Assessing and ImprovingInnovation Capability in

Organisations

D.L. Francis

Ph.D. 2000

Assessing and ImprovingInnovation Capability inOrganisations

David Louis Francis

A thesis submitted in partial fulfilment ofthe requirements of the University ofBrighton for the degree of Doctor ofPhilosophy

June 2000

The University of Brighton

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Abstract

The rationale for examining innovation is persuasive. It has been widely

argued that exploiting the potential of ideas will be a cornerstone of

competitive success in the 21st century.

The thesis presents the findings of a research programme into the

components of innovation capability. This, it is argued, is an organisational

property that underpins an ample flow of multiple, value-creating and novel

initiatives. A significant outcome is a comprehensive reference model defining

56 factors that enable an organisation to be innovative. In addition, the results

of a pilot organisation development process, based on the reference model,

are described.

The research sought to answer four questions:

1. Can innovation capability be described?

2. What are the attributes of a firm with high innovation capability?

3. Can a means be found to 'audit' innovation capability?

4. Are there ways in which innovation capability can be developed?

Literature relating to organisational innovation has been reviewed, especially

that from strategic and organisation development perspectives and an

integrated theoretical framework constructed. This orientated the empirical

research undertaken. The role of contingency factors has been considered.

Using grounded and adaptive theory methodology, a reference model of

innovation capability was developed and revised following testing

procedures. An audit instrument was devised and used in 48 firms. Three

longer case studies were undertaken, leading to a tentative taxonomy of

innovation-specific organisation development techniques.

The implications of this research for theory and practice have been considered

and suggestions made for further research.

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List of contents

List of tables ................................................................................................................... 7

List of figures................................................................................................................... 7

Preface and acknowledgements......................................................................................... 9

Chapter 1 Introduction and overview..........................................................................13

1.1 Introduction ..................................................................................................13

1.2 Study area....................................................................................................14

1.3 Research focus...............................................................................................15

1.4 Previous studies in this area..........................................................................16

1.5 Research perspective ....................................................................................18

1.6 Research goals ..............................................................................................18

1.7 Research methods.........................................................................................19

1.8 Contribution of the research ..........................................................................22

1.9 Structure of the thesis ...................................................................................22

Chapter 2 Innovation and innovation capability—a theoretical review......................25

2.1 Introduction ..................................................................................................252.1.1 Theoretical orientation.....................................................................25

2.2 The scope of innovation .................................................................................262.2.1 Innovation within the firm................................................................292.2.2 Innovation as a concept......................................................................30

2.3 Innovation within the firm............................................................................342.3.1 Why can innovation be difficult to manage ........................................35

2.4 The nature of innovation................................................................................382.4.1 Innovation as a managed process........................................................442.4.2 Idea acquisition ................................................................................482.4.3 Idea adoption ...................................................................................502.4.4 Idea application...............................................................................562.4.5 Idea exploitation..............................................................................582.4.6 Learning ...........................................................................................59

2.5 Innovation and strategy.................................................................................622.5.1 Innovation from the perspective of the strategic planning school ........642.5.2 Innovation from the perspective of the resource-based school..............672.5.3 Innovation from the perspective of the entrepreneurial school ............752.5.4 Innovation from the perspective of the innovative organisation

school...............................................................................................792.5.5 Innovation and strategy.....................................................................84

2.6 Targeting innovation.....................................................................................862.6.2 4Ps targeting.....................................................................................872.6.3 Innovation in product.........................................................................882.6.4 Innovation in process .........................................................................92

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2.6.5 Innovation in position........................................................................952.6.6 Innovation in paradigm.....................................................................982.6.7 4Ps—organisational implications.................................................... 105

2.7 Innovation capability ................................................................................. 1052.7.1 What is a capability?..................................................................... 1052.7.2 Elements of innovation capability ................................................... 1082.7.3 Norms, Assets, Technologies and Skills (NATS)............................... 110

2.8 Contingency factors ..................................................................................... 111

2.9 Theoretical integration............................................................................... 112

Chapter 3 Data and methodologies .......................................................................... 115

3.1 Overview ................................................................................................... 115

3.2 Methodological context ............................................................................... 1153.2.1 The person of the researcher............................................................ 117

3.3 The research task........................................................................................ 119

3.4 Methodological choices............................................................................... 1203.4.1 Methodological assumptions ........................................................... 1233.4.2 Vitality and texture........................................................................ 1263.4.3 Choice of methodologies ................................................................. 1283.4.4 Selection of methodologies.............................................................. 133

3.5 Research strategy ....................................................................................... 135

3.6 Data sources................................................................................................ 138

3.7 Research techniques.................................................................................... 141

3.8 Development of a reference model and audit instrument................................ 1433.8.1 Development of an audit instrument................................................. 1443.8.2 Development of an audit process...................................................... 1463.8.3 Improving the diagnostic tools......................................................... 1493.8.4 Extending the research team............................................................ 1503.8.5 Statistical analysis ........................................................................ 151

3.9 Interventions............................................................................................... 1513.9.1 Review of effectiveness................................................................... 152

3.10 Research process as learning........................................................................ 152

3.11 Limitations of the research method............................................................. 154

Chapter 4 Research findings..................................................................................... 155

4.1 Introduction ................................................................................................ 155

4.2 Research design .......................................................................................... 155

4.3 The second generation reference model (G2).................................................. 1594.3.1 The G2 reference model: components and elements............................. 1634.3.2 The G2 reference model: 18 components and 56 elements..................... 166

4.4 Using the reference model in organisation development interventions ........... 2184.4.1 Findings from interventions ............................................................. 2194.4.2 Reviewing interventions.................................................................. 2234.4.3 The NORWESCO review................................................................ 2244.4.4 Learning from all interventions........................................................ 225

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4.4.5 The current situation ....................................................................... 227

Chapter 5 Discussion and conclusions......................................................................... 229

5.1 Introduction ................................................................................................ 229

5.2 Review against objectives............................................................................ 230

5.3 The theoretical context of innovation capability.......................................... 2315.3.1 Trends and common features............................................................. 2355.3.2 Innovation and other processes in the firm........................................ 2365.3.3 Is the notion of innovation capability helpful? ................................ 238

5.4 The use of adaptive theory.......................................................................... 239

5.5 The G2 Model - an assessment ...................................................................... 2435.5.1 Use of the reference model............................................................... 246

5.6 Interventions intended to enhance organisational innovation capability....... 2495.6.1 An 'intervention tree' ...................................................................... 252

5.8 Contingency theory and this research .......................................................... 255

5.9 Theoretical discussion................................................................................. 257

5.10 Learning for the researcher......................................................................... 262

5.11 Suggestions for further research................................................................... 264

5.12 Thesis structure and research limitations..................................................... 266

5.13 Concluding remarks..................................................................................... 268

Appendix 1 Interview schedule................................................................................... 270

Briefing statement .................................................................................................. 270

The questions .......................................................................................................... 270

Appendix 2 Auditing innovation effectiveness—a review of alternative models........... 275

Ahmed ....................................................................................................... 276Archibugi ................................................................................................... 278Burgelman .................................................................................................. 278Chiesa........................................................................................................ 280Coombs ....................................................................................................... 280Cook........................................................................................................... 281de Ven........................................................................................................ 281Deutschman................................................................................................ 282Dooley........................................................................................................ 283Doyle ......................................................................................................... 287Johne and Snelson........................................................................................ 288Kao ........................................................................................................... 289Koeste ........................................................................................................ 290McGourty.................................................................................................... 291Rothwell .................................................................................................... 291Tang ........................................................................................................... 292Trott ........................................................................................................... 293

Comparative assessment ......................................................................................... 293

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Appendix 3 The first generation reference model (G1).................................................. 296

Appendix 4 NUD•IST database—node statistics ........................................................ 319

Appendix 5 The innovation capability audit............................................................... 326

Appendix 6 List of companies and individuals contributing to the research................... 331

Appendix 7 Letter from Fleming Agri-Products Ltd...................................................... 334

Appendix 8 Innovation capability—a universal or contingent attribute? ...................... 337

8.1 Innovation in an entrepreneurial organisation (simple structure) ................... 339

8.2 Innovation in an machine organisation (machine bureaucracy)...................... 343

8.3 Innovation in an professional organisation (professional bureaucracy)........... 346

8.4 Innovation in an diversified organisation (divisionalised form) ................... 349

8.5 Innovation in an innovative organisation (adhocracy) .................................. 351

8.6 Innovation in an missionary organisation ..................................................... 354

8.7 Common features of the six cases.................................................................. 358

8.8 Consistency check........................................................................................ 359

Abbreviations and technical terms................................................................................. 361

References ................................................................................................................ 363

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List of tablesTable 2.1: idea acquisition...............................................................................................49Table 2.2: idea adoption..................................................................................................55Table 2.3: idea application..............................................................................................57Table 2.4: idea exploitation.............................................................................................59Table 2.5: learning...........................................................................................................62Table 2.6: four strategic perspectives................................................................................64Table 2.7: strategic perspectives and innovation capability..............................................85Table 2.8: sources of innovation (following Mintzberg) .................................................... 105Table 2.9: elements of innovation capability .................................................................. 109Table 2.10: comparing NATS and Amabile's categories................................................... 111Table 3.1: biographical factors influencing research ....................................................... 118Table 3.2: appropriateness of methodologies.................................................................. 133Table 3.3: major activities undertaken............................................................................ 136Table 3.4: rationale for inclusion of data sources ............................................................. 139Table 3.5: data set ......................................................................................................... 141Table 3.6: audit design criteria ...................................................................................... 145Table 3.7: audit design options....................................................................................... 147Table 4.1: data set for G1 reference model ....................................................................... 156Table 4.2: G2 components compared with G1 ................................................................... 162Table 4.3: G2 components and elements ........................................................................... 164Table 4.4: participants' evaluation................................................................................ 223Table 4.5: review of activities ....................................................................................... 226Table 5.1: relevance of this research: conclusion one........................................................ 232Table 5.2: relevance of this research: conclusion two ....................................................... 232Table 5.3: relevance of this research: conclusion three..................................................... 233Table 5.4: relevance of this research: conclusion four....................................................... 233Table 5.5: relevance of this research: conclusion five....................................................... 234Table 5.6: relevance of this research: conclusion six......................................................... 234Table 5.7: relevance of this research: conclusion seven..................................................... 235Table 5.8: this research and adaptive theory................................................................. 240Table 5.9: relevance of the 4Ps framework...................................................................... 253Table 5.10: intervention tree activities (level D)............................................................ 253Table 5.11: intervention tree breakdown (level E)........................................................... 254Table 5.12: need for a multidisciplinary approach.......................................................... 261Table A2.1: comparison of G2 and Ahmed's framework ................................................... 277Table A2.2: comparison of G2 and Burgleman's framework .............................................. 279Table A2.3: comparison of G2 and the Siegel scale .......................................................... 281Table A2.4: comparison of G2 and Deutschman's framework............................................ 282Table A2.5: comparison of G2 and Dooley et al's framework ........................................... 284Table A2.6: comparison of G2 and Doyle's framework ..................................................... 287Table A2.7: comments on Johne and Snelson's framework ................................................. 288Table A2.8: comparison of G2 and WEI framework.......................................................... 290Table A2.9: comparison of G2 and Rothwell's framework................................................ 291Table A2.10: comparison of G2 and Trott's framework ..................................................... 293

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Table A2.11: comparative assessment............................................................................. 294Table A3.Ia: transformational leadership ..................................................................... 296Table A3.Ib: stretching strategic intent .......................................................................... 298Table A3.Ic: dedicated innovation resources ................................................................... 299Table A3.Id: strong external linkages............................................................................. 300Table A3.Ie: directed innovation initiatives .................................................................. 301Table A3.IIa: empowerment practised............................................................................ 302Table A3.IIb: demanding expectations............................................................................ 303Table A3.IIc: high enrolment......................................................................................... 304Table A3.IId: respect for mastery................................................................................... 305Table A3.IIe: confronting learning.................................................................................. 306Table A3.IIIa: exceptional individuals.......................................................................... 307Table A3.IIIb: creative destruction................................................................................. 308Table A3.IIIc: active internal networking....................................................................... 309Table A3.IIId: conceptual road map ............................................................................... 310Table A3.IIIe: full competencies portfolio ...................................................................... 312Table A3.IVa: relentless continuous improvement........................................................... 313Table A3.IVb: effective new product–process development systems ................................. 313Table A3.IVc: sound decision processes ........................................................................... 315Table A3.IVd: honoured champions ............................................................................... 316Table A3.IVe: strong implementation capacity............................................................... 317Table A4: node statistics (G2) ........................................................................................ 320Table A8.1: organisational configurations ...................................................................... 337Table A8.2: common features and the G2 model............................................................... 359

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List of figuresFigure 2.1: institutionalisation of innovation....................................................................32Figure 2.2: a model of the innovation process ....................................................................48Figure 2.3: strategic perspectives on innovation ................................................................85Figure 2.4: characteristics of high innovation capability................................................ 108Figure 2.5: perspectives on innovation capability ........................................................... 113Figure 3.1: research strategy map................................................................................... 135Figure 3.2: hindsight map.............................................................................................. 136Figure 3.3: assessment of data sources ............................................................................. 139Figure 3.4: possible diagnostic procedures....................................................................... 147Figure 4.1: G2 reference model ........................................................................................ 160Figure 4.2: domain, components and elements.................................................................. 163Figure 4.3: asset intensiveness and innovation requirements............................................. 182Figure 4.4: cultural factors ............................................................................................. 191Figure 4.5: areas for learning.......................................................................................... 198Figure 4.6: types of maps................................................................................................ 212Figure 4.7: illustrative decision profiles......................................................................... 215Figure 4.8: structure of intervention ................................................................................ 219Figure 4.9: intervention process (actual case) .................................................................. 220Figure 5.1: helix model .................................................................................................. 237Figure 5.2: paths for development of innovation capability ............................................ 251Figure 5.3: intervention tree........................................................................................... 252Figure 5.4: intervention over time................................................................................... 259Figure A2.1: audit categories ......................................................................................... 275Figure A2.2: other researchers ....................................................................................... 276Figure A8.1: clarifying opportunity space....................................................................... 340Figure A8.2: exploitation options................................................................................... 341Figure A8.3: an example of process innovation ................................................................ 344Figure A8.4: elements of a process innovation.................................................................. 345Figure A8.5: participants' perceptions of opportunities ................................................... 347Figure A8.6: opportunities following discussion .............................................................. 348Figure A8.7: balancing global and local requirements...................................................... 349Figure A8.8: adhocracy.................................................................................................. 354Figure A8.9: values driven organisation ......................................................................... 355Figure A8.10: pulls on values.......................................................................................... 357

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Preface and acknowledgements

Many people contributed to this research and, concurrently, to my own

learning. I am grateful to them all.

Particularly helpful guidance concerned my own values, attitudes and skills.

Having been a consultant in organisation development for many years, with

some experience of writing, I felt, at the outset, that a research degree would

build on my existing expertise. This proved to be a naive assumption. I was

unprepared for the significant unlearning that was needed. Over time I came

to understand and respect the role of scholarship in the development of

robust theoretical frameworks. Also, I came to learn how to build theory

from reliable and comprehensive data sets. In my consulting role my goal

had been client-centred and goal-orientated. I needed to become

knowledge-centred and integrity-orientated.

I learned and unlearned within CENTRIM (the Centre for Research in

Innovation Management) from the mid-1990s and thank my colleagues for

being open-minded and generous with their time and ideas. Often without

realising it, they provided role models and I came to understand the

importance of enquiry, diligence and valid conceptualisation. CENTRIM's two

'fathers', professors Howard Rush and John Bessant, have created something

rare and special that challenged, nourished and informed me. Thank you

both.

John Bessant, as one of my academic supervisors, provided unfailing support,

challenge and inspiration. In many ways this research reflects his

commitment to root theory in practice and use theory to inform practice.

Jon Bareham, my other academic supervisor, skilfully enabled me to re-think

and restructure this thesis so that it is, hopefully, balanced, readable and

useful to others.

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Whilst I was undertaking this research another student, Milady Parejo PhD,

was completing her studies. We read each others' work and she spent many

hours helping me to access ideas and theory pools of which I was unaware.

Her support was extremely valuable. In addition, my colleague,

Sandie Meredith, read several chapters and made valuable comments,

supporting me with unfailing enthusiasm. During the final two years of this

research Mike Hales PhD led the development of a researchers' community

that proved a source of ideas, feedback and support. Professor

Raphie Kaplinsky provided insight into the disciplines of academic work

through his inspired leadership of a reading group and detailed comment on

my theoretical work.

Outside CENTRIM many people contributed to this research effort. The

original motive to undertake a research degree was inspired by conversations

with professors Henry Mintzberg and Gareth Morgan in the 1980s. Professor

Yves Doz agreed to be a mentor and, brilliantly, helped me to frame the

research agenda. Murray Dalziel, PhD, was a second mentor and, as

managing director of Hay Consulting, offered insights into the organisational

development aspects of this work.

I am grateful to John MacKay and the Innovation Unit of the Department of

Trade and Industry for undertaking more than 110 interviews and focus

groups and giving me permission to use the data set from the Partnerships

with People Research. In addition, I wish to thank Trevor Bradford and

Gren Amstrong, both from the University of Ulster, who conducted many

interventions based on this research.

Many managers generously gave their time and I thank them all. Six people,

in particular, took my thinking forward. They are Jim Wright PhD, Terry

Hutton PhD (both of SmithKline Beecham), Vincent Henry (New York Police

Department), Helen Price (Jardine Pacific), Patrick Maule CIPD (Hong Kong

Mass Transit Railway) and Stephen Walker PhD (Thames Water).

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During this research I gained much from presenting preliminary ideas to

audiences of academic specialists and managers. Their feedback has been

invaluable. In particular, colleagues in CENTRIM on several occasions,

members of the Jardine Pacific Annual Strategy Conference in 1996, the

special interest group at the Strategic Planning Society in 1997, the audience at

the Institute for Personnel and Development Annual Conference in 1998,

members of the Technology Development Programme in Poland in 1999 and

senior members of the Czech Consultants Forum in 2000.

Finally, I wish to thank Graham Perrin whose skills in solving computer

problems are legendary. His dedication helped this thesis to be delivered on

time.

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Chapter 1Introduction and overview

1.1 Introduction

The May 2000 edition of Management Consultancy (2000a) had six articles.

The first (2000b), on new technologies influencing telecommunications, began

with the sentence "five years ago all of the 'issues' raised here would have

been predicted on either laboratory, blue sky or barely emerging

technologies… new entrants, using bleeding edge (sic) technologies are

rewriting the rule books and reshaping business models." (9). Other articles in

the magazine included a discussion of e-retailing, manufacturing systems

designed for flexibility, supply chain management using the www, internet

security, business to business commerce via the internet (B2B). In the

appointments section of the magazine there were 54 job advertisements, of

which 41 mentioned technological or organisational change. The wording of

one advertisement includes the following statement "this e-building, venture

capitalist hybrid organisation is shortly to be rolled out globally. It is a unique

offering in that it is a triumvirate partnership between a strategy consultancy,

a well-regarded venture capitalist and an institutional investor. They have

first mover advantage, a host of technological partners… and the clout to

shoehorn a place in a growing market" (55).

The April 1996 edition of the same magazine had five articles. The topics

included the speed of air travel, developments in the Australian economy,

coping with disasters (e.g. fire), outsourcing and data warehousing. There

were 31 job advertisements of which 21 mention technological or

organisational change—with business process re-engineering and quality

systems management being the most commonly mentioned managerial

specialisms.

The scale of change in the content of articles and job advertisements in

Management Consultancy over four years is striking. This magazine,

intended for change agents, concentrates on new ideas, business models,

technologies and management methodologies. It, arguably, presents a

snapshot of current business development trends. Within the profession of

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management consulting, and embedded in the services offered by

consultancies, there is evidence that many products, processes, market

positions and business models are undergoing radical and/or incremental

change.

Such changes require that ideas are developed then exploited for

advantage—a brief definition of innovation. This thesis presents research into

those organisational factors that enable multiple, value-creating initiatives to

be generated and implemented for the advantage of the firm—'innovation

capability'.

1.2 Study area

Innovation is a broad topic. As will be discussed in Chapter 2, innovation

requires ideas (new to the unit of adoption), making commitment decisions

about novel, perhaps uncertain, proposals, the realisation of ideas and

exploiting benefits. Firms may undertake hundreds or thousands of

innovation initiatives (Christiansen, 2000). Innovation can embrace a whole

organisation as a strategy and/or a cultural attribute (Coyne, 1996).

Innovation is important but, as Christiansen (2000) observes, "under the best

circumstances, innovation is an uncertain endeavour" (1). It is widely

considered that high innovation capability is necessary for survival and

facilitates superior commercial performance. For example, Freeman and

Soete (1997) assert that "not to innovate is to die" (266). However, not all

innovation initiatives provide advantage. For example, one of the largest

investments in an innovative product in the 1990s, $5 billion invested in the

Iridium global phone system, was totally wasted (Doz and Hamel, 1998). It is

possible to innovate and die. Innovation cannot be considered as a

guaranteed path to superior, sustained profit margins.

Despite the risks inherent in some forms of innovation, there is a broad

consensus amongst scholars (Duggan, 1998) that the rate and scale of the

'innovation requirement' has increased, and will continue to increase—with

globalisation, technological development and heightened competition being

key drivers.

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Forces driving innovation are disparate. They may be internal to the firm,

come from linkages (for example, with suppliers), customers, technological

leaders, strategic choices, rival firms etc. These forces can influence a firm at

all levels—from the executive team to entry-level employees. A firm's

innovation activities are influenced by, and may influence, political, economic,

social, market-driven, ideological and/or technological phenomena (Giddens,

1995).

Despite its importance, organisations can be unfriendly hosts for innovation

(Mintzberg, 1983a) through an emphasis on conformity, hierarchy,

predictability and the like. Firms using the principles of scientific management

(Taylor, 1911) have sought to professionalise innovation and thereby

inhibited some potential wellsprings (Leonard–Barton, 1995).

The obvious outputs (at least as far as customers are concerned) of innovation

are improvements in products and/or services. However, customers and

potential customers may not be the sole beneficiaries as other stakeholders

can benefit including employees, the environment and local community.

Partly for the reasons mentioned above (importance, risks, multiple drivers,

varied stakeholders and organisational constraints) innovation presents

distinctive management challenges (Duggan, 1998). Some managers are

concerned to develop their own skills and organisations to facilitate

innovation. This research is intended to help them.

1.3 Research focus

Innovation capability will be examined at the level of the firm, rather than

related to individuals, teams, projects, value-streams, clusters, industries,

nations or other possible foci. This research focused on innovation within

strategic business units (SBUs) but not at the corporate level1. Despite the

1 Distinctive models, methodologies and tools are used to develop corporate strategies. Issues

such as industry positioning, portfolio evaluation and parenting philosophies areimportant. The researcher decided not to consider specific characteristics of innovativecorporations but has little doubt that a different pattern of innovation attributes would beneeded than the one developed for this thesis.

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commercial orientation of the research, there is reason to believe that the

models developed could be applicable to not-for-profit organisations2.

The research has a pragmatic bias and belongs to the school of doctoral

studies (Easterby–Smith et al., 1991) that considers a useful outcome to be a

worthwhile endeavour. A managerialist perspective has been adopted and

with the aim of helping managers to answer the question: "how can the

management of a firm increase the possibility that there will be sufficient

numbers of apt, creative, timely, efficiently executed and value-creating

initiatives to provide it with 'high' innovation capability?"

This researcher adopted a position that high innovation capability is often

necessary and sometimes essential for 21st century organisations. However,

to adopt an uncritical pro-innovation bias would have been unhelpful. It will

be argued that the targeting of innovation capacity can be as important as its

possession. High 'innovative capability' needs to perform two functions

simultaneously—to enable a specific unit of innovation (referred to in this

thesis as an 'innovation initiative') to yield benefits and, more broadly, to

enrich the dynamic capability to the firm to enhance future value creation by

sustaining a flow of multiple, timely and appropriate initiatives.

It is not argued that all activities in a firm's value chain require the same

degree of innovation capability. For example, an advertising text for a

Scotch whisky (1999b) says:

"Since time immemorial, the Macallan has been distilled bycraftsmen on the same Estate in particularly small hand-beatencopper stills and, whilst other distillers no longer insist on usingoaken sherry casks, at Macallan this costly tradition ismaintained." (message on package of bottle)

Such examples provide useful reminders that new does not, invariably, equal

better—at least for some consumers.

1.4 Previous studies in this area

Innovation has been studied for many generations. It became a

preoccupation of industrialists in Britain in the early days of the industrial

2 A police force and a school were included in the case studies and no significant differences

could be identified with commercial examples.

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revolution in the middle of the 18th century (Weber, 1976). Studies of 'great

innovators' have enlivened the popular imagination for decades as

remarkable individuals (Sobel, 1998), like Brunel, Edison and Arkwright, were

seen as heroes. However, there are many examples of an earlier practice,

going back to the Palaeolithic period (Diamond, 1997).

Many bodies of literature have relevance including economics, economic

history, biology, sociology, social psychology, psychology, management

theory, strategic management, systems theory and organisation

development. This research draws primarily from three fields of scholarship:

innovation studies, organisation development and strategic management.

Current approaches to the study of innovation owe much to the work of

Schumpeter (1961). Innovation management emerged as a distinctive field in

the years following the Second World War, partly as it was seen to underpin

the drive for industrial recovery and economic development in the

Third World (Rostow, 1971). From the late 1950s sociological research (Burns

and Stalker, 1971; Gouldner, 1956) provided distinctive perspectives on

organisational life and contributed to a rich tradition of relevant sociological

research.

From a different world of practice another field of literature emerged in the

1960s. A distinctive set of methodologies, given the generic name of

'organisation development' (OD) developed, primarily in the USA (Blake and

Mouton, 1964) and from the Tavistock Institute in the UK. From the

beginning OD was driven by a belief-set that held that organisations were, in

the main, poor guardians of individual and collective creativity. In order to

develop, it was claimed, they needed to adopt facilitative processes (Schein,

1969), humanistic values and open-systems organisational designs

(McWhinney, 1972). OD provided insights into the organisational and

behavioural characteristics of innovation, combined with improving

understanding of the processes of organisational change and meant that

managers could institute interventions with the goal of enhancing innovation

capability.

The rapidly evolving field of strategic management provided a source of

further insights (Mintzberg et al., 1998a). The long-range planning school was

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superseded by dynamic frameworks, specifically the positioning approach to

competitive strategy that came from Harvard's faculty (Porter, 1980) and,

later, resource-based views (Hamel and Prahalad, 1994). The relationship

between innovation and strategy emerged as a significant issue—one that

continues to interest scholars and managers.

1.5 Research perspective

The approach adopted in this thesis is a child of the dynamic capabilities view

of the firm. However, innovation capability is not seen as an universal

formula like, for example, good accounting practice. Rather, it is seen as a

flexible resource for an organisation comparable to physical fitness for an

individual. Marathon runners, university researchers, school children, yogis

and old-aged pensioners—all need a degree of physical fitness but the type

and extent varies significantly. Of particular interest is the impact of a change

of requirement—when a university researcher whose sport is practising darts

takes up marathon running, for example!

1.6 Research goals

Despite a wealth of interest in the topic, a systematic methodology to help

managers develop the capability of their organisations to be innovative in

ways that are functional to the firm has not been fully developed—a new

synthesis is needed. It is to that end that this research is directed. In a seminal

paper Wolfe (1994) wrote:

"The objective of OI (Organisational Innovativeness) research isto discover the determinates of an organisation's propensity toinnovate" (408).

"innovation researchers have recently began to specify thecharacteristics of the organisations they investigate… a typologyof organisational innovational approaches, by providingresearchers with a common frame of reference, would facilitateclassification efforts. Though several have been proposed…nobroadly acceptable typology or check-list of attributes hasemerged" (418).

The research undertaken for this thesis adopted the suggestion made by

Wolfe and aims to deepen understanding by providing such a 'typology or

check-list of attributes' of innovation capability.

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The research sought to answer four questions.

