Sustaining the Inflow of Game Changing Ideas
Joost Glazenburg March, 2013
University of Groningen
Faculty of Economics and Business MSc Business Administration
Specialization Business Development
First supervisor: Jo van Engelen Second supervisor: Hans van der Bij
Supervisor Philips: Maarten van den Boogaard
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SUSTAINING THE INFLOW OF GAME CHANGING IDEAS
Author
Joost Glazenburg
Student number: S2053543 Diamantlaan 177
9743 BE Groningen Tel: +31 (0)6 47578280
E-mail: joost_glaz@hotmail.com
Organization
Philips Consumer Lifestyle B.V.
IT Shaving FD Oliemolenstraat 5 9203 ZN Drachten
Supervisor Philips: Maarten van den Boogaard
Education
Faculty of Economics and Business Business Administration
Specialization: Business Development University of Groningen
Landleven 5 9747 AD Groningen
First supervisor: Jo van Engelen Second supervisor: Hans van der Bij
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Executive Summary
Large innovate organizations often face the challenge to sustainably develop radical innovations. It is therefore crucial that the continuous inflow of radical ideas is exerted. This study contributes to both theoretical and pragmatic concerns on how to realize a sustainable inflow of game changing ideas.
Research is done at Philips Male Grooming in Drachten, an organization which has ambitious growth goals and wants to achieve these partially by the realization of successful radical or ‘game changing innovations’.
Through a problem solving approach based on qualitative research, barriers have been identified and analyzed in order to get insight on inhibiting aspects in the realization of a continuous inflow of game changing ideas. Through literature review and business analysis, it became clear that a certain degree of coherence was present in the identified barriers. This resulted in a solution design which addresses three coherent elements that require change in order to provide a sustainable inflow of game changing ideas.
The knowledge element concerns the provision of valuable information that is required in order to generate and develop game changing ideas. Barriers that were mentioned during interviews indicated that an increase in consumer insight is often required, complemented by more extensive early investigation, early prototyping and the discovery of latent needs. An increase in continuous experimentation during ideation will result in valuable knowledge gains and provide input for game changing ideas.
While gaining valuable knowledge through continuous experimentation would increase the amount of rich information available to generate ideas, a culture element is identified in which knowledge dissemination should be endorsed. Research analysis indicated that the organizational mindset should be more oriented on game changing innovation. Also, knowledge dissemination should constantly be stimulated in order to increase the continuous flow if valuable information, including consumer insights, market trends, new technologies, new ideas, concepts and game changing innovation activities.
Realization of changes in both the knowledge and culture element requires a flexible, complex or even chaotic approach. A process element has been identified in which this approach should be enabled. This research indicates that the main bottleneck in the realization of a continuous inflow of game changing ideas at Philips Male Grooming lies in this enabling element. Research analysis indicated that ideation activities are to a large extent reactive to the identification of the next product on the innovation roadmap.
This phenomenon is defined as ‘process driven innovation’ and has an adverse effect on the continuous inflow of game changing ideas at Philips Male Grooming.
Several recommendations are provided in order for Philips Male Grooming to realize a sustainable inflow of game changing ideas. By formally decoupling front end innovation activities from the overall new product development process (or roadmap), innovation slack can be exerted. Innovation slack enables flexibility in the front end innovation process and embraces the complex emergence and development characteristics of game changing ideas. It creates room for extensive and continuous experimentation during front end innovation in which valuable knowledge is gained, providing a basis for the emergence and development of game changing ideas. These activities should be endorsed by several practices in the cultural element. Recommendations in cultural respect are provided on the basis of two propositions.
First, an overall awareness on game changing innovation should be created, which can be realized with a
5 top-down approach. Second, widespread involvement in ideation activities should be stimulated in order to effectively disseminate knowledge, ideas, concepts and innovations. The practical utilization of innovation narratives are considered to effectively bridge these knowledge and cultural elements that are involved in the continuous inflow of game changing ideas.
This research indicates that in order to realize a continuous inflow of game changing ideas, Philips Male Grooming should tackle barriers that are evident in all three identified elements, as they are related or even dependent on each other. Changes in the process element would have an enabling effect towards cultural and practical activities. Changes in the culture and knowledge element address a providing and endorsing effect which will lead to an increase of idea input and embraces the continuous emergence and development of game changing ideas.
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Preface
This thesis marks the end of my formal studies for the Master’s degree in Business Administration, with the specialization in Business Development at the University of Groningen. Research was done at Philips Male Grooming in Drachten, a category of Philips Consumer Lifestyle that covers the development and production of shavers, trimmers, clippers and groomers. I enjoyed doing research at Philips Male Grooming as I got to experience a highly professional and innovative working environment.
The development of this research would not have been possible without the help of many people. I want to thank everyone at the Product Research Center department where I have been performing working on my research most of the time. While my research was not directly related to their working activities, I have experienced a very energetic and cooperative working environment where everyone has always been very helpful and supportive. I also want to thank all the employees who participated in my interviews. They have been very collaborative and were always available for providing input and feedback for my research analysis.
There are two people I want to thank in particular. First, I want to thank my supervisor at Philips, Maarten van den Boogaard, for providing me the opportunity to work on a very interesting and challenging research subject at Philips Male Grooming. Without the supervisory support, in-depth discussions and close collaboration with Maarten I would not have been able to develop this thesis. Second, I want to thank my academic supervisor Jo van Engelen for his guidance, feedback and enjoyable discussions about the challenging research subject and the business context in which this research is performed.
