for self-renewal. ! OD is committed to change through freedom of choice, shared power, and self-reliance. ! OD takes advantage of knowledge about human behavior in organizations.
What is organization development? The organization development process.. ! Establish a working relationship. ! Diagnosis. ! Intervention. ! Evaluation. ! Achieve a terminal relationship.
What is organization development? Action research…… ! The process of systematically collecting data on an organization, ! feeding it back to the members for action planning, ! and evaluating results by collecting more data and repeating the process as necessary. ! Is initiated when someone senses a performance gap ! First stage in change management - listen
What is organization development? Steps in the action research process…. ! Problem sensing. ! Data gathering. ! Data analysis and feedback. ! Action planning. ! Action implementation. ! Evaluation and follow-up.
What is organization development? Individual OD interventions…….. ! Sensitivity training (T-groups) ! Management training ! Role negotiation ! Job redesign ! Career planning
What is organization development? Team OD interventions……… ! Team building ! Team Facilitation ! Process consultation ! Inter-group team building ! Individual Coaching
How can stress be managed in a changing environment? Stress…. ! A state of tension experienced by individuals facing extraordinary demands, constraints, or opportunities. Stressors….. ! Things that cause stress ! Originate in work, personal, and non-work situations. ! Have the potential to influence work attitudes, behavior, job performance, and health.
How can stress be managed in a change environment? Work factors as potential stressors: ! Includes: • Excessively high or low task demands. • Role conflicts or ambiguities. • Poor interpersonal relationships. • Too slow or too fast career progress. ! Work-related stress syndromes: • Set up to fail. • Mistaken identity.
How can stress be managed in a change environment? Personal factors as potential stressors….. ! Includes needs, capabilities, and personality. ! Stressful behavior patterns of the Type A personality: • Always moving, walking, and eating rapidly. • Acting impatient, hurrying others, disliking waiting. • Doing, or trying to do, several things at once. • Feeling guilty when relaxing. • Trying to schedule more in less time. • Using nervous gestures such as a clenched fist. • Hurrying or interrupting the speech of others.
How can stress be managed in a changing environment? Non-work factors as potential stressors…… ! Includes: • Family events. • Economics. • Personal affairs. ! “Spill-over” effect on the stress an individual experiences at work.
How can stress be managed in a changing environment? Consequences of stress…. ! Constructive stress. • Acts as a positive influence. • Can be energizing and performance enhancing. ! Destructive stress. • Acts as a negative influence. • Breaks down a person’s physical and mental systems. • Can lead to job burnout and/or workplace rage.
How can stress be managed in a change environment? Personal wellness: ! The pursuit of personal and mental potential though a personal health-promotion program. ! A form of preventative stress management. ! Enables people to be better prepared to deal with stress.
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