1. Can innovation capability be described?

2. What are the attributes of a firm with high innovation capability?

3. Can a means be found to 'audit' innovation capability?

4. Are there ways that innovation capability can be developed?

These questions position this research differently than some major research

programmes, for example that undertaken by the Minnesota Innovation

Research Programme which Angle and de Ven (1989) stated had the objective

"to provide the innovation manager a road map that indicates how and why

the innovation journey unfolds, and what paths are likely to lead to success or

failure" (663). Using Angle and de Ven's metaphor of innovation as a journey,

this research is concerned with the resources that are needed to plan the

journey and cope with vicissitudes on the way—including the fitness of

travellers, their training, mental attitude and experience as well as practical

'tools'—waterproofs, corn plasters and compass.

An intent statement for this research (written in June 1995) was:

'to provide an intervention process for enhancing innovationcapability that managers would find practical, relevant anddevelopmental'.

1.7 Research methods

An approach adopted to link theory to empirical research was 'adaptive

theory'. Since this is little known a brief explanation is relevant. The

researcher decided in 1996 to use extant theories of innovation management,

strategy formulation and organisation development as sensitising concepts to

set an agenda for his empirical research. The methodology selected to analyse

and theorise from data was grounded theory (Strauss and Corbin, 1990a).

The 'classic' mode of undertaking grounded theory includes the use of

sensitising concepts. This was reinforced and extended by Layder (1998) who

published a work on a distinctive sociological method that he called adaptive

theory. Layder argued that an ongoing dialogue between theory and data

gathering/interpretation is constructive—a stance that had been adopted by

this researcher. Layder's explication of adaptive theory came too late to affect

20

the design of this research but almost all of his "new rules of the sociological

method" (173) had been (unknowingly) adopted.

The research was structured as a looping process in which a 'theory' was

developed, tested, reviewed and redefined. This thesis describes a process of

learning-over-time where ideas and insights have evolved, been changed,

destroyed and deepened through interaction with firms. It is interesting to

note that the research process included phototyping, iterative learning and a

dialogue between theory and practice; cited, for example, by

Leonard–Barton (1995) as typical steps in innovation development.

Accordingly, the research itself can be seen as an innovation initiative and

reflection on it provided a source of double-loop learning (Argyris, 1977).

Five primary research methods were used. These were:

1. The researcher codified a set of frameworks that, taken together,provided a tentative model of innovation capability from a review ofrelevant literature. This led to the design of a research questionnaire.

2. Data was collected from change agents, managers and other employeesusing the research questionnaire as the basis for semi-structuredinterviews. In addition, video and audio tapes of innovation processeswere studied. In total, more than 400 firms and individuals were includedin this element of the research.

3. Data from various sources was placed in a qualitative database (NUD•IST)and grounded theory methods used for the development of twogenerations of reference models.

4. The reference model provided the basis for an audit instrument that wasused as an element in an intervention process. Procedures for using auditsas an intervention methodology have been described in the literatureunder the generic heading of 'survey feedback' (Bowers and Franklin,1977; Franklin, 1976).

5. Three cases3 were explored in greater depth to track the development ofinnovation capability over time. This provided preliminary data forunderstanding possible links between intervention processes,developmental initiatives and innovation capability.

3 These were large organisations in the pharmaceutical and water industries and a police

service.

21

The researcher invested significant effort in the development of a reference

model. Despite limitations of such forms of codification, its merits were

considered to be persuasive. It provided a means of generating theoretical

insights. Also, it offered a basis for dialogue with firms that could alert

managers to domains of adequacy and inadequacy.

Findings and tentative models were subjected to peer reviews, presentations

to managers and trials with companies. The reference models went through

numerous minor changes and two major re-formulations. At the same time

the model was developed as a diagnostic aid and located within a structured

practice for developing innovation capability. The methodologies used in the

research will be described in Chapters 3 and 4, but here it is necessary to note

that some of the research studies were the consequence of opportunistic

assignments and were not the result of deliberate sampling.

Initially, the researcher decided to share the view of Tidd et al. (1997) that

"there is some commonality around the things which are managed—the key

enablers—in successful innovation… how these enablers are actually put

together varies between firms but they represent particular solutions to the

general problem of managing innovation" (26). This research, therefore, took

a non-contingent approach and sought to define the 'commonalities' of

innovation capability. Later, the decision to take a non-contingent view was

questioned as fieldwork enabled a preliminary assessment to be made

innovation practices in six organisational configurations described by

Mintzberg (1998).

The later phases of the research required entering companies and seeking to

facilitate a change process that would enhance innovation capability. A

'product specification' was attempted for the intervention process. This was

amended and developed several times during the enquiry. 41 audits of

companies followed by intervention were carried out4 by the end of August

1999 and 943 people had completed the audit. All companies had fewer than

500 employees and were largely selected from the engineering and

manufacturing sectors. A review of the effectiveness of these interventions

4 Six audits and interventions were completed directly by this researcher. The remainder

were completed by change agents trained by him.

22

was undertaken including a workshop with participating firms. In addition,

an independent consultant reviewed the process and provided a report.

1.8 Contribution of the research

As will be described in the body of the thesis, many scholars and change

agents have defined and sought to facilitate the development innovation

capability. This research does not claim to make a pioneering contribution but

it did, independently, check and extend the findings of others.

The researcher sought to be cautious about the contribution made by this

work being mindful of Rickards' (1999) observation that "over generalized

inferences from empirical work, and less than clear evidence for the proposed

mechanisms are recognized as limiting the usefulness of theoretical models

and practical prescriptions" (42).

The research makes five distinctive contributions to the field.

1. This research extends understanding of how innovation capability can betargeted towards products, processes, positions and paradigms.

2. The development of the NATS (norms, assets, technologies and skills)framework provides a bridge between high-level aspiration andorganisation development initiatives.

3. The use of adaptive theory with a large data-set offered an opportunity toexplore the use of a relatively new theoretical approach.

4. The reference model (second generation) has 18 components and 56elements. This provides a degree of precision not previously available.

5. Although there are many examples of the use of survey feedback as anintervention methodology, the specific approach developed and tested inthis research was new.

1.9 Structure of the thesis

The thesis has five chapters and eight appendices. Chapter 2 provides a

literature review, Chapter 3 explores methodological issues, Chapter 4

contains the research's findings and Chapter 5 discusses the research and

draws conclusions.

23

Chapter 2 addresses six questions: 'what is the scope of innovation?' 'Why

can innovation be difficult to manage?' 'Can innovation be managed?' 'what

is the strategic role of innovation?' 'what is innovation capability?' 'is

innovation capability a contingent attribute?' It concludes with a conceptual

model that synthesises the conclusions of the theoretical review and sets an

agenda for the empirical research programme—providing a set of orienting

and sensitising concepts (see Layder, 1998 pages 101–116 for a discussion of

this use of theory).

Chapter 3 provides a discussion of methodological issues. A rationale is

provided for the selection of methodologies used and the researcher's

strategy is discussed. The chapter concludes with a review of interaction

between research and learning.

Chapter 4 contains the findings of the research. It explores the second

generation (G2) reference model in detail and describes the effects of

interventions into firms. In order to prevent this chapter being unwieldy to

the reader, the research findings on the first generation model (G1) have been

included as Appendix 3.

In the final chapter, the research is reviewed against the objectives set.

Innovation capability, within the context of intervention processes, is

considered in the light of the research conducted. In addition, the researcher

reflects on his own learning. Following discussion, suggestions for further

research are made and conclusions drawn.

In the appendices can be found the research interview schedule (1), an

examination of other researchers' audits (2), findings from the first tranche of

research (3), a statistical breakdown from the NUD•IST database of node data

(4), the audit instrument (5), a list of companies and change agents included in

the data-set (6), a letter from the first company that experienced an

intervention (7) and preliminary findings related to innovation capability

from a contingency perspective (8).

Despite quantity of data collected, and the support of others in the data

collection and intervention work, the researcher is aware that this work is

limited. The findings, and the intervention process developed for this

research, will be challenged by others, superseded and improved upon.

24

Nevertheless, this has been an exciting endeavour, replete with learning and

the warm support of many managers and colleagues gave encouragement at

times when the task seemed excessively daunting. Few topics on the

managerial agenda can be as significant as developing innovation capability.

This researcher hopes that he will play a small part in 'shining a light in the

black box' and rendering the development of innovation capability

manageable.

25

Chapter 2Innovation and innovationcapability—a theoretical review

2.1 Introduction

This chapter considers theoretical frameworks relevant to innovation

capability from the perspective of the firm. It is organised in six sections:

• The topic of innovation is introduced—exploring the question 'what is thescope of innovation?'

• The context of innovation is examined—exploring the question 'why caninnovation be difficult to manage?'

• The nature of innovation is considered—exploring the question 'caninnovation be managed?'

• The relationship between innovation and competitive strategy isreviewed—exploring the question 'what is the strategic role ofinnovation?'

• The notion of innovation capability is discussed—exploring the question'what is innovation capability?'

• The question of whether innovation capability can be considered to be anuniversal attribute is considered—exploring the question 'is innovationcapability a contingent attribute?'

The chapter concludes with an integrated model that summarises the

theoretical work reviewed in this chapter. The theoretical review was

undertaken to provide a basis for an empirical study of innovation capability.

It provided a set of orienting concepts following the suggestion of

Layder (1998) that "(b)y using orientating concepts one is able to deal with the

problem of how to bring some provisional order to a mass of data or

information" (108).

2.1.1 Theoretical orientation

As mentioned in Chapter 1, much is known about innovation from the work

of scholars, researchers and managers (Trott, 1998). Innovation has been

26

extensively studied in economics (Porter and Stern, 1999) and sociologists5

have explored the organisational values and organisational arrangements

that help or hinder the development of innovation capability. In addition,

psychology, social psychology, management theory, strategic management,

biology, systems theory and organisation development have added

considerable insights (Leonard–Barton, 1995).

The primary intellectual orientations explored in this chapter are from

innovation management theory, strategic management and organisation

development rather than economics, psychology or biology. Throughout an

assumption has been made that innovation capability is generally beneficial

but that it is, by itself, not sufficient to assure competitive advantage.

Innovation needs to be supported by effective strategic decision-making and

multiple competencies in many or all the activities in a firm's value chain

(Porter, 1985).

The research focus is the firm, not the wider society, industry, sector or

economy, although it is accepted that firms are influenced by their

environments—in particular, the prevailing national system of innovation

(Porter and Stern, 1999).

2.2 The scope of innovation

Since the Palaeolithic period (Curwin, 1954) some, but not all, human societies

have devised new or improved products, processes, ways of selling and

models of organising (Diamond, 1997). This process can be termed

'innovation'. It has been defined as "the successful exploitation of new ideas"

(DTI, 1994).

5 Marx (Mayo, 1960), Weber (1976) and Durkheim (1984) were among the first to discuss

innovation as a driver of societal change in industrialised society. Each considered theantecedents and consequences of periods of innovative change. Their explanations vary fromclass exploitation to religious beliefs and social anomie. Explanations of social change haverelevance at the organisational level since organisations are social institutions (Cuff et al.,1990). Issues such as the relationship between owners and workers (perhaps drawing fromthe Marxist perspective), predominant ideology (Weber) and the identification of theemployee with the firm (Durkheim) have relevance in the study of management ofinnovation and innovation capability. The implication is that firms seeking to enhancetheir innovative capability need to construct a social entity capable of multiple,value-creating innovation initiatives—to initiate, at least in part, a form of 'socialengineering'.

27

This definition of innovation, while apparently straightforward, raises several

questions. These include, what is meant by 'successful'? Exploitation for

whose benefit? How is 'new' defined? And what is an 'idea'?

Implicit in the definition is the notion that innovation can be a managed

process. If this is true then it is reasonable to assume that some managers are

better able to manage innovation than others. Some organisations are

believed to demonstrate a consistent record of successfully exploiting new

ideas and can be said to possess, at least for a period of time, a superior

'innovation capability'. From a study of these, it may be possible to identify

elements that result in high innovation capability.

Tidd et al. (1997) in their review of the field conclude that:

"Management research suggests that innovative firms—thosewhich are able to use innovation to differentiate their productsand services from competition—are on average twice asprofitable as other firms" (ix).

This observation alone would be seem sufficient to put innovation

'centre-stage' for top management decision-making. The promise of doubling

profitability must seem attractive for non-innovative firms and the risk of

reducing profitability by half surely would concern executives in firms that

are already deemed to be 'innovative'.6

The words 'on average' in Tidd et al's assessment are important. The

contribution of innovation to the profitability of a firm is not straightforward.

Some innovation initiatives have proved to be dysfunctional, occasionally

leading to catastrophic losses. Even an 'excessive' rate of innovation can be

disadvantageous as Yoffie and Cusumano (1999) illustrated when considering

the increasing resistance of corporate clients to rapid product developments

by Netscape in the mid-1990s.

Tidd et al. suggest that there is a recognisable entity—the 'innovative

firm'—that implements more and/or better ideas than its rivals and thereby

6 A report from the consultants Arthur D Little indicates that innovative firms are, on

balance, more highly valued by stock exchanges in the USA and UK (Jonash andSommerlatte, 1999). It is suggested that (1999a) there is a minimum 15% higher valuationwith which the City rewards innovative companies" (5). However, this study wasundertaken with large firms and depended on interpretations of the term 'innovative' byinvestment analysts.

28

gains advantage. It is reasonable to assume that an innovative firm must

generally7 possess 'innovation capability'—an underlying capacity to gain

advantage by implementing more and better ideas than rivals. However,

innovation capability may not be a unitary set of attributes (Mintzberg,

1989)—just as physical fitness can be sustained in different ways so different

kinds of innovation may require distinctive approaches. Indeed, it may be

that some types of innovation, continuous improvement for example, can

impede other innovation, especially radical changes (Christensen, 1997).

Innovation, at least as defined by the DTI above, is a broad, perhaps too

broad, concept. It would include a simple change, for example using

self-adhesive rather than moisture adhesive envelopes in an office or refer to

a complex programme of initiatives like establishing an internet banking

business. Some innovations have created new industries and destroyed

others (Utterback, 1994). The scope of the topic is vast; Diamond (1997), for

example, sees innovation as a primary driving force of human history.

Despite, or perhaps because of, its complexity, the management of innovation

is a 'hot topic'. Virtually every management journal has at least one pertinent

article in each issue. Drucker (1994) argues that innovation is a core process

for a firm; he suggests that:

"in…a period of rapid change the best—perhaps the only—waya business can hope to prosper, if not survive, is to innovate.This is the only way to convert change into opportunities. This,however, requires that innovation itself be organised as asystematic activity" (Preface 1).

Drucker goes on to suggest that "innovation is a discipline, with its own, fairly

simple, rules" (2).

If Drucker and Tidd et al. are correct then two puzzles become apparent. If

innovation is a profitable strategy from a historical viewpoint, offers the best

way to ensure future survival and has "fairly simple rules" then why is it not

adopted by all but 'basket case' firms? Furthermore, if the majority of firms

succeed in adopting an innovation strategy then (assuming that they are

7 Not all firms that create value through innovation may possess innovation capability

themselves. For example, a film-production company may produce innovative films byproviding financial backing for talented film-makers but the company itself may lackinnovation prowess.

29

successful) innovation would cease to be a source of differentiated

competitive advantage and become 'table stakes'—a requirement to compete

rather than a source of competitive advantage. The notion that firms are

either innovative or not may be simplistic as much depends on the rate of

innovation, fit with strategy, value created, costs incurred and other factors.

Many firms have adopted the rhetoric, if not the substance, of innovation, as

Coyne (1996) observed:

"In 1994, 85% of the annual reports of the 50 largestcorporations in the United States used the word innovation todescribe their products and operations. One report employedthe word 11 times" (3).

There is evidence that, in some industries at least, the 'we must innovate'

message has been already widely adopted (Cusumano and Selby, 1996).

Perhaps many firms have acquired innovation capability in recent years and

the key question is 'how and where is this targeted?'

Innovation and innovation capability are complicated constructs. Both will be

explored from several viewpoints in this chapter in order to un-pick

complexities, explore puzzles and identify questions.

2.2.1 Innovation within the firm

Innovation can be seen as one of several interdependent streams of processes

and/or activities that a firm undertakes (Porter, 1985) and is influenced by,

and can influence, a firm's strategy and operations. It is helpful to explore

such interdependencies through the medium of a brief case example, as this

presents a holistic viewpoint or gestalt (Köhler, 1947).

Svensk (1973) wrote a relevant case about a firm in the elevator industry

called Daag Europe (actually the company was Otis). The case was set in 1969

and, at that time, the company had failed to show a profit on the sales of

elevators for the fourth consecutive year. However, progress was being

made on a move "towards standard models and rationalised production

facilities" (5). The Managing Director, Dr Pelz, was seeking to adopt a strategy

based on radical innovation and introduce standardised elevators, rather than

manufacture the customised ones that were typically installed at that time.

Pelz faced several difficulties, in particular the lack of needed competencies,

30

technical problems, reluctance from the firm's sales force, consumer

resistance, changing industry cost structures and declining revenues from

elevator sales. Pelz committed the firm to major investment in innovation,

based on a speculative model of industry evolution, but he could have been

wrong. If this had happened then the firm's investment in innovation could

have rendered it weaker. In the event Otis gained a dominating position in

the European elevator industry, sustained it for more than a decade (Aguilar,

1987) and the experience facilitated learning across Otis world-wide.

The case suggests that innovation cannot be understood within a single field

(Leonard–Barton, 1995). Strategy, scenario development, innovation

processes, investment decisions, competency development and organisation

behaviour were relevant in this case. Also demonstrated, is the

interdependency of some innovation initiatives. For example, Daag Europe

developed an innovative product concept but needed a new reward scheme

to persuade its sales force to promote it. Innovation in product and

innovation in sales force management needed to progress hand-in-hand in

order for the strategy to be deployed (Howard, 1995).

2.2.2 Innovation as a concept

The value created by innovation in Daag Europe is not repeated in all cases.

As mentioned in Chapter 1, Innovation can be a demanding, uncertain,

time-specific and subtle endeavour. However, there is a persuasive rationale

for examining it. Innovation is high on many agendas (Porter and Stern,

1999). Governments define it as a key element in their drive for economic

success and social development (DTI, 1994). Many scholars of organisational

effectiveness consider that innovation is a core element in maintaining

organisational dynamism (Foster, 1986). Some managers espouse the belief

that value-creating innovation is key to the development of a robust

competitive strategy (Semler, 1993). Some senior academics argue that

organisational creativity is necessary but underdeveloped in today's business

schools (Rickards, 1999). Consultants facilitate the development of innovation

capability in client firms, some claiming to have a formula for success (Perrin,

1999). With many influential actors adopting innovation as a mission, it can be

argued that this is an age of innovation. Garratt (1987), Guinness (1996) and

31

CBI (1992) are some of the many voices that suggest that innovation will be

the cornerstone of competitive success in the 21st century.

Innovation may be elevated towards the top of national developmental

agendas but it is not, of course, new. The industrial revolution in Great Britain

was an era of intense innovation (Heaton, 1936), perhaps more profound in

its social and economic impact (Rostow, 1971) than any period before or since

(Utterback, 1994) (see anon., 1993 for a description of a Victorian Flour Mill

that incorporated many innovative features). Many other historical periods,

such as the Western Han dynasty in China 206 BC—8 AD) when printing was

developed (Ting, 1998) and the development of the rail-roads in the USA

(Johnson and Kaplan, 1987) were periods of intense and radical innovation.

Innovation takes place within a set of contexts (Peng and Heath, 1996).

Relevant factors include the quantity and orientation of educational provision,

societal value systems, technological diffusion, availability of capital, tax

regimes, legacy of skills and existence of industry clusters (Schmitz, 1998).

Innovation can be more consequential than an internal organisational

attribute or a stratagem for achieving competitive advantage—it may have a

broad social impact. Transformational innovations, like the wheel, television

and the internet, have social consequences; they are social facts. It appears

that the impact of innovation on society is increasing and has become an

extensive social phenomenon—a form of social hunger. Penrose (1980)

suggests that "a kind of 'competition in creativity' has become a dominant

motif in the pattern of competitive behaviour in many industries, where

consumers and producers alike are caught up in an almost compulsive

obsession for that which is 'new'" (106).

Giddens (1995) described the key change in late 20th century society as the

rapid evolution of 'modernity'. By this he meant a society in which thought is

globalised, permanence becomes a heritage concept, the traditional

relationship between space and time has been lost and people expect a

continuous flow of novelty. If modernity is a dominant social form then firms

need to operate in ways that allow them to thrive in these conditions. Of

particular interest is the impact of the globalisation of thought and

information (Bessant and Francis, 1999). Where this applies it seems that

32

market-facing innovation initiatives must either conform to dominant

(global) valuation criteria or find another way to signal their superiority

(Cook and Lunt, 1996). This provides a dominant logic that shapes

firm-specific innovation strategies.

Viewed from the perspective of the sociology of knowledge (Wolff, 1959)

innovation has become, increasingly, an institutional rather than an individual

property (Foster, 1986), beginning with work of Edison (Tidd et al., 1997) and

the impact of scientific management constructs in the early years of

the century (Taylor, 1911). The institutionalisation of innovation enabled the

development of a separate innovative component of the firm (termed the

'technostructure' by Mintzberg (1989)) and R&D by Freeman and

Soete (1997). More recently, the firm, as an entity, has been seen by some as

an unitary innovative system or generative organism (Wheatley, 1994). These

broad changes are illustrated by Figure 2.1 developed by the researcher

below:

Innovation as an organisational property

Innovation as a technostructure-driven activity

Innovation as a product of remarkable individuals

1899 1999

Impo

rtan

ce i

n ex

plan

atio

ns

Figure 2.1: institutionalisation of innovation

The diagram suggests that are three major ways of locating innovation in

organisations, The innovation drivers can be individual innovators, coalitions

of 'experts' and/or multiple actors, working interactively. If the figure is

correct then the third form, 'seeing multiple actors, working interactively, as

drivers of innovation' is likely to be especially relevant to organisations

today.8

8 This assertion is supported by the DTI Partnerships with People research undertaken by

this researcher (DTI, 1996).

33

Although there were examples of innovative organisations in the

past—ancient universities and early military organisations, for example—the

economic history of innovation is punctuated with the names of great

individuals like Reith, Brunel, Arkwright, Edison and Bell. This is less likely

today. SmithKline Beecham, NASA, Bell Labs, Sony and Disney are regarded

as innovators (Kelley and Caplan, 1993)—they are organisations where

talented people are enabled by facilitative organisational arrangements to

produce ongoing collective innovation (Livesay et al., 1996). It seems that at

least some large organisations have learned how to be innovative rather than

operate as rule-bound machine-bureaucracies that Weber (1976) described.

For example, over the past decade many innovations in retailing have come

from the largest players (Gereffi, 1999) rather than independent stores.

The nature of the innovation process is, itself, subject to innovation (Freeman,

1994). It has changed and, arguably, has become more efficient and diffused

in the past century (Leonard–Barton, 1988). There is a greater participation in

the innovation process today than was historically the case (Gill et al., 1993).

Many people contribute to workplace innovation (kaizen) (Caffyn et al.,

1997), their wants and needs are extensively studied through market research

(Tull and Hawkins, 1993) and their response to ideas helps determine whether

they are implemented (Christopher et al., 1987). It could be said that we live

in an era of the democratisation of innovation (Giddens, 1999a).

As innovation became of greater significance to firms, economies and

societies since the second world war innovation management emerged as a

distinctive field of academic study (Burgelman et al., 1996). The literature is

largely concerned with understanding innovation, defining innovation

processes and assessing its impact (Rothwell, 1994). A distinctive 'technology'

for the integrated development of innovation capability has not yet fully

emerged, although many relevant frameworks and techniques,

theories-in-action, case examples, developmental methodologies and tool-kits

have relevance.

Innovation and innovation capability are significant, probably vital, to

organisational effectiveness but there is a risk that researchers adopt a

optimistic stance. Abrahamson (1991) points out that "reviewers of the

34

innovation literature unanimously agree that it contains pro-innovation

biases" (589). In some literature there appears to be a sub-text that says, in

effect, 'if these managers took more risks and invested more in innovation

then their firms would be a lot more profitable'. Such assertions need to be

regarded with caution. As will be discussed below, innovation can prove

disadvantageous or misbegotten. Some forms of innovation incur a high risk

profile, like generational changes of technologies, partnerships and entry into

new markets (Hamel and Prahalad, 1994). Inevitably, some who take risks

will fail.9

2.3 Innovation within the firm

A popular use of the term 'innovation' is 'something new, something better'

(Schumann et al., 1994). This can be applied, for example, to digital television,

internet share-dealing or a holiday combining adventure with comfort in

Antarctica.

The development of new or improved products or services can be described

as a process having four stages. Someone had an idea (perhaps original,

probably not), the idea was adopted, applied and someone benefited. These

stages provide an apparently simple outline of the process of innovation

(Rosenfeld and Servo, 1991) and will be discussed below in more detail. They

offer a preliminary framework for understanding what is required to manage

"the successful exploitation of new ideas" (DTI, 1994).

In addition, organisations adopt new internal processes, position or

re-position themselves in markets and invent or re-invent the business

models that they use to define their identity (Houlder, 1995). Such initiatives

can also be innovations. Again, someone had an idea, it was adopted, applied

and someone benefited.

9 Giddens (1999b) suggests that risk refers to "hazards that are actively assessed in relation

to future opportunities" (22) and may not be confined to the risk-taker. For example,asbestos cement, nuclear power and crack cocaine could all be said to be 'innovations' butintroduced new hazards for users and, in some cases, those remote from the product. Giddenssuggests that an accumulation of social and technical innovation has led to "the end ofnature" (27). Hence, innovation has a moral dimension as the current debate (2000) aboutgenetically modified foods demonstrates.

35

The scope for internal innovation is wide and deep (Bessant et al., 1994). It can

include team decision-making processes (Rickards, 1999), accounting

procedures (Johnson and Kaplan, 1987), production technology

(Goldman et al., 1995), relationships with suppliers (Butler, 1992), new product

development (Bessant and Francis, 1996) and many other activities.

Organisations may have thousands of innovation initiatives, large and small,

underway at any time (MacLennan, 1998).

2.3.1 Why can innovation be difficult to manage

Innovation is distinct from invention in that it requires commitment

(Ghemawat, 1991) and enactment. It can, therefore, be said to be a strategic

act whenever and wherever it takes place. Strategic decision-making results in

the opening of some windows of opportunity and the closing of others—a

process that can be described as 're-configuration of opportunity space'

(Power et al., 1986).

Drucker's observation that "innovation is a discipline, with its own, fairly

simple, rules" was cited above. If this were true then identifying these 'simple

rules' should be relatively straightforward. As will be illustrated below, it

seems that Drucker was underestimating the complexity of the field. In fact,

multiple factors influence innovation—some hard, some soft (see Tranfield

and Starkey, 1997 for a discussion of hard vs. soft categories). Moreover, once

innovation capability has been acquired it can be lost—maintenance and

renewal are required (Leonard–Barton, 1995).

36

Seeking to understand innovation capability presents distinct theoretical

challenges as it is more complex organisationally than a single act of

innovation (Rosenfeld and Servo, 1991). Eight factors help to explain why:

1. Not all innovation initiatives add more value than cost. Innovation can beeither functional or dysfunctional—it is rarely neutral. Dysfunctionalinnovation undermines a firm if it adds cost faster than value (Porter,1996), occupies resources on fruitless activities, undermines the existingcore business (becoming a 'distraction') (Tregoe and Zimmerman, 1982) orlocks the firm into sustaining, rather than disruptive technologies(Christensen, 1997). Important variables are likely to be uncertain orspeculative. Since innovation often, but not always,10 includes an elementof risk it cannot offer a guaranteed formula for gaining or sustainingadvantage.

2. Innovation can have the effect of increasing complexity, strife anduncertainty in an organisation and 'disturb' existing policies, practices,mind-sets and competencies (Pinchot, 1996). The known can be replacedwith the unknown: that which is tried-and-tested replaced with promise oraspiration. Innovation can be a driver of change in which some aredisadvantaged (Machiavelli, 1984).

3. In many organisations there are more ideas generated than can beimplemented.11 Many must be 'killed-off', sometimes without a fullunderstanding of their potential (Chee and Phuong, 1996). The culling ofideas and proposals can demoralise their champions and there is a riskthat promising ideas are not given the commitment needed. Decisionsabout which innovations to adopt can be demanding and significant—acomplex organisational process without certain benefit.

4. Assuring the needed quality and quantity of ideas is a demandingorganisational task. It is possible that ideas available to one organisationare inferior to those developed by rival firms in terms of their capacity toexploit assets, create value to the firm and/or its customers. Not everyfirm has access to the 'best' ideas (McGourty et al., 1996). The quantity ofsupply of ideas is also variable.

