Session 3 organization of innovation

1. Session 3: Organization of Innovation
Prof. Dr. Bernhard Katzy
2012
www.CeTIM.org
Prof. Dr. Bernhard R. Katzy

2. Overview of Course Content
Innovation
System
Organization of Innovation
innovation Governance
Innovation
Transformation
and
entrepreneurship
Basic innovation concepts Introduction to innovation
Innovation Theory ……
Dominant theory, Main issues
and developments of innovation
research
www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 1

3. Session 3: An Overview
AGENDA
● Mini-Test
● Challenges when organizations face innovation
● Understanding organization
● Organizing innovation
● Readings for session 4
www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 2

4. Session 3: reading engagement
Mini-Test
www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 3

5. Challenges when organizations face innovation
INNOVATION'S UNCERTAINTY
Survival depends on maintaining a stream of innovations but
INNOVATION
Technology uncertainty Market uncertainty Organization uncertainty
R&D capabilities to develop
new technology Competition uncertainty Formal structure
Whether developed the right
technology Demand uncertainty Culture
• Every two years almost our entire product line turns over. We
can almost go out of business in two years if we don't do it right
----Gordon Moore
www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 4

6. Challenges when organizations face innovation
MODEL OF FUNCTIONAL ORGANIZATION
Finance
Human
Resources
Operative
core Marketing
Purchasing
R&D
Source: [Thompson]
www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 5

7. Challenges when organizations face innovation
AN INFORMATION PERSPECTIVE OF ORGANIZATION DESIGNING
Reduce the need for Increase the information
information processing processing capability
Creation of Investment in vertical
slack resources information system
Stable organization
Increasing planning targets Rules and programs Create information channels,
Hierarchy standardize information…….
Targets and goals
Creation of
Creation of
Self-contained tasks
Lateral relations
Uncertainty
Difference between
Groups created based on information required and Direct contact, task force
markets, projects……. possessed Teams …….
[Jay R. Galbraith 1974]
www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 6

8. Understanding organization
TRADITIONAL ORGANIZATION STRUCTURE
Comparison between organic structure and mechanistic one
Organic Mechanistic
an unclear hierarchy Follow the principle of hierarchy
unclear job responsibilities Every official is subject to an
impersonal order by which he
guides his actions
decision making is consultative Each incumbent of an office has a
and based on task expertise specified sphere of competence,
rather than being centralized in with obligations, authority, and
the management hierarchy and power to compel obedience
strictly defined
communication patterns are The system serves as a career
lateral as well as vertical ladder
…….. ……
[Burns and Stalker 1961]
www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 7

9. Understanding organization-Architecture
ORGANIZATION ARCHITECTURE
Informal
Organization
Formal
Task Organization
Arrangements
Individual
[ David A. Nadler and Michael L. Tushman, 1997]
www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 8

10. Understanding organization-Growth
ORGANIZATION GROWTH
Size Growth through
Collaboration
Growth through
Coordination
Growth through
Delegation ???
Growth through Crisis
Crisis of
Direction Red Tape
Growth through Crisis of
Creativity
[Greiner Crisis and Control
growth model] Crisis of
Autonomy
Crisis of
Leadership
Phase / Time
www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 9

11. The Case of Siemens AG
Fax PBX
Internet/
Email
EDV
Video
[Siemens AG, 1999]
www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 10

12. Understanding organization-Culture
LINKING INNOVATION AND CULTURE
summary from Charles A. O'Reilly and Michael L. Tushmans' idea
Unpredictability
Nonstandard INNOVATION
Solution Risk Taking
CREATIVITY IMPLEMENTATION
Support for risk taking & change Effective group function
Tolerance of mistakes Speed of action
www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 11

13. Organizing innovation - Ambidextrous organization
THE CASE OF IBM
www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 12

14. Organizing innovation - Virtual Organization
VIRTUAL ORGANIZATION
Network Project
- Co-operation
Management - Order
platform
of dynamic Processing
Co-operations
- stable - Dynamic
[Schuh, Katzy, Eisen, 1997]
www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 13

15. Organizing innovation - Virtual Organization
ROLES IN VIRTUAL ORGANIZATION
Competence manager
- brings partners competencies together
- communication with customers Project manager
Broker
- order processing
- acquisition
- engineering
- merchandising of the
network competencies
I/O
I/O
- balancing supply/
demand I/O
Auditor
- financial control (neutral)
- assessment
Manager
in-/ outsourcing
Network-coach
- coordination
- construction and maintenance of
- communication
with the the infrastructure
project manager - acquisition of partners [Katzy, Schuh, Millarg, 1996]
- rules for order processing
www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 14

16. Organizing innovation – Virtual organization
WHEN IS VIRTUAL VIRTUOUS
Vertical Market:
Integration Fusion uncertainty and high risk
JV
high incentives
Cooperation
Supplier
Hierarchy:
Contracts Market
certainty and low risks
Transactions
low incentives
Integration
[Chesbrough, Teece, 1996]
www.CeTIM.org Prof. Dr. Bernhard Katzy 14/02/12 15

17. Readings for session 4
S4:
Transformation and Entrepreneurship
•Article 22: Dynamic capabilities and
strategic management
•Article 36: Creating new ventures from
Bell labs Technologies
Selective reading
<Capturing value from technological
innovation: integration, strategic partnering,
and licensing decisions> by David Teece 1988
www.CeTIM.org 14/02/12 16