Groningen, March 2013
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List of Abbreviations
CL Consumer Lifestyle
PMG Philips Male Grooming
PPC Philips Personal Care
GCI Game Changing Innovation
IPD Integrated Product Development
IPP Innovation Planning Project
T&FC Technology and Function Creation
VPH Value Proposition House
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Table of Content
1 INTRODUCTION ... 10
1.1 Theoretical Motive ... 11
1.2 Business Motive ... 11
1.3 Outline ... 12
2 RESEARCH PROBLEM ... 13
2.1 Problem Context ... 13
2.1.1 Company Profile ... 13
2.1.2 New Product Development ... 13
2.2 Problem Statement ... 15
2.2.1 Initial Research Motive ... 15
2.2.2 Preliminary Analysis ... 15
2.2.3 Research Questions ... 17
3 LITERATURE REVIEW ... 18
3.1 Game Changing Innovation ... 18
3.2 Idea Initiation ... 19
3.2.1 Quantitative Aspects of Ideation ... 22
3.2.2 The Quality of an Idea ... 23
3.3 Organizing Ideation ... 26
3.3.1 Structuring Ideation ... 26
3.3.2 Complexity in Ideation ... 28
4 EMPIRICAL ANALYSIS ... 32
4.1 Research Methods ... 32
4.1.1 Quantitative Research Methods ... 32
4.1.2 Qualitative Research Methods ... 32
4.2 Problem Validation ... 34
4.2.1 Idea Quantity ... 34
4.2.2 Idea Quality ... 35
4.3 Barriers to Sustained Ideation ... 36
4.3.1 Interview Results ... 36
4.3.2 Relationship Graph ... 37
4.3.3 Cause and Effect Analysis ... 39
4.3.4 Diagnosis ... 41
4.3.5 Key Barrier Validation ... 42
4.4 Theoretical Validation ... 43
4.4.1 Knowledge ... 43
4.4.2 Culture ... 45
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4.4.3 Process ... 47
5 RECOMMENDATIONS ... 51
5.1 Decouple Front End Innovation ... 51
5.2 Exploit Innovation Slack ... 52
5.3 Encourage Continuous Experimentation... 53
5.4 Create Awareness and Encourage Involvement ... 54
5.5 Conclusion ... 56
6 ACADEMIC REFLECTION ... 58
6.1 Evaluation and Further Research ... 58
6.2 Theoretical Implications ... 59
6.3 Managerial Implications ... 60
REFERENCES ... 61
APPENDIX ... 65
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1 I NTR OD U CTI ON
“To successfully innovate, firms need to have a sustainable inflow of ideas from which to choose” (Bjo, 2009, p. 663).
Successful innovation is a key element in order for firms to provide growth. A large body of literature elaborates on the importance for firms to exert innovation in both exploitative and explorative innovation activities in order to gain or retain a healthy position within their business environment (Tushman, O’Reilly, 1997). While exploitative innovations are designed to meet the needs of existing customers or markets (Benner & Tushman, 2003, p. 243; Danneels, 2002), explorative innovations are designed to meet the needs of emerging customers or markets (Benner & Tushman, 2003; Danneels, 2002) and require new knowledge or departure from existing knowledge (Benner & Tushman, 2003). A large body of academic studies on innovation indicates that next to exploitative innovation, a firm should develop dramatically new and different ones to cope with turbulent environments, often described as ambidexterity (O’Connor
& Rice, 1999). However, research shows evidence that explorative innovation requires a significantly different approach compared to exploitative innovation (Tushman & O’Reilly, 1996). Many firms are faced with the challenge to successfully exert radical innovation in which the front end of new product development (NPD) is crucial. As Cooper and Kleinschmidt (2007) indicate, many projects move from the idea stage right into the development stage with little or no assessment, leading to disastrous results.
More emphasis on preliminary market assessment and technical assessment is then required to create a more efficient new product development process. Girotra, Terwiesch and Ulrich (2010) also stress out the crucial early stages of new product development, with explicit focus on the idea generation phase. This phase is often defined as ideation: “The generation and development of ideas that can be converted into innovations” (Björk, Boccardelli, Magnussion, 2010). Whatever process and activity an organization exerts in its front end innovation (FEI) phase, it would not have the desired functionality if the inflow of ideas of the ideation phase is insufficient or unsustainable.
This research elaborates on how the inflow of ideas can be sustained within an organization and what aspects are potentially inhibiting this sustainable inflow. The research is performed at Philips Male Grooming in Drachten, which develops and manufactures Philips Shavers and numerous other innovative products, such as beard trimmers and hair clippers. The Male Grooming Category strives to provide a sustainable inflow of game changing ideas in order to adapt on recent strategic growth goals, in which new product development (also defined as game changing innovation) is one of the key elements. In this context, game changing ideas can be considered as ideas that are deviant from incremental innovations.
While the Philips Male Grooming category is currently increasing its focus on game changing innovation activities and its process, it is aware of the fact that an insufficient inflow of game changing ideas could cause problems in achieving their ambitious growth goals. This research helps to provide more insight in the category’s concerns. Through empirical analysis the research provides a set of elements in which factors are identified that inhibit the inflow of game changing ideas. On the basis of these findings, it provides a set of actions to be taken in order to stimulate or increase the continuous inflow of game changing ideas.
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1.1 Theoretical Motive
From a theoretical perspective, this research elaborates on the large academic interest in the complexity involved in front end innovation, and explicitly focuses on the emergence and inflow of ideas. Many studies implicate that this topic is mainly critical in radical innovation, as innovation complexity is higher in these situations (Garud, Gehman, Kumaraswamy, 2011). Process management and control therefore also become more critical in radical innovation since these aspects may hinder the complex emergence of new and deviant ideas (Benner & Tusman, 2003). Mainly three literature streams have been used as a foundation for this research. First, there is a literature stream that deals specifically with the concept of an idea, including the emergence of ideas, the desired quantity of ideas and the quality of an idea. Second, there is large body of literature that concerns the process that is involved in the front end of explorative innovation. Within this literature stream it is noticeable that in successful explorative innovation, proper balance between control and flexibility is crucial. A third and more recent literature stream further elaborate on this flexibility by explaining and building on the complex characteristics in which explorative innovations emerge and evolve.
This research adds value to the emerging literature stream on the complexity involved in radical innovation and its specific relation with the inflow of ideas. Both literature streams on innovation processes and innovation complexity mainly focus on front end innovation in general, that is, all activities involved in front end innovation. By focusing explicitly on the idea inflow in front end innovation, this research provides insight on how process management and innovation complexity are related to the emergence and inflow of ideas in innovative firms.
1.2 Business Motive
Related research focuses on influential factors such as flexibility, organizational learning (Sethil, Iqbal, 2008) and complexity (Garud, et al., 2011) in relation to mostly radical innovation. However, a business would most likely not recognize these aspects and consider them as a problem when they have trouble in realizing their radical innovation goals. All three aspects are considered to be present within front end innovation to a certain degree and they are difficult to identify or measure. Measurable indicators to front end innovation success are manifested in its process’ output or input. Where a business could recognize a poor outcome of innovation propositions as an output, it could also recognize a lack of inflow of ideas as an input. These recognizable aspects would thus most likely be considered as an initial problem within front end innovation. In other words, it would be less likely that a business would initially state that they are not flexible enough, learn insufficient in order to innovate or that innovative paths and activities are too complex for them to exert. Still, aspects like these seem highly influential in the success, idea inflow, and innovation outcome of front end innovation. This research therefore strives to bridge the more measurable aspect – in specific; idea inflow - to related organizational aspects, resulting in a pragmatic perspective on how to increase the inflow of ideas within an innovative business. A problem solving approach is therefore applied at a technology oriented and innovative business that aspires to realize a rich and continuous inflow of game changing ideas in order to achieve the organization’s growth goals.
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1.3 Outline
This research project is executed in accordance with the business problem-solving approach (Van Aken, 2009) and contains the following outline.