10 For example, if a firm with a requirement for making international calls begins to use a free

internet connection, rather than using BT phone lines, the (process) innovation is risk free.11 Sometimes firms in a 'disadvantaged' section of an industry may be unable to develop ideas.

For example, in the early 1990s the British government reduced expenditure on roadbuilding by nearly 80%. Some firms in the civil engineering sector found it impossible to finda way of remaining profitable in these adverse circumstances and industry restructuringfollowed.

37

5. Innovation capability it is not a single process—rather a multiplicity ofprocesses that occur in a multiplicity of places within a firm. This presentsa management challenge as the diffusion of multiple speculativeinnovation initiatives cannot be effectively managed using conventionalmanagement-by-objectives (MbO) disciplines (Ashkenas et al., 1995).Management in distributed power systems is more complex than inunitary power systems (Mintzberg, 1983b).

6. Innovation initiatives often require co-operation across internalorganisational boundaries, perhaps requiring the re-organisation ofresponsibilities—with the possibility that internal 'politics', interplay ofpersonalities or lack of managed horizontal processes will retard effectiveimplementation (Hastings, 1993). Lateral management processes are morecomplex (Galbraith, 1973) than classic functional structures (Hammer andChampy, 1993).

7. Not all organisational forms encourage innovation (Mintzberg, 1983a).For example, an emphasis on conformance and reliability—importantperformance indicators for many firms—can diminish the motivation tobe innovative and the skills to do so. An organisational form thatfacilitates innovation can be 'untidy', perhaps conflicting with otherorganisational values and policies.

8. A final factor renders innovation more complex than routine activities.This is the requirement for learning and unlearning (Argyris, 1977). Someinnovations can be straightforward—the replacement of a slow computerprinter for a faster one, for example. But they can require the destructionof mind-sets, routines, assets, authority structures and cultural imperatives(Hurst, 1995). New learning may be required, at the organisational, teamand individual level. Unlearning and learning can be drivers of innovationas well as servants of it. The learning and unlearning process can beexploratory, anticipatory and speculative, thereby challengingorganisational routines that provide stability, effectiveness andconformity. The significance of learning in innovation is difficult tounderestimate, especially as much can depend on tacit knowledge.Moreover, codified learning can change from being an asset to a rigiditywith rapidity (Leonard–Barton, 1995).

These eight factors are illustrative rather than exhaustive. However, the

discussion demonstrates that, when considering innovation capability, many

dimensions of organisational design and management practice are relevant,

including decision-making, risk-taking, conflict-resolution, power

relationships, organisational change, motivation, creativity, management

38

philosophy, horizontal management, learning and cultural factors. The

development of innovation capability presents a challenge to managers

(Senge, 1992) and change agents (Beckhard, 1997).

2.4 The nature of innovation

Above, the DTI's straightforward definition of innovation was mentioned:

"the successful exploitation of new ideas". It was also described as a process

with four stages (idea—adoption—application—benefit). Many academic

authorities, and some managers, have sought to define the term 'innovation'

from different perspectives, thereby enabling its epistemology to be

explored.

There are debates about what constitutes an innovation (Trott, 1998). The

successful development and marketing of a totally new product—a pair of

electronically stabilised binoculars, for example—is, for all observers, 'an

innovation'. Few would argue that the replacement of hand-machines with a

robotic production line would be 'an innovation'. However, it is less clear

whether other changes, such as adopting known technologies or structural

re-organisations, should properly be called 'innovations'. Also significant is

the question of profitability: for example, if a firm invests in a new product

concept that yields a low or negative return on investment can that be said to

be a 'successful innovation'?

Definitions of 'innovation' differ in scope. They can be narrowly or broadly

defined. The term 'technological innovation' considers innovation to be an

application of science-based technologies that facilitate major changes of

process and/or product (Tidd et al., 1997). Innovation can also be defined it

terms of originality with firms that produce the original idea being described

as 'innovative' and the others as copyists. For example, Mintzberg et al.

(1998b) define innovation as "the first reduction to practice of an idea in a

culture" (706) (authors' italics).

From the perspective of a manager or change agent, advantage can be gained

by defining the term 'innovation' narrowly. Targets for intervention can be

tightly defined (Burgelman et al., 1996). To use an analogy, it is easier to see

how to improve treatment of a single illness than improve the health of the

39

nation. Specific fields of study can be identified that help the application of

science-based technologies to facilitate major changes of process and/or

product. Relevant topics include technology auditing, R&D management,

product development, process management, multi-disciplinary working,

technology transfer and protection of intellectual capital. Importantly, there

are specific developmental methodologies (procedures, training etc.) relevant

to each of these areas.

However, the disadvantages of narrow definitions are significant. Science-

and engineering-based definitions of innovation, or those that define

innovation as something original to the world, are, by definition, inherently

limiting. Adopting a narrow definition would mean that many firms would

be excluded from participating in innovation since they are neither

science-based nor capable of original invention. In addition, there are

examples of initiatives that are novel and add value, but are neither

technology-driven nor totally original. An example makes the point. In the

early 1990s, SmithKline Beecham took a strategic decision to re-launch

Lucozade as a health and life-style drink rather than a sickness aid. The

re-launch re-defined the product in the customers' eyes, even though the

beverage was not significantly changed in formula.12 The Lucozade re-launch

used marketing methodologies rather than 'the application of science-based

technologies'. However, it is difficult to claim that this was not an innovation,

since it was "the successful exploitation of a new idea" and four innovation

stages (idea—adoption—application—benefit) were present.

A perspective from economic history might define 'innovation' differently, as

a pattern of adaptive organisational changes—the responsiveness of a firm to

the interaction of technology push and market pull—the metaphorical 'blades

of a pair of scissors' (Tidd et al., 1997)—and facilitated by enabling managerial

philosophies, by codified bodies of applicable knowledge within a conducive

organisational climate.

The trend is to define the scope of innovation broadly. For example,

Guest et al. (1997) elaborate on the UK Department of Trade and Industry's

definition of the term ("the successful exploitation of new ideas") by focusing

12 In fact, advertising related to the product in 1999 describes the formula as 'original'.

40

on the use of innovation for advantage (note the use of the word

'exploitation' in both):

"innovation is defined as 'the creation, successful exploitationand impact of new ideas at all levels—the economy, sector,enterprise, workplace and individual'" (1).

Rosenfeld and Servo (1991) adopt a similar definition but emphasise the

creative nature of the process, that they define as 'transformational'. They

assert that:

"The challenge (in innovation) is to transform creative ideas intotangible products or processes that will improve customerservices, cut costs and/or generate new earnings" (29).

This definition would seem unnecessarily limiting but it links creativity,

developmental processes and value creation. However, there is no obvious

reason why an idea has to be 'creative' for it to contribute to an innovation

initiative. For example, if a firm re-configures its production process to be a

pull rather than a push system there is novelty in the approach but not

significant creativity, since the firm is applying a tried-and-tested operations

management model.

Vrakking (1989) adopts a similar viewpoint and sees innovation as a means of

strengthening a firm's competitive position. He considers that:

"Innovation is any renewal, designed and realised, whichstrengthens the organisation's position against its competitorsand allows a long-term competitive advantage to bemaintained… The term 'innovation' is usually linked to thecreation of new products… innovative energies should bedirected to all aspects of organisation: products, markets andtechnology" (95).

Vrakking's test of the benefit of an innovation initiative is whether it

strengthens "long-term competitive advantage". He suggests the notion of

'innovative energies', inferring that these are different in kind from other

forms of organisational energies. The scope of Vrakking's definition is broad,

probably excessive—for example, it would include the purchase of a

competitor or the acquisition of capital equipment, neither of which could be

reasonably said to be innovative acts. However, Vrakking widens the scope

of innovation beyond new product development and suggests that

innovation "should be directed to all aspects of organisation". In short,

41

Vrakking argues with Porter (1985) that every activity within a firm's value

chain, both direct and indirect, can be a target for innovation.

Some scholars mention the frequency of innovation initiatives. For example,

Pearson (1990) commented: "competitive success is built on a steady stream of

improvements in production, finance, distribution, and every other function,

not just a big hit in sales, or marketing or R&D" (277). Pearson supports the

view that innovation can occur in many activities but his use of the term

'steady stream' can be questioned. There are times when an unsteady stream

of innovations are required, for example when technological changes are

providing new opportunities to create value (Christensen, 1997).

Broad definitions of innovation are commonplace, indeed dominant. Dewar

and Dutton (1986) write "we define an innovation as an idea, practice or

material artefact perceived to be new by the relevant unit of adoption" (1422)

(authors' italics).

The broadest definitions of innovation include new (to the unit of adoption)

forms of business models as 'innovations'. For example, Jonash and

Sommerlatte (1999) define innovation as:

"the process of harnessing creativity to create new valuethrough new products, new products and new businesses. Thevalue-creation activity is not limited to the products and servicesthemselves, but also applies to business strategy and processes.In fact, strategic innovation, aiming at creating top-line growthand capturing innovation premiums, is one of the most criticalchallenges facing businesses today" (6-7).

Broad definitions can embrace all firms, indeed all organisations. But they

pose a conceptual dilemma. If the views of the DTI, Guest, Pearson, Dewar,

Jonash and others who define innovation broadly are adopted, it is

reasonable to ask, 'if every change, large and small, is to be regarded as 'an

innovation' what is the difference between innovation management and

management per se?' Indeed, is it helpful to make a distinction? It may be

more accurate to consider that strategic/operational management and

innovation management are totally intertwined and that the firm, as an

entity, needs to be a dynamic system or organism capable of building bridges

between competing domains for acquiring, developing and implementing

ideas. Perhaps there was a time when the usual role of a manager could be

42

properly described as 'administrative'. However, the depth and breadth of

internally and externally driven change has rendered such passive role

definitions obsolete in most cases (Francis and Woodcock, 1996). It can,

therefore, be argued that, today, the key job of the manager is to innovate

and innovation is inseparable from management.

Broad and inclusive definitions of 'innovation' have an additional

disadvantage—almost anything can be included, even micro-changes. In a

café, for example, the following could be regarded as 'innovations'13—a new

menu item, larger napkins, customer comment cards, an improved fly-killing

machine and environmentally-friendly operating procedures for washing

dishes. These five initiatives may be described as trivial but each, hopefully,

added value to the customer—including the improvement of customer

choice, superior customer experience, higher quality assurance, faster

management decisions and greater social responsibility. A café owner may

undertake dozens or hundreds of such initiatives in a year, many of which

appear to have a minor benefit but with, potentially, a cumulative effect

(Imai, 1986). However, from a theoretical perspective it can be difficult to see

how the introduction of a fly-killing machine in a café and the development of

global satellite telecommunications can be correctly named as the same

construct.

Although there are very significant differences in the scale of innovation

initiatives, such changes share common characteristics. Innovation is,

generally, about realising possibilities rather than solving puzzles and is likely

to have uncertain or unknowable elements, as demonstrated by an

observation made during the Davos World Economic Forum in 1999

(Jackson, 1999). Michael Bloomberg, observed that:

"(u)npredictability is the nemesis of any establishedorganisation… You only run the business by planning. Mostcompanies project revenues. In my business you can't do that.And if you can't predict, you're not willing to devotemanagement time to the problem. You're unwilling to set upthe political structure in the company which can deal with newmarkets". Innovation, he concluded was a religion rather than ascience. "You've just got to keep the fire in your belly andplough ahead…" (19).

13 This example was developed by ideas suggested in Maule and Lai (1995).

43

Bloomberg's comment that innovation is a "religion rather than a science"

opens an interesting avenue of enquiry. Perhaps, innovation, at least

sometimes, requires decisions that are an act of faith or, more accurately, a

series of acts of faith. Bloomberg was describing, at least in part, an

organisational process that depends on beliefs, intuition, power-brokering,

passion and opinion. He describes innovation, in part, as a political process.

This is apt as politics is the practice of decision-taking in human systems

where an objectively correct answer cannot be demonstrated—often the case

with innovation (Golembiewski, 1978).

Some researchers see innovation as, quintessentially, a creative act and draw

perspectives from the human potential movement. Innovation is considered

as being directly energised by people. Goodfield (1999) points out that it

requires a commitment "to put wheels on a thought"14—and can be

considered as a practice of generative action (Weick, 1995). Stoltz (1997) for

example, emphasises the importance of the person in innovation, writes that:

"innovation is, in essence, an act of hope. It requires the beliefthat something that did not previously exist could be possible"(68).

Others define the term in the context of fundamental processes of change,

adaptation and progress. For example, Wheatley (1994) puts it this way:

"Innovation is fostered by information gathered from newconnections; from insights gained by journeys into otherdisciplines or places; from active, collegial networks and fluidopen boundaries. Innovation arises from ongoing circles ofexchange, where information is not just accumulated or stored,but created. Knowledge is created anew from connections thatweren't there before. When this information self-organizes,innovations occur, the progeny of information-rich, ambiguousenvironments" (113).

Wheatley argues that: "living systems… respond to disorder

(non-equilibrium) with renewed life. Disorder can play a critical role in giving

birth to new, higher forms of order" (11). Her viewpoint offers an 'elemental'

perspective, different from models of the innovation process based on

systems theory (Dooley and O’Sullivan, 1998). She sees innovation as a cosmic

14 A phrase used by Professor Goodfield in a lecture at the Diplomatic Academy, London

on 12 March 1999.

44

property and draws parallels between organisations, the animal kingdom,

galaxies and sub-atomic particles. The models presented by Wheatley might

seem fanciful, even esoteric, were it not for some case studies, such as that on

the highly innovative Japanese company Kao (Butler, 1992), that appear to

adopt a similar set of principles to those advocated by Wheatley. The Kao

company continued to be more successful than most in the bleak economic

environment in Japan during the late 1990s (Abrahams and Harney, 1999)

and will be discussed in more detail below. From these, and other cases, it

may be that innovation should be regarded as more than just another

management process (Peters, 1992) and it is a kind of 'organisational alchemy'

(Harrison, 1995c). If this were true then it would help to explain why the topic

has proved uniquely exciting for some managers and change agents (Semler,

1993).

Since the purpose of this research, as discussed in Chapter 1, was to develop

an intervention methodology it was necessary for the researcher to take a

definitive view on the scope and the nature of innovation—at least for the

first stage of the empirical research (Layder, 1998). From the perspective of a

change agent (Egan, 1990), a broad definition of innovation opens doors of

opportunity to help firms (especially smaller ones). Accordingly, for the

purposes of this research, innovation was defined as "the application of any

idea, new to the unit of adoption, undertaken with the intention of

strengthening a firm's competitive position and/or benefiting others".

2.4.1 Innovation as a managed process

There have been many studies of managerial aspects of innovation in firms

(Tidd et al., 1997). Models have been developed of good practice (see, for

example, Hamilton, 1997) and research has been undertaken into the process

of innovation (for example, Schroeder et al., 1989). A broad conclusion from

this body of literature is that innovation is one of the least structured

dimensions of organisational performance. However, it is widely considered

that innovation can, to some extent, be a managed process (Tidd et al., 1997).

It has been argued above that competition, strategies, resources,

technologies, values, culture, communication, uncertainty, politics and

self-organisation can play a role in innovation. Accordingly, the use of the

45

term 'process' to describe the development of an innovation initiative must

be used with caution. For example, MacDonald (1998) writes, "innovation is

not the culmination of a process, and consequently there may be no particular

process involved. Innovation would seem to be inherently incremental with

change itself stimulating and contributing to further change. With doubt cast

on the very existence of process, the linear model of technology change

would seem to lie in ruins" (43).

MacDonald's stance is extreme and, in the view of this researcher, incorrect.

Innovation requires a movement from idea to exploitation over time. But the

sequence of acts is not noted for uniformity or predictability. Extensive

studies by de Ven et al. (1989) into the empirical characteristics of innovation

projects demonstrated that they are characterised by setbacks, uncertainties,

looping backwards, re-direction and external changes that re-shape initial

intentions and plans. The notion of an innovation development process

working, in practice, like neat stages on a flow-chart (Pinchot, 1985) or a

symmetrical funnel appears to be fanciful (Wheelwright and Clark, 1992).

Nevertheless, in all cases, there must be a process of sorts as ideas become

enacted, even if some stages are truncated, repeated, neglected, apparently

magical or contemporaneous.

Clear examples of innovation processes come from studying new product

development (NPD) (Wheelwright and Clark, 1992). This can be a major

endeavour for firms (Ghemawat, 1991). Complex and/or technically

advanced products can take years to move through the product development

process at a cost of millions of pounds (Walton, 1997). Emphasis is placed on

NPD processes that simultaneously provide quality, variety, frequency, speed

of response and customisation (Cooper, 1994). Specific methodologies have

been developed to facilitate this, such as concurrent engineering,

rapid-phototyping, time-compression, cross-functional working, early

involvement, etc. (Jayaram et al., 1999). Attention has focussed on the

decision-making dimension of NPD, with progression frameworks such as

Cooper's 'stage-gate' approach providing a systematic approach (Bessant and

Francis, 1996). It has been argued that NPD capability can become a

high-performing resource for a firm that supports talented individuals with

46

managed processes to provide the firm with a hard-to-replicate advantage

(Millson et al., 1992).

Despite the availability of specific methodologies, the management of NPD

may not be straightforward. Schön (1983) conducted a case study in product

development within a consumer products firm. He pointed out that the

innovation process was characterised by a complex interfusion of assertion,

persuasion, uncertainty, data and hunch. When analysed at a conceptual level

innovation can seem to be a logical and coherent activity. However, at least in

the case Schön discussed, the reality was different. He writes: "It consists in

on-the-spot surfacing, criticizing, restructuring, and testing of intuitive

understanding of experienced phenomena; often it takes the form of a

reflective conversation with the situation" (241-242). Organisational norms

were vital ingredients of successful product development. Schön observes

that "(t)he pattern was one of 'heroism under a tent'. To quote some of the

observations of the participants, "Three people told me not to work on

Product X, but I wouldn't stop," "Don't tell management what you are doing,"

"Fix the problem first, and then tell them about it" (26). Schön concludes,

"managers must commit to a process which they distrust. They respond by

making the commitment of resources hard to win…" (260). "Thus heroism

and secrecy (mastery and mystery) are essential elements of the strategy for

winning the product development game" (262).

Schön's analysis is replete with implications for students of innovation.

Perhaps the most important, for a reader personally involved in the

management of innovation initiatives, is an intuitive sense that Schön is

largely correct. It is difficult not to nod with agreement as he describes

undercurrents of emotion and game playing. This 'feels like' a more accurate

description of innovation, as it is experienced, than that presented by

flow-charts and descriptions of formal product development reviews.

Two conclusions relevant to this research emerged from Schön's study.

Firstly, innovation is more demanding on the person than other aspects of

organisational life; people operate in a domain where undue caution is seen as

negative and, yet, advocating and participation in change can be surrounded

by risk. Secondly, Schön points out that groups can take contrary positions:

47

the organisation does not work as one but as a number of 'tribes'. Individual

and group behaviour plays a role in innovation and objectives may be

re-interpreted by the actors concerned, sometimes on multiple occasions.

It is within this context that the exploration of innovation as a process needs

to take place. Perhaps innovation is best described as an untidy nexus of

processes. The four stages mentioned above

(idea—adoption—application—benefit) provide a basic structure for

examining innovation initiatives (Greer and Bessant, 1996). However, these

four stages alone are insufficient as they do not provide a feedback loop

(Pascale et al., 1997). It is important that individuals, groups and the

organisation adopts a reflexive stance. Otherwise the innovation process

becomes mechanistic and repetitive (Senge, 1992). In the discussion below,

each stage will be sub-divided to provide an elaborated description.

Figure 2.2 below provides an overview of the material to follow. The figure

shows the steps described above. With the addition of learning to the

otherwise linear model of innovation, it is possible to conceptualise the

process as an open systems diagram.

48

IDEA ACQUISITIONIntentionalityOriginality

MaturityRadicalness

Utility

IDEA ADOPTIONRisk

Type of Commitment

Decision Clarity

IDEA APPLICATIONMeans Planning

Project ManagementPortfolio of

CompetenciesResource Provision

IDEA EXPLOITATION

DefendabilityLongevityMagnitude

Marketing Plan

LEARNINGPersonal

GroupProcess

Targeting

IndividualsGroups Decision-Makers

Figure 2.2: a model of the innovation process

2.4.2 Idea acquisition

The first stage of the innovation process (if the development of conducive

organisational arrangements, the provision of enabling assets, technologies

and capabilities are taken for granted (Burgoyne, 1995)) is the acquisition of

an 'idea'. Ideas are creative acts, at least for the actors involved.

Rickards (1974) observes that:

"Creativity is a mysterious process which can give rise to heatedarguments amongst psychologists. It is sufficient here to regardthe process as one which gives rise to novel combinations ofconcepts which have significance to the solver or hisenvironment" (13-14).

Rickards' notion of "novel combinations of concepts" emphasises the

importance of human processes. These may take place in the mind of an

individual and/or through interaction between people. Rickards also uses the

term "significance", emphasising that someone needs to see the potential

application of an idea within a particular environment. The acquisition of

49

ideas can, therefore, be seen as requiring insight, combination and attribution

of meaning (see Elias and Hill, 1986 for a discussion of this point).

Ideas come from different sources or wellsprings. Leonard–Barton (1995)

comments on the functions of generative sources and suggests that "a

wellspring, the source of a stream, sustains life within and beyond the

riverbanks or, by becoming dammed up, or polluted, denies its existence"

(xiii). An exploration of the wellsprings or sources of innovation reveals a

complex picture. Some sources are direct (a firm can buy a patent from an

inventor) whilst others are indirect (a firm may see a rival undertaking an

initiative, reverse engineer it and develop a new product or process concept)

(Schonberger, 1986). In addition, some sources are generic (acquisition of new

technologic platforms, for example) whilst others are specific. Firms can

demonstrate considerable ingenuity in finding sources of innovation (Sowrey,

1988). For example, Anita Roddick, co-chairperson of Body Shop learnt about

skin care from South American Indian women and deodorants from African

women (Lessom, 1991) and employed the ideas she gained in the

development of new products.

It is helpful to draw this section to a conclusion with a tentative schema

relating to the acquisition of ideas. These can be sub-divided on the basis of

intentionality, originality, maturity, radicalness and utility. These are referred

to as 'variables' in the table below:

Table 2.1: idea acquisition

Variable Definition Explanation

Intentionality The degree to whichan idea is soughtdeliberately.

Sometimes a company will search for an innovation initiative(Shillito, 1994), perhaps in pursuit of a strategic initiative, a novelsolution to a problem or an opportunity (MacLennan, 1998). At othertimes ideas emerge, sometimes serendipitously, and intention followsthe idea.

Originality The degree to whichan idea is new (toknowledge).

Ideas can possess a high degree of, or total, originality. Others arenew combinations of existing ideas or applications of known principles(Schumpeter, 1961). The least original ideas are those adoptedwithout adaptation.

Maturity The degree to whichan idea iselaborated.

Some ideas are rudimentary or embryonic—especially if developed'in-house'. Others are elaborated and, perhaps, proven(Hesselberth, 1994).

50

Variable Definition Explanation

Radicalness The degree to whichan idea requiresinternal changeand/or marketrepositioning.

Many, probably most, innovation initiatives are incremental andpromote minor change. Others require significant organisationalchange. Some initiatives offer new choices of products and/or servicesto customers and require market repositioning (Collinson, 1993).

Utility The degree to whichan idea appears tooffer advantage.

An initial assessment of the potential utility of an idea(Hauschildt, 1996) determines whether it is discarded or provided with'space to grow' (Schwartz, 1991). However, this is notoriously difficultto predict (Tidd et al., 1997).

2.4.3 Idea adoption

The second stage of the innovation process is the adoption of an idea. This

requires a decision—at least to invest in the development and testing of

possibilities. As mentioned above, ideas can come from multiple sources,

including lower level employees, advisers, technological experts, customers,

lead users, suppliers and so on. Management usually have a over-full agenda

of things to do (Mintzberg, 1973). A proposed innovation initiative must,

therefor, gather a 'critical mass' of support amongst those whose agreement

is needed to move an idea into a commitment (Ghemawat, 1991). In order for

resource-intensive innovations to be adopted it is possible that other

initiatives are deprived or resources, stopped or rejected (Smith et al., 1985).

Some, perhaps most, ideas must be culled and a selected number given the

necessary attention and resources to be developed (Pinchot, 1996). How this

is done is highly significant.

Rickards (1997) suggests that "there are excellent methods of closing down"

(51) but notes that "there will often be a need to experiment with more than

one technique, to develop a greater understanding of their scope and

limitations" (51). A priority for management is to invest in innovation

initiatives that are functional for that firm at that time (Pearson, 1991).

'Functional', in this context, means 'creating value faster than cost and helping

the firm move to an attractive and defendable position'. Decisions must be

taken and, often, these are a matter of judgement.15 Such decisions are

firm-specific in that a commitment to undertake an initiative may be

15 Some decisions regarding innovation may not require significant managerial judgement. For

example, in 1999 BT determined that all its suppliers would henceforth communicate withthe company via the internet (company document). For an individual supplier the decisionas whether to conform requires little thought—the question is 'how?'.

51

functional for one firm and dysfunctional for another (Day, 1984). For

example, it could be a prudent decision for Rolls Royce to develop a

top-of-the-market sports car but disastrous for Leyland Trucks to do the

same—even though both are in the motor vehicle industry.

Realising the need to take decisions that are prudent, functional, progressive

and achievable is one thing but being able to do it in practice is another.

Rosenberg (1995) sees the difficulty as a consequence of novelty—he notes

that:

"Major innovations often constitute entirely new technologicalsystems. To conceptualize an unknown system is extremelydifficult" (178)… "Since innovations often arise as solutions tospecific problems in particular industries, their flow toapplication in different settings is bound to be highly uncertain"(179).

Rosenberg used the development of the laser as an example. He observed

that potential uses for lasers were not imagined until the technology had been

developed for several years. The difficulty of decision-making in such

situations can be compounded by behavioural factors, as noted by Sharpe

and Keelin (1998) who asked: "how do you make good decisions in a

high-risk, technically complex business when the information you need to

make those decisions comes largely from the project champions who are

competing against one another for resources?" (45).

Chiesa et al. (1999) provide a methodology that results in a quantitative

analysis of risk based on an assessment of three factors: levels achieved in the

technology, target easiness and commercial risk. Such methodologies can be

useful but reflect the assessments of an expert group at a particular time.

Experts can be wrong. Accordingly, decision-making regarding innovation

initiatives often includes irreducible elements of chance in situations where

cause and effect chains are impossible to predict (Gleick, 1987). Doz and

Hamel (1998) call such decisions 'bets', drawing from the language of

gambling. The mismanagement of decision-making processes can result in

damaging fiascos (Janis, 1982). Most observers conclude that, whatever

conceptual tools and processes are used, the task of selecting innovation

innovations will be demanding and uncertain (Olins, 1997).

52

Stances to the management of risk are an element in innovation management

and were discussed by Klein and Meeking (1958) who suggested that projects

that have imponderable, uncertain, unknown or ambiguous elements are

best approached by a decision-making strategy that stimulates experiment,

keeps options open and makes commitment decisions as late as possible. This

has the effect of stimulating learning, thereby enabling decisions to be taken

with a greater likelihood of success. A high order of individual skills can be

required to manage a flow of decisions in this context—keeping the odds on

taking the 'right' decisions as favourable as possible.

Dysfunctional innovation can be defined as 'not creating value faster than cost

and/or failing to help the firm move to an attractive and defendable position'.

There are two primary forms of dysfunctional innovation—either an

innovative product or product positioning can lack value in the eyes of the

potential customer, or the activity of innovating can be dysfunctional for the

organisation and, possibly, for industry as a whole (Dean, 1987). On the later

point, there is evidence, for example, Salk Jr. and Webber (1993) that the rapid

pace of product innovation in the Japanese consumer electronics industry

depressed profit margins for all firms in the affected industries during the

early 1990s.

Decision-making is rendered more complex because opportunity space and

profit potential are not the same (Buzzell and Gale, 1987). Something new or

different may not prove to be attractive to potential customers and a

'technology-push' strategy can lead to interesting products but bankruptcy.

