Lectures Tidd 4-5

Oct - Dec 09 Laestadius: MONTIC/Tidd 1

ManagingInnovationlecturesrelatedprimarilytoabookby

JoeTidd&JohnBessant

chpt45

StaffanLaestadius,prof.

OctDec2009

Chpt4:Developinganinnovationstrategy

rationalistorincrementaliststrategiesforinnovation?(4.1) Thedynamiccapabilitiesoffirms(4.2) Appropriatingthebenefitsfrominnovation(4.3) Technologicaltrajectories(4.4) Developingfirmspecificcompetencies(4.5) Globalizationofinnovation(4.6) Enablingstrategymaking(4.7)



Therationalisticstrategytradition.

Systemsanalysis,linearprogramming themilitaryinheritage,Clausewitz thelinear,rationalisticmodelofaction appraice determine act

Theclassic:IgorAnsoff


..isfarfromunproblematic

Influencesourfocus:isthetargettodefeatanenemyortocreatesatisfiedcustomers?

Civicsocietyhastotallydifferentsticksandcarrots(structuresofincentives)

Theshortcomingsofmilitaryintelligence Thelinear,rationalisticmodellacksinitssimpleforma

cognitivedimension,i.e.learning therationalistapproachtendstounderestimatethe

culturalheritage,i.e.tooverestimatethedegreesoffreedom.


Famousillustrations

Whentheanalysiscangowrong: ThewarinVietnamigoingwellandwillsucceed(Robert

MacNamara,1963) Cf.theIraquiwar

Whenoverestimatingthestrengthofownresources: Icannotconceiveofanyvitaldisasterhappeningtothisvessel

(CaptainofTitanic,1912)

Whenunderestimatingnewtechnology Ithinkthereisaworldmarketforaboutfivecomputers(T.Watson,

IBM,1948)


Therationalisticviewtendstohaveanindustry(branch)focus

Structuralpropertiesofindustries Barriersforentry Productdifferentiation Demandelasticity Inshortthecompetitivesituation,i.e.primarilyexogenous

mechanisms


Porterrootedintherationalistschool

Portersfieldofforcesfivestructuralforces Portersstrategymatrixthree(four)strategies FromcompetitiveanalysistoSWOT


Thefieldofforces

Newentrants

Rivalryamongexistingfirms

StrengthofbuyersStrengthofsuppliers

Substituteproducts


PortersstrategymatrixStrategicadvantage

Uniqueadvantagesforthecustomer

Lowcostposition

Strategictargetgroup

Totalindustry

Selectedsegment

Differentiation

Costleadership

Differentiationfocus Costfocus


SWOTanalysis(relatedtothePortertradition)

Strengths internal Weaknesses internal Opportunitites external Threats external


Consequencesofthematrixthinkinginbetweenpositionsareunderestimated

profitability

MarketshareX

Isthereapositioninthemiddle?

Lufthansa Ryanair



CriticalreflectionsonPorter

Underestimatesthethepower/strengthoftechnology(technologicaltrajectories)

Overestimatestheabilityofmanagementtoenforce/implementstrategiesi.e.Tobreakwiththeproductbase,thebaseofcustomers,thetechnologybase,thecompetencebaseetc.

gettingstuckinthemiddlenotnecessarilyaproblem Tofocusedoncompetitionandrivalrywherearecooperative

relationsand(winwin)networks? whereislearning,innovativeness,dynamics?


Thealternatives

theincrementalistview:Mintzberg Focusonpatternofbehaviour,revealedstrategy Feedback,smallstepbasedstrategy

theresourcebasedapproach Teece&Pisano,thedynamiccapabilitiesapproach orig.Penrose,TheTheoryoftheGrowthoftheFirm processes,positions,paths

Normallystartsintheuniqueresourcecombinationsofthefirm,i.e.endogenousmechanisms


TheDynamicCapabilitiesoftheFirm(cf.section4.2)

Afirmcanaccumulatelargeresources/assetsandstilllackusefulcompetences/capabilities

Theabilitytoutilizetheresourcesoftheownfirmandacquire(assimilate)externalonesmaybelabelleddynamiccapabilities

Thefoundationinthisapproachisthatcapabilitites/competenciesnoteasilycanbebought/soldonthemarketbuttoasignificantextenthavetobebuiltoutsidethemarket.


Thecoreoftheresourcebased/capabilitiesapproach

Asuccessfulfirmischaracterizedbyitscapabilitytocreateheterogenitythroughtransformingexistentoracquiredresources.

Thisheterogenityisnotpossibletoimitateintheshortperspectiveorpossibletoinstantlybuy/sellonthemarket.

Wemaythustalkaboutatemporaryexcessinterest(monopolyorentreprenurialinterestorprofit)

Thedynamiccapabilititesmaybeanalyzedthroughtheconcepts:position,path,process

Whatarethecapabilitiesofthisautomotivefirm?