First, the research problem is discussed. This section gives a description of the company profile in which this research is performed. It provides a description of the problem that the company is currently facing, followed by a preliminary analysis. The analysis results in the definition of the problem statement and research questions that are the main driver for this research. On the basis of the preliminary analysis, a literature review (chapter 3) has been performed in order to gain insight in the research topic and its related aspects. The literature review also gives a better understand about decisions that are made in the research methodology, which is discussed in chapter 4. The methodology provides information on why and how certain research methods and tools have been used. The empirical analysis is then further discussed. As the previous discussed preliminary research just gives an indication on the research problem and its possible direction of causes, the empirical analysis further elaborates on the validation of these preliminary findings. This is followed by a more extensive research in which data on relevant barriers are gathered, analyzed, diagnosed and validated. Barrier validation has been performed both pragmatically and theoretically. Next, recommendations are proposed (chapter 5) that are applicable in accordance with the specific business problem that Philips Male Grooming is facing. Academic reflection is then discussed in chapter 6, in which the research is evaluated. Propositions for further research, theoretical implications and managerial implications are discussed in this chapter.
Some parts of this version of the Thesis have been removed due to confidentiality.
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2 RE SE AR CH P RO B LEM
In the following section, the problem context related to this research is first explained. It starts with a general description of the company profile and works towards a more detailed explanation of structural aspects and occurring complications. This leads to an evaluation of the problem statement and leads to a final problem statement, followed by the research questions that are at the basis of this research. The project approach is then further elaborated.
2.1 Problem Context
2.1.1 Company Profile
Philips Consumer Lifestyle is part of Royal Philips Electronics NV, one of the largest companies in the field of health, lifestyle and technology worldwide. Philips develops meaningful products that improve people’s health and wellbeing.
Philips Drachten is part of the Consumer Lifestyle sector and with more than 2000 employees it is one of Consumer Lifestyle’s largest development and production centers in Europe. Products include coffeemakers, vacuum cleaners, hot air fryers and energy lamps. Philips Consumer Lifestyle Drachten has also been the development and production center for Philips shavers since 1950.
The Male Grooming Category covers development and production of shavers, trimmers, clippers and groomers and represents the largest product category within Philips Personal Care. There is a clear desire to grow further within this business. This growth - on one hand - should come from its core propositions as well as definition of new solutions that provides growth beyond its core. To meet these ambitious goals, it implemented a separate front end innovation process. The purpose of this implementation is to increase the development of game changing innovations.
2.1.2 New Product Development
In the previous (before 2012) situation, propositions of new products ideas were made based on consumer insights scouted by marketeers. These propositions were evaluated and decisions are made whether the proposition should be further developed or not. An approved proposition would be handed over to the Technology and Function Creation (T&FC) phase, followed by the Integral Product Design (IPD) phase (See Appendix 2 for a more details on the standardized new product development phases at Philips Male Grooming). The front end of the development process used to be rather concise and has been mainly applicable in exploiting incremental innovations.
14 Figure 2.1: Previous (before 2012) model of the new product development funnel(s) of Philips Male Grooming.
Figure 2.2: Current situation of the new product development funnel of Philips Male Grooming.
Strategy change in the Male Grooming category with an increased focus on Game CCI led to a new perspective of the new product development process. While the category has extensive range of resources to carry out development, test and launch stages, front end stages have had less attention during this incremental focus. Therefore, a new model is designed and implemented to realize a more comprehensive front end process with a more long term focus and an increase in game changing innovation activities.
This model is illustrated in figure 2.2 and contains a separate product development funnel. Sequential structuration of both product development models have strong resemblance with the earlier stages of the stage-gate model (figure 2.3) designed by Cooper (1990).
15 Figure 2.3: First 3 stages of Cooper’s stage gate model (Cooper, 1990).
2.2 Problem Statement
2.2.1 Initial Research Motive
Management of the Male Grooming category has been dissatisfied with the amount of radical product innovations that result in actual market launches. To realize growth, the category wants to increase the development and market launches of radical innovations. Therefore, a separate funnel for radical or ‘game changing’ (this definition is further explained chapter 3.1) innovations has been created, as illustrated in figure 2.2. Separating the radical innovation funnel from the incremental innovation funnel, allows front end innovation activities in radical innovations to be approached differently. For example, – as figure 2.2 indicates – the new funnel allows a more comprehensive set of front end innovation phases to be applied.
Although there is an increasing emphasis on front end innovation, it can only be of value when there is sufficient idea inflow. As shown in figure 2.2, management at Male Grooming is aware that the innovation funnel can be fed by ideas from different directions. As indicated at the intake meeting, it is unclear how to maximize and sustain an inflow of good new product ideas. Although changes in the front end innovation structure have been implemented, the category lead noticed a risk that a lack of a sustainable inflow of game changing ideas would limit the utilization of the new front end innovation structure. Hence, there is a desire to realize a continuous inflow of game changing ideas.
2.2.2 Preliminary Analysis
Further exploration of the initial problem statement indicated that there are three main contributing factors included in the problem statement. To realize a constant flow of good new ideas, problems may occur concerning idea quantity (1), idea quality (2) and sustainability (3). In quantitative aspects, there might simply be not enough ideas entering the innovation funnel. To realize a good product proposition with the potential of a successful product, ideas should be of a certain quality. Concerning sustainability, it might be that there are structural, cultural or practical aspects that inhibit a constant flow of good new ideas. To analyze where the initial problem is rooted, preliminary analysis is done by interviewing three key stakeholders, having managerial experience in innovation projects and activities. The goal of the interviews was to identify the problem, to get an indication of where the problem is rooted and to identify
16 possible causes of the business problem. Brief open interviews (appendix 5) have been conducted in which the proposed problem statement has been put up for discussion. Respondents were asked to explain whether they recognized the proposed problem statement and the main research question. Also, they were asked to indicate what probably causes this problem to occur.
Out of the interviews the following main identifications with the initial problem arose. These identifications are neither conclusive nor evident. Still, they provided direction to further execution of the research.
Consolidating to the preliminary problem statement:
• There is no organizational foundation that controls, manages and analyzes ideas.
• Unique outcome of idea generating activities wears off.
• Ideas are not recognized, cannot ‘land’ or are rejected.
• Ideas don’t fit with the current strategic view or business opportunity.
• Ideas are not sufficiently stored and/or re-used.
• Most activities are temporary and not long-term oriented.
• New insights mostly stem from the marketing department.
Contradicting to the preliminary problem statement:
• There are sufficient ideas generated when required.
• There are sufficient methods applied in which ideas are generated.
• The resources and skills to come up with high quality ideas are available.