The market is, of course, the arbiter of success rather than the product

producer. It helps if the voice of the (potential) customer is heard by those

who decide which product innovations to support and which to cull (D'Venti,

1995) but there are cases where listening to an established customer-base has

locked firms out of generational changes (Christensen, 1997). People can

change their purchasing criteria, sometimes with great rapidity (Millson et al.,

1992). Moreover, competitors' initiatives are frequently surprising and occupy

some or all of the available opportunity space (Eisenhardt and Brown, 1999).

Sometimes, guesses and bets have to be made about the likely evolution of a

market to allow time for product development and, as will be illustrated

below, these can prove to be wrong.

53

There are many examples of flawed decisions regarding innovation initiatives

including the Rabbit phone, the C5 motor vehicle, BR's tilting train and the

Apple Newton. Firms can take decisions about individual innovations that

may be functional when looked at individually but dysfunctional when

considered as a whole. Apple, arguably one of the most innovative

companies of the 20th century, over-extended its product range and paid the

price with falling profits (Thomson, 1996) for several years in the mid-1990s.

Large amounts of money can be lost in implementing an innovation

proposal, as Ghemawat (1991) observed, "by its own account, Lockheed

eventually lost about $25 billion on the Tristar programme, an average of $10

million on each plane sold" (55).

In order to be functional, innovation requires effective 'fit'—or, to be more

precise, effective fits (Francis, 1992). The most significant fit required (from an

innovation perspective) is matching what an organisation seeks to become

(its 'strategic intent') with its capacity to create value aligned within its

strategy16 and deliver sustainable competitive advantage (Hamel and

Prahalad, 1989). The question of capacity is important. For example, in the

1980s Jaguar Cars had the stated strategic intent of being a world leader in

luxury sports saloons (Edwardes, 1983) but lacked the ability to deliver

this—hence the ultimate sale of the company to Ford. In general, it can be

argued that firms' innovation ambitions largely need to fit their capability,

although there are examples of extraordinary deviations from this principle

(Janov, 1994) that suggest stretch goals can sometimes enable breakthroughs

to occur (Semler, 1993).

In addition, other fits may be required. These can include the interests of the

senior managers, organisational cultural characteristics, stakeholders' needs,

existing co-ordination mechanisms, current activities within the firm and so

on. Decisions are given more momentum since not all ideas and/or

opportunities are of the same merit: initiatives can be misguided, arduous,

destructive or offensive to values. An organisation, therefore, needs to have

what Pinchot (1996) called an 'effective immune system'. This has the effect of

16 As will be discussed below, it should be noted that innovation can be a driver of strategy as

well as an implementation mechanism.

54

providing a set of sifting, evaluating and selecting mechanisms that,

themselves, operate at multiple levels. On this topic Schön (1983) observed:

"At each stage in the development of a radically new product,managers must make decisions in the absence of adequateinformation or rules for rational decision. Each such judgementis a unique case…" (244-245).

Achieving fit can be simplified into a single question: "is this the right thing for

us to be doing?" If the answer appears to be 'yes' then managers need to

answer a much broader range of questions like: where shall we innovate?

What shall we create/acquire? What should we not do? How will our

product/service be superior? Is the cost likely to be repaid by revenues?

When? Can we protect our investments? Do we have the resources? How

will the task get done? What will we lose by doing this? The act of

commitment to an innovation initiative releases a welter of 'how to'

questions.

Decision-making (answering 'what' and 'how' questions) in relation to a

specific innovation initiative may have an impact on the firm's development

of a portfolio of technological and other competencies. Not all innovation

initiatives advance or deepen a firm's applied expertise (Morita, 1989) in areas

that it can leverage in the future. Sometimes firms take decisions about which

innovation initiatives to adopt on the basis of whether they strengthen the

technological capabilities by providing learning-through-action stepping

stones.

Technologies can be considered as codified bodies of knowledge and practice

that enable complex things to be done reliably (Cohan, 1997). The term

'technology' is generally applied to the application of science-based

knowledge but this may not always be so. For example, the development of

co-dependent relationships with suppliers, rather than a hands-off adversarial

approach, can be described as 'a technology' even though it emerged through

the application of values and practical experiment, rather than through

scientific enquiry. As new or different technologies become available they

redefine the opportunity space available for decision-making

(Schumann et al., 1994). However, the impact of technologies can be

speculative, the commitment cost can be high, competing technologies may

55

be available, the firm may be locked into existing technologies (leading to

high switching costs) and the utilisation of technologies in new application

areas can be far from simple (Faulkner and Johnson, 1992).

Decision-making regarding the adoption of an innovation proposal

sometimes requires consideration of enabling organisational arrangements.

For example, some innovations in a global marketplace may offer the

promise of massive value-creation but the scope of the commitment could

require the development of strategic alliances, as no single firm can make the

necessary investment of funds or competencies. This last point adds a new

dimension to the decision-making task: strategic alliances are not easy to

form or sustain (Doz and Prahalad, 1987). Key questions include: who to form

an alliance with? How to make it mutually beneficial? And how to make the

alliance effective? Radical or architectural innovations, possibly within an

alliance framework, pose major challenges of decision-making as the

commitment required can, in certain circumstances, bet the company

(Ghemawat, 1991).

It is helpful to draw this section to a conclusion with a tentative schema

relating to the adoption of ideas. These can be sub-divided on the basis of

risk, type of commitment needed and decision clarity.

Table 2.2: idea adoption

Variable Definition Explanation

Risk The degree towhich theprobability and costof failure or successcan be assessed.

Making an assessment of the costs and likelihood of failure is astandard, although imprecise, analytical technique(Kleindorfer et al., 1993). Some innovations require significantfunding and resources in the start-up and market-developmentstages but are undertaken with the expectation that they will leadto rewards later (Bartlett, 1995).

Type ofcommitmentneeded

The degree towhich people in anorganisation needto committhemselves to aninnovation initiative.

Studies have emphasised the importance of champions, sponsorsand enthusiasts (Coyne, 1996), some of whom may develop anew product or process in opposition to senior management(Kidder, 1981). Top management may simply need to acquiescewhilst more junior people require full commitment. However, thereare cases where the opposite situation may pertain.

Decision clarity The degree towhich objectives forinnovation need tobe specific.

Some innovation initiatives can be progressed with clarity aboutthe intermediate but not ultimate outcomes. At times only areas ofintention can be indicated (Hamel and Prahalad, 1989). Thoseoutside of the decision-making process, but who are affected, mayneed to understand their roles in the enactment of the decision(Francis, 1987).

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2.4.4 Idea application

The adoption of an idea transforms it from being a possibility into a

commitment (although commitments can, sometimes, be tentative or

reversed). The delivery of a commitment concentrates on the 'means rather

than ends' and introduces a new stage in the innovation process.

According to Hamilton (1997) "(w)ork can generally be classified as either

operations or projects. The two types of work differ primarily in that

operations are ongoing and repetitive while projects have characteristics that

include impermanence, uniqueness and uncertainty" (64) (author's italics). An

innovation initiative would generally be regarded as a project but it does not

have to be so. For example, there has been a considerable emphasis over the

last 20 years in incorporating innovation into the operational routines of a

firm (Caffyn et al., 1997).

The work of transforming an idea into a delivered innovation can involve a

great deal of effort. In some cases, thousands of activities need to be

accomplished, some of which are interdependent on others (Hamilton, 1997).

Conceptual and planning tools have been developed to assist in project

management including tiers of objectives charting, relationships diagrams,

task flow diagrams, Gantt charts, time, cost and performance targets for

deliverables, risk identification, quantification and control, sponsors' and

champions' roles, shared philosophies, using learning to trigger reviews of

project plans, developing 'self-healing' and the use of problem-solving tools.

However, project management is more than a portfolio of techniques. It is a

set of routines that can become elements of the normative structure of a firm

(Frame, 1994). It may well be that the mind-sets and skills required for

effective project management are different from those required for the first

two stages of the innovation process. However, it would be an error to see

implementation as uncreative (Rickards, 1999). In fact, a great deal of

ingenuity and invention can be found at later stages of the innovation

process.

Project management provides a way of managing individual initiatives but

can be insufficient as it focuses on single issues and work packages. Projects

are, at least sometimes, elements of larger programmes and 'programme

57

management', which looks at interrelationships, overall capacity and shared

efficiencies, can be used (Holt, 1991). This can be important in relation to the

management of innovation when multiple initiatives are taken. For example,

Walton (1997) describes the design of the Ford Taurus and observed:

"(e)ver day at noon, Landgaff and Bell (the programmemanagers) presided over a meeting called 'change control',where engineers streamed in with problems. They were notcalled 'problems' however, a word thought too negative… Inthe beginning when their goal was simply to hold down thesheer number of changes it ('change control') had seemedappropriate, but now (as the prototype was developed) therewas more to the process than controlling the numbers. Somechanges were critical. Others were desirable, but could bedelayed" (108).

The noon meeting provided a way of co-ordinating projects and making

decisions about interdependencies. The design of the Ford Taurus was

advanced but each element had to fit overall design concepts. It was

necessary to provide organisational mechanisms and resources to achieve

this. The provision of resources can require considerable management

attention. Walton considers that the cost of introducing a new model of a

motor car exceeds $300 million and tight time milestones are set. Moreover,

appropriate resources must be available throughout the development of an

initiative—these change considerably over time.

It is helpful to draw this section to a conclusion with a tentative schema

relating to the application of ideas. These can be sub-divided into means

planning, project management, portfolio of competencies and resource

provision.

Table 2.3: idea application

Variable Definition Explanation

Means planning The degree towhich the means ofaccomplishment isclear.

In some cases the means of implementing an innovation initiativeis clear but this is not always the case, especially wheretechnological or social change is required (Schwartz, 1991).Considerable work may be needed to develop a strategy forimplementation (Galbraith and Nathanson, 1978).

Projectmanagement

The degree towhich a managedtemporaryorganisation isrequired.

Project management refers to the creation of a temporaryorganisation (Holt, 1991) to achieve time-limited objectives(Riccardi et al., 1996). Some innovation initiatives need to bemanaged as projects in order to be realised (Galbraith, 1973).

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Variable Definition Explanation

Portfolio ofcompetencies

The degree towhich new ordifferentcompetencies arerequired.

Competency development is needed to support some forms ofinnovation initiative (Prahalad and Hamel, 1990). In one case atleast, SmithKline Beecham, (Tanouye, 1995) therapeutic areateams spent hundreds of days defining the competencies neededto make use of developments in genetic engineering and relatedscientific advances.

Resourceprovision

The degree towhich specificfinancial and otherresource provisionsneed to be made.

Many factors can prevent intention from becoming reality,including lack of funds, competing requirements, managementdisinclination, communication breakdowns, lack of competenceand insufficient resolve (de Gues, 1988).

2.4.5 Idea exploitation

Ideas can be realised within a firm but the exploitation of potential benefits of

innovation can prove difficult. Kay (1993) suggests that "the rewards of

innovation are difficult to appropriate (for the firm that introduces the

innovation). Returns must be defended from competitors, from suppliers and

customers, and may accrue to groups within the firm rather than to the

organisation itself" (102).

The exploitation of innovation is central to the concept—otherwise a firm is

engaging in invention or adoption, not innovation itself. Exploitation of

market-facing innovations (i.e. innovations that directly affect the firm's offer

to customers) can take several forms, the principal methods being selling,

licensing, commercialising and entering into a partnership.

It is important to note that the value created by an innovation initiative is not

fixed (Doyle, 1997). It can be considered as a unrealised asset (sometimes

capable of being patented or protected by intellectual property rights) but,

ultimately, limited in its worth (its potential to create value or help the firm

achieve longer-term goals). The capacity to realise the potential value of a

market-facing innovation is shaped by the dynamics of competition in an

industry, for which Porter's five forces model provides a useful analytical

framework. Also, a variable is the skill a company demonstrates in signalling

the value of its differentiated product or service (Porter, 1980).

In general, scholars of the innovation process pay relatively little attention to

the exploitation of ideas, especially those concerned with new product

development. For example, one recent review of the field by Trott (1998)

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hardly mentions issues of gaining advantage from ideas. However, literature

on marketing provides detailed guidelines, case examples and research

(Buzzell and Gale, 1987) that enable aspects of the management of innovation

to be better understood (Day, 1984).

It is helpful to draw this section to a conclusion with a tentative schema

relating to the exploitation of ideas. These can be sub-divided into

defendability, longevity, magnitude and marketing plan.

Table 2.4: idea exploitation

Variable Definition Explanation

Defendability The degree to whichan innovation can beprotected from rivals'offers

Firms can find that ideas are copied or adapted so that a rival reapsthe benefit (Teece, 1998). For example, the standard (1999) incomputer presentation is PowerPoint, a Microsoft product. This hassimilar features to Persuasion by Aldus (O'Leary, 1989). However,Microsoft was able to dominate the market and Persuasion is anextinct product.

Longevity The degree to whichsustained value canbe created from aninnovation.

The length of time that an innovation can be exploited helps todetermine its attractiveness (Harrison, 1989). Calculation of likelyreturns enable a degree of systematic consideration to be given tothis topic.

Magnitude The degree to whichbenefits achievedoffers a superiorreturn on investmentof time and funds.

The assessment of the potential benefits of an innovation affectsdecisions about resources allocated to its roll-out (Kim andMauborgne, 1999b). This includes an assessment of the size of thepotential market and the likely share that the firm can expect toachieve (Chryssochoidis and Wong, 1995).

MarketingPlan

The degree to whicha marketing planplaces theproduct/service in aposition at a pricewhere it offerssuperiorcharacteristics

Marketing (Gummesson, 1987) provides information on consumerattitudes and habits (Wiggins, 1955). Decisions about the pace,form, scope, intensity, brand-integrity and priority of the 'roll-out' ofan innovation (Day, 1980) may affect the extent to which a firmreaps benefits from its investment (Chryssochoidis and Wong,1995).

2.4.6 Learning

Learning can help to improve the targeting of innovation capability, the

efficiency and effectiveness of innovation processes (Wenger, 1991) and the

prowess of individuals, teams and other groupings (Garratt, 1987). In

addition, learning provides an input into an innovation process that renders it

open rather than closed—thereby facilitating adjustment to external changes

(Argyris, 1977).

Mintzberg (1994) offers a persuasive example of the relationship between

learning and innovation. He suggests that a "salesperson may have the idea

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to sell an existing product to some new customers. As the other salespersons

realise what that person is doing, they begin to do so too, and one day,

months later, management discover that the company has entered a new

market. This new pattern certainly was not planned. Rather… it was learned"

(26). In this example innovation was adopted through a process of ongoing

socialisation (Broom and Selznick, 1958) that can be seen as organisational

learning.

Learning flows, in part, from considering the effects of doing or not-doing

(Kolb, 1983a). This has been described as 'double loop learning' by

Argyris (1977) who discusses how an individual or group undertake an

activity and use the experience as a source of learning. Work, therefore,

becomes 'work plus learning'. It would be reasonable to expect that firms

with high innovation capability apply the double loop learning principle. A

case study of Microsoft suggests that, at least sometimes, this is the case

(Cusumano and Selby, 1996).

Learning is related to the improvement of routines (Caffyn, 1998) and may

also be concerned with the structure of thought that people apply to make

sense of situations (Weick, 1995). Senge (1992) suggests that:

"One of the most important, and potentially most empowering,insights to come from the young field of systems thinking isthat certain patterns of structure occur again and again. These"system archetypes" or "generic structures" embody the key tolearning to see structures in our personal and organizationallives… As we learn to recognise more and more of thesearchetypes, it becomes possible to see more places where thereis leverage in facing difficult challenges and to explain theseopportunities to others" (94).

Senge emphasises the scale of the learning challenge. However, it may be that

the implementation of the ideas will prove difficult—it is not easy to help

people to review their 'system archetypes' and change them if they are

inadequate (Pedler et al., 1991).

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Despite the persuasive case for encouraging learning from the experience of

innovation this remains difficult to accomplish (Nourayi, 1996). Relevant

factors (Mayo and Lank, 1994) include:

• It can prove difficult to determine factors that led to success or failure in aspecific innovation initiative;

• Multiple influences can affect performance interdependently and it is noteasy to unravel them;

• Sometimes 'lessons' affect groups who did not have a sharedmanagement structure and so are difficult to apply;

• Methodologies of learning from experience may not be valued;

• People whose behaviour was significant in an innovation process may bein a partnership relationship or have moved on;

• The communication of tacit knowledge is demanding to accomplish.

Products are more than an offer to prospective customer groups—they can

provide a source of learning for a firm. Products 'close the loop' between an

idea and its enactment. This topic was considered by Ayas et al. (1994) who

examined learning within the context of new product development. Ayas,

perhaps optimistically, made the point that "all individuals involved in a

project are engaged in a constant process of learning, transmit their learning

to others; the cumulative knowledge acquired can be embodied in the project

organisation and used continually to improve project performance" (31).

As briefly discussed above, sometimes a product can be a stepping stone, a

learning step, towards enhanced organisational capability. Learning therefore

extends beyond the boundaries of a specific innovation process. Morita

(1989), then chairman of Sony, reported that he regretted not making a Sony

digital calculator (it was decided that Sony could not make a profit and so the

proposal was abandoned) because his decision deprived the company of

experience in manufacturing low cost digital products that they needed for

future product families.

It is helpful to draw this section to a conclusion with a tentative schema

relating to learning—this can be subdivided into personal, group, process and

targeting variables.

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Table 2.5: learning

Variables Definition Explanation

Personal The degree to whichindividuals learn to bemore effective ininnovation roles

Innovation can involve many individuals whose attitudes, skillsand knowledge-sets play a significant role (Drucker, 1994;Senge, 1996).

Group The degree to whichgroups learn to be moreeffective

Group objectives, norms and routines can help or hinder theprogress of innovation initiatives (Bennett and O'Brian, 1994;Rickards and Moger, 1999).

Process The degree to which theinnovation processimproves throughlearning

Feedback can be used to improve the efficiency and effectivenessof innovation processes (Millson et al., 1992; Prince, 1980).

Targeting The degree to whichdecision-making improvesthe exploitation ofinnovation capability.

Since innovation capability can be targeted in various ways, the(strategic) choices about how the capability is used helpsdetermine whether sufficient value is created (Porter, 1996;de Gues, 1988).

2.5 Innovation and strategy

Innovation for its own sake might interest enthusiasts but firms look to

innovation to provide advantage (Tidd et al., 1997). Innovation is, therefore, a

means not an end (Schumpeter, 1961).17 In general, 'advantage' is taken to

mean achieving economic returns but innovation can also benefit other

stakeholders (Schumacher, 1973). For example, the environment can be

protected by innovations in emission control (Hansen et al., 1999) and public

safety through the development of fail-safe railway signalling. Obviously,

seeking to enjoy the benefits of innovation provides a significant motivation

to invest resources in it (Smith et al., 1992).

17 Professor John Bessant observed that use of the term 'innovation' can be confusing since it

refers both to artefacts and the process by which ideas are realised for advantage (personalconversation 13/11/99).

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Achieving a viable competitive strategy in a capitalist economy generally18

requires innovation (Kay, 1993). Francis (1992) defined competitive strategy

in the following terms:

"A winning competitive strategy is a 'bundle of advantagesprovided at sustainable cost that impel sufficient numbers ofcustomers to choose your firm over its rivals'… If a business canprovide greater value than its accumulated costs the businesswill prosper—if not oblivion beckons" (31).

Francis makes the point that advantages offered need to be provided at an

acceptable cost. Customers make, perhaps subconsciously, assessments of

cost and benefit before they buy. The result of such decisions determines the

effectiveness of a firm's competitive strategy and whether its 'bets'

(Hamel et al., 1989) in innovation have yielded sufficient value.

Taking a strategic perspective helps a firm to answer the question 'why

should we innovate'? However, innovation is not simply a servant of

strategy but can also be a partner or a leader. Strategic choices may be

elaborated, extended, truncated, enabled or redefined by innovation. The

strategy of a firm may include a generalised commitment to innovation

(Goshal et al., 1999) or innovation may be targeted more precisely.

Relating two large and diffuse constructs—innovation and strategy—cannot

be easily undertaken. But the relationship is important and must be

considered.

18 Some firms may thrive in a competitive environment for a period of time without

innovation. For example, Oxted Taxis have maintained the same business formula for morethan 10 years (interview with owner 13/8/98) and no significant innovation has taken placesince the installation of two-way radios in 1983.

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The researcher is mindful of the observation of Freeman and Soete (1997) that

"(a)ny classification of strategy by types is necessarily somewhat arbitrary

and does violence to the infinite variety of circumstances in the real world"

(265). Nevertheless, the relationship between innovation and strategy will be

considered from four perspectives or schools of thought (simplified from

Mintzberg et al., 1998b) and summarised in the table below:

Table 2.6: four strategic perspectives

Strategic perspective Key assumptions

1 Strategic Planning School Innovation provides product and process improvements that enabledesirable product-market positions to be gained and retained.Innovation provides waves of differentiation advantage.

2 Resource-Based School Innovation provides distinctive core competencies. These act aswellsprings of innovation. Core competencies that are sticky andhard-to-replicate offer sustained advantage. Dynamic capabilities aregenerative resources that can provide multiple benefits.

3 Entrepreneurial School Innovation is the way that entrepreneurs and intrapreneurs createand exploit opportunities. Essentially innovativeness is an individualattribute. Strategy is the flow of commitments from ideas developed byentrepreneurs and intrapreneurs.

4 Innovative Organisation School Innovation flows from facilitative culture, routines, processes andreward systems. The organisation, itself, becomes dynamic andcreative in multiple ways.

Each school gives a primacy of place to innovation but in none is innovation

considered to be the only building block of an effective strategy—it is an

element within an organisational gestalt. This supports the view of Kay (1993)

who writes "(f)irms add value by competitive advantages established through

innovation, reputation and architecture and by the management of strategic

assets" (327).

2.5.1 Innovation from the perspective of the strategic planning school

Porter (1980) can be considered as the high priest of the strategic planning

school. His notions of generic approaches to sustaining strategic advantage

and the five forces framework for the analysis of industries became

foundation blocks for strategic analysis in the early 1980s. Porter's discussion

of differentiation strategies placed innovation in a distinctive strategic context.

From his viewpoint, innovation was a (but not the) pathway to the

implementation of a successful differentiation strategy. Innovation of

processes was a primary means of delivering a cost leadership strategy.

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Jones (1996) points out that Porter saw that the acquisition of relevant

technologies provided a key resource base and commented that: "Porter's

work is important for those interested in the management of innovation

because he, almost uniquely amongst corporate strategists, views technology

as a central element in the quest for competitive advantage" (26).

Porter (1996) emphasises the value creation potential of a differentiation

strategy and asserts that:

"(a) company can outperform rivals only if it can establish adifference it can preserve… ultimately, all differences betweencompanies… derive from the hundreds of activities required tocreate, produce, sell and deliver their products or services" (62).

Of course, being different is not, in itself, an effective competitive strategy.

Porter points out that "competitive strategy is about being different. It means

choosing to deliver a different set of activities to deliver a unique mix of

value" (64). The aim is to create a set of differences that sufficient numbers of

customers value and sways their purchasing decisions towards the products

offered by that particular firm.

Some firms adopt a single competitive strategy, perhaps to ensure brand

integrity. For example, a top hotel will take pains to ensure that all of its

services are consistent (Kumarand and Foy, 1996). However, many firms

operate in a number of markets and determine their competitive strategy,

positioning and innovation agenda separately, to some extent,19 for each.

Ghemawat (1991) suggests that:

"modern positioning theory stipulates that strategic choicesshould always be analysed in terms of their implications forcompetitive positions in individual product markets" (61-62).

Ghemawat argues that advantage can be gained by targeting innovative

capability on the precise needs of sub-markets (Tull and Hawkins, 1993). This

requires that differentiation strategies are deployed through activities within

a firm (Porter, 1985). Many, if not all, of the activities present targets for

innovation.

19 If a firm owns a brand then consistency is needed across different markets. The Sony

Corporation, for example, sells to a wide range of groups but maintains common standards ofquality, design style, warranties, price/value etc. in all products (Nakamoto, 1996).

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If Porter is correct, it would be possible at the level of a firm, or a strategic

business unit within a corporation, to ask the question "where should we

direct our innovation capability to affect our chosen competitive strategy?"

and devise a rich picture answer. This would relate innovation initiatives

directly to the firm's competitive strategy. For example, it may be that a

pharmaceutical firm makes a deliberate strategic decision to develop a drug

to alleviate the symptoms of Alzheimer's disease. A billion dollars is

earmarked for the programme, world-leaders in this disease are recruited

and research and development goals are established. Once this critical mass of

research talent is gathered, and resources allocated, there is a probability that

useful drugs will be developed (Sternberg, 1999). Without such an extensive

commitment the likelihood is low that an Alzheimer's disease drug will be

developed by that company (but not non-existent as an individual researcher

may have a breakthrough driven by his or her own interest).

Recent thinking in this area, driven by notions of the agile enterprise

(Harvey, 1996), take micro-marketing to its logical conclusion and focus the

firm on meeting the precise needs of a market size of one (Curtis, 1998). For

some products, for example high-end computers, it has become possible to

provide highly customised or unique solutions for individual customers in a

mass market thereby changing the product innovation requirement to a

product kernel/modular configuration rather than a completed offer

(Magretta, 1998). In addition, there may be an opportunity for ongoing

innovation: when, for example, a person buys a computer s/he is buying a

product that is not complete, and will never be complete, as new hardware

and software can be added over time.

Kim and Mauborgne (1999a) suggest that notions of value have hitherto

underestimated the emotional meanings attached to products. They suggest

that innovation can be in the 'meaning' of the product or service, which, in

itself, is often embedded within the meaning or image of the firm. If this is

correct then it may be possible to be innovative in relation to meanings as

well as the tangible characteristics of the product or service.

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2.5.2 Innovation from the perspective of the resource-based school

As was mentioned in Chapter 1, resource-based models of strategy and

organisation are particularly significant for this research and will be discussed

in detail below. It will be argued that innovation capability can be seen as a

resource that provides a 'dynamic capability', meaning that its possession is

generative—a force for change (Barrett and Cooperrider, 1990). It should be

noted that this definition of a dynamic capability is broader than that adopted

by Teece et al. (1997) who state "the term 'dynamic' refers to the capacity to

renew competencies so as to achieve congruence with the changing business

environment" (515).

The principal argument is this: defendability of competitive advantage

requires a firm develops resources in ways that rival firms find it difficult, or

impossible, to replicate these 'ingredients' of superior performance (Hamel

and Prahalad, 1994). Few firms can rely on long-term exploitation of valuable

patents or intellectual property so innovation is required. In order to feed a

firm's innovation requirement there needs to be an enabling and developing

resource-base (Teece, 1998) that maintains dynamic development.

Resource-based theories of the firm (Hamel and Prahalad, 1989) adopt the

view that the most significant strategic assets are internal capabilities,

especially if they are 'sticky' (difficult to replicate). So, Honda's capability in

engine design provided the opportunity to enter markets like motor cycles,

generators, cars, trucks etc. Based on their outstanding generic engine

designs, Honda's products are likely to have advantages in efficiency,

functionality and serviceability (Mintzberg et al., 1998b).

Proponents of resource-based theories of the firm argue that strategies

without capabilities are inconsequential—like threats without power (Hamel

and Prahalad, 1989). Attention, it is argued, should be paid to acquiring and

harvesting an integrated and relevant portfolio of resources that provide a

raft of attractive strategic and tactical options. Resources include human

assets, technologies, company culture, alliances, partners, joint-ventures,

supply chains, knowledge-assets, downstream channels and so on. A case can

be made that the possession of a resource impels a need to exploit it and so is

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a change driver in itself.20 As new or different resources are developed, or

become available, over time, a broad resource-base can prepare the firm for a

range of possible futures.21

If the resource-based theory of the firm is adopted then there are two

primary targets for innovation. One is to create, deepen, widen and/or

re-configure a firm's competencies, the second is to exploit efficiently and

creatively existing (evolving) competencies.

Hales (1999) points out that the roots of the resource-based theories of the

firm go back to the 1980s or before. Recent experience brings some earlier

assumptions into question—particularly those that Stokes et al. (1998), citing a

paper by Teece et al. (1992) make concerning flexibility. The point is made

that "over any strategically relevant time frame, firms are stuck with what

they have and may have to live with what they lack" (2). This observation

may be, at least in part, outdated as recently firms have demonstrated

increased agility (Maciariello, 1997).

