Framework for Supporting Innovation Strategy Implementation and Measurement

Master’s Thesis Presentation, 7.5.2010

Author: Minh-Hai NguyenSupervisor: Docent Timo O. KorhonenInstructor: Docent Marja Toivonen, MSc Juha Hulkkonen

Case Organization: Local unit of Global IT Business Services Firm (Application Development&Management, Consultation and System Integration)

Contents

Background Motivation Research Problem Research Approach and Methods Case Organization Results Conclusions

Background and Motivation

Innovation is seen as the key strategic factor that enables success and competitive edge 95% of CEOs list innovation among their top 10 strategic priority Although companies pursue innovation, fewer company measures it based on the

same study

In case organization being innovative and prospector is highly valued and mentioned strategically, but.. There are no indicators on how the organization is performing from innovation

perspective Measurement is seen as supportive guidance to implementing strategic plans

Why isn’t innovation measured? Abstract and fuzzy concept… Lack of clear innovation measurement frameworks Number of studies for explicit innovation measurement models and frameworks in

service organization is relatively small Most studies concentrate on clear R&D process (invention to be commercialized)

Research Questions

Main Research Problem: How to measure implementation of strategy that pursues innovativeness and

innovations in a service organization?

Sub-questions: What is innovation and innovativeness in service organization and how are they

managed? What are the factors that affect organization’s innovation activities?

Research Output: Suggestion on Measurement Framework for Supporting

Implementation of Innovation Focused Strategy

Research Framework

Research Method

Theoretical Part Literature Review

Definitions regarding innovation and innovation management State of the art of innovation performance measurements

Empirical Part Case Study

Observation of Local Unit of Global IT Business Services Firm (AD&M, C&SI) Survey conducted for the personnel of the case organization

Theoretical Framework Regarding Determinants Affecting Creativity and Innovation

Strategic vision and missionCustomer focus (external environment)

Means to achieve objectivesManagement processes

Employee needs and objectivesInterpersonal relationships

Leadership

DIMENSIONS MEASURED TO DESCRIBE ORGANIZATIONAL CULTURE

DETERMINANTS OF ORGANIZATIONAL CULTURE THAT INFLUENCE CREATIVITY AND INNOVATION

STRATEGY

• Vision and mission• Purposefulness

STRUCTURE

• Flexibility• Freedom• Autonomy• Empowerment• Decision Making• Cooperative Team and

group interaction

SUPPORT MECHANISMS

• Reward and recognition

• Availability of resources

• Time• Information technology

• Creative people

BEHAVIOR THAT ENCOURAGES INNOVATION

• Mistake handling• Idea generating• Continous learning

culture• Risk taking• Competitivenes

COMMUNICATION

• Open communication

CREATIVITY AND INNOVATION

Strategic vision and missionCustomer focus (external environment)

Means to achieve objectivesManagement processes

Employee needs and objectivesInterpersonal relationships

Leadership

DIMENSIONS MEASURED TO DESCRIBE ORGANIZATIONAL CULTURE

DETERMINANTS OF ORGANIZATIONAL CULTURE THAT INFLUENCE CREATIVITY AND INNOVATION

STRATEGY

• Vision and mission• Purposefulness

STRUCTURE

• Flexibility• Freedom• Autonomy• Empowerment• Decision Making• Cooperative Team and

group interaction

SUPPORT MECHANISMS

• Reward and recognition

• Availability of resources

• Time• Information technology

• Creative people

BEHAVIOR THAT ENCOURAGES INNOVATION

• Mistake handling• Idea generating• Continous learning

culture• Risk taking• Competitivenes

COMMUNICATION

• Open communication

CREATIVITY AND INNOVATION

Organizational D

eterminants

affectin

g creativity

and innovatio

n

Source: Martins & Terblanche ()

Theoretical Framework Regarding Innovation Strategy Execution

Critical Tasks

Formal Organization

People Culture

•Component tasks•Work Flows/Processes

Executive Leadership•Competencies•Demography•Group Progress

•Norms, values•Communication Networks•Informal Roles•Informal Power

•Strategic Grouping •Formal Linking•Rewards•Information Systems•HR Management Systems•Career Systems

•Human Resource Capabilities•Competencies

Strategic Choices•Strategy•Objectives•Vision

Critical Tasks

Formal Organization

People Culture

•Component tasks•Work Flows/Processes

Executive Leadership•Competencies•Demography•Group Progress

•Norms, values•Communication Networks•Informal Roles•Informal Power

•Strategic Grouping •Formal Linking•Rewards•Information Systems•HR Management Systems•Career Systems

•Human Resource Capabilities•Competencies

Strategic Choices•Strategy•Objectives•Vision

Critical Tasks

Formal Organization

People Culture

Critical Tasks

Formal Organization

People Culture

•Component tasks•Work Flows/Processes

Executive Leadership•Competencies•Demography•Group Progress

•Norms, values•Communication Networks•Informal Roles•Informal Power

•Strategic Grouping •Formal Linking•Rewards•Information Systems•HR Management Systems•Career Systems

•Human Resource Capabilities•Competencies

Strategic Choices•Strategy•Objectives•Vision

Strategy Executio

n Model

Driving fo

r Innovatio

n

Results – Measuring Innovation Pulse

Critical Areas Idea Implementation Support Risk Taking Mistake Handling Rewarding and Recognition Strategy Alignment

Results – How to foster innovation?

Pay attention for creating environment where individuals can be creative Assure alignment with strategy and clear communicaton Encourage by providing right resources, motivate with right rewards and

recognition Learn from mistakes Leadership commitment

Communication and Networking Client intimacy Cross line innovating

Innovative organizations can also be operative ones Structures and formalities support in larger organizations

Results – Measurements Proposed

Lot of responses arguing the need for measuring innovativeness and innovation activities

Proposed measurements linked to idea generation vs idea implementation

Measurements need to be done for different levels

In addition to input or output, the context and environment need to be measured

Conclusions

Shift in business from products to services require different metrics for innovation, as the nature is more intangible

Implementation of innovation focused strategy in services is difficult to be measured, for improving visibility, companies need to Define and frame what is innovation for them, align it with existing strategy,

define goals and objectives Create portfolio and structures Create receptive and fertile ground for innovation and assuring involvement

of management

Measuring provides visibility and can help in management, but the basic building blocks need to done as well Organization needs to assure right conditions for innovating are

provided and foster the culture

THANK YOU FOR YOUR TIME!

Questions?