Preliminary discussions with respondents on the problem statement led to an indication that the problem is not considered to be directly caused by lack of practical methods, capabilities or resources that concern idea generation in quantitative or qualitative terms. However, the lack of a certain foundation or ‘breeding ground’ that enables or stimulates ideation in a sustainable matter is recognized among all of the respondents that were interviewed during the preliminary research stage. Concerns about sustainability seem to emerge from the perception that ideas are only generated actively when required. Based upon the intake meeting and interviews with members of the Male Grooming category, a preliminary cause and effect diagram has been developed (Appendix 5). The analysis resulted in the following problem statement:
“There is a concern that the sustainable inflow of game changing ideas might not be sufficient in order to realize long term growth”.
Preliminary analysis led to a specification of the problem scope, in which a practical approach to qualitative and quantitative aspects seems to be less of a concern. While in this context sustainability does include idea quantity and quality to a certain extent, there are mainly other factors derived from the preliminary interviews that directly or indirectly relate to sustainable ideation. Further validation of the preliminary analysis is provided in the empirical analysis (chapter 4.2).
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2.2.3 Research Questions
The problem statement leads to the following main research question that will be addressed in this research:
“How could Philips Male Grooming realize a continuous inflow of Game Changing Ideas?”
This question can be sub-divided into a set of underlying questions:
1. How does Philips Male Grooming currently come to ideas and to what degree does this approach need adjustments?
2. What are the critical causes or barriers that relate to the problem statement?
3. What does recent scientific literature say about the critical causes or barriers?
4. What could Philips Male Grooming do to realize a sustainable flow of Game Changing Ideas?
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3 LI TE RA T UR E RE V I EW
The following section contains the theoretical background concerning the realization of a sustainable flow of game changing ideas. This subject is divided in three main sections. The first part provides a more general theoretical background on the definition of Game Changing Innovation. Second, theoretical background on quantitative and qualitative aspects of an idea is provided. The third section specifically concerns the sustainable inflow of ideas on an organizational level.
3.1 Game Changing Innovation
Game changing innovation is the main subject within this research. Since ‘game changing’ can be interpreted in different ways, it is important that everyone involved in game changing innovation related activities, projects and studies should have a common understanding of the term and its purpose.
The term ‘innovation’ is thoroughly discussed in academic literature. Amabile (1998) defines innovation as “the successful implementation of creative ideas within an organization” (Amabile, 1998, p. 126), and is used in this research as this definition emphasizes that an idea is the basis of an innovation. However - in addition to the aspect of successful implementation - innovation is the conversion of an idea into a commercially valuable solution (Biemans, 2011). Thus, innovation is relevant only if it creates value for customers — and therefore for the firm (Sawhney, Wolcott & Arroniz, 2006). While innovation is thoroughly defined and discussed, a common definition of ‘game changing innovation’ is not found in academic literature. Therefore, it is important that this term is clearly formulated and commonly understood among stakeholders within Philips Male Grooming. Desk research on earlier meeting reports and project briefings provided a definition of game changing innovation that is considered to be applicable within Philips Male Grooming:
A Game Changing Innovation should meet the requirements for Champion Products:
• They should be superior to the competition;
• Expect to have significant impact in the market (resulting in 50M€ in incremental sales cumulative in the first 3 years);
• Build the Philips brand towards innovation leadership.
In addition:
• They should be validated in quantitative tests;
• Be sufficiently game changing: Judgment call by BG MT;
• Be feasible: land on the roadmap.
The above conditions provide more insight in the actual definition of what management at Philips Male Grooming considers as game changing. Still, the above definition of game changing seems rather vague or superficial. The definition has however purposely not been sharpened during these meetings. Problem owners and managers came to the conclusion that it would not be possible to define a game changing innovation in such way that it clearly separates game changing innovation from incremental innovation.
Confidential
19 Instead, a judgment call is therefore implemented in order to evaluate if an innovation is sufficiently game changing.
While game changing innovation is defined in accordance to the consideration of stakeholders, it is important to relate these criteria with concepts that are used in academic literature. From a research perspective, relating the specific game changing innovation definition with academic literature is useful in order to gather theoretical background concerning the similar concept or problems. A clear distinction in the innovation literature stream can be indicated between incremental innovation and radical innovation.
Radical or explorative innovations are designed to meet the needs of emerging customers or markets (Benner & Tushman, 2003; Danneels, 2002) and require new knowledge or departure from existing knowledge (Benner & Tushman, 2003). Incremental innovations – often described as exploitative - are designed to meet the needs of existing customers or markets (Benner & Tushman, 2003; Danneels, 2002).
They broaden existing knowledge and skills, improve established designs, expand existing products or services and increase the efficiency of existing distribution channels (Abernathy & Clark, 1985).
Taking the above definitions in account, the specific game changing innovation criteria defined by the key stakeholders at Philips Male Grooming have most in common with radical and explorative innovation since a significant impact in the market is required. Hence, most incremental innovations won’t lead to the ambitious criteria of achieving these desired target goals. However – from a technological perspective – the Philips specifications of game changing innovations do not imply that the development of a substantially novel and unique product is required in order to consider it Game Changing. Significant change in business model or offering, based on existing technologies could fit with the given definition of game changing innovation. Goldenberg, Horowitz, Levav and Mazursky (2003) elaborate on this balance between offering renewal and technological expertise as a desired ‘Innovation Sweet Spot’ - far enough from existing products to attract real interest, but close enough to fall within a company's existing positioning and capabilities.
In the overall perspective of the stakeholders of Philips Male Grooming, game changing innovation has close resemblance with the definition of Business Development: a significant change in the fit between suppliers’ offerings and market demands (Biemans, 2010). From a theoretical perspective, the concept of game changing innovation in the context of this research mostly involves radical innovations in the dimension of a firm’s offering, as defined and illustrated in ‘the innovation radar’ by Sawhney, Wolcott &
Arroniz, 2006. However these innovations do not necessarily include technological novelty or uniqueness.
It’s the significant impact of the suppliers offering that indicates whether an innovation is Game Changing.
3.2 Idea Initiation
Along with Game Changing Innovation, ideas are the main subject during this research. However, the study does not fully emphasize on the process of an idea towards actual product development. More specifically, this study focuses on ideation; the generation and development of ideas that can be converted into innovations (Björk, Boccardelli, & Magnussion, 2010). Adding to this definition, not only generating and developing ideas, but mostly the emergence of an idea is emphasized in this research.