Doz and Hamel (1998) argue that, in the late 1990s, some firms became

capable of achieving rapid reconfiguration of their resource endowments—so

have lessened their path dependence (Teece et al., 1997). For example, during

1998 GEC underwent a structural transformation and 're-invented' itself in

the telecommunications industry within a year (Lorenz, 1999). In early 1999

Microsoft made large investments to position itself in entertainment and cable

television, as Alexander (1999) notes "Microsoft is launching a blizzard of

deals to ensure that it is not left behind in the 'post-PC' era'" (3.7). Neither

GEC or Microsoft were markedly confined by their 1998 firm-specific

resource-base and, since they were organised as SBUs (strategic business

20 For example, if a retail firm specialising in selling stationery buys a printing firm the very

act of acquisition opens new possibilities—offering printing services to customers ofstationery or stationery to customers of the printer, are obvious examples. Here the act ofacquisition of a new resource becomes a generalised dynamic. Part of the reason for this isthat new combinations of interaction are facilitated by the acquisition: the managers of thestationery business sit down with the printers and ask the question "how can we exploit theopportunity?" The use of the word 'we' is important as it can lead to joint action.

21 There is a close connection with emerging theories of agility (Arnott et al., 1996). Theargument of the proponents of the agile enterprise is that it is impossible to plan for apredicable future and so an organisation needs multi-level entrepreneurship, rapidre-configurability, flexible resources and rapid learning processes. These are,quintessentially, dynamic resources.

69

units), it was possible to for them to buy and sell businesses as going

concerns. However, both GEC and Microsoft had proactive leadership, ample

funds and a commitment to both agility and strategic positioning

(Slywotzky et al., 1999). The scale of the re-alignment of these major firms

suggests that earlier resource-based theories tended to underestimate the

significance of strategic leadership as they are located in a view of the firm

that sees boundaries as relatively inflexible, rather than personally led,

permeable, tradable, re-configurable and negotiable.

The perspective of strategy being shaped by flexible firm-specific

accumulations of expertise can be related to notions of military strategy

(Fraser, 1993). The British army does not know where it will be required to

fight next. It may be countering an urban terrorist threat, fighting a full-scale

battle in the Middle East or helping clear-up after a flood in Norfolk.

However, it is possible for an army to develop scenarios (de Gues, 1988) of

possible types of commitment (Schwartz, 1992) and, subsequently, to develop

flexible capabilities that can be rapidly re-configured to meet a range of

possible requirements. In effect, an army's strategy in peace time

concentrates on targeted resource acquisition that enable both planned and

emergent strategies to be effected in real time during engagement according

to the then existing combination of circumstances. Scenarios and flexible

resource development help determine the innovation agenda for armed

services.

Coombs (1996) suggests that it is demanding, although not impossible, to

develop capabilities22 on a 'just in case' basis. The British army have a

world-class competence in urban warfare honed by decades of combating the

IRA in Northern Ireland. It would have been difficult for them to develop this

if their role had been confined to exercises in the tank country of Germany.

22 The researcher has not sought to draw a fine distinction between 'competencies' and

'capability', partly as there is no generally acceptable definition for these terms (Hales,1999). However, working definitions have been adopted. In this work the term 'competence'in this work is taken to mean 'possessing all that is necessary to accomplish complex orimportant tasks to world-class standards now'. 'Capability' is considered to be a broaderconcept as it includes what could be re-configured or acquired as well is what is possessednow. For example, as mentioned above, in 1998 Microsoft did not have competence in cabletelevision but it did have the capability to enter this industry (which it did by acquisitionin May 1999).

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Acquiring a capability requires experience in achieving objectives in a relevant

area—theory is not enough (Revans, 1984).

The resource-based theory of the firm has attractions for managers. The

reasons for this become clearer when a military example is considered. A

general will sleep easier at night if he has ample trained and motivated

manpower, superb equipment, excellent intelligence services and short

supply chains. The availability of resources mean that he has a broader range

of options and a higher likelihood that decisions can be implemented

successfully. However, there is a substantial cost23 incurred in development

and maintenance of some forms of resource,24 especially those that require

major learning or assets to be purchased or maintained—such as the

resources needed by a modern army.

Parejo (1998) shed light on the acquisition of resources in her study of

technology transfer within the telecommunications company of Venezuela

(CANTV) between 1991-1996. Her doctoral dissertation examined technology

transfer within the context of international alliances. In the late 1980s the

performance of CANTV was below international best practice. It was

determined, at governmental level in Venezuela, to institute a radical

transformation. Fundamental changes took place in ownership, technology

and, subsequently, performance during the 1990s. During the five years of

Parejo's study several new capabilities were acquired by

CANTV—demonstrating that strategic choices, combined with appropriate

institutional arrangements, can be the driving force behind the development

or acquisition of new or enhanced resources.

Parejo's work draws attention the fact that innovation capability cannot

always be seen as being the singular property of a firm. There may be an

underlying logic at the industry level which defines the required norms,

assets, skills and technologies needed for innovation capability for any firm

23 Cost categories can include direct, set-up, DCF, maintenance, renewal and lost

opportunities.24 Not all resource development necessarily adds to the cost structure of the firm. For example,

the case can be made that benefits in improved efficiency and higher levels of conformancemore than offset the costs of total quality management (TQM) programmes. Otherinitiatives may also be 'free'—including continuous improvement, teamworking,problem-solving and supply chain management.

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within a defined industry. This is especially significant in industries within

which innovation requires a major investment of capital or substantial R&D

resources (like aircraft manufacture, pharmaceuticals or defence) and/or is

subject to external regulation. Here, the capabilities required for waves of

'required' innovation may be almost impossible for smaller firms to acquire

and this drives industry consolidation and/or partnership arrangements.

However, despite the industry logic, it may be that a small firm, or even an

individual, 'breaks the rules' and produces an innovation against the logic of

an industry's evolution or that a contextual change, a 'strategic inflection

point', occurs which 're-writes' the logic of innovation in an industry

(Christensen, 1997).

Required resource endowments may be generalised in that there are

quasi-mandatory generic capabilities required by most firms in some

industries. For example, running a successful international hotel requires

meeting the expectations of guests in terms of room size, comfort,

service-levels, dining options etc. These are global expectations but not fixed

over time. The 'firm-specific expertise' of a specific hotel builds on providing

required generic capabilities and seeks to add a unique persona, combination

of services, style and the like. However, as one hotelier put it,25 "get the basics

100% right and then think about being different. You can have all the bells

and whistles you like but if people come into their hotel room and the loo is

dirty you've lost it all!" In this context, innovation can be targeted on 'order

qualifiers' and/or 'order winners' with the latter being firm-specific

(Brown et al., 2000).

Some capabilities are broader than industry-specific. Exploitation of the

potential of information technology crosses almost all industries, as does

market research, quality management, customer responsiveness, financial

reporting and cost-structure management. These 'world-business' capabilities

provide a generic platform for competition26 but, again, change over time.

25 Personal communication.26 An example of this is the European Quality Model that provides a reference model and

scoring system that enables firms to assess whether their processes, control systems andactivities are 'world class'. Firms have found this a helpful discipline thereby suggestingthat there are a range of generic abilities required for running a robust and well-managedorganisation.

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For example, it is likely that success in the next industrial era will require

enhanced capabilities to exploit accumulated knowledge and develop the

organisation's capability to learn and adapt (Davis, 1988). Firms will need to

target some of their innovation capability on these areas should this occur.

Capabilities can provide the foundation for a multi-functional set of

competitive edges—at least until rivals catch up. They rarely last forever

unless continuously updated. Four examples make the point:-

• In the 1920s Ford developed the capabilities to mass produce motor cars atprices ordinary people could afford and gained competitive advantage butlater other firms achieved the same capabilities.

• In the 1940s Caterpillar developed the capabilities to supply the worldwith reliable earth moving equipment and gained competitive advantagebut later other firms achieved the same capabilities.

• In the 1960s Michelin developed the capabilities to construct superior tiresfor motor vehicles and gained competitive advantage but later other firmsachieved the same capabilities.

• In the 1980s Canon developed the capabilities to supply low cost butsuperior photocopiers and gained competitive advantage but later otherfirms achieved the same capabilities.

There is a hazard when employing resource-based views of the firm. Today's

core capabilities can become tomorrow's core rigidities (Leonard–Barton,

1995). There are well-described cases where a major shift has occurred in the

nature of successful business models in specific industries. Existing firms are

disposed to cling to old formulae of competition and, unwittingly, orchestrate

their destruction. A particularly powerful example of this phenomenon was

the 19th century ice-cutting industry in North America that proved unable to

cope with technological advances in refrigeration (Utterback, 1994). At times

when industry logics are changing incremental innovation may be

insufficient; radical innovation is needed.

One systematic approach to relate innovation to resources within the context

of business models was developed by (Tregoe and Zimmerman, 1982). They

argue that resources need to be developed in an aligned way so that a firm

becomes a good example of type (Slywotzky et al., 1999). To use a simple

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analogy, it would be rational for Glyndebourne Opera to develop capabilities

in staging operas but not in recording, transportation of performers or

teaching opera singers—since these are forms of business and can be better

provided by others. In fact, the attempt to develop such 'wider' capabilities

could become a distraction and reduce the opera's focus on 'core' capabilities

and thereby undermine its capacity to create and sustain value. The notion of

aligning resource development to selective business models is important and

will be discussed below in the section related to targeting.

It seems that capabilities must be developed as an integrated portfolio, that

changes over time. Doz and Hamel (1998) make a direct link between

innovation and competency development. Firms, they argue, must stay in the

race to be contenders or risk being sidelined. They write:

"Competencies are complex bundles of constituent technologies.They are not built through sudden leaps of inventiveness butthrough patient and relentless innovation. Once these efforts areabandoned, it is extraordinarily difficult to jump back into therace with the fast leaders" (205).

Doz and Hamel describe innovation as a means to acquire 'complex bundles

of constituent technologies'. This provides a different perspective than that

described by Porter above who argues that innovation needs to be focused

on activities within a firm's value chain. Rosenberg (1995) supports Doz and

Hamel's view and points out that the "impact of an innovation depends on

improvements not only in the invention itself, but also in complementary

inventions" (176). Technologies can affect multiple activities. Doz and Hamel's

perspectives on innovation are located within the 'dynamic capabilities'

approach.

It is helpful to consider dynamic capability as a generative rather than existant

resource (Barrett and Cooperrider, 1990). An example makes the point. In the

US pharmaceutical industry Bierly and Chakrabarti (1996) observe that:

"(f)irms that predominately generate new knowledge internally have

significantly faster cycle times than firms that predominately generate new

knowledge from external sources" (124). The capacity to 'generate new

knowledge internally' can be seen as a dynamic capability in that

organisational improvements can flow from its presence.

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A strategy to develop dynamic capabilities could incur lower costs and

present a lower risk profile than the development of other firm-specific

resources. This is because dynamic capabilities can be used in multiple ways.

An example makes the point. If a firm adopts the principles of agility as a

policy this can become a dynamic capability. Agile management

principles—short cycle decision-making, pro-activity, cycle-time reduction,

micro-marketing and asset reconfigurability—can be employed throughout a

firm (Gunasekaran, 1999) and provide multiple advantages (Perry et al.,

1999). Here, the adoption of agile processes that do not require irreversible

commitments (Knies, 1997) or sunk costs that have been committed to 'hard'

capabilities (for example, building a power station).

Dynamic capabilities can become wellsprings of organisational learning

(Nonaka, 1991). Viewing strategy as a learning process brings the

metaphorical rivers of innovation and strategy together so that they flow as

one. Since innovation and, its close companion, experimentation are major

drivers of learning, innovation can become an element of strategy (Senge,

1992).

The limits of the resource theory of the firm, and the extent to which it should

drive a firm's innovation agenda, have yet to be fully explored. One way to

challenge the theory is to assess how it explains relevant cases. The case of

Iridium, mentioned in Chapter 1 and one of the largest investments in a

single innovative venture in the 1990s, demonstrates some principles of the

resource theory of the firm being applied in practice. The Iridium consortium

determined to develop the resources needed to provide global mobile

satellite telephony and exploit their firm-specific resources in evolving

markets. This required significant innovation, especially with technologies. A

full set of resources were created and the requisite numbers of satellites were

launched. However, the venture was not successful. In the event, the

consortium was unable to pay the interest on its loans. The project was

abandoned in 2000 with estimated losses exceeding $5 billion. It is logical to

conclude that the acquisition of firm-specific resources is not a guaranteed

75

way to superior profitability and that resources are only one element27 in the

process of value creation (Price, 1999).

The resource-based and related dynamic capability theories of the firm

provide a business model that is particularly suitable for turbulent

environments (Magretta, 1998). A firm's innovation capability can be seen as

an element of a firm's resource base and, since it generates change, provides a

dynamic capability.

Even when a firm possesses a portfolio of resources and/or dynamic

capabilities it is still necessary for managers to decide what markets they wish

to serve, what business model(s) to adopt and what products to offer. As

Teece et al. (1997) observe "these approaches are in many ways

complementary" (511). From this point of view, the positioning school28 and

the resource-based/dynamic capability schools offer complementary

perspectives. Positional strategies and capabilities can be viewed as a

conceptual see-saw. Capabilities are needed to implement strategies and the

possession of capabilities opens, shapes and curtails a firm's opportunity

space.

2.5.3 Innovation from the perspective of the entrepreneurial school

The entrepreneurial school sees the driving force of innovation as a special

kind of person who sees opportunities and combines ideas in new ways. S/he

has the character to overcome hindrances, 'creatively' destroy and make

things happen. Schumpeter (1961), as the primary advocate of this school,

stands out from those who take an institutional perspective of innovation by

concentrating on the mind and being of the entrepreneur—the motive force

driving innovation. Schumpeter suggests that a person is an entrepreneur

when he "carries out new combinations and loses that character as soon as he

has built up his business, when he settles down to running it as other people

run their businesses" (506).

27 Other elements include the firms' strategy, access to markets, customers' perception of

value, reputational assets, cost-base, conformance, financial disciplines and capability toinnovate.

28 This is an approach to competitive strategy that suggests that three interdependentdecisions are the cornerstones of competitive strategy. The questions are: 'where shall wecompete? 'how shall we compete?' and 'what position do we want to achieve?' Thisapproach to strategy will be elaborated later in this chapter.

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Numerous case studies have shown the significance of entrepreneurial

leadership (see Davis, 1991 for example). These demonstrate the significance

of willpower, personal motives and boldness. Eddy (1999) provided a

relevant example in his study of the 1998 anti-trust hearing between

Microsoft and Netscape over rival internet browsers. Strategy emerged as

driven by egos and ambition of a few key people rather than a technocratic

endeavour. The language used in internal records was significant, including

discussion of collecting a 'vig' from customers ("In the language of organised

crime, the 'vig' is the unavoidable and extortionate interest demanded of a

loan… Microsoft e-mail also speaks of 'wars' and 'jihads…" (43). Gates wrote

in an e-mail in May 1995 that "(a) new competitor 'born' on the internet is

Netscape… they are pursuing a multi-platform strategy… to commoditize the

underlying operating system." (44).

Microsoft's counter to this threat was driven by Bill Gates personally and

included four principal elements, one was an attempt to convince, using

apparently strong-arm tactics, Netscape executives that they should avoid

"sabotaging our platform evolution"29 (44). Secondly, the influencing and

deal-making strategy was supported by accelerated development of the

Microsoft Explorer product (requiring targeted innovation within Microsoft).

Thirdly, Microsoft did a deal with AOL to supply them with a free customised

browser. Lastly, Microsoft integrated its Explorer product into its Windows

interface. Eddy points out that the use of power was an underlying motif.

Such strategies are not new. Sun Tzu, a Chinese General writing around

320 B.C. spelt out the importance of clarity, focus, decisiveness, alignment,

coherence, intelligence and responsiveness in achievement of action goals

(Hou et al., 1991).

In an analysis of this case Yoffie and Cusumano (1999) saw the competitive

dynamics of these two companies as following the rules of judo, specifically

"rapid movement, flexibility and leverage" (71). Product innovation was

needed by Microsoft, but in a tightly defined time-frame. The motives and

skills of a few key people, engaged in a power struggle, were key factors.

Perhaps Porter's comment that the aim is "to deliver a unique mix of value"

29 After the meeting (described as the 'Mountain View Showdown') one of the Netscape

participants described Microsoft's stance as if "Don Corleone had come to see me".

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needs to be extended to "deliver a unique mix of value, try to prevent others

from doing the same and be in a position on the 'high ground' of the next

wave of value-adding innovation".

The personality of Bill Gates has been dominant in Microsoft (Cusumano and

Selby, 1996). His value system, actions and attention shaped the company

profoundly. It is not always necessary that entrepreneurship is confined to

the top of the organisation. Pinchot (1985) suggests that it is possible for firms

to institutionalise entrepreneurship—he describes such people as

intrapreneurs. His research (Pinchot, 1996) suggests that the roles of

champion and sponsors are key. They galvanise an organisation behind an

idea and overcome internal disinterest, reluctance or resistance.

Processes of entrepreneurship and intrapreneurship were outlined by Hamel

and Prahalad (1994) who assert:

"what does it take to get to the future first? At the broad level, itrequires four things: (1) an understanding of how competitionfor the future is different; (2) a process for finding and gaininginsight into tomorrow's opportunities; (3) an ability to energisethe company top-to-bottom; and (4) the capacity to outruncompetitors and get to the future first, without taking unduerisks. Implicit here is a view of strategy quite different fromwhat prevails in most companies. It is a view of strategy thatrecognises that a firm must unlearn much of its past before itcan find the future" (22-23) (authors' emphasis).

People who undertake these four roles create the firm's future and, Hamel

and Prahalad (1994) suggest, possess a distinctive skill-set. However, their

contribution is essentially personal—a different individual might take a

different set of decisions.

Mill (1982) made a contribution to the understanding of the behaviourial

aspects of strategy formulation in his study of tobacco companies as they

responded in the wake of the finding that cancer was linked to cigarette

smoking. Mill placed emphasis on the role of top decision makers who served

as the primary link between the organisation and its environment and

pointed out that "this view emphasises the role of learning and choice in the

process of organizational adaptation" (11). It is reasonable to conclude that

individuals in powerful positions, the organisation's elite, have a significant

impact on the direction on policy and practice (Pareto, 1961).

78

The question of 'who is the organisation's elite?' is, therefore, important.

Chandler Jr. (1962) demonstrated that strategy and structure were

interdependent. He observed that centralised organisations, in general,

hindered entrepreneurship and innovation. Divisionalised business forms

permit a degree of decentralised entrepreneurship as divisions are

quasi-independent (Mintzberg, 1983b). Such decentralisation can permit

strategies to be flexible, responsive and emergent rather than fixed and

deliberate as Mintzberg (1994) put it:

"Implicit in deliberate strategy is the belief that… the headthinks—the body acts… in the case of emergent strategybecause big strategies can grow from little ideas (initiatives), andin strange places, not to mention at unexpected times, almostanyone in the organisation can prove to be a strategist" (26).

It seems probable that turbulent and uncertain environments require

strategies to be opportunistic, frequently revised and pursued with vigour

despite contextual ambiguities—a working definition of entrepreneurship.

Mintzberg et al. (1998b) used the term 'emergent strategy' to describe such

managerial stances in contrast with formal, planned 'deliberate strategy'. In

essence, an emergent strategy is one in which a firm's strategy-makers accept

that there are too many unknown or unknowable variables for prudent plans

to be prepared in well in advance and it is necessary for strategies to be

developed in real time according to factors that prevail at that time. Emergent

strategies depend assessments and commitments by the power elite of an

organisation are particularly responsive to serendipitous innovation

opportunities. Indeed, it is reasonable to argue that a capacity to adopt an

emergent strategy is, in itself, an element in innovation capability.

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2.5.4 Innovation from the perspective of the innovative organisationschool

The innovative organisational school sees innovation as coming from many,

perhaps most, individuals within the firm or associated with it. An example

described by Butler (1992) demonstrates the distinctive features of the

approach in the Japanese company Kao:

"Kao dominated most of its markets in Japan. It was the marketleader in detergents and shampoo, and was vying for first placein disposable diapers and cosmetics… the ability to produce acontinuous stream of innovative, high quality products clearlyrested on Kao's repertoire of core competencies, the wellspringbehind these was less obvious: Kao's integrated learningcapability… Kao believes that the development of originalproducts with true value depends on integrated technologiesand perpetual efforts to innovate in all areas…" (2).

Butler suggests that Kao had successfully institutionalised creativity and

innovation. Similar cases have been reported from Hewlett Packard

(Eisenhardt and Brown, 1999), Sony (Nakamoto, 1996) and the Hay

Consulting Group (Heraculeous and Langham, 1996).

The argument of proponents of this school (Cooperrider and Srivastva, 1987)

sees individuals, rather than organisational capabilities, as the primary

wellsprings of innovation. If, it is claimed, organisational members grow in

creativity, efficacy and commitment then the organisation will become

innovative as each individual plays a quasi-autonomous and proactive role.

This has been termed by Hall (1997) the use of kinetic theory within an

organisational context.

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A body of literature exploring kinetic and endemic innovation is 'organisation

development' (OD). This developed from social-science research in the late

1940s.30 OD can be described as a form of 'social technology' (French and

Bell Jr., 1995). Its purpose was to bring about intentional organisational

change. The value system on which it was founded was humanistic and

inspirational, as Greiner (1980) observed:

"There are two key values that provide the foundation of OD.One is an overriding emphasis on the human dimension. We areclearly not in the business to advance the financial or technologydimension—economists and engineers do very well in theseareas. We can even say a bit more about the human side,because OD proponents have long believed that people caninfluence organizations instead of being the victims of them.This leads to a second value—that of broadening thedecision-making process to include the affected employees sothat they can influence what happens to them and theirorganizations." (328) (author's italics)

The context in which OD developed was complex. From the middle of the

last century there was increasing doubt that bureaucratic forms of

organisation would be capable of handling either the rate or depth of

innovative change needed (Burns and Stalker, 1971) in the future. The 'human

potential movement' emerged and devised a new form of educational

experience, sensitivity training (the T-Group), that facilitated reflection largely

through gaining extensive feedback on the presentation of self (Benne et al.,

1964). More generally, OD brought a shift in social values into organisations

influenced by such social forces as the hippy movement, Rock 'n Roll, and

youth culture—Bob Dylan was echoing the voice of a generation when he

sang "the times they are a-changing".

30 Mary Parker Follett (Graham, 1996) had presaged the development of OD in her lectures

given in the mid-1920s.

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The values orientation of OD can be glimpsed by examining the writings of

Carl Rogers, a persuasive advocate of the human potential movement. In his

comments on creativity Rogers (1961) states:

"recent clinical findings from the field of psychotherapy give ushope. It has been found that when the individual is fully 'open'to all of his experience… then his behavior will be creative, andhis creativity may be trusted to be essentially constructive… asthe individual becomes more open to, more aware of, all aspectsof his experience, he is increasingly likely to act in a manner wewould term socialised (sic). If he can be aware of his hostileimpulses, but also of his desire for friendship and acceptance,aware of the expectations of his culture, but equally aware of hisown purposes; aware of his selfish desires, but also aware of hissensitive concern for another; then he behaves in a fashion thatis harmonious, integrated, constructive" (352-353).

Rogers advocated inner exploration and self-knowledge as the primary route

to personal growth and creative, effective functioning. Practitioners in the

field of OD, either explicitly or implicitly, have often adopted a similar

position that asserts that there is intrinsic merit in releasing and channelling

latent or releasing blocked human potential.31 A lesser but related movement,

improving the quality of individual and organisational thinking, was

promoted by de Bono (1999) and Buzan (1974) amongst others.

These values informed ways of thinking about organisations that were

supported by organisational change methodologies. Opinion leaders in the

field of OD found ways to link their beliefs with views about leadership,

organisational culture, authenticity and behaviour. For example, a seminal

article by Harrison (1983b) introduced the concept of alignment and

attunement. "By the first is meant the voluntary 'joining up' of individual

members of the organization". "By attunement is meant the support of

individuals for one another and by the larger whole which comes about

through a sense of mutual responsibility, caring and love" (210).

The 'spiritual' theme continues to be a live issue in organisation development

(Harrison, 1995b). It is relatively common for OD practitioners to write about

31 This core value means that OD shares many of the objectives of innovation management. In

the main, OD people would say that "releasing and channelling human creativity is a goodthing in itself". Those in the innovation management school would say that "releasinghuman creativity in the service of the organisation is essential for strategic differentiationand corporate survival". Although the perspectives differ, the end points are similar.

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'meaning', 'essence', 'energy', 'balance', 'harmony' and 'love'. This apparently

un-pragmatic focus differs markedly from the output and process orientation

of many observers and yet finds favour at the very top of some, highly

prestigious, organisations who consider it to be 'real'. The spiritual dimension

of innovation in organisations is, largely, a 'black box' as far as researchers

are concerned.

Although not originally within the mainstream of OD another strand of

work, pursued as a lonely furrow for many years by (now) Professor Reg

Revens (1980) was a radical approach that wrought a transformation in the

methodology of manager development and, arguably, enhanced the capacity

of managers to innovate. Action learning (AL), or action reflection learning as

it is known in the USA, takes a manager into new areas of practice and

requires a 'helicopter perspective'. It was based on the belief that action is the

critical element in learning: if a person cannot make positive change happen

in the reality of his/her world then learning cannot be said to have occurred.

Of great importance in the AL approach is the central role played by the

learning group—the set—who are 'comrades in adversity' (Revens, 1982;

Garratt, 1987; Mumford, 1995).

A contributing influence to OD was work undertaken to identify skills and/or

competencies that facilitate the development of the innovative individual (see

Boyatzis, 1982 for an overview of the methodologies used). An early

contributor was Prince (1980) who provided a framework for deepening

understanding of the normative aspects of innovation and identified five32

stages: wishing, retrieving, imaging, comparing and storing. Prince believed

that these specific skills can be learnt by individuals that mitigate, or eliminate,

potential hindering factors. He notes that:

"My twenty years of research has been in the field of creativity:discovering the actual process and then helping people get backin touch with their latent capacities for it. I am convinced thatjust about everyone has a large potential for creativity that hasbeen submerged by the socialisation that we all go through"(39).

32 In an earlier work (Prince, 1976) six stages are identified. These are wishing, retrieving,

imaging, comparing, transforming and storing.

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The release of creativity at the individual or team level is seen as an element

in the development of innovation capability. However, in its pure form,

Prince is describing a strategically undirected approach and there are few

mechanisms for alignment or policy deployment built into the process.

The publication of work related to OD, action learning, competency

management and related fields coalesced into a reasonably coherent

approach that offered frameworks, models, intervention processes and

change-agent role descriptions. These provided intervention processes33 that

facilitated the development of innovation capability (Rickards and Moger,

1999). However, OD did not provide a complete answer to developing

innovation capability as it had less well-developed models and techniques for

dealing with 'harder' issues—such as technology forecasting, use of IT, R&D

management, cost-benefit trade-off decision-making, competitive positioning,

asset deployment etc.

In addition to the body of literature from OD a parallel strand of

development was taking place from the 1970s driven by 'the quality

movement'. Influential figures such as Deming (1986) advocated that

managers should "put everyone in the company to work to accomplish

transformation" (24). This led to perhaps the most ubiquitous application of

the innovative organisation principle—the adoption of kaizen or continuous

improvement (Imai, 1986). Here the responsibility for innovation, at least in

part, was devolved to the people actually doing the work. Their familiarity

with opportunities for improvement, combined with appropriate skill-sets,

enabled multiple initiatives to be undertaken, sometimes with cumulative

benefits (Yasuda, 1991).

The motivation to adopt OD practices was increased by 'success stories'. For

example, Larson (1988) provided a description of OD work in Honeywell and

suggested that there are learnable behaviours (partly norms, partly skills, and

partly project management technologies) that support innovation. Larson's

33 It is relevant to note that other forms of intervention can be used. These include 'carrot'

methods (e.g. government may offer tax advantages), 'stick' methods (e.g. governmentpenalise the non-innovators), 'leadership-change methods (e.g. change in leadership),'support' methods (e.g. from technical institutes), 'exemplar' methods (e.g. the example ofothers serves as a catalyst) and 'education' methods (e.g. key personnel attend conferences,courses etc.).

84

work assisted in 'getting to the behaviourial level' and was given additional

moment with the observation that Honeywell reported a 30% to 60%

reduction in average product development times as well as substantial cost

savings as a result of initiatives.

