CHAPTER 2

THE PROCESS OF CORPORATE INNOVATION

KEY TERMS

Corporate InnovationCorporate Venturing

TurfismStrategic Entrepreneurship

NeophobiaCorporate Innovative Strategy

Social CapitalCEAI

AmplifyingInnovation Teams

ChampionSponsor

CHAPTER OUTLINE

  1. Introduction
  2. OBSTACLES TO CORPORATE INNOVATION

A.No Time

B.Poor Rewards

C.Under Funded

D.Job Domain

E.No Allies

F.Fellow Employees

G.Methods for handling some of the obstacles:

a.Building Social Capital

b.Resource Allocation

  1. CORPORATE INNOVATION AS A STRATEGY

A.The Critical Elements

B.Create the Vision

C.Encourage Innovative Thinking

D.Establish an Innovative Environment

E.Develop Innovative Managers

F.Commit to Innovation Teams

  1. SUSTAINING CORPORATE INNOVATION
  2. THE INNOVATIVE EDGE: “Innovation for the Sake of Dominance”

LECTURE OUTLINE

  1. Introduction

In the 21st Century, companies cannot be static, they must continually adjust, adapt, or redefine themselves. More and more corporate strategies are focused heavily on innovation.

  1. OBSTACLES TO CORPORATE INNOVATION

A.No Time

Because of increased global competition and the birth of the information age, business professionals are extremely busy keeping up with a wealth of available information and changes in technology.

B.Poor Rewards

Traditionally, corporations do not necessarily reward (financially or otherwise) employees for being innovative.

C.Under Funded

Without financing, a corporate innovator's idea will remain only a vision.

D.Job Domain

When an employee tries to be innovative in an established company they may find that departments are more concerned with protecting their “domain” than they are with developing new ideas that will benefit the organization.

E.No Allies

To help them in their assessment of these political wars,corporate innovators need an ally higher in the organization who oversees the progress of the corporate venture. These allies act as buffers guarding innovators against unnecessary organizational bureaucratic interference.

F.Fellow Employees

One of the biggest obstacles to corporate innovation involves getting employees to embrace innovative thinking, change the way they do things, collaborate on projects involving new ideas, and give up resources to support innovative initiatives.

G.Methods for handling some of the obstacles:

a.Building Social Capital

Corporate entrepreneurs must rely on their ingenuity and persistence to build influence. They need to build “social capital” by networking, sharing information, and creating opportunities for others within their network.

b.Resource Allocation

The major method of securing the necessary resources is through co-optation or leveraging of the resources currently underutilized by the firm.

  1. CORPORATE INNOVATION AS A STRATEGY
  2. Create the Vision

The first step is sharing the vision of innovation that the corporate leaders wish to achieve.

  1. Encourage Innovative Thinking

Corporations must understand and develop innovation as the key element in their strategy.

  1. Establish an Innovative Environment

In establishing the drive to innovate in today's corporations, there must be a commitment to invest heavily in innovativeactivities that allow new ideas to flourish in an innovative environment.

  1. Develop Innovative Managers

As a way for organizations to develop key managers for innovative leadership, a corporate innovation training program (Corporate Innovation Training) often induces the change needed in the work atmosphere.

  1. Commit to Innovation Teams

Innovation teams hold the potential for producing innovative results and productivity breakthroughs. Companies that have committed to an innovation team approach often label the change they have undergone a “transformation.”

  1. SUSTAINING CORPORATE INNOVATION

How does an organization sustain the corporate innovative process? The answer lies in the actions of senior managers. In order to maintain this innovative mindset in an organization, managers must assume certain ongoing responsibilities.

  1. THE INNOVATIVE EDGE: “Innovation for the Sake of Dominance”

Google vs. Microsoft: The possibility exists that neither company will be able to claim absolute victory, but competition breeds innovation, and innovation breeds new technology and, in turn, more choices for consumers.

ANSWERS TO DISCUSSION QUESTIONS

  1. What are two reasons that such a strong desire to develop corporate innovators has arisen in recent years?

i.Increased global competition

ii.Continual downsizing of organizations seeking greater efficiency

iii.Dramatic changes, innovations, and improvements in the marketplace

iv.Perceived weaknesses in the traditional methods of organizational management

v.The exodus of innovative minded employees who are disenchanted with bureaucratic organizations

  1. What are some of the corporate obstacles that must be overcome to establish a corporate innovative environment?

i.No time

ii.Poor Rewards

iii.Under Funded

iv.Job Domain

v.No Allies

vi.Fellow Employees

  1. What are the two major domains that comprise corporate entrepreneurship?

Corporate Venturing and Strategic Entrepreneurship.