20 The well-known stage-gate system - originated from research by Cooper (1990) - illustrates the new product development process as a sequential set of events. The new product development process progresses through a set of stages. Each stage is divided by a quality checkpoint or so called gates (Cooper, 1990). As illustrated in figure 2.3, the model implies that the emergence of an idea is the first activity of this new product development process and it is typically represented as a single ideation step without any indication on how this first step would work and what key elements are required. Cooper’s major contribution was to describe a stage-gate system for the whole new product development process (Koen et al., 1996). However, the emergence of an idea is considered to be more complex and often requires some form of motive in order to take place. Concerning incremental innovation, this motive usually stems from the combination of technology and a customer problem or a customer need (Koen et al., 2001). These problems or needs are mostly articulated and are therefore appropriate to be systematically processed (often involving technology) towards solutions, in which many idea generation methods are applicable (Koen et al., 2001).
However, when developing new propositions that are substantially different from the existing product portfolio, customer needs become less articulated. Many studies elaborate on the occurrence of these unarticulated needs, also referred to as sticky user information (Leonard & Rayport, 1997; Von Hippel, 1998). Also suggested by Von Hippel (1988), the average user of a product or service often lacks the expertise required to make a truly insightful contribution to a firm’s innovative efforts. Narver & Slater (1995) elaborate on these findings and mentions that innovative firm should realize that they need to search for so called ‘latent needs’, needs that customers are not even aware of themselves. Especially firms engaged in radical and explorative innovation activities are confronted with the challenge to generate ideas without having a clear articulated customer need or problem to build on. The idea generation process in radical innovation should therefore be approached differently.
Koen, et al. (1996) defines an idea in the context of innovation as ‘an embryonic form of a new product or service, which often consists of a high-level view of the solution envisioned for the problem identified by the opportunity’ (Koen et al. 1996, p.7). This definition implies that an idea in radical innovation is derived from a given problem. In addition, it should fit between the boarders of a broader unfulfilled market need in which a firm will engage, a business opportunity (O’Connor & Rice, 1999). Koen et al. describes this business opportunity as “a business or technology gap, that a company or individual realizes that exists between the current situation and an envisioned future in order to capture competitive advantage, respond to a threat, solve a problem, or ameliorate a difficulty” (Koen et al., 1996, p-7). A clearly defined business opportunity is important for the ideation phase since it specifies borders and directions in which problems can be identified and ideas should be addressed (Paap, 2012). Ideation activities in radical innovation thus tend to be guided by business opportunities in which ideas can evolve. O’Connor & Rice (1999) indicate that these business opportunities are in its turn guided by strategic intents or objectives.
They also argue that idea generation and opportunity recognition can evolve in a two way process. Ideas can be generated on the basis of a given business opportunity. However, ideas that don’t fit with related business opportunities could have the potential to address and discover a new business opportunity.
O’Connor & Rice (1999) stress out the importance and complications of the internal capabilities in recognizing these new business opportunities. Opportunity recognition can be characterized as reactive or
21 proactive. Individuals may reactively recognize new business opportunities and react to ideas that have the potential to become an opportunity. This concept of opportunity recognition is also emphasized by Shane (2000), who argues that entrepreneurs within an organization mostly recognize opportunities (instead of actively searching for them) on the basis of their prior knowledge. O’Connor & Rice (1999) indicate that also a pro-active approach allows individuals to take on the responsibility of searching through the organization for ideas that can be developed into opportunities. O’Connor & Rice (1999) describe several methods that can be applied to improve the organizational capacity for opportunity recognition. These methods can focus on taking top down actions to articulate and sustain a need for breakthrough ideas and to enable activities into people’s jobs to increase the probability that opportunity recognition will occur. Next to direct attention that senior management can give to stimulating opportunity recognition, organizational enablers can be applied in order to make it easy for opportunity recognizers to come forward. O’Connor & Rice (1999) point out three types of opportunity recognizers that should be taken into account when developing such supporting structure mechanisms. A distinction is being made between passive and active opportunity recognizers, in which active opportunity recognizers are more oriented towards marketing and business development. A third type is the so called
‘radical innovation hub’, which functions as an organizational repository for ideas in which ideas are gathered, evaluated and stored.
As a product development is frequently described or visualized as a process that evolves from an idea towards a product launch, the emergence and initiation of this idea during front end innovation has several directives that are crucial to the emergence of an idea. Ideas usually derive from needs, threats, problems or difficulties which are characterized within the borders of a business opportunity. In its turn, this opportunity is derived from strategic guidelines. Thus, the business opportunity and strategic guidelines – as illustrated in figure 3.1 - are considered to be guiding principles in the emergence of ideas.
However, this is not necessarily the sequence in which ideation should occur and thus, the illustration does not represent an ideation process. As indicated by O’Connor & Rice (1999), new and deviating ideas can lead to newly defined opportunities and ideas could emerge during the development of concepts or propositions.
Figure 3.1: Directives during the emergence of an idea, in which iteration could occur. This composition is based on previous studies on front end innovation.
Guided by the scope of a business opportunity (in line with strategic guidelines), a firm needs certain practices to generate a desired amount of ideas and it should strive to ensure that the quality of the generated ideas is as high as possible. The following sections further elaborate on generating ideas in quantitative and qualitative aspects.
Strategy Opportunity Idea Concept Proposition
22
3.2.1 Quantitative Aspects of Ideation
When explicitly focusing on idea quantity, several studies are built towards an indicative model that describes how many ideas there are theoretically required in relation to the launch of a successful product. To analyze idea quantity, Koen et al. (2001) suggest several basic metrics to measure ideas:
• The amount of ideas retrieved;
• The amount of ideas generated over a certain amount of time;
• Percentage of ideas commercialized;
• Percentage of ideas entering the new product development process;
• Percentage of ideas that result in patents.
Stevens and Burley (1997) indicate that among most industries, it appears that 3,000 raw ideas are required to produce one substantial new commercially successful product. Patent activity, project activity, venture capitalist activity and independent inventor activity were used as sources to assemble the success curve. While this study indicates that ideas should be generated with large amounts in order to successfully launch a new product, several aspects can be considered to be rather superficial. First of all,
‘raw ideas’ are defined as unwritten which indicates that they cannot be measured in that state. Therefore, the previously mentioned idea definition derived from research by Koen et al. (1996) is used in order to consider an idea as an item that can be applied in empirical research. A second point of discussion is the relation with idea quality. Generating a large amount of ideas as argued by Stevens and Burley (1997) does not give any indication about the quality of these generated ideas. As stated by Girotra, Terwisch and Ulrich (2010), the success of idea generation in innovation usually depends on the quality of the best idea identified. This is explained with a common mindset that an innovative firm prefers to have 1 outstanding idea instead of 100 merely good ideas, indicating that idea quantity and quality are closely related. Still, several studies emphasize on the assumption that more ideas will lead to better ideas (Girotra, Terwiesch and Ulrich, 2010; Alexy, 2012). On the contrary, Alexy (2012) points out that firms might be confronted with too many ideas and will then face the problem of not being able to select the most promising ones.