One academic writer to address the issue of how to develop innovation

capability is Morgan (1993b) who points out that "organization always hinges

on the creation of shared meanings and shared understandings, because there

have to be common reference points if people are to shape and align their

behaviour in an organized way" (11) (author's italics). He claims:

"The challenge now is to imaginize: to infuse the process oforganizing with the spirit of imagination. We need to findcreative ways of organising that enable us to 'go with the flow',using new images and ideas as a means of creating sharedunderstandings among those seeking to align their activities inorganized ways" (page xxix) (author's italics).

Morgan's work emphasises the significance of liberating parts of the self and

enrolling the whole person in creativity and innovation. His position was

informed by research on the capabilities of the brain, first described by

Ornstein (1972). Such viewpoints are becoming more widely advocated, for

example by Kao (1996).

The innovative organisational school is distinctive. It advocates that the

managers of an organisation should not seek to control innovation; rather

they seek to develop, facilitate and, perhaps, align it.

2.5.5 Innovation and strategy

It is unlikely that any company adopts one strategic mode to the exclusion of

all others (Mintzberg et al., 1998a) but it may be that firms favour a certain

strategic perspective (Miles and Snow, 1978). This may influence the firm's

broad targets for innovation as outlined in the table below.

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Table 2.7: strategic perspectives and innovation capability

Strategic perspective Broad targets for innovation capability Strategic modes

Strategic Planning School Innovation to achieve and sustain superior positionsin selected product-markets.

Deliberate

Resource-Based School Innovation to build a portfolio of capabilities,including dynamic capabilities and exploiting thesefor value creation.

Deliberate thenemergent

Entrepreneurial School Innovation to realise the benefits of those withentrepreneurial talents.

Emergent thendeliberate

Innovative OrganisationSchool

Innovation to realise the benefits of those withcreative talents.

Emergent

Consideration of strategic perspectives illuminates the interrelationship

between competitive strategy and innovation. This are shown on a diagram

developed by this researcher (Figure 2.3). For the purposes of illustration, the

positions of selected theorists have been approximately positioned on the

diagram. It can be seen that each school has several respected advocates.

Innovation for Positional

Advantage

Innovation for Sticky and Generative Core Competencies

Innovation for Realisation of Opportunities

Innovation as 'a way of life'

• Teece

• Senge

• Argyris

• Doz

• Hamel

"We win because we well

positioned in profitable markets"

"We win because we leverage

hard-to-replicate competencies"

"We win because we have people who create and

exploit profitable opportunities"

"We win because everyone is innovative"

• Porter

• Mill

• Levitt

STRATEGIC PLANNING SCHOOL

INNOVATIVE ORGANISATION

SCHOOL

ENTREPRENEURAL SCHOOL

RESOURCE-BASED

SCHOOL

• Yoffie

• Mintzberg

• Kim

• Tregeo & Zimmerman

• Ghemawat

• Parejo

• Coombs

• Heraculeous• Nonaka

• Knies

• Slywotzky

• Eisenhardt• Leonard-Barton

• Schumpeter• Pinchot

• Wheatley

Figure 2.3: strategic perspectives on innovation

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2.6 Targeting innovation

It has been argued above that possessing a high degree of innovative

capability provides a dynamic resource for a firm. However, in order to be

useful, a resource must be applied. This must be done prudently. There are

examples where high innovation capability has engendered anarchic,

disruptive, expensive and foolish initiatives or consequences. The targeting of

the use of the capability is as important as its possession (Ghemawat, 1991).

Bartlett and Rangan (1985) illustrate the process of targeting innovative

capability in their case on Komatsu Ltd. In the 1960s Komatsu made dumper

trucks for the local market. The chairman, Ryoichi Kawai, decided that

Komatsu would topple Caterpillar from being the undisputed number one in

the EME (Earth Moving Equipment) sector. This statement of strategic intent

was called 'Maru-C' which means, approximately, 'encircle Caterpillar'. The

executives at Komatsu did not know how they would achieve their strategic

intent, but it provided an overriding direction that guided initiatives in quality

management, product design, marketing and so on. Komatsu grew stronger

and, in the 1980s, Caterpillar was plunged into severe loss (more than $1

billion over 11 quarters) caused mainly by competition from Komatsu (see

Chapter 6 of Eckley (1991) for a detailed description of this case from

Caterpillar's perspective). Komatsu went through four distinct stages on its

path from obscurity to beating Caterpillar in many core markets in the EME

industry during the 1980s. Firstly, they used innovative capability to improve

quality, secondly, to reduce costs, thirdly to develop innovative products and,

lastly, to devise new methods of sales and financing. These waves of focused

innovation were undertaken sequentially. The argument used by their

management was that too many initiatives at the same time would have

fragmented effort and permitted non-achievement. The Komatsu case34

demonstrates that it is possible to target innovation capability on firm-specific

strategic goals.

34 The case also demonstrates that competitive advantage, gained through innovation or

other means, does not guarantee permanent success. Komatsu reported a trading loss in 1999whereas Caterpillar had returned to profitability.

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2.6.2 4Ps targeting

It is possible to identify four35 generic targets for the exploitation of

innovative capability.36 Fortuitously, these all begin with a 'P'.

• P1 innovation to introduce or improve products;

• P2 innovation to introduce or improve processes;

• P3 innovation to define or re-define the positioning of the firm or products;

• P4 innovation to define or re-define the dominant paradigm of the firm.

These 4Ps are not tight categories: they have fuzzy boundaries. Nor are they

alternatives: firms can pursue all four at the same time. There are linkages

between them; a firm using innovation capability for positioning, for

example, will be highly likely to introduce or improve products. It is possible

to define P3 and P4 as variations of re-framing—either concerned with what

the offerings the organisation provides or what identity it pursues (Tidd et al.,

1997). However, the 4Ps provide an approach to examining the opportunity

space for innovation.

35 It has been suggested to the researcher by Helen Poole of the University of Brighton that

there needs to be a 5th P—for person. The argument being that innovation needs to takeplace within individuals as well as in a system. The point is important but it was decidedthat this emphasis has already been subsumed in the 4 P model (see the section related toinnovation in internal paradigms).

36 This analysis is similar to that of Higgins (1995) who identifies "four primary types (ofinnovation): product, process, marketing and management" (112). Others suggest more, forexample, Rickards (1999) notes that Schumpeter identified six categories including "the'conquest' of a new source of supply" (57).

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2.6.3 Innovation in product

Product development is an obvious target for innovation capability and can

be considered on several dimensions. For example, Wheelwright and

Clark (1992) identify criteria that differentiate products including number,

timing and rate of change of product platforms, whether they are variations

or derivatives, the frequency of introduction/refresh rate, relationship with

strategy and degree of modularity. They point out that product innovation is

influenced by the state of industry maturity:

"In relatively young industries, such as medical instruments,every development effort appears to be a platform effort (tobroaden the firm's market coverage), with incremental changestargeted primarily at correcting deficiencies in the platformproducts" (42).

The resource requirements for product development can vary over

time—with the development of product platforms requiring more effort over

a sustained period. A firm may be able to plan for several generations of

products over a life cycle with derivatives in between. Here, innovation can

be seen as strategy-driven and deliberate rather than emergent or

serendipitous (Randale and Rainnie, 1996).

Product innovation is also applicable to service firms37 whose 'products' are,

to some extent, created in real time. For example, Singh (1991) notes that in

Singapore Airlines, "the innovative spirit gave the travelling public the first

slumberettes on Boeing 747 upper decks, jackpot machines to relieve

boredom and round-the-world fares" (164).

At one level the notion of innovation in products offered is simple. All a firm

has to do is to find ways of providing superior functionality and/or price and

signal this to the market. It can be argued that any initiative in which the

added value exceeds the added cost by an acceptable margin should be

37 The distinctive features of a service have been defined as (Irons, 1993):

" 1 They are transient—leave only memories or promises2 Cannot be separated from the person of the provider3 They cannot be stored4 Standardisation is only partly possible5 Constant supervision is almost impossible6 The consumer is a participant7 Culture is two way—the organisations and the customer"

89

undertaken. Such a stance has a beguiling logic but is simplistic –a case

example will demonstrate that product development requires making

decisions with unknown consequences, making 'bets' and channelling limited

resources.

ABC Lighting38 in 1990 had more than 8000 products in their catalogue, some

of which were slow-moving, lacked competitive advantage or were priced

more highly than competitors' offers. An obvious remedy would be to go

through the catalogue and determine to innovate with some products and cut

out others. Why wasn't this done? The view of top management was that a

pruning of the product list could prove counter-productive as ABC Lighting's

strategy was to offer a 'total solution for the contractor' rather than a partial

offer of superior products. Some managers argued that the firm had to offer

certain categories of products at low levels of profitability in order to be able

to fulfil all the requirements of large contracts that were generally offered to a

sole supplier. In addition, each product put through the factory bore a share

or burden of the factory's cost overhead. It could be that, if a marginally

profitable but large volume product was cancelled, the added burden on

other highly profitable lines, perhaps smaller in volume, might be sufficient to

propel them into loss.

Managers realised that decisions about innovation in products offered could

have multiple effects on market perceptions and was linked in somewhat

obscure ways to profitability. Criteria used to make decisions could not be

readily quantified. For example, no one could say how many contracts would

be lost if ABC stopped supplying Emergency Lighting, for example. Product

development was given significant resource in ABC Lighting but was limited

and some initiatives required more or different forms of effort than others.

The added value of intensive product development could frequently only be

assessed by surmise; competitors' intentions in the area were rarely clear39

and, lastly as mentioned above, the link with the firm's overarching product

policy was complex.

38 Case material drawn from a presentation at INSEAD in March 1994. Certain details have

been disguised.39 There were cases where competitors deliberately set out to confuse the company and try to

cause it to abandon certain product development processes or 'waste' resources developingothers.

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Historically, several of the fundamental technological innovations in lighting

had been invented by ABC Lighting scientists, including halogen lighting and

the use of light as a source of heat for cooking. The invention of halogen

lighting was a major technological breakthrough and provides an illustrative

example. ABC Lighting had developed the concept, proven it, taken out

patents, devised complex production machines and assessed the potential

market as 'huge'. The question was 'should we develop a halogen light

product range?' and, since the ingredients of competitive advantage appeared

to be present, the answer was 'yes'.

ABC Lighting's range of halogen lighting products were launched and rapidly

became world-leaders. The product found a ready market amongst

commercial designers and profit margins were well above average.

However, other major players, notably Philips, saw the rapid growth of the

halogen lighting market and invested considerable research resources in

devising alternative technologies. It was not long before ABC Lighting saw its

margins dropping and competitors' products being made in volumes beyond

the capacity of ABC Lighting's factories.

The initial reaction of an observer is to say 'well it's a story of a firm that

couldn't capitalise on their advantage, but at least they had the benefits of

excellent margins at the beginning'. This was true but developing the halogen

lighting range absorbed a huge amount of resource from the managing

director, the R&D lab, production engineers and marketing staff. It was the

focus of a great deal of strategy formulation and problem-solving effort. In

effect, the decision to develop the halogen product deprived other products

of development resources. 40 Whether this was counter-productive in the

ABC Lighting case is not known by this researcher.

ABC Lighting provides a useful case to assist in the understanding of the

interplay between management decision-making, industry logics and new

product development. Here was a company with a long history, a full range

of firm-specific capabilities, a uniquely talented R&D facility, global scope and

a strong market presence being unable to survive as a light sources

40 During the later stage of this case study ABC Lighting reported a loss on its light source

business and sold it.

91

manufacturer. They were too small a player in an industry where economic

logic favoured huge producers. This did not apply in the fittings business,

which was retained and operated successfully in markets ruled by a different

strategic logic.

The issue of timing can be significant. House and Price (1991) cite a McKinsey

report that suggests that "on average, companies lose 33% of after-tax profit

when they ship products six month's late, as compared with loses of 3.5%

when they overspend by 50% on product development" (92). The

management of the product development provides a complex decision-taking

task for the firm. Uncertainty and risk can rarely be avoided and rules of

game theory can seem more applicable than direct cause and effect

relationships (McDonald, 1963).

The process of new product development can, itself, be the target of

innovation. Arguably the greatest resource in the future for product

innovation will be in the use of the internet for accessing customers and,

using mass-customisation and agile techniques, it may be possible for firms to

devise a distinctive product for each customer (Goldman et al., 1995). Here,

the product is presented as an 'envelop of possibilities' rather than a

pre-determined entity. This notion presents intriguing challenges; it may

become possible for a customer to participate actively in the development of

a unique product.

It can be seen that managing innovation in product can be a complex task in

which branding policies, market development trajectories, industry logics,

resource availability, technological opportunism, intrapreneurship and other

factors influence decisions. Accordingly, it would be incorrect to define

product innovation 'merely' as an internal middle-level managed

process—rather it can be a major element of strategy. Targeting innovation

capability on developing new and/or improved products, as the ABC lighting

case shows, can involve multiple actors engaged in complex and inter-linked

processes with a single end in view—creating value at an acceptable cost for

the customer.

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2.6.4 Innovation in process

Processes are widely, if not universally (Clarysse et al., 1998), accepted as a

target for innovation initiatives. Processes are sequences of activities, often

proceeding horizontally across the organisation, that are transformations.41

Transformation processes can often be improved (Gallagher et al., 1997). For

example, new technology can add precision, improved training can increase

conformance or process mapping can identify time wasted in unnecessary

activities (Stalk Jr., 1993).

Process innovations can be direct (e.g. implementing single minute exchange

of dies (SMED) in an manufacturing facility) or indirect (e.g. adopting TQM).

Indirect process innovations are thematic and can apply to multiple processes.

They can be remarkably beneficial, as illustrated by Hanson and Voss (1999)

who describes Total Productive Maintenance (TPM) programmes in Japan

and observes that "cases of 40% cost reduction, in factories already highly

accomplished in lean production, are not unusual" (12).

Not all improvements in processes are innovations as, for example, repetition

and training have been shown to result in efficiencies. For example, during

the Second World War it was noted by Bogue III and Buffa (1986) that "for

each doubling of cumulative total output of an aircraft model, the deflated

unit costs were reduced by 20 per cent…" (23). From such cases the

'experience effect' was identified. Because a useful distinction can be made

between innovative and non-innovative process improvements it is helpful to

define a process innovation as one where a novel (to the unit of adoption)

idea or methodology is applied deliberately to a sequence of activities

(Bessant and Francis, 1996).

Processes interact, sometimes in complex ways (Heygate, 1996). In a simple

organisation, for example a dentist's reception area,42 there may be processes

41 The term 'transformations' is derived from systems theory. Each process in an organisation

is conceptualised as a system with defined inputs, transformation processes and outputs.Systems models have been influential since socio-technical systems (Trist, 1978) began to bearticulated in the 1950s and open systems planning was conceptualised in the 1960s(McWhinney, 1972). At the strategic level Porter (1985) used the underlying philosophy inhis concept of the value chain. A more recent iteration of organisational analysis using thesystems metaphor is re-engineering (Hammer and Champy, 1993).

42 This example was suggested by comments in Roper (1996b).

93

in place for registering patients, keeping records, stock management, making

bookings, arranging rotas, logging staff time, arranging maintenance work,

cleaning the waiting room, reminding patients of forthcoming visits and so

on. At least some of these processes will be interdependent and core

processes like maintaining hygiene will be particularly important. Innovation

in processes in this relatively simple environment is unlikely to be coherently

managed—different agents will play distinctive roles and ideas for

improvement arise from a variety of sources. For example, there is a

likelihood that reception staff will notice weaknesses in some processes or see

opportunities and take initiatives to bring about improvements themselves

without reference to senior personnel (Hummel-Kohler and Kristof, 1997).

From time to time, problems or opportunities may occur that require a

formal review and changes will be made on a planned basis. The dentists,

who have the highest status in the system, will make suggestions or issue

instructions—as may patients and suppliers. Moreover, trade journals will

contain occasional articles on improving reception services that give

inspiration. The dental practice may decide to submit itself to an overarching

set of disciplines like ISO 9002.

It can be seen that ownership of innovation in processes in the dentist's

reception area is likely to be diffuse, even though there may be a practice

manager in a co-ordinating role (Sirkin and Jr., 1990). There are a variety of

sources of critical observations and improvement ideas and several ways in

which decisions are taken to initiate change. Such complexity in the

ownership of process innovation is typical although major processes, like the

layout of a new automated production line, will generally be managed using

a systematic approach. This is more difficult to achieve where sub-processes

evolve in a number of ad hoc ways (McHugh et al., 1995). Those directly

involved may be the best people to identify improvement possibilities and

effect change (Bessant, 1992). There can be multiple actors dealing with

multiple processes in multiple ways.

The diversity of agents playing roles in process innovation means that they

tend to develop without an overall coherence. Accordingly, they can be

inefficient, patchy and/or inherently contradictory. Approaches such as

business process re-engineering (Hammer and Champy, 1993) seek to

94

overcome such weaknesses, identify core processes and subject them to

intensive development.

Process innovation can be facilitated by systematic analysis and comparative

benchmarking. Specific techniques include: process mapping, activity analysis,

constraints analysis, kaizen, problem analysis, video recording, modelling,

time compression, statistical analysis, pilot experimentation, process

management, problem-solving fora and cost structure analysis. These

techniques have the effect of raising consciousness about problems and

opportunities, thereby increasing the probability that innovative initiatives

can be undertaken (Burgess, 1994).

Innovation in process can be divided into two categories: radical and

incremental (Preiss, 1997). Some process innovations can be revolutionary in

their impact—the use of the internet for product distribution by a publishing

company for example. Here technological change is often a major driver as it

opens windows of opportunity. A key issue for firms is whether to, when to,

and how to undertake radical process change since there are costs in making

changes and exiting from commitments already undertaken.

All parts of an organisation use processes. Waterman Jr. (1992) throws light

on a top team process: a form of process innovation rarely discussed in

literature on innovation management. Creativity can be employed, as was

demonstrated by a case example of the annual planning retreat of the top

management group at Raychem. He observed:

"The meeting began in the usual soporific way. Suddenly it wasinterrupted by a horrendous racket. A fleet of helicopters,bearing signs that read IMAGINATION, RISK-TAKING, landedright outside the conference room. The pilots, dressed as prisonguards, strode into the meeting room and herded the groupmembers into the waiting helicopters, then flew them 50 milessouth to Big Sur. There they were met, oceanside, by a smallelephant wearing a sign forecasting Raychem's growth goalsthroughout the 1980s. The elephant was followed by a string ofcamels. More messages: IMAGINATION, TECHNICAL-PIONEERS. Last in line was a huge elephant announcing thecompany's target growth rate for the early 1990s. By the end ofthe retreat one big message was clear: Business as usual was outat Raychem" (54).

95

This dramatic episode was intended to unfreeze the existing mind-set of

senior executives and "galvanise management" (54). Since the group at the

retreat were the primary decision-makers in the company it is reasonable to

assume that their values, beliefs, attitudes and routines play a significant role

in maintaining innovation capability (Ramqvist, 1994; Goleman, 2000).

Processes for determining strategic intent, firm's identity and development

goals are as susceptible as production processes to innovation (Francis and

Young, 1991).

Not all process innovations are within firms. Perry et al. (1999) describe a

form of process innovation at the level of the value stream or supply chain. In

the early 1990s the textile, clothing and footwear industries in Australia were

in danger of being overwhelmed by more efficient foreign suppliers. The

Australian government funded the 'Quick Response Program' to facilitate

increases in speed-to-market. This took the form of a series of workshops

that included participants from all components in a supply chain. The results

showed improvements of between 74% and 100% on key indicators over four

years (129). Interestingly, the development of mechanisms for open

communication were considered just as significant by participants as the

adoption of a standard for electronic data interchange.

Processes present a fertile and extensive set of targets for innovation. Multiple

small improvements can accumulate into large gains. Major processes can be

improved or re-engineered, perhaps incorporating new technologies. All

processes, including those at the strategic apex of the firm and within the

value stream, are potential candidates.

2.6.5 Innovation in position

The brief discussion in Section 2.4 of the re-positioning of the Lucozade brand

offered an example of positional innovation. A positional innovation does not

significantly affect the composition or functionality of the product43 but the

meaning of the product in the eyes of the potential customer (Kim and

Mauborgne, 1999a) and/or the market segments selected as targets.

43 Product attributes may be changed but these are minor compared with the revised

marketing stance.

96

Positional innovation is not mentioned by some commentators on innovation

management who prefer to adopt a narrower product-process definition.

Nevertheless, the realisation that innovation can be positional is supported by

some publications. For example, Guest et al. (1997) point out that, for some

products, "success depends on finding innovative ways of bringing to the

market products that appeal to potential buyers" (1).

It can be argued that the capacity of firms to be innovative in product

positioning has grown over the past 50 years for two main reasons. Firstly,

there has been an improvement in the prowess of marketing and advertising

agencies to construct meanings in potential customers enabled by their

increasing skills, availability of market research data and the proliferation of

means of persuasion (Tull and Hawkins, 1993). Secondly, low cost data

processing means that customer profiling can be elaborated, practical and

instant. Using this capacity presents specific management challenges. In a

mass market billions of pieces of information could be collected about

customers and potential customers but marketing decisions need to be based

on a limited number of salient factors, hopefully interpreted with brilliance

and insight. Kim and Mauborgne (1999b) suggest that managers need to

"(i)magine a market universe that is made up of known and unknown market

space" (16) and they argue that there is a need to "(b)reak free from

competitive convergence" (16).

Most cases of positional innovation relate to firms, brands or products.

However, institutions can go through the same process (Irons, 1993). For

example, the Labour party successfully positioned itself as New Labour

before the 1997 general election in the UK. This required a host of changes in

personalities, power-structures, policies and practices, apparently following a

similar change model to that adopted by commercial firms.

Product positioning can be summarised as 'what the firm would like typical

customers from targeted groups to feel and say about their product (and

company)'. There are many examples of successful positioning and

re-positioning (Gummesson, 1987). For example, the Daily Mail repositioned

itself as the leading newspaper in the UK for women readers in the 1980s, the

BBC repositioned itself as a global media corporation in the 1990s, Henley

97

Management College repositioned itself as Britain's largest internet-based

provider of MBA degrees between 1987 and 1993 and Manchester United FC

positioned itself as a fashion brand in 1994-6.

The central feature of an innovative product positioning strategy is the

management of identities, through advertising, marketing, media, packaging

and the manipulation of various signals. These topics are extensively

discussed in the literature of brand management (Doyle, 1997). Positional

innovation can change the characteristics of a market or create a market that

does not exist. An example is the global brand of ice cream—Haagen–Daz

(Joachimsthaler and Taugbol, 1995). This brand is owned by Grand

Metropolitan whose marketing specialists44 noted in the 1980s that ice-cream

was associated with children or unsophisticated adults. They decided to create

a hitherto unknown product—an ice-cream for sophisticated adults that fell

into the category of an 'affordable luxury'. Many initiatives followed,

including product formulation, packaging, advertising, selection of

distribution channels and global product standardisation codes. Haagen-Daz

has become a global brand of adult ice-cream and tapped a new market. The

case suggests that product identity can be as significant as tangible product

attributes. Some positional innovations are so radical in thinking that they

could be considered to be innovations in paradigm (discussed below)—the

development of Haagen–Daz ice cream would be an example, as neither the

concept of an adult ice cream, nor the ambition of global branding for ice

cream, had been previously developed it required multiple innovations of

mind-set to launch and develop the product.

Product positioning includes the four elements of innovation

(idea—adoption—application—benefit) and may excel at the first stage

(Beatty, 1997). For example, some would use the word 'brilliant' for the

notion of associating a leading brand of toilet paper with the gentleness of a

puppy or connecting a brand of petrol (perhaps the ultimate commodity

product) with the vitality of a tiger. The final element in the innovation

process, harvesting benefits, is difficult to evaluate but this can be attempted

(Tull and Hawkins, 1993).

44 Additional information regarding this case was gathered from an ex-marketing manager of

Haagen-Daz in confidence by the researcher.

98

Firms can seek build a distinctive market position by the management of

identity. It is a frequent occurrence to hear a person choosing to buy a

product as it comes from Sony, Gap or Harrods. In these cases the firm itself

can be seen as 'a brand. Kim and Mauborgne (1999c) discuss the case of

Southwest Airlines and comment that by:

"focussing on the key discriminating factors of both flying anddriving, and by eliminating everything else, Southwest hasinserted itself creatively between airlines and surface transport,thereby creating a new and highly profitable market" (16).

It is significant that the word 'creatively' is used in the assessment of

Southwest's strategic processes. Kim and Mauborgne assert that the

company's possessed a superior ability to perceive a latent need and devise a

business system to fulfil it. This is an example of positional innovation and

Southwest's new business model was, arguably, an innovation in paradigm

(see below)—demonstrating that the two can be interdependent. More

generally, Kim and Mauborgne suggest that it "is in the space between

substitute industries that tremendous opportunities exist for creating new

markets" (16). If this is correct, then positional innovation is particularly

significant.

2.6.6 Innovation in paradigm

This final 'P' is more contentious. Not all scholars support the notion that

'paradigm' is a legitimate target for innovation capability. However, it is not

unknown, for example Rickards (1999) observes:

"Today the term 'paradigm' has found its way into thevocabulary of organizational management, in such terms as'paradigm switch' and 'paradigm breakthrough'. Theexpressions are broadly taken to imply that a traditional beliefsystem—the old paradigm—has been replaced by a new way ofunderstanding, a new paradigm" (11-12).

Rickards locates paradigms in the (collective) belief system of a firm and notes

that these can change, perhaps fundamentally. This view concurs with that of

Kuhn (1970) who explored the role of paradigm in the context of scientific

enquiry. Kuhn's definition of the term includes a "paradigm is an accepted

model or pattern" (23) and "if I am talking at all about intuitions, they are not

individual. Rather they are the tested and shared possessions of the members

99

of a successful group, and the novice acquires them through training as part

of his preparation for group-membership" (191).

Kuhn's discussion of paradigms emphasises their significance as social and

psychological constructs. Paradigms affect how people think, what they

perceive and what they take for granted. In the relatively closed intellectual

world of a scientific discipline there is, typically, a dominant paradigm. In the

more equivocal world of organisational effectiveness there may be multiple

paradigms,45 perhaps ambiguous, indistinct and influenced by wider

contingency factors (religion, national culture, economic situation etc.). Kuhn

points out, "paradigm changes do cause scientists to see the world of their

research-engagement differently" (111). In short, paradigm change is

revolutionary and, therefore, is relevant to the study of innovation.

Ring (1989) supports this point with his discussion of 'sensemaking' which he

describes as "an enactment process in which organizational participants come

to appreciate the nature and purpose of a transaction with others by

reshaping or clarifying the identity of their own organisation" (180).

The collective mind-set of the organisation, referred to by Professor Yves Doz

as the 'organisational orthodoxy',46 has a sensemaking function. But it is not

always functional as it can persist beyond the point of relevance. As

Grove (1998) points out, there are times ('strategic inflection points') when

managers may know that their current approach is failing but may not know

what new paradigm to adopt. Here a 'pre-framing' activity can be

required—that can be termed 'exploration', 'learning' or 'entering a void'.

Innovation in paradigm includes a requirement for learning, including

self-reflection (Kolb, 1983b) and/or discourse. In a metaphorical sense it is

necessary for actors in an organisation to 'look into the mirror' and see

themselves as having adopted just one of several options in the way that they

have framed reality and opportunity. Here reflection is a key enabler and the

level needs to be deep and, potentially, transmutational (Cooperrider and

Srivastva, 1987).

45 Examples include: scientific management, lean production, project-based organisations,

theory X, TQM and the like.46 Personal communication.

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Although there is a significant degree of fuzziness in definition, it is useful to

categorise two types of innovation in paradigm. These are:-

• Type A—innovation in inner-directed47 paradigms

• Type B—innovation in outer-directed paradigms (business models)

2.6.6.1 Type A—inner-directed paradigms

Type A innovation capabilities targets organisational values and people

management policies. Abrahamson (1991) calls these 'administrative

technologies'. These can be important as, for example, Steele (1975) asserted

"(o)ne of the most important concepts to emerge from behavioral science

consulting is, in my opinion, the notion of social invention. This is simply the

realisation that social settings do not have to be taken only as they occur by

chance" (129).

