jonesch13 5e

Copyright 2007 Prentice Hall 113-

Organizational Theory, Design, and Change

Fifth EditionGareth R. Jones

Chapter 13

Innovation, Entrepreneurship,

and Creativity


Learning Objectives

1. Describe how innovation and technological change affect each other

2. Discuss the relationship among innovation, intrapreneurship, and creativity

3. Understand the many steps involved in creating an organizational setting that fosters innovation and creativity


Learning Objectives (cont.)

4. Identify the ways in which information technology can be used to foster creativity, and speed innovation and new product development


Innovation and Technological Change

Innovation: process by which new goods and services or new production and operating systems are developed

Enables better response to customer needs

Quantum technological change: a rare, fundamental shift in technology that revolutionizes products or the way they are produced

Quantum innovation: new products or operating systems that incorporate quantum technological improvement


Innovation and Technological Change (cont.)Incremental technological

change: technological change that represents a refinement of some base technology Incremental innovations:

products or operating systems that incorporate refinements of some base technology


Innovation and Technological Change (cont.)

Technology cycle Quantum innovations occur rarely

Technological discontinuity Dominant design emerges Era of incremental change and

innovation during which competition is based on technology

Technological discontinuity may occur again and the process starts all over


Figure 13-1: The Technology Cycle


Innovation and Technological Change (cont.) Product life cycle: the changes

in demand for a product that occur over time

Demand for most successful products passes through four stages:

The embryonic stage The growth stage The maturity stage The decline stage


Innovation and Technological Change (cont.) Product life cycle (cont.)

Embryonic stage: a product has yet to gain widespread acceptance

Minimal demand Growth stage: a product has been

accepted by customers Demand increases

Mature stage: market demand peaks because most customers have already bought the product

Decline stage: occurs if and when demand for a product falls


Innovation and Technological Change (cont.)

Determinants of the length of the product life cycle Rate of technological change

Faster the rate of change, the shorter the product life cycle

Role of fads and fashion Determine the attractiveness of products

to customers “Creative destruction”: new

companies use new global and technological opportunities to make better products that drive old, inefficient companies out of business


Figure 13-2: Technological Change and Product Life Cycle


Innovation, Entrepreneurship, and CreativityIntrapreneurs: leaders of

innovation and new product development in established organizations Notice opportunities Manage product development May leave organization if their ideas

are not supported Become entrepreneurs


Innovation, Entrepreneurship, and CreativityCreativity: ideas going beyond the

current boundaries, whether those boundaries are based on technology, knowledge, social norms, or beliefs Most people are creative at some time May involve combining and synthesizing

new thingsKnowledge-creating organization:

an organization where innovation is going on at all levels and in all areas


Managing The Innovation Process

Project management: the process of leading and controlling a project so that it results in the effective creation of new or improved products

Project: a subunit whose goal centers on developing the products or service on time, within budget, and in conformance with predetermined performance specifications


Managing The Innovation Process (cont.)Project management (cont.)

Effective product management often begins with a clearly articulated plan

Takes a product through the concept, initial test, modification, and manufacturing phases

Project manager’s tasks are different from regular managers

Manage high proportion of highly skilled and educated professionals

Plan to deal with top corporate executives Must keep project on track

Often quantitative modeling is used


Managing The Innovation Process (cont.)

Quantitative modeling (cont.) Examples include PERT/CAM network

of Gantt Chart Flowcharts of a project that can be

built with many proprietary software packages

These software packages focus on: Modeling the sequence of actions necessary

to reach a project’s goal Relating these actions to cost and time criteria Sorting out and defining the optimal path for

reaching the goal



Quantitative modeling (cont.) Critical path method

Goal is to determine: Which particular tasks or activities of the

many that have to be performed are critical in their effect on project time and cost

How to sequence or schedule critical tasks so that a project can meet a target date at a minimum cost

Optimal sequencing of tasks is often worked out by a team

Analysis is an important learning tool


Figure 13-3: CPM Project Design



Stage-gate development funnel A structured and coherent innovation

process that improves control over the product development effort

Forces managers to make choices among competing new product development projects so that resources are not spread thinly over too many projects


Managing The Innovation Process (cont.) Stage-gate development funnel

(cont.) Stage 1: Funnel has a wide mouth to

encourage as many new product ideas as possible from both new and established project managers

Stage 2: Specify all of the information required to make a decision about whether to go ahead with a full-blown product development effort

Plans are either accepted, revised, or rejected

Stage 3: Proceed to development phase


Figure 13-4: A Stage-Gate Development Funnel



Cross-functional teams Coordinating R&D function with

other functions is critical but often difficult

New product development teams Marketing, engineering, and

manufacturing need to be core members of product teams

Core members: refers to a nucleus of three to six people who bear primary responsibility for the product development effort


Figure 13-5: Innovation as a Cross-Functional Activity


Managing The Innovation Process (cont.) Team leadership

Having cross-functional teams is not sufficient for innovation – they have to be managed properly

Lightweight team leader: a mid-level functional manager who has lower status than the head of a functional department

Heavyweight team leader: a true project manager who has higher status within the organization



Skunk works: a temporary task force that is created to expedite new product design and to promote innovation by coordinating the activities of functional groups

An island of innovation located away from the organization

Dissolved when the product is brought to market



New venture divisions: a new division that is allocated a complete set of value-creating functions to manage a project from beginning to end

Assumes full responsibility for the commercialization of the product

Normally an independent division Balance of control between the

division and the corporate center is problematic


Managing The Innovation Process (cont.) Joint venture: a strategic alliance

among two or more organizations that agree to jointly establish and share the ownership of a new business

Allows organizations to combine their skills and technologies and pool their resources to embark on risky projects

Partners may disagree over future development plans



Creating a culture for innovation Organizational structure

Creating the right setting is important to fostering innovation

Increasing organization size, age, and complexity may slow innovation

Organic structures tend to promote innovation

People - organizations need to guard against too much similarity

Property rights – create career paths to show that success is closely linked with future promotion and rewards


Innovation and Information Technology

Information efficiencies: the cost and time savings that occur when IT allows employees to perform current tasks at a higher level

Enables employees to assume additional tasks

Enables employees to expand their roles in the organization due to advances in the ability to gather and analyze data also allows information efficiencies


Innovation and Information Technology (cont.)Information synergies: the

knowledge-building created when individuals or subunits pool their resources and collaborate across boundaries

Boundary-spanning activity: the interactions of people/groups across the organizational boundary to obtain valuable information and knowledge from the environment


IT and Organizational Structure and Culture IT affects the innovation process

through its many effects on organizational structure

IT gives lower level employees more detailed and current knowledge of consumer and market trends and opportunities

IT can produce information synergies

Facilitates increased communication and coordination between decentralized decision makers and top managers


IT and Organizational Structure and Culture (cont.) IT means that fewer levels of

managers are needed to handle problem solving and decision making

IT provides lower level employees with more freedom to coordinate their actions

Information synergies may emerge as employees experiment and find better ways of performing their tasks


IT and Organizational Structure and Culture (cont.) IT facilitates the sharing of

beliefs, values, and norms Allows for the quick transmission of

rich and detailed information between people and subunits

jonesch13 5e

Education

prentice hall

technological opportunities

rate of change

speed innovation

product decline stage

era of incremental change

new products

new product development