Hence, an effective evaluation method is desired in which only the high quality ideas are developed towards a product concept. Due to a large amount of ideas and their qualitative diversity, idea quantity may be higher than the managerial threshold of what the firm is able to process (Alexy, 2012). The further an idea develops through a certain filtering process, the more information about the idea’s potential is gathered. As the amount of uncertainty decreases, it can be noticed that in these stages more studies contribute to quantitative aspects of ideas in front end innovation. Research of Barkzak, Griffin and Kahn (2009) indicates that among 614 respondents in a large variety of industries, 1 out of every 7 initial ideas generated actually become commercial successes. In this case, ‘initial’ ideas are well formulated ideas that passed a preliminary screening. Stevens and Burley (1997) also indicate that 1/7 to 1/10 of serious ideas are commercialized. ‘Serious ideas’ are in this case defined as idea projects that include significant exploratory R&D spending along with a preliminary business analysis and market segmentation efforts.
Studies on explicit quantitative aspects of ideation related to product success vary in outcome. While some studies indicate that large amounts of ideas are required to generate and develop successful new products, others point out that one single outstanding idea is preferred over a large amount of mediocre
23 ideas. These contradictions imply that effective ideation in quantitative terms is highly dependent on the qualitative aspects of the generated ideas. Next to that, a large amount of idea inflow requires a more comprehensive evaluation or funneling system, including the necessary resources to maintain this inflow of ideas. Explicit idea quantities given in academic literature differ among studies and are considered to be only indicative. The maturity state of an idea is difficult to identify among studies, which makes comparative analysis on quantity somewhat inaccurate.
Respondents in the preliminary interviews at Philips Male Grooming indicated that there are enough ideas generated when this is required, meaning that sufficient idea generation capabilities are available. As studies on idea quantity indicate, Philips Male Grooming should have a rich amount of generated ideas entering an effective evaluation process. This process should be designed in such way that new product failure rates (around 1 out of 7 as stated by Stevens and Burley, 1997) are taken into account. The current amount of generated and registered ideas could be measured and benchmarked in comparison with indications from literature and other organizations. This way, the idea generation capabilities of Philips Male Grooming can be indicated. However, these measurements and comparisons give a mere indication on the actual continuous idea inflow, as they don’t say anything about idea quality, continuity (over time) and they don’t include raw, unwritten or unregistered ideas. Further analysis on idea quantity is discussed in the empirical analysis (chapter 4) and appendix 7.
3.2.2 The Quality of an Idea
The quality of ideation as a whole can be determined according to the amount of unique ideas generated and the quality measure of each individual idea (Reining, Briggs, Nunamaker, 2007). Next to generating a sufficient amount of unique ideas, firms thus need to apply proper evaluation methods to specify the quality of these ideas. Considering the definition of an idea - ”an embryonic form of a new product or service, which often consists of a high-level view of the solution envisioned for the problem” (Koen et al.
1996) - the quality of a particular idea can only be judged with respect to the specific goals of the ideation session itself (Reining, Briggs, Nunamaker, 2007). The quality of an idea is thus related to a combination of the need or problem that the idea addresses and the solution that the idea embodies (Girotra, Terwiesch &
Ulrich 2010).
In the stage gate model, several idea assessment stages and screening gates are implemented in order to progressively generate support for an idea (Khurana & Rosenthal, 1998). The early stages provide an assessment of the quality of the project, ensuring the firm does the right projects and does them correctly (Cooper, 2001; Martinsuo, Nissinen, 1998). Screening gates provide the quality-control mechanism in the process and support go/no-go and prioritization decisions (Carbonell-Foulquié, et al.; Cooper, 2001). The very first initial screen provides “gentle” evaluation criteria and amounts to subjecting the idea to a handful of key "must meet" and “should meet" criteria. Cooper (1990) indicates that in this stage, screening criteria involve strategic alignment, project feasibility, magnitude of the opportunity, differential advantage, synergy with the firm's core business and resources and market attractiveness.
Cooper also indicates that in this stage, financial criteria are not part of the first screen. Hart et al. (2003), also indicate that during the evolution of an idea some criteria were used more often in the early gates of
24 the new product development process (such as technical feasibility and intuition), while other criteria were more often used in later gates of the process (such as sales in units, meeting profit objectives and margin). Previous research on idea quality thus indicates that the idea evaluation criteria are somewhat dependent on the maturity of the idea itself. In order to make proper evaluation decisions, a certain amount of information concerning the idea is required.
Table 3.1 provides an overview of what previous research indicates to be essential idea evaluation criteria during the first stages in the new product development process. In this review, a distinction is made between three maturity stages of the idea within the early stages of the new product development process, in accordance with the stage gate model as defined by Cooper (1990).
In the early stages of front end innovation, a total of 6 common screening criteria can be identified among previous studies: strategic alignment, project feasibility, magnitude of the opportunity, differential advantage, technological fit feasibility and market attractiveness. Carbonell-Foulquié (2004) indicates that most firms use 4 to 7 criteria to monitor new product projects. During the second and third screen the same criteria are used to re-evaluate ideas according to the information achieved during assessment activities. A common finding among studies indicates that customer satisfaction and financial criteria are added to the evaluation process during these later stages.
Criticism on the application of these evaluation criteria is based on the judgment that qualifying an idea in an early stage requires the collection and consideration of information which is often lacking or too superficial during these early stages. As Boeddrich (2004) indicates, managers cannot decide how to allocate R&D budgets based on ideas that are vague and highly uncertain. These uncertainties tend to be especially high in exploratory activities (Benner, Tushman, 2003; Levinthal & March, 1993; March, 1991;
O’Connor & Rice, 1999). Koen, et al. (1996) point out that during the selection of ideas to consider for further development, most businesses will reject disruptive technologies. “Thus any idea selection process may be fundamentally flawed, since a disruptive idea will be unable to garner resources against the existing business” (Koen, et al., 1996, p. 25). Radical ideas often address unarticulated needs, new markets, and new-to-the-firm project activities and technologies (Von Hippel, 1986). Therefore, ideas for explorative innovations tend to be more difficult to evaluate on their quality than ideas for exploitative innovations (Benner, Tushman, 2003). These perceptions indicate that ideation requires a different approach for more radical innovation activities than for incremental innovation activities. This consideration will be further discussed in the next section.
25
Ideation Phase Evaluation Criteria Literature
Criteria in Initial Screen • Strategic Alignment, Organizational Fit.
Cooper (1990),
Carbonell-Foulquié, et. al. (2004), Kuczmarski, Silver (1982), Khurana, Rosenthal (1998), Van Engelen (2010).