The significance of changes in inner-directed paradigm is underlined by

Binney and Williams (1997) who suggest:

"Underlying the patterns of behaviour that define organisationsare the mental models that people have, the assumptions andframeworks that enable them to make sense of the world… it isthese mental models or paradigms that ultimately organisationshave sought to change" (12).

There are cases in which such 'mental models' appear to have changed. In the

late 1960s, General Foods (GF) had a low performing dog food plant in

Chicago. In 1969 the company decided to relocate the factory on a greenfield

site in Topeka, Kansas and to use the new plant as a laboratory for innovative

forms of work organisation including autonomous work groups, payment

for skills, commitment to the quality of work life, operator-led problem

solving, participative decision-making and non-authoritarian leadership styles

(Ketchum and Trist, 1992). The initiative was led by the factory director, Ed

Dulworth,48 and supported by Professor Richard Walton as a facilitator

(Walton, 1977).

47 The concept of inner-directed and outer-directed is adapted from Riesman et al. (1953)48 Two tape recorded interviews between Ed Dulworth and the researcher (1973 and 1975)

were consulted in preparation for this section of the thesis.

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This was one of the first experiments in 'innovative work organisations' to be

the subject of systematic research and was managed according to a distinctive

set of values, many of which were derived from a socio-technical systems

framework (Trist, 1978). The socio-technical experiment at Topeka stimulated

root-and-branch innovation in the social organisation of a factory. According

to Dulworth, in consequence, a wealth of process innovations followed which

resulted in superior performance and gave employees an enriched experience

of work. The adoption of a new organisational paradigm is more than a

process innovation (discussed above) as it requires a shift in values and

associated power structures. In the case of the Topeka GF plant, many

processes were revolutionised—as Dulworth said in an interview with this

researcher, "we challenged all of the givens". The case also highlights another

important aspect of innovation. It can service other stakeholders than the

management, shareholders and customers. Employees can also benefit

(Ketchum, 1974).

The Topeka case, and similar experiments in organisational form, had

innovation as a superordinate goal. This was pointed out by Ketchum and

Trist (1992) who was organisation development manager for GF during the

1970s. Ketchum wrote twenty years later:

"equally important is the replacement of a climate of low risktaking with one of innovation. This implies high trust andopenness in relations. All of these qualities are mandatory if weare to transform traditional technocrat bureaucracies intocontinuous adaptive learning systems" (42).

Ketchum and Trist described the origins of the 'new' paradigm in the 1970s,

which they termed 'third-order diagnosis of problems of organisational

performance'. Importantly, industrial plants that adopted this new paradigm

were up to 40% more productive than their counterparts (21) at the time

when a financial evaluation was conducted. Ketchum and Trist describe these

as "organizational innovations" (32).

The underlying principle in Ketchum's observation is that bureaucracy is

unfriendly to innovation. Somewhat contentiously he, and others, for

example Nutt and Backoff (1997), argue that innovation capability cannot be

achieved by the installation of systematic management of new product and

process development. Rather, the fundamental social architecture of

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organisation needs to be rebuilt to be 'innovation friendly' (Hurst, 1995).

Equally disadvantageous, in their view, was the alienating and de-humanising

effect of working in a bureaucratic form of organisation where individuality

was perceived as a threat (see Beynon, 1973 for a vivid description of this

form of social setting).

Thus far an inner-directed paradigm shift has been discussed as if it were a

single event. There is evidence that a flow of paradigm changes, a form of

episodic revolution in paradigms, is needed—at least in some industries. This

is suggested by comments on Microsoft from one of its senior managers:

"what distinguishes Microsoft is that we're not afraid of makingparadigm shifts, largely because our senior management is verytechnical. We understand the technology, which at the end ofthe day is really what drives the industry." (Cusumano andSelby, 1996: 56)

Cusumano implies that paradigms can be managed, and that it can be

important to do so. It is reasonable to assume that explicit paradigm

management would be especially important in industries where the structure

of thinking is advancing in generational ways.

2.6.6.2 Type B—innovation in outer-directed paradigms (business models)

Type B innovations of paradigm relate to business models—these are the

system of coherent, comprehensive, explicit and/or implicit constructs used

by managers to understand their firm and shape its development (Senge,

1992).

This form of innovation in paradigm is outer-directed in the sense that it

seeks to provide an organisational formula for thriving in, generally, a

competitive environment. Hence, the test of the efficacy of a business model

is whether it provides the necessary conceptual architecture for a firm to gain

and sustain competitive advantage. As such, it is more extensive than the

market-facing positional innovation discussed above. An early

comprehensive approach to strategic positioning was mentioned in

Section 2.5.2 and described in Tregoe and Zimmerman (1982). They argued

that firms need a Driving Force (a dominant paradigm) and that they can

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only have one at a time. Tregeo and Zimmerman described 849 different

possible driving forces, each of which required a distinctive pattern of assets,

capabilities and strategies. The relationship between the Driving Force

concept and innovation capability was discussed by Tregoe et al. (1989):

"There is a wide range of opportunities for future businessdevelopment facing just about every organization: deeperpenetration of existing markets with existing or improvedproducts; expanding to new markets with current or improvedproducts; developing or acquiring new products for currentmarkets; developing new products for new markets. Noorganization can pursue all future business developmentoptions simultaneously. If it does, scarce resources becomedissipated, as do the creativity and energy of those involved.Focus is lost, and with it the discipline to achieve the vision" (39).

Slywotzky et al. (1999) extended this approach and argue that there are

unifying principles around which a firm's activities need to be aligned. It is

possible, Slywotzky et al. argue, to identify 30 or so patterns, several of which

may be unfolding at the same time. They argue that what is frequently

needed is innovation at the level of business design—the structure of thinking

shared by the power elite of the firm that determines policy and practice.

Describing firms that had found their way out of a profitless position (for

example, Swatch) Slywotzky and his co-authors write:

"In each of these cases, business design innovation brought thebusiness back to sustained profitability. In each of these cases, atleast one player created a paradigm shift, a change in the rulesof the game, in order to create new kinds of value that had notpreviously existed in the industry" (63).

There can be multiple innovations to be undertaken in pursuit of a new

business design, each of which is aligned to the new meta-patterns selected.

This raises the interesting issue of how alignment is to be managed of a rapid

flow of innovation initiatives in product, process, (market) position and

(organisational) paradigm.

The choice of business model shapes innovations in product, process and

position. The Slywotzky framework provides an intermediate level of

49 Unfortunately for academic researchers the Driving Force concept is company-confidential

as it is used as the foundation for an extensive strategic consulting business. This researcherwrote to the parent company requesting access to their research. The company wereforthcoming with published material but would not allow access to their extensive case

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analysis between the generic dynamic resource of innovation capability and

the specific needs of a particular organisation. Rather than saying "all

organisations are the same" or "all organisations are different" the approach

asserts that "you need to understand what your dominant strategic thrust is

and the attributes that firms in your classification need. How effective are you

in each of these?"

A change in business model can have revolutionary implications. Keith Todd,

Chief Executive of ICL, commented on the extent of change in the company

in the following way: "ICL started as a manufacturing company. Now it has

no factories—we put together service products. For companies like ours,

these are fundamental discontinuities. They're on the scale of the Berlin Wall

coming down" (Jackson, 1998: 15).

Sub-systems within organisations can also be the targets for paradigm

innovation. Indeed, they are a natural location. For example, a training

function may move from promoting a business school-based approach to

executive education to running an in-house action learning programme

(Ulrich, 1997) or a finance function may move from cost analysis to activity

based costing (Srinidhi, 1998). Such paradigm shifts can be the spur for

multiple innovative initiatives (Ulrich, 1995).

Perhaps the most dramatic forms of reconfiguration business model follows

acquisitions, mergers, joint ventures and alliances. These may be undertaken

specifically to provide an appropriate resource base for innovation, as seems,

for example, to have been the rationale for the merger between AOL and

Time Warner, described (Hill and Waters, 2000) as "revolutionising the way

that news, entertainment and the internet are delivered to the home" (1). In

this case the internet distribution capability of AOL was merged with the

content provider, Time Warner, following a 'convergence strategy'.

Innovation in business models has become topical at the time of writing as

many firms seek to transform their operations and use the potential of the

internet for commercial advantage. This requires, in some cases, radical

changes in the ways that businesses are structured, conceptualised and

conducted.

library.

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2.6.7 4Ps—organisational implications

Mintzberg (1983a) provided a model that assists in understanding the

organisational context of the 4Ps framework. Elaborating from Mintzberg's

analysis, it is possible to define nine sources of innovation. These are shown in

the table below with illustrations of the functions that they may perform.

Table 2.8: sources of innovation (following Mintzberg)

Sources Examples related to the 4Ps framework

1 Strategic Apex 'Big' ideas, paradigm changes and commitment decisions (P4)

2 Technostructure Technologically advanced ideas (P1–4)

3 Middle Line Process developments (P3)

4 Support Process developments (P3)

5 Operating Core Product and process developments (P1,2)

6 Downstream Suppliers Technological and value stream ideas (P1, 2, 4)

7 Upstream Distributors Customer-driven ideas (P1, 4)

8 Advisers and Researchers Paradigm and 'out of the box' ideas (P4)

9 Ad hoc groups Paradigm and 'out of the box' ideas. Cross-functional improvement (P1–4)

Although the model is simplistic, it suggests that the innovation agenda and

innovation processes differ in different parts of a firm. If this framework

incorporated a strategic dimension (as discussed above) then it might be

possible to determine the 'innovation entitlement' from each part of an

organisation. However, as far as this researcher is aware, this has not yet

been done.

2.7 Innovation capability

Above it was suggested that some firms are better than others in generating

ideas, selecting ideas that create or add value to the firm and its customers,

managing ideas into practice and exploiting potential benefits. This statement

provided an initial definition of high innovation capability. However, the

'high-level' statement needs to be elaborated before it can provide an

adequate definition of innovation capability.

2.7.1 What is a capability?

As discussed in Section 2.5.2, resources, dynamic capabilities, competencies

and competitive advantage appear to be overlapping constructs and as

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Hales (1999) points out, "the terms are very variable in usage" (2). As stated

earlier in footnote 22, in this work the term 'capability' is considered to mean

'possessing, or being able to acquire, all that is necessary to accomplish

complex or important tasks to world-class standards'. This definition is similar

to that used by the US Army (Lengy, 1996). Klemp Jr. (1980) cited in

Boyatzis (1982) postulated that there are "an underlying set of

characteristics… which results in effective/superior performance" (21). Since a

capability can be considered to be 'a set of underlying characteristics' (rather

as physical fitness underlies the performance of a boxer) there are difficulties

in using the term 'capability' in relation to innovation. Four issues are

particularly relevant:

1. Innovation capability is an enabling set of attributes and is detectable onlywhen exploited—this makes it difficult, or impossible, to measureaccurately.

2. Innovation capability possibly requires a combination of factors, bothhard and soft, interacting in a complex gestalt—accordingly attempts todesegregate elements for analysis may destroy meaning.

3. Innovation capability itself may not be unitary and may vary betweenorganisational levels, configurations, national or firm-specific cultures,distinctive strategies, different threat levels, technological complexity orother factors.

4. Innovation capability can be seen as 'energising or dynamic force' withinan organisation (Schein, 1996) but empirical frameworks for studying ordeveloping organisations as 'energy systems' are scarce (Morgan, 1986and 1989).

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Despite conceptual difficulties it is necessary to attempt to define innovation

capability since it has been shown to be an important, perhaps vital, element

in organisational effectiveness. However, any codification is likely to be

inadequate as it will tend to oversimplify the situation that de Ven and

Angle (1989) describe in the following observation:

"re-invention, proliferation, re-implementation, discarding andtermination… many entrepreneurs, distracted, fluidly engagingand disengaging over time in a variety of organizational roles…(an) expanding and contracting network of partisanstakeholders diverging and converging on ideas… innovationprocess constrained by and creates multiple enactedenvironments… final result may be indeterminate; multiplein-process assessments and spinoffs; integration of new orderswith old… from simple to multiple progressions of divergent,parallel, and convergent paths, some of which are related andcumulative, others not" (11).

de Ven et al. go on to say that "(t)his 'fuzzy set' epitomizes the general

environment for innovation, as multiple environments are 'enacted'" (12).

Trott (1998) suggests that, whatever the level of uncertainty:

"(w)ithin organisations there is a fundamental tension betweenthe need for stability and the need for creativity. On the onehand, companies require stability and static routines toaccomplish daily tasks efficiently and quickly.… On the otherhand, companies also need to develop new ideas and newproducts to be competitive in the future" (35).

However, managers have to do their best. Innovation is important and

cannot be placed in the 'too difficult' basket. Many observers suggest that

innovation requires a distinctive stance to management. Hirshberg (1998),

writing as the director of Nissan's Design Facility in San Diego, which is noted

for its prowess in innovation, suggests that high innovation capability is a

rarely found attribute:

"While the creative process is essential to the health and successof any corporation, it is rare to find a company both willing andagile enough to its seemingly odd and unpredictable rhythms"(13).

Hirshberg argues that high innovation capability is an orchid—it requires a

special combination of circumstances to thrive. In the light of research on

continuous improvement (Bessant, 1997c) Hirshberg's viewpoint seems

excessively pessimistic. Innovation can become commonplace, at least at the

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incremental level (Japan Human Relations Association, 1992). From this

viewpoint, high innovation capability is neither an orchid nor a weed—it is a

vine that needs careful tendering but can grow, and yield ample fruit, in most

gardens given the right conditions.

2.7.2 Elements of innovation capability

Just as one swallow does not make a summer, neither does one innovation

make an innovative organisation. Leonard–Barton (1995) presented a study

of Chaparral Steel (5-16) prior to her discussion of core capabilities. A content

analysis of this case suggests it is possible to define innovation capability as

having ten interconnected attributes (although Leonard–Barton limits her

own analysis to "core technological capabilities" (16). The definitions below

have been supplemented with case material from Cusumano and

Selby (1996), Magretta (1998), Sculley (1988) and Semler (1993), and are shown

in Figure 2.4 below:

SOURCES METHODS OUTCOMES• Ubiquitious

• Ample

• Creative

• Fast

• Efficient

• Selectively adopted

• Creates value

• Builds competencies

Innovation both leads and follows strategy

• Directed (partly) • Fits organisation

Figure 2.4: characteristics of high innovation capability

The figure divides innovation capability into sources, methods and outcomes.

The double-headed arrow represents a reciprocal push from innovation

towards a firm's strategy and a push from a firm's strategic commitments to

determine the firm's innovation agenda. The ten elements are briefly

described in the table below:

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Table 2.9: elements of innovation capability

Element Description

SourcesUbiquitous

Innovation can be initiated and implemented anywhere in a firm. Firms withhigh innovation capability enable innovation to take place in multipleplaces (Semler, 1993).

Ample

The quantity of innovation initiatives is sufficient to maintain the firm'srenewal process to provide 'world-class' performance. Toyota, forexample, benefited from an estimated 2 million suggestions per year(Yasuda, 1991).

Creative The quality of innovation initiatives (both radical and incremental) exploitsindividual and group creativity (Rickards and Moger, 1999).

Directed(partly)

Innovation assists the firm to achieve its strategic development agenda.However, innovation can also develop new strategies (Porter, 1980).

Methods Fast Innovation initiatives can be speedily realised (Millson et al., 1992).

EfficientEvery innovative initiative is likely to incur costs and deprive other activitiesin the firm of funds and/or other resources. It is important that the valuecreated exceeds the cost incurred (Srinidhi, 1998).

Selectivelyadopted

Firms have at least a notional 'innovation capacity'. Only so much can bedone at once (Bower, 1970). When innovation capacity is exceeded thenthe organisation can be overwhelmed by its developmental agenda.

Fitsorganisation

Innovation initiatives can be assimilated by the operations of the firm(Mintzberg, 1987).

Outcomes

Creates value

Innovation enhances the firm's offer to customers and potential customers(Porter, 1985). Firms could undertake many innovative initiatives, withoutaddressing key issues which critically affect the future competitive strengthof the firm (Utterback, 1994).

Buildscompetencies

Competencies enable a firm to have a broader range of options and beclose to what Porter (1996) describes as a 'productivity frontier' "thatconstitutes the sum of all existing best practices at any point in time" (62).

These elements provide a preliminary definition of high innovation capability.

It has been assumed, for the purpose of this research, that all elements may

be significant and are probably interdependent. The development of high

innovation capability within the firm is not the only way to achieve the

outcomes mentioned. For example, a staid but wealthy pharmaceutical

company may purchase a dynamic biotechnology firm and achieve a superior

flow of innovation initiatives. In this case the pharmaceutical company has

acquired innovation outcomes without developing high innovation capability

itself (King, 1995).

A body of literature suggests that 'full' innovation capability requires

top-down, side-in and bottom-up processes along with a generalised

capability that combines cultural dimensions, specific assets with individual

and collective skills (Nonaka, 1991; de Bono, 1980; Amabile et al., 1996 and

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Maslow, 1954). These can be analysed in terms of norms, assets, technologies

and skills.

2.7.3 Norms, Assets, Technologies and Skills (NATS)

Some change agents suggest that innovation capability50 requires specific

norms, assets, skills and technologies. If this is correct then it provides a

helpful framework for defining innovation capability more precisely.

A 'norm' can be considered as something people can be relied on to

do—generally codified into a routine by the culture of the firm (see Broom

and Selznick, 1958: 52—60 for an introduction to the topic). The notion of a

routine is reviewed extensively in Stokes et al. (1996). An 'asset' is any item

which has a financial cost or a value on a firm's balance sheet (Kaplan and

Norton, 1996). A 'technology' is a cluster of integrated codified knowledge that

enables complex and/or important things to be done with predictable

reliability (Brady, 1995). A 'skill' is all that it takes for people to be able and

willing to perform specialised tasks to world-class standards (Rae, 1991).

The NATS categorisation provides a format for answering the question 'what

do we need to take an innovative initiative forward?' For example, if a sales

force is going to move to internet-based sales forecasts (a process innovation)

it is constructive to ask:

• What new or different norms are needed?

• What new or different assets are needed?

• What new or different technologies are needed?

• What new or different skills are needed?

Discussion of assets and technologies will not be undertaken here as the focus

of this research is behaviourial and organisational. However, it is important

to note that assets and technologies play an important, sometimes vital, part

in facilitating innovation. The menu of NATS needed will, to some extent, be

issue-, firm- and time-specific. NATS may differ from firm to firm and from

department to department. NATS are affected by situation, types of

50 The author wishes to record his thanks to Dr Jim Wright of SmithKline Beecham for his

assistance in the elaboration of this framework.

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innovation, technological trajectories, priorities and the availability of

resources. The norms, assets, technologies and skills framework can be

complex; however, it provides an approach to help managers to understand

the organisational and behaviourial requirements of specific and multiple

innovation initiatives (see Mumford, 1991 for a description of a similar

model).

As far as this researcher is aware the categorisation of enabling initiatives into

the NATS framework is novel but the notion is not. For example,

Amabile's (1998) study of the relationship between organisational

characteristics and creativity lists six management practices that affect

creativity (80). These attributes map onto a NATS framework as shown in the

table below:

Table 2.10: comparing NATS and Amabile's categories

NATS Amabile's categories

Norms challenge, freedom, work-group features

Assets resources, organisational support

Technologies

Skills supervisory encouragement

The NATS framework is speculative but provides a means of integrating

existing strands of research. If further research supports the framework it

could prove beneficial to managers and change agents since it provides a

simple format for identifying behavioural-specific attributes that are

susceptible to training (Jones et al., 1996).

2.8 Contingency factors

Innovation capability may, at least in part, may be affected by the rate and

sophistication of industry evolution, a firm's accumulated experience in

innovation practice (Freeman, 1994), firm's size (Greiner, 1998), the scope of

innovation undertaken (Wheelwright and Clark, 1992), degree of formality

(Pearson, 1997) and/or other factors. If this is correct then innovation

capability may, at least in part, be contingent upon situational factors and not

a universalistic property.

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In Section 2.2 Tidd et al. (1997) were cited suggesting that there was a

recognisable entity—the "innovative firm" but this viewpoint could be

incorrect. It may be that different firms require different forms of innovation

capability. One contingency model that suggests otherwise is that of

Mintzberg (1989) whose explorations of organisational configurations have

been subjected to considerable scrutiny. Mintzberg's model has the merit that

it covers several contingency factors and provides clear differentiation

between organisational forms. A recent version of the model, published in

Mintzberg et al. (1998b) provides an up-to-date articulation of the model.

Mintzberg argues that there are six distinct organisational configurations or

forms (originally only five were identified). These are: the entrepreneurial

form (originally termed 'simple structure'), the machine form (originally

termed 'machine bureaucracy'), the professional form (originally termed

'professional bureaucracy'), the diversified form (originally termed

'divisionalised'), the innovative form (originally termed 'adhocracy') and

missionary form (which was not included in the early formulations of the

model. These organisational configurations vary by co-ordinating

mechanisms, key part of the organisation, dominant ethos, control

methodology, type of decentralisation and other variables (see pages 347–357

of Mintzberg et al. (1998b) for an elaboration of these categories).

Mintzberg argues that innovation proceeds differently in each of the

organisational forms. If this is correct then it has considerably relevance for

this research. It may be that the development of a single programme for

enhancing innovation capability is an over-simplistic, perhaps misguided, aim.

A researcher has to remain open to the idea that the phenomenon being

studied may not be unitary and may have contingent dimensions.

2.9 Theoretical integration

From the review of the literature undertaken, it was possible for the

researcher to summarise the key points related to innovation capability, as

shown in Figure 2.5 below.

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"The firm's strategy process supports

innovation"

"Processes are well managed"

Innovation for Positional Advantage

Innovation for Sticky and

Generative Core Competencies

Innovation for Realisation of Opportunities

Innovation as 'a way of life'

Acquire Adopt Apply Exploit

Learn

Position

Paradigm

Product Process

HIGH INNOVATION CAPABILITY

• Ubiquitious• Ample• Creative• Directed (partly)• Fast• Efficient• Selectively adopted• Fits organisation

• Creates value• Builds competencies

"Sufficient innovation is happening"

"Innovation capability is

targeted where value can be

created"

Double Loop Learning

N

A

T

S

"Innovation- specific resources are in place"

"Innovation capability is improving"

Figure 2.5: perspectives on innovation capability

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This figure integrates the frameworks described in this chapter but presents a

simplified model. An additional dimension mentioned several times during

the explication has been added—a learning loop from targeting to strategy.

Double loop learning (Argyris, 1977) enables a firm assess whether strategic

intents and organisational development goals are both informed from, and

fulfilled by, innovation processes.

As mentioned in Section 1.7, this integrated framework provided a set of

orienting concepts following adaptive theory approach of Layder (1998). The

aim was to adopt the principle that "the best use of individual concepts drawn

from a wider body of theory or knowledge is as a means of cranking up the

process of theorizing—either by elaborating on extant theory or by

generating theory in relation to the research evidence" (23-24). Accordingly,

the elements in the model were worded as questions51 providing a

framework for the empirical research that will be described in Chapter 4. The

methodology adopted for this is described in the next chapter.

51 This model provided the basis for the research questionnaire, see Appendix 1.

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Chapter 3Data and methodologies

3.1 Overview

This chapter begins with a discussion of methodological issues relevant to this

research. A rationale is provided for the selection of methodologies adopted

and the researcher's strategy is discussed. The chapter concludes with a

review of interaction between the research undertaken and the researcher's

learning. In conclusion, limitations of the research are noted. For clarity, some

detailed methodological considerations are dealt in the next chapter.

3.2 Methodological context

Methodologies are tools—orientations and routines used by researchers to

further the development of substantive knowledge to those who share their

specialisation and, possibly, for other audiences as well (Silverman, 2000). To

some extent methodologies are discipline-specific. They can assist researchers

working in the field of organisation studies for several reasons, including that

they:

• provide a discipline for data collection and interpretation that has beensubject to epistemological scrutiny. This increases the probability thatresearch will be comprehensive, accurate and insightful, therebypossessing greater value than a lay view in terms of its faithfulness to thephenomena studied and the validity of the indicator-concept linkages;

• assist scholars to have their work assessed or validated by others. Thishelps to ensure that research is conducted with rigour, care, sensitivity,and methodological coherence thereby contributing to an accumulatingbody of knowledge in the field;

• offer a structured process for a researcher that assists in the managementof work tasks;

• offer end-users (in this case managers) disciplined research rather thananecdotal or speculative material.

The last point raises questions about the role of research in management

practice. This is particularly relevant as one of the objectives (see Chapter 1)

was to produce a work that managers find useful. It has been observed that

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managers are not noted for their eagerness to base their decisions on

research-based theories (Easterby–Smith et al., 1991). Mintzberg (1973) points

out that the policies and practices of management are influenced by many

factors other than academic research (however, see McNally et al., 1996 for an

example of where research has been used).

A partial explanation of the relatively low status of research in the eyes of

managers is provided by Mintzberg (1987) who described management as a

'craft'—combining science, art, accumulated experience, love of materials

used, disciplines and 'mysteries' learnt from masters. Craftspeople view

research-based knowledge as another input, rather than an overarching

discipline. From this perspective, a researcher can be a contributor to practice,

but one who has less stature than a master of the craft.

The caution with which managers appear to view research is not a matter of

concern if the analogy of management as a craft is adopted. It suggests that

the researcher needs to accept the role that facilitating authoritative discourse

is a worthwhile endeavour, as Egan (1985) puts it "without taking over

responsibility for a task, help others to get it done" (14). A potter (the example

used in Mintzberg's paper) would not turn to a person, no matter how

scientifically or academically qualified, who had never made a pot for overall

direction, although s/he might consider using specific findings to improve

their practice.

This researcher considered that it was a worthwhile aim to help managers to

consider a new body of perspectives and information and relate this to their

organisation—in short, to be a catalyst and an adviser. Accordingly, he

adopted a process consultation perspective, based on Schein (1988) who

clarified the role in the following way:

"The process consultant seeks to give the client insight into whatis going on around him, within him, and between him and otherpeople. Based on such insight, the consultant then helps theclient to figure out what he should do about the situation. Butthe core of this model is that the client must be helped to be'pro-active', in the sense of retaining both the diagnostic andremedial initiative" (11).

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A commitment to a process consultation perspective meant that the research

methodologies adopted needed to facilitate the processes described by Schein.

Accordingly, the criteria for selecting methodologies included:

• is the research process likely to 'give the client (new) insight'?

• is the research process likely to help 'the client52 to figure out what s/heshould do about the situation'?

Process consultation could provide an intervention model but not a research

methodology. From the discussion in Chapter 2 regarding the nature of

innovation capability it was considered that it would be necessary to find

ways to relate several bodies of knowledge to a broad organisational

capability (since, as discussed in Chapter 2, innovation affects multiple

activities in multiple ways). It became clear that a single research method was

unlikely to be sufficient—a research strategy would be needed that could

combine methods synergistically. However, before an appropriate portfolio

of methods could be selected it was important to question how it might be

possible to study an underlying organisational attribute.

3.2.1 The person of the researcher

As the phenomena being studied could not be easily seen or measured, the

person of the researcher becomes more influential. It is widely considered

that a researcher in the social sciences cannot be an impartial observer and

s/he brings a personal history, preconceptions, stances, values, sensitivities

and theoretical affiliations to the research process (Altheide and Johnson,

1990). This is especially significant when qualitative rather than quantitative

research is undertaken (Silverman, 2000). The person of the researcher can

affect the conduct of research at every stage but this is not, necessarily,

negative, as Denzin and Lincoln (1990) point out:

"The bricoleur (qualitative researcher) understands that researchis an interactive process shaped by his or her personal history,biography, gender, social class, race and ethnicity, and those ofpeople in the setting" (3) (authors' italics).

Accordingly, if the personal characteristics of the researcher are made explicit

they can enhance the research process since they provide a distinctive but

52 In this research the term 'client' is taken to mean a manager.

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explicit way of ascribing meaning. For example, a researcher coming from a

feminist perspective examining behaviour in male prisons may detect cultural

stereotypes that researchers from other perspectives would not observe

(Olesen, 1990). However, acceptance of the person as an active influence can

undermine the integrity of the research process since s/he may selectively

screen out data, label prejudicially, build unwarranted linkages or interpret

data selective ways and develop an coherent but invalid case that supports

his/her viewpoints. Incorporating the person into the research process can

add to the value of the research but also imbue it with bias.