..andofthese?


SSAB&AvestaOuokumpu

Appropriatingthebenefitsfrominnovation(4.3)

Xeroxafamouscaseoflowappropriabilitycompetence Factorsenablingappropriability:

Secrecy Accumulatedtacitknowledge Leadtimeandaftersalesservice Thelearningcurve Complementaryassets Productcomplexity Standards Pioneeringradicalproducts Strengthofpatentprotection(IPR)


Technologicaltrajectories(4.4)

TheScylla&Karybdisdilemma:interpretingthecharacteroftechnologytoogeneralortoospecific=>wecanjoinanytrajectoryorweareoutsideallofthem

ThePavitttypology: Supplierdominatedfirms Scaleintensivefirms Sciencebasedfirms Informationintensivefirms Specializedsupplierfirms



Majortechnologicaltrajectories(4.4contd.)

Questionstoask: Wheredothecompanystechnologiescomefrom? Howdotheycontributetocompetitiveadvantage? Whatarethemajortasksofinnovationstrategy? Wherearethelikelyopportunitiesandthreats,andhowcanthey

bedealtwith?

08-09-05 EPIM/Staffan Laestadius 22

Hallstapapermachine(Mets)underconstruction

Supplierdominatedfirms

Scaleintensive


Sciencebased


Informationintensive


Specializedsupplierfirms


Thelogicbehindinnovationstrategies

TheinnovationlogicaccordingtoCTO:s Patentdrivendiscovery Costbasedcompetition Systemsintegration Systemsengineeringandconsulting Platformorchestration Customizedmassproduction Innovationsupportandservices


Developingfirmspecificcompetencies(4.5)

Hamel&Prahaladoncompetencies Corecompetencies Associatedorganizationalcompetencies focus

Assessmentofthecorecompetenceapproach Strength:placesthecumulativedevelopmentoffirmspecific

technologicalcompetenceinfocusofcorporatestrategy

Problemwithtechnologybaseddifferentiation&multitechnologyfirms

Corerigidities Developingandsustainingcompetencies/capabilities


Aspectsofthecorecompetenceapproach


Globalizationofinnovation(4.6)

Mostinnovationactivitiesstillinoldindustrialcountries

GloballocationofR&Dunitsisonething

Globalizedinnovationprocesssomethingelse



CorporatevsDivisionallocationofR&D

WhatistheroleoftheR&D/innovation/designunit? Corporateintelligencecontributetoabsorptivecapacity? Createcapabilities/competencies? Produceradicalinnovations? Contributetoincrementalinnovations? Focusonproducts,onprocesses? Other?

Amultidimensionproblem: Physicallocationtodifferentcorporatelevels/divisions Fundingresponsibility Decentralizationcentralization


HowtofinanceR&D? Quantitativemethodsforevaluatingresourceallocationin

R&Darenotsousedasyoucouldimagine,althoughtheyarethere: NPV Probability/uncertainty Projectmanagementmethods(earnedvalue)

WhatistheproductfromtheR&Dunit?(learning,competence,positioning)

TwolegstrategyinR&D?: TheRleg(scanning,competencebuilding) TheDleg(product/processdevelopment)


GlobalvslocalR&D

HithertomostmultinationalfirmshavelocalizedtheirR&Dunitstotheirhomecountrieswhy??

ThereisnowatendencytoglobalizealsoR&Dwhy? AnalyzingR&Dstrategies:

MarketorientedR&D Process/technology/competenceorientedR&D

GlobalnetworksinR&D? Huawei&ZTEhaveR&DunitsinKistaandGothenburgwhat

aretheydoingthere?


Globalnetwork? Globalhubsystem

Theproblemofglobalknowledgeformation

Enablingstrategymaking(4.7)

Whatcanwedo(realistically?) analysis Whatarewegoingtodo choice Isthiswhatweintended/want? monitoring Routinestohelpstrategicanalysis Portfoliomnagementapproaches



Part3:Search

Sourcesofinnovation(chpt5) Wheredoinnovationscome

from?(5.1)

Knowledgepush(5.2) Needpull(5.3) Whoseneeds?(5.4) Towardsmasscustomization

(5.5)

Usersasinnovators(5.6) Extremeusers(5.7) Watchingothers(5.8) Recomb.Innov.(5.9)

Regulation(5.10) Forecasting(5.11) Accidents(5.12) Aframeworkforlookingat

innov.sources(5.13)

Howtosearch(5.14) Exloitat./explor.(5.15) Absorptivecapacity(5.16) Toolstoenablesearch(5.17 Dimensionsofinnovation

search(5.18)

Amapofinnovationsearchspace(5.19)



Christensen:themessageinonepictureCa

pacity

Year

New(disruptive)technology

Lowenddemand

Highenddemand

Documents

Lectures Tidd 4-5