• Project Feasibility, Technological Feasibility, Resource Compatibility.
Cooper (1990), Green, Wong (2002), Koen, et al. (2003),
Carbonell-Foulquié, et al. (2004), Khurana, Rosenthal (1998).
• Magnitude of the Opportunity, Window of Opportunity, Market Size.
Cooper (1990), Green, Wong (2002), Koen, et al. (2003),
Carbonell-Foulquié, et al. (2004), Khurana, Rosenthal (1998).
• Differential Advantage, Product Superiority, Product Quality, Product Uniqueness.
Cooper (1990), Green, Wong (2002), Koen, et al. (2003), Hart, Hultink (2003), Kuczmarski, Silver (1982), Carbonell-Foulquié, et al. (2004), Van Engelen (2010).
• Synergy with Core Business, Newness to Firm,
Competency, Technological Fit.
Cooper (1990), Green, Wong (2002), Koen, et al. (2003), Hart, Hultink (2003), Kuczmarski, Silver (1982), Carbonell-Foulquié, et al. (2004), Van Engelen (2010),
Khurana, Rosenthal (1998).
• Market Attractiveness, Market Need,
Market Acceptance, Customer Potential.
Cooper (1990), Green, Wong (2002), Koen, et al. (2003), Hart, Hultink (2003),
Carbonell-Foulquié, et al. (2004), Van Engelen (2010).
Khurana, Rosenthal (1998).
Additional Criteria in Second Screen
• Sales Force. Cooper (1990).
• Customer Reaction, Customer Acceptance, Customer Satisfaction.
Cooper (1990), Hart, Hultink (2003),
Carbonell-Foulquié, et al. (2004).
Additional Criteria in Decision on Business Case
• Financial Screening, Sales in Units, ROI.
Cooper (1990), Hart, Hultink (2003).
• Target Market Definitions, Market Share.
Cooper (1990), Hart, Hultink (2003).
Table 3.1: Review of essential idea evaluation criteria during front end innovation.
26
3.3 Organizing Ideation
“To successfully innovate, firms need to have a sustainable flow of ideas from which to choose” (Boeddrich, 2004; As cited in Bjo & Jennie, 2009, p. 663). Having discussed the emergence of an idea, quantitative aspects of ideation and the measurement of idea quality, this section further elaborates on the approaches required to realize and sustain ideation with respect to Game Changing Innovation.
3.3.1 Structuring Ideation
In his study on organizing the fuzzy front end, Boeddrich (2004) stresses out that most firms do not pay enough attention to the steps to be taken before starting R&D projects (as also indicated by Cooper and Kleinschmidt, 2007). “The collection and flow of ideas are not regulated, decision criteria are not specified and authorizations are unclear” (Boeddrich, 2004, p. 265). Formality and structure within front end innovation can lead to more explicit, widely known innovation activities and stimulates clear decision- making responsibilities (Khurana, Rosenthal, 1998).
Boeddrich (2004) also emphasizes a certain degree of structure by relating them to a set of key success criteria in innovation:
• The ideas are linked with companies’ strategic goals at a very early stage of the innovation process;
• The ideas will give rise to superior products with obvious benefits for customers and users;
• The concept identification phase is structured and conducted systematically.
The first two criteria show strong resemblance with the previously mentioned idea success criteria such as strategic alignment, synergy with core business, differential advantage, market opportunity and market attractiveness (table 3.1). The third criterion aims on the firm’s ability to systematically and effectively process ideas towards concepts. In other words, FOI should be organized, structured and disciplined in order to realize a sustainable flow of ideas (supported by Cotterman, et al., 2009; Ho & Tsai, 2011).
However, the extent to which structure should be implemented is crucial and is discussed in many studies.
Boeddrich (2004) suggests that neither a highly structured and programmatic approach, nor an absolute free and uncontrolled environment that stimulates creativity is the key to success. Both extremes are imperfect; “On the one hand, idea-generation without any focus is useless for companies. On the other hand, machines are not able to duplicate certain creative functions of the human brain” (Boeddrich, 2004, p. 275).
Structure should therefore be properly applied so it provides efficiency and control, without restraining creativity and discouraging people from taking initiative (Boeddrich, 2004; Björk, Boccardelli &
Magnusson, 2010; Khurana, Rosenthal, 1998).
Boeddrich presents both a set of general organizational and company-specific requirements which are key elements in order for an idea-management system to be sustainable (table 3.2). The elements are confirmed by studies from Cooper (1996), Ernst (2001) and Montoya-Weiss & Calantone (1994).
27
Category Requirement
Organizational • Strategic Guidelines for innovation.
• Installation of broad idea collection point.
• Strategic analysis of ideas.
• Predefined and transparent criteria for selecting and implementing ideas.
• Multi-disciplinal involvement in idea generation activities.
Company Specific • Known definition of company-specific idea categories.
• Commitment to company-specific evaluation methods and selection criteria.
• Commitment to the owner of the idea-management process.
• Commitment to certain individuals or units that promote innovation.
• Known definition of creative scopes for the company.
• Employee motivation to develop new ideas.
• Transparent Idea Management.
• Fights for penetration of new ideas.
Table 3.2: Requirements for structuring the flow of ideas, as argued by Boeddrich (2004).
The general and company specific requirements define a set of practical conditions for creating and implementing idea pipelines. The set contributes to a systematic handling of ideas in organizing the ‘fuzzy front end’ (FFE) and generating a sustainable flow of ideas. However, it still provides room for company specific flexibility, which is necessary to confront companies’ specific knowledge with new ideas (Boeddrich, 2004).
Reid and Ulrike (2004) argue that for discontinuous innovations, information is typically unstructured and ideas are brought onto the organization by individuals which are not explicitly directed by others within the organization. A bottom-up approach in ideation is typically recognizable in discontinuous and explorative innovation activities. Idea or information flow is likely to begin with individuals operating at the technical level, moving upward to small groups or teams that operate at the product level and then moving on to the project-level for implementation (O’Connor and Veryzer, 2001; Crossan et al., 1999; as cited in Reid & Ulrike, 2004, p. 177). Reid and Ulrike therefore suggest that the emergence of discontinuous innovation occurs in the opposite (bottom up) direction compared to incremental innovations, in which problems can be identified and ideation approaches can be structured by the organization in a top down approach (as also indicated by Björk, Boccardelli & Magnusson, 2010). As Benner and Tushman (2003, p. 247) argue: “While the exploratory units are small and decentralized, with loose cultures and processes, the exploitation units are larger and more centralized, with tight cultures and processes”. Khurana and Rosenthal (1998) also describe two approaches to achieve a holistic front end:
The formal process approach and the cultural approach. Standardized and formal approaches seem to work well for incremental product innovations. The more radical innovations tend to be less explicit and require a more cultural approach (Khurana & Rosenthal, 1998; Benner & Tushman, 2003). Biazzo (2009) indicates that structure and formality can also have positive effect on radical innovation. However, this structure is present in a different dimension, namely the ‘organizational dimension’. Flexibility is present
28 in what Biazzo (2009) defines as the ‘informational dimension’. The degree of flexibility is considered to be the intersection between problem formulation and problem solving activities (Biazzo, 2009).