Corporate venturing approaches have as their commonality the adding of new businesses (or portions of new businesses via equity investments) to the corporation.

Strategic entrepreneurship approaches have as their commonality the exhibition of large-scale or otherwise highly consequential innovations that are adopted in the firm’s pursuit of competitive advantage.

  1. Define a “corporate innovation strategy.”

A corporate entrepreneurial (innovative) strategy is “a vision-directed, organization-wide reliance on entrepreneurial behavior that purposefully and continuously rejuvenates the organization and shapes the scope of its operations through the recognition and exploitation of entrepreneurial opportunity.”[i]

  1. Identify the five key elements on which managers should concentrate to develop a corporate innovation strategy.

i.Create the Vision

The first step is sharing the vision of innovation that the corporate leaders wish to achieve.

ii.Encourage Innovative Thinking

Corporations must understand and develop innovation as the key element in their strategy.

iii.Establish an Innovative Environment

In establishing the drive to innovate in today's corporations, there must be a commitment to invest heavily in innovative activities that allow new ideas to flourish in an innovative environment.

iv.Develop Innovative Managers

As a way for organizations to develop key managers for innovative leadership, a corporate innovation training program (Corporate Innovation Training) often induces the change needed in the work atmosphere.

v.Commit to Innovation Teams

Innovation teams hold the potential for producing innovative results and productivity breakthroughs. Companies that have committed to an innovation team approach often label the change they have undergone a “transformation.”

  1. Explain the differences between radical and incremental innovation.

Radical innovation is the launching of inaugural breakthroughs that take experimentation and determined vision (such as personal computers, Post-it Notes, disposable diapers, and overnight mail delivery). Whereas, incremental innovation refers to the systematic evolution of a product or service into newer or larger markets (examples include microwave popcorn or popcorn used for packaging to replace Styrofoam).

  1. Identify the five specific innovative climate factors that organizations need to address in structuring their environment.

i.Management Support: The willingness of top-level managers to facilitate and promote innovative behavior, including the championing of innovative ideas and providing the resources people require to take innovative actions

ii.Work Discretion/Autonomy: Top-level managers’ commitment to tolerate failure, provide decision making latitude and freedom from excessive oversight and to delegate authority and responsibility to middle-level managers

iii.Rewards/Reinforcement: Developing and using systems that reward based on performance, highlight significant achievements and encourage pursuit of challenging work

iv.Time Availability: Evaluating work-loads to ensure that individuals and groups have the time needed to pursue innovations and that their jobs are structured in ways that support efforts to achieve short- and long-term organizational goals

v.Organizational Boundaries: Precise explanations of outcomes expected from organizational work and development of mechanisms for evaluating, selecting and using innovations

  1. Why are innovation teams emerging as part of a new strategy for many corporations?

They hold the potential for producing innovative results and productivity breakthroughs. Companies that have committed to an innovation team approach often label the change they have undergone a “transformation.” This new breed of work team is a powerful strategy for many firms. They have been referred to as self-directing, self-managing, high-performing, and empowering.

  1. Identify the key roles that members of an innovation team could fulfill.

i.Innovator: The person who has made the major technical innovation

ii.Venture Manager: The internal entrepreneur responsible for the overall progress of the project

iii.Champion: Any individual who makes a decisive contribution to the project by promoting its progress through the critical early stages, particularly up to the point of implementation

iv.Innovative CEO: The individual who is in charge of the venture and controls the allocation of resources (e.g., a sub-CEO, a division manager, or a venture division manager)

v.Sponsor: The high-level person in the parent company who acts as buffer protector, and modifier of rules and policies and who helps the venture obtain the needed resources

  1. Describe the elements that are involved in sustaining corporate innovation.

The first element is to establish a clear definition of the specified challenges that everyone involved with innovative projects should address. Second, managers have the responsibility to make the uncertainty of pursuing innovative projects less daunting. Create the self-confidence within all employees that they can act on innovative opportunities without seeking managerial permission.Employees must not be overwhelmed by the complexity inherent in many innovative situations. Finally, managers need to clear out any obstacles that arise as a result of the innovative project progress.This can be a problem especially when the innovation begins to undergo significant growth. The ability to regroup and reorganizebecomes invaluable.

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[i] Ireland, R. D., Covin, J.G., & Kuratko, D.F. 2009. Conceptualizing Corporate

Entrepreneurship Strategy, Entrepreneurship Theory and Practice, 33 (1): 19-46.