Research on structuring ideation implies that it is necessary to apply a certain degree of structure in ideation to give guidance, efficiency and control. Without these elements, a firm would most likely fail in realizing a rich and continuous inflow of ideas. However, there is a strong common believe that applying structure would mostly be beneficial in environments where incremental innovation is a leading driver.
When innovation activities become more explorative, ideas will emerge in a more chaotic, more iterative and less controllable way, an approach that could be negatively affected by formality and structuration.
The next section further elaborates on studies that explicitly focus on dealing with these complex elements of explorative innovation.
3.3.2 Complexity in Ideation
Koen et al. (2001) further elaborate on structuring the front end of innovation and state that most ideas disappear into a kind of black hole when there is a lack of some formal decision process. However, they are also aware that front end innovation activities do not progress in a structured and iterative matter. By determining the best practices of front end innovation among eight companies, Koen et al. (2001) constructed a model that is adapted to unstructured activities within front end innovation, as shown in figure 3.2. It consists out of three elements. The engine represents the leadership, culture and business strategy of the organization that drives the five key elements. These key elements represent controllable activities within front end innovation. The influencing factors consist of relatively uncontrollable aspects like distribution channels, law, government policy, customers and competitors. Note that the five key elements are similar to the directives illustrated in figure 3.1. However, Koen et al. (2001) explicitly illustrated their model as a wheel to emphasize that the emergence of an idea towards a concept is not rigid and sequential. Hence, an idea is not necessarily the starting point for a new concept development project; it is interwoven in all front end innovation activities. The rotating arrows represent the iterative occurrence of front end innovation activities. When an idea eventually has enough foundation, it will progress towards new product development activities.
Figure 3.2: The New Concept Development Model (Koen et al., 2001).
29 Earlier research on ‘managing chaos’ is done by Quinn (1986). By analyzing both small and large innovative organizations, Quinn argues that innovation can be characterized as being chaotic, which should be guided by a few performance targets and limits. Technical units should decide how to achieve these targets. Exploitation of these chaotic characteristics of front end innovation is further discussed by Garud, Gehman and Kumaraswamy (2011). They point out that innovation is difficult to sustain because it is a complex process. “It involves interactions among networks of people and technologies from different practice domains and across micro and macro levels of the organization. The innovation process is nonlinear, full of ups and downs, false-starts and dead-ends” (Garud et al., 2011, p. 737). In their research, a distinction is made between four types of complexity that are involved in front end innovation (as illustrated and explained in table 3.3).
Complexity Type Explanation Example
Relational Complexity Innovation emerges from local interactions between individuals that occur in response to local conditions.
Ad hoc communication and knowledge exchange on an individual level, based on serendipity.
Temporal Complexity Environmental or situational changes during the innovation process that occur over time.
Changes in market, customer, technology, government policy, law.
Manifest Complexity Diversity in range of products, patents, tools, techniques that emerge from research, development and marketing.
Diversity in expertise and understanding among business departments.
Regulative Complexity Collection of rules, routines and guidelines that governs how elements may be combined and used.
Definition of strategy guidelines and target goals.
Table 3.3: Four complexity types by Garud et al. (2011).
Each of the complexity types is indicated to be apparent during the emergence and development of an idea. Relational complexity is necessary to transfer information during ‘micro-level’ interactions and is a key element in the emergence of new ideas. “It is through such local interactions that innovation emerges as a distributed process” (Garud et al. 2011, p. 738). Temporal complexity is evident in the iterative characteristics of ideation. Also, the potential for success of an idea can increase or decrease over time, as its environmental elements change. ‘Eureka moments’ or moments of serendipity and flashes of insights are also strongly dependent on temporal complexity, since they occur unpredictably. In line with relational complexity comes manifest complexity, which is apparent in the range of products and services that emerge from the different activities undertaken by organizations. Large organizations often categorize themselves in forms of expertise or separate departments. Categorization may inhibit communicational and collaboration activities among them. Regulative complexity concerns the rules and routines that are applied within the organization. These sets of guidelines and routines may be more or
30 less complex and may be context-dependent (Garud et al., 2011). Garud et al. (2011) state that most firms are often unable to deal with each of these complexity types since they have been designed to reduce or suppress them. Departmentalization, short-term focus, rigid application of activities and an inappropriate culture are examples that might cause an organization to be unable to deal with the complexity involved in innovation.
Peschl and Fundneider (2012) also emphasize on the presence of a complex knowledge process that is rooted in every innovation. This process leads to what Peschl and Fundneider (2012) refer to as ‘new insights’, in which it is very challenging to get an understanding of how these new insights come about.
“Innovation and creating new knowledge cannot be managed or brought about in a mechanical manner.
Rather, the only action that can be taken is to enable such processes.”(Peschl & Fundneider, 2012, p. 42).
They state that in this context, enabling is put on the opposite of managing innovation processes and thus, attempts to manage explorative innovation processes most likely fail. Peschl and Fundneider (2012) provide a list of five key elements in innovation which they describe as interacting domains:
• Object of Innovation: A profound understanding of the core of the object of innovation;
• User/Market: Getting into resonance with the user;
• Society: Cultural contains, values, etc.;
• Technology: One of the main sources and drivers of innovation;
• Organization: The structural container in which most of the innovations come about.
Compared to the three earlier mentioned key success criteria of Boeddrich (2004), Peschl and Fundneider (2012) put more emphasis on the cultural and technological aspects of innovation, while the presence of structured and systematic approach is mitigated. The domains must not be seen as separate from each other. Instead, they are mostly in permanent interaction with each other. Therefore, Peschl and Fundneider (2012) created a set of enabling spaces (as shown in table 3.4) that (1) give up on the regime of control, determinism and making and (2) providing a facilitating framework supporting the processes of bringing forth new knowledge.
Enabling Spaces Explanation
Architectural Space The physical space in which the innovation and knowledge processes are taking place.
Social Space Social interaction is a critical condition for the emergence of new knowledge in a collaborative setting.
Cognitive Space Every innovation has its origin in an individual’s mind and its cognitive processes involved.
Emotional Space Cognition is always embedded in emotional and social states.
Epistemological Space Dealing with innovation always involves a wide spectrum of different types of knowledge processes.