This researcher accepts that his personal stance, biography, skills, value

positions and other characteristics have shaped the ontological,

epistemological and methodological positions adopted. Accordingly, at an

early stage, he sought to clarify personal characteristics and value stances that

were likely to affect the conduct of this research. Hopefully, this enhanced the

researcher's 'theoretical sensitivity' (Strauss and Corbin, 1990b). The principal

personal characteristics and stances that were believed could influence the

conduct of this research are outlined in the table below, based an approach

outlined by Layder (1998):

Table 3.1: biographical factors influencing research

Researcher's personal characteristicsand stances Possible effects

1 Believes that 'management is a craft'(Francis, 1989)

The research will be seen as a contribution to practice ratherthan 'a thing apart'. May result in excessive respect given to'masters of the craft'.

2 Is male The feminist paradigm will be under-explored.

3 Has a career spent in organisationdevelopment from a humanisticperspective

There will be an emphasis on the human side of the enterprise.The research will be optimistic about possibilities but ignorant oftechnological aspects.

4 Has worked as a strategy consultant The research will seek to build links between strategy andinnovation but not innovation and operations.

5 Originally trained as a sociologist inthe Leicester School

The sociological thinking of Professor Elias et al. will provide abasic interpretative framework. There will be a bias towardsmodel building.

6 Considers that hierarchicalorganisations can be functional

Radical organisational models will be unlikely to be developed.

7 Adopts a process consultationperspective

Concern for the communicability of the research findings maycause over-simplification.

8 Is, generally, respectful towardsmanagers

The research is likely to be supportive towards management andaccept the assumptions and value-positions of the managerialelite.

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The researcher attempted to be aware of biographic influencing factors

throughout. But there were surely occasions when an interpretation was

made that escaped full scrutiny. Another researcher, with the same data set,

may have developed a different interpretative and/or theoretical framework.

This researcher was not value-free—for example, he believes that people

have a right to be well managed. At the deepest level this research was, in

part, an endeavour to help this to happen.

Schön (1983) observed that a researcher "does not keep means and ends

separate" (68). This can provide another source of subjectivity. Maintaining a

dialogue between means and ends may shape and/or bias the researcher's

perspectives, perhaps unconsciously, and require 'a result' delivered to a

predetermined time scale rather than allowing time for a full exploration of

the data and related conceptualisation. The requirement to come to 'a result'

may also lead to unwarranted claims being made for findings, conceptual

models and predictive statements—in other words, a commitment to the

pragmatic may lead to 'bad science'.

However, there are methodological benefits in focusing on ends and means

together and coming to 'a result'. There is, arguably, a greater possibility that

the output of the research will be of use to the practitioners for whom, in

part, it was intended, since their interests are considered throughout the

process. Seeking to achieve 'a result' delivered to a predetermined time scale

would enable the research to be tested, at least in a preliminary way, thereby

establishing a learning loop between reflection and action. For this research it

was considered that ends and means would be considered together.

3.3 The research task

Silverman (2000) describes three forms of research "theoretical,

methodological and empirical" (233). It is useful to consider into which of

these categories this research can be lodged.

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As mentioned in Section 1.6, the intent statement for this research, written in

June 1995, was:

'to provide an intervention process for enhancing innovationcapability that managers would find practical, relevant anddevelopmental'.

The statement was concerned with deliverables, specifically to provide an

intervention process of utility to managers in firms. In order to do this two

research tasks needed to be undertaken.

• Firstly, to determine what (high) innovation capability was;

• Secondly, to identify ways by which it could be enhanced.

These could be either theoretical or empirical research tasks, depending on

whether or not new studies were undertaken. In Section 2.9, Figure 2.5

integrated a number of contributions into a single framework describing

innovation capability. Reviewing this framework it seemed too broad to 'give

the client insight' or help 'the client to figure out what s/he should do about

the situation'.

Within the scope of this research it was decided that the first task ('to

determine what (high) innovation capability was') would be the major

commitment of this research as this provided a conceptual foundation for the

second. If possible, empirical research would be undertaken to examine

organisation development, within a process consultation perspective, for

enhancing innovation capability.

3.4 Methodological choices

Legitimised methodologies for academic research are those accepted as useful

by an influential body of scholars in the field at a point in time. As

Kuhn (1970) pointed out, methodologies are not fixed. They are influenced by

dominant, subject-specific paradigm(s). In medieval times a method used to

test for spiritual possession was the ducking stool. No longer is this the case;

someone with similar symptoms would probably be categorised as mentally

ill and the methodology used to test their 'possession' would be clinical

psychological assessment (this example has been drawn from Cuff et al., 1990:

14—24). Methodologies are not immutable—like other forms of tool they are

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susceptible to innovation, both radical and incremental. The possibility of

methodological innovation was important in this research as the researcher

sought to use several methods, possibly in new combinations.

As discussed in Chapter 2, innovation capability is a 'big topic'—comparable

in scope to organisational culture or organisational efficiency. The

methodological issues were posed in this way in a researcher's memo dated

1 July 1996:

"How can appropriate research methodologies be selected toenquire into a topic that is large in scope, may or may not be acontingent property, is an underlying (therefore not directlyobservable) attribute or set of attributes, can be widelydistributed across the organisation, has anarchic properties,makes an uncertain measurable contribution and blurs intoother areas of a firm's activities (like strategy and operations)?"

This question describes a research task that is broad in scope, complex in

concept and pragmatic in intent. Within the scope of a doctoral programme, a

full research study is probably impossible. When a similar task was

undertaken by Porter (1990) into the nature of national factors affecting

competitive advantage it was found necessary to employ an international

team of scholars and invest more than 50 person-years into the enquiry.53 So

a new question emerged: what does a researcher do when a task is simply

too large?54

This problem is not new. Sociologists have been researching topics of

enormous scope for more than a century (Giddens, 1995) developing grand

or general theory, as undertaken by Mead, Parsons and others (see, for

example, Parsons, 1954). Grand theory provides a way to understand

large-scale phenomena, like the influence of religion on society (Durkheim,

1961), socialisation (Broom and Selznick, 1958) or social class (Marx, 1961). In

addition, grand theory provides a means of exploring underlying forces that

are not readily detectable as specific behaviours. However, grand theory does

not, in general, offer rich pictures, behaviourally-anchored theory or complex

contingent frameworks. Some scholars in management have adopted a grand

53 Comment made by Professor Porter at a lecture in the Cafe Royal, 19/8/92.54 In general, the advice is to avoid such topics! For example, Silverman (2000) writes "I tell

my students, your aim should be to say 'a lot about a little (problem)'. This means avoidingthe temptation to say 'a little about a lot' (64).

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theory perspective. For example, Peters and Waterman (1982), Prahalad and

Hamel (1990) and Trist (1978).

To overcome a perceived weakness in grand theory, that is a lack of

connectivity between indicators (that which can be observed) and concepts,

middle-level theories developed. These emphasise, as Layder (1998) points

out, "the importance of formulating theoretical hypotheses in advance of the

research in order to guide the research and give shape to any subsequent

theorizing after the data has been gathered" (15) but "(m)iddle range theories

deal with a limited number of controlled variables" (16).

Some researchers, for example Strauss and Corbin (1990a), have argued that

there is a profound weakness in both grand and middle-range theories. That

is pre-formed theories or hypotheses orientate a researcher towards defined

perspectives and, perhaps subconsciously, act like a pair of blinkers on a

horse. Valid knowledge, from this perspective, can only be obtained from

research that is solidly and solely grounded in observable phenomena.

These differing perspectives on the relationship between theory and practice

posed a dilemma for this researcher. He was dealing with a research topic

that was sufficiently large in scope to require middle-range, or even grand,

theory but was drawn towards grounded theory as this provided a set of

methods that could enable sound but creative concept construction. In

addition, although it could be argued that the research topic required

middle-range theory, the requirement of influential middle-range theorists to

begin with a hypotheses seemed unduly limiting in a topic that had been little

explored from a composite of theoretical positions (see Appendix 2 for a

discussion of other researchers' frameworks and findings).

Tranfield and Starkey (1997) provided a perspective that helped to explore

this dilemma. Drawing from Biglan's and Becher's work on the mapping of

academic disciplines, Tranfield and Starkey provide five dimensions for

drawing distinctions between disciplines: hard vs. soft, pure -vs- applied, life

vs non-life sciences, convergent vs divergent and urban vs rural. Tranfield

and Starkey conclude that management, in general, is a "soft discipline" as

"management operates no single agreed ontological or epistemological

paradigm" (4).

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Using these frameworks, this research could be defined as 'soft' (there is not a

consensus that a unitary paradigm explains innovation capability), 'applied'

(there is a concern with practical problems), 'life-science' orientated, 'more

convergent than divergent' (there is a growing "sense of togetherness and

shared purpose" (3) amongst researchers and increasingly 'urban'—as

innovation in organisation55 is, increasingly, a relatively well-populated

research and discussion topic.56

Tranfield and Starkey suggest that management "may be situated at the cusp

between engineering and a craft" (4) and that "management research should

always address the question 'what are implications for management?'" (4).

The point is developed when Tranfield and Starkey suggest that management

research "might be characterised as becoming the social sciences' equivalent

of engineering (to the physical sciences) or medicine (to the biological

sciences). Specifically, such a role would require that scholars and researchers

adopt a trans-disciplinary approach… to problem definition and investigation,

and subsequent dissemination… Finally, such a discipline might be expected

to put in place a rhetoric and discourse which is meaningful to users" (4-5).

This researcher adopted Tranfield and Starkey's advice and tried "to put in

place a rhetoric and discourse which is meaningful to users". However, he

decided to reject the advice to say a 'lot about a little' and seek to construct a

comprehensive framework of innovation capability.

3.4.1 Methodological assumptions

In order to devise a methodological framework that fulfilled as many of the

requirements discussed above as possible, consideration was given to

fundamental issues, specifically the nature of the reality being studied

(ontology) and the stance taken to determining the questions to be examined

by research (epistemology).

From an ontological perspective it can be useful to position a research effort

on a continuum with positivism on one end and phenomenology on the

55 The researcher considers that it is reasonable to subsume work on organisational creativity,

entrepreneurship, improvement, adaptation and new product development under theheading of 'organisational innovation'.

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other. Positivism is a philosophical paradigm that sees the world as being able

to be described in terms that are true, real and definite. Phenomenology sees

the world as a construct of observers with reality existing 'just' as a structure

of meanings (see Easterby–Smith et al., 1991: 22—32 for further explanation

and examples).

In this research the choice of philosophical stance was complicated, as both

paradigms had heuristic merit. Positivism offered an opportunity to study

high innovation capability as a real phenomenon and be able to say to

managers, "I've looked at x companies and have found that these are the

characteristics of firms with high innovation capability. Shall we consider your

firm against these criteria?" Phenomenology offered an opportunity to say

"let's have a look at how you think about your organisation at the moment

and see whether the ways that you are thinking help or hinder your capacity

to be innovative'. Both stances could be useful. Perhaps unusually, this

researcher considered that it would not be constructive to take a position on

the philosophical continuum. From the perspective of a craftsperson the

material that s/he deals with is real but the way that s/he ascribes meaning is

also highly significant since it shapes action. Accordingly, it was considered

that toggling between positivism and phenomenology offered a fruitful

philosophical stance as it opened a wider range of perspectives that could be

considered in the data interpretation process.

As mentioned in Section 1.7, in 1998, after a theoretical review had been

undertaken and bulk of the data for this research had been gathered

Layder (1998) published a book introducing 'adaptive theory' that provided

theoretical justification for the stance taken by this researcher. Layder wrote:

"Adaptive theory is accretive, it is an organic entity thatconstantly reformulates itself both in relation to the dictates oftheoretical reasoning and the 'factual' character of the empiricalworld. Prior theoretical concepts and models suggest patternsand 'order' in emerging data while being continuouslyresponsive to the 'order' suggested or unearthed by the datathemselves" (27).

56 This is in contrast to many other areas of management research that are defined by

Tranfield and Starkey as 'rural'.

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"…there has to be some dialogue with all of the kinds ofresources available: general and substantive theory,theory-testing types, sensitizing concepts, and empiricallyemergent theory" (43)

Layder's work provides a way of maintaining a creative dialogue between

theory and data in relation to four levels of research: self, situated activity,

setting and context. This research map, as Layder (1993) calls it, "is to help in

the planning and ongoing formulation of field research which has theory

generation as a primary aim" (73). Some years earlier Schön (1983) discussed a

related aspect—the relationship between theory and action, a topic not

extensively discussed by Layder. Schön observed that:

"there is a high, hard ground where practitioners can makeeffective use of research-based theory and technique, and thereis a swampy lowland where situations are confusing 'messes'incapable of technical solution. The difficulty is that theproblems of the high ground, however great their technicalinterest, are often relatively unimportant…" (42).

Applying Schön's metaphor, an important question is 'does innovation

capability belong on the high ground or the swampy lowland?' Some aspects

of innovation, for example the patterns of patent registration, seem to be

located on the high ground but the blend of organisational attributes

described in Chapter 4 are more likely to be characteristic of the swampy

lowland. This view is supported by the examples cited by Schön, particular a

case study of the behaviour of a leading architect. Schön describes the process

in the following way:

"When someone reflects-in-action, he becomes a researcher inthe practice context. He is not dependent on the categories ofestablished theory and technique, but constructs a new theoryof the unique case. His enquiry is not limited to a deliberationabout means which depends on a prior agreement about ends.He does not keep means and ends separate, but defines theminteractively as he frames a problematic situation. He does notseparate thinking from doing, ratiocinating his way to a decisionwhich he must later convert into action. Because hisexperimenting is a kind of action, implementation is built intohis inquiry" (68).

Schön was describing the stance taken by an able professional, rather than an

academic researcher. However, the approach described had implications for

this research as there was an intention to move from description and

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model-building into application. It became an aspiration to adopt at least

some of the principles of a reflective practitioner that required a commitment

to learn through action and reflexive insight and incorporate learning

deliberately into the research process.

3.4.2 Vitality and texture

A factor affecting selection of methodologies for this research was a sense of

unease with some existing literature on innovation management (for

example, Brundenenius, 1994). It was not that the literature lacked

imagination or thoroughness, more that it seemed to miss the vitality and

texture of the innovation process, just as a written description of a holiday

often fails to capture the essence of the experience. Maslow (1965) made the

point as he was concerned about the need for verisimilitude in management

writing. Maslow observed:

"the data that I've been reading in the books on managementcan either be organised in an atomistic, cause-effect,beads-on-the-string manner, and treated like a pile of bits offacts, or they can be perceived in organismic terms, that is as ifthey were all related to one another. Now, this latter way isactually more true, more real, more pragmatically successful"(108).

This 'lack of vitality and texture' was manifested in various ways in the

relevant literature. Four points were considered to be important. Firstly,

much theoretical literature emphasised understanding but not doing.

Secondly, the use of structured methodologies was frequently advocated as

ways to improve the management of situations but these were not always

found in practice.57 Thirdly, participating in innovation processes can be an

emotional experience but this aspect is infrequently discussed—dilemmas are

keen, choices taxing and people lie awake in the night to worry about them.

Lastly, innovation appears to be more informal than is reflected in much of

the literature. There might be a business team from a aircraft simulation

company marooned by a delayed flight and sipping coffee at Heathrow when

one says "I've half an idea that we can use our CX 134 display technology for

57 For example, this researcher undertook more than 100 strategy workshops with top teams in

eleven countries and in no case did he find that Porter's five forces model was being used,even though has been cited as one of the most influential strategic frameworks available(Pfeiffer et al., 1986).

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a computer game based on people delayed at airports".58 That apparently

random comment could be a defining moment in an innovation initiative.

An element missing from literature that adopts a systems perspective (see

Dooley et al., 1998 for example) is the significance of the individual in

innovation and the role of 'cognition' or paying high-quality attention to

challenging issues (however, for example, Senge, 1992 and Bennis and Nanus,

1985 see this as a major issue). In the view of this researcher participating in

an innovating group is an experience that 'gets one in the gut'. There is a level

of demand that can be daunting as variables, uncertainties and implications

are considered and weighed. Yet despite the level of challenge, some people

participating in innovation appear to be capable of assessing a large number

of factors and coming to positions, testing, reacting and 'developing thinking'

with rapidity and sureness. In this research it was hoped that it would be

possible to explore the relationship of the person to innovation, at least to

some extent.

Conversely, an element missing from person-centred literature (see de Bono,

1999 for example) is a commitment to understanding the role of the social

system in defining the context within which innovation occurs. Seeing

innovation as, at least in part, a social fact facilitates an understanding of the

interplay between lifeworld and systems—the micro and macro features.

Excessive concentration on the experience of innovating could belittle the role

played by organisational structures, status systems, power relationships,

ideological stances, mythologies, socialisation processes and the like.

It was concluded that the methodologies selected would need be sensitive to

both lifeworld and system domains. Sensemaking activities were deemed

particularly relevant, especially amongst groups of actors (Weick, 1997)

involved in acquiring, adopting, applying, exploiting and learning from

innovation initiatives. Innovation capability requires the interaction of people,

systems and practices within evolving strategies. How innovation proceeded,

in practice, needed to be better understood. This research focus was not new.

58 The idea that sparked the development of instant photography came to Edwin Land in 1943

when his three year old daughter, Jennifer, asked him why she could not see thephotograph he had just taken of her. Land comments "within the hour the camera, the filmand the physical chemistry became so clear". From an article in Time Magazine in 1972 and

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Others have undertaken similar studies. For example, the sound and video

analysis methods outlined by Prince (1980) provided inspiration, although not

a detailed methodology as they were only briefly described in published

literature.

3.4.3 Choice of methodologies

As noted above, a significant challenge was to adopt or adapt

methodologies59 that fitted the phenomena under investigation and other

goals of the research. In addition, other 'fits' were needed—with the

pragmatic intent of the research, the time-scale/resources allowed and the

biases and skill set of the researcher (since, as described above, the

sensitivities of the person of the researcher are seen as an irreducible factor in

the research process).

It was accepted that, if a strong case could be put, it would be acceptable to

adapt an existing methodologies in creative ways. This would not be

undertaken lightly, however, as Strauss and Corbin (1990b) point out,

creativity "is a vital component… [to…] force the researcher to break through

old assumptions and create a new order out of the old" (27).

Once a methodology is chosen it becomes a strategic commitment as far as

the researcher is concerned and has profound effects on the manner of study

and the kinds of output that can be produced. Various methodological

frameworks were reviewed to select those that were fit for purpose in this

research, in particular Experiment, Survey, Case Study, Grounded Theory,

Action Research and Participant Observation. They are briefly considered

below.

Experiment is the quintessential method adopted for scientific enquiry in the

'hard' sciences (Crano and Brewer, 1973). By controlling the number of

variables in an experiment, adopting impartial disciplines, being transparent

about research process and testing measurable hypotheses it becomes

possible to study phenomena with objectivity, precision and reproducibility

of findings. Experiments produce results that predict what will happen in

cited in Mintzberg et al. (1998a) (163).

59 In this chapter the term 'methodology' is used to describe a coherent approach to gatheringand using data. The term 'method' is used to describe a specific technique.

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defined circumstances. The efficacy of prediction provides a test of the validity

of findings and, therefor, the experimental methods used.

Experiments can be difficult or impossible to conduct in the social sciences,

especially when dealing with large systems. Difficulties include ethical

constraints, the inherent complexity of human systems and the unwillingness

of people to submit themselves to experiments. Despite such difficulties,

experiments can be sometimes conducted or may occur by chance. For

example, one organisation may undertake a programme of customer-service

training. Another, in the same industry may not. Comparing the two firms

can indicate the effects of the customer-service training on the former.

However, findings need to be treated with caution as other factors may have

intervened so that apparent cause-effect relationships become suspect or

misleading.

Surveys collect data by gathering the answers to questions from defined

populations (Bowers and Franklin, 1977). Surveys are structured in advance.

Data can be collected by questionnaire, interview, etc. Data analysis allows a

researcher to explore associations and detect patterns of relationship and/or

interdependency between variables. The survey has a long history of

application within the social sciences. Its relative objectivity, reproducibility

and precision provide a defendable foundation to findings and theoretical

frameworks that flow from analysis of survey data.

When survey data is collected by interview, it becomes possible to adopt

flexible and context-sensitive approaches. As Burgess (quoted in

Easterby–Smith et al., 1991) points out, the interview is "the opportunity for

the researcher to probe deeply, to uncover new clues, open new dimensions

of a problem and to secure vivid, accurate, inclusive accounts that are based

on personal experience" (73). Rosemary Stewart (quoted in

Easterby–Smith et al., 1991) says that the purpose of the interview is to

discover "how individuals construct the meaning and the significance of their

situations… from… the complex personal framework of beliefs and values

that they have developed over their lives in order to help explain and predict

events in their world" (73). In order to be able to do this, as

Easterby–Smith et al. (1991) advise, "the researcher will need to be sensitive

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enough, and skilled enough, to ensure that s/he not only understands the

other person's views but also, at times, assists individuals to explore their

own beliefs" (73-74).

A related research tool is 'the focus group'. This was developed as a market

research tool but has become more widely used in the last 20 years (Morgan,

1993a). For example, the Labour Party used focus groups as a technique for

gauging the mood of the nation in the run-up to the 1997 election in the U.K.

If the membership of the focus group is representative of a category

(e.g. senior executives, telecommunications managers, mature university

students etc.) the approach can provide relevant and valuable information

about the 'population'—sometimes the data is more insightful than can be

achieved either through questionnaire or individual interview. The method is

straightforward but not easy. A group of about 4-7 people are brought

together, encouraged to relax and invited to discuss topics chosen by the

facilitator. The interaction between people in the group provokes the detailed

exploration of thoughts and viewpoints. The facilitator guides the group,

manages participation and ensures that pre-determined topics are covered.

Case studies collect multi-dimensional data on a human system, sometimes

over time (Erskine et al., 1981). A benefit of the case study approach is that it

allows interdependencies between variables to be examined in a 'real' setting.

From this point of view, the researcher is able to examine the totality—the

gestalt—rather than see the parts independent of the whole—thereby

avoiding the limitations of a reductionist approach (see, for example, Bessant,

1999).

The case approach has proven useful in organisational research (and

teaching). Since a firm possesses some of the properties of a system it is useful

to adopt a holistic viewpoint. Without examination of the systemic

characteristics of the organisation an analysis can be simplistic, insufficiently

meaningful or naive. However, case studies present a significant

methodological conundrum. Their value as generalisations is limited as they

examine the interaction of a particular set of variables in a particular set of

circumstances. It may be that general principles, predictive statements or

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theories cannot be developed from cases thereby rendering them of

questionable value to managers.

Grounded Theory is a relatively new form of qualitative research

methodology (Strauss and Corbin, 1990a) and provides a framework for

undertaking case studies, action research and other fine-grained studies.

Grounded theory insists on open-mindedness and a clear 'audit trail' between

data and theory. Theory is developed interactively with data and includes

examination of interdependencies, explicit acceptance of the researcher's

personal interpretative framework, and a deliberate search to hear many

voices (of the actors involved). Particular emphasis is placed on the

maintenance of a careful, intelligent, ongoing interplay between data

collection and conceptualisation.

Influential uses of grounded theory have been in fairly limited social

settings—a study of people dying in hospital or youth behaviour in a street

gang, for example (Altheide and Johnson, 1990). The methodology begins to

'strain at the edges' when it is applied to large phenomena, like organisational

culture or innovation capability. One reason for this is that there may be a

large number of actors involved whose behaviour is affected by a variety of

factors that occur in fleeting or complex combinations. Nevertheless, used

appropriately, grounded theory provides close-textured and accessible

conceptual frameworks that have a direct, assured relationship with 'the

real-world'.

Action Research refers to a set of approaches in which the researcher

becomes a part of the reality that s/he is studying. The researcher participates

in action and 'feels' what it is like to be involved. Since the researcher

becomes an actor within the system under investigation s/he can experience

issues and dilemmas inherent in the situation. The action researcher, by

effecting the situation, can become valued by the actors and gain privileged

access, deep insight and continuity of observation.

For example, West (1999) undertook an action research programme into

teams undertaking process change in information systems. She comments

that "through involvement as a participant the action researcher learns about

the organisation (within which s/he is working). Action research can gain rich

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insights into different interpretations and perspectives of the changes that are

occurring" (84). However, she observes that "even the strongest supporters of

action research note that it has several disadvantages" (89). These including

questionable validity, ethical dilemmas, lack of reproducibility and goal

confusion.

The conceptual base of action research can be related to Kolb's cycles of

experience, reflection, re-conceptualisation and experiment (Kolb, 1980). The

action researcher may experience all elements of Kolb's cycle. Despite a

commitment to involvement, the researcher must seek to acquire and capture

learning that meets academic criteria for acceptability—namely, reliability,

comprehensiveness, integrity and maintaining a public dialogue between

theory and practice. As Steele (1975) remarked "(i)t is true that science is a

cumulative process, but a lot of the accumulation comes through the process

of performing scientific work rather than simply piling knowledge on top of

knowledge" (31).

Participant Observation provides an opportunity for a researcher to be

engaged as an actor in a situation but not with a mission to change it. An

inspiring example is provided by methods adopted by Latour (1986) in his

study of the Salk science laboratory in the early 1970s. Latour's research aim

was to use:

"a research procedure analogous with that of an intrepidexplorer of the Ivory Coast, who, having studied the beliefsystem or material production of 'savage minds' by living withtribesmen, sharing their hardships and almost becoming one ofthem, eventually returns with a body of observations which hecan present as a preliminary research report" (28).

Latour worked in the science laboratory for two years. The benefits of his

fine-grained research are apparent in his report as this took forward

understanding of the sense-making processes in science. Moreover, the

importance of participant observation as a learning methodology is made

clear. For example, when acting as an observer Latour had been struck by a

'mania' for writing notes but, on one occasion, while he worked as a

laboratory technician he found he could not recall whether he had added a

particular chemical to a particular beaker. He made an error and a day's work

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was lost. It was through this experience (rather than the observation) that he

realised the merits of scrupulous note taking (245).

Participant observation provides an opportunity to be engaged but not be

intensely committed. A degree of detachment can be maintained so that the

researcher's field notes are observational and intimate (see Walton, 1997 for

an example).

3.4.4 Selection of methodologies

The following criteria were adopted for the selection of methodologies. The

methodology(ies) selected should fit the:

• requirement to contribute to the development of knowledge;

• aims of the research—i.e. "to give the client insight" and be likely to help"the client to figure out what he should do about the situation";

• nature of the phenomena under investigation;

• time-scale/resources allowed;

• skill set of the researcher.

Methodologies were used to assess suitability using a decision matrix

approach, summarised below:

Table 3.2: appropriateness of methodologies

Methodology Suitability

Experiment Low—it was unlikely that any valid experiments could be undertaken.

Survey Medium—a survey could be constructed but its validity could be questionablesince the phenomenon being studied (innovation capability) is subject to unknowncontingency factors. The topic required a methodology that was capable ofproviding rich textured data and interpretation. However, interviews and otherdata collection methods were likely to be needed.

Case Study Medium—cases provide depth of understanding but have limited generalisability.Possibly of value in gathering data about organisation development interventions.

Grounded Theory High—the use of this methodology should be able to provide a rich-texturedpractice-orientated theoretical framework (important for the first phase of theresearch programme).

Participant Observation Medium–High—being close to innovation-in-action could provide valuableinsights.

Action Research Medium–High—action research could provide insight into the application of atheoretical model into practice.

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Based on this assessment, grounded theory was the primary methodology

selected for the initial phase of the research but using the stance of adapted

theory (Layder, 1998) as deliberate study was undertaken to sensitise and

orientate the researcher through a review of extant literature (see Chapter 2).

Strauss and Corbin (1990a) describe grounded theory as "a general methodology

for developing theory that is grounded in data systematically gathered and

organized" (273) (authors' italics). They emphasise that grounded theory

explicitly recognises the role of the person of the researcher and the

importance of including "the perspectives and the voices of the people whom

we study" (274). Importantly, it requires "adaptation to the circumstances of

their (researchers') own thought processes" (275). They assert that "(t)his

methodology is designed to further the development of effective theory"

(278).

As noted above, it was important that the adaptation of grounded theory

methodology by the researcher was permitted. According to Strauss and

Corbin (1990b):

"We like to think of grounded theory as a transactional system, amethod of analysis that allows one to examine the interactivenature of events (159)… Central to the transactional system, andlocated with the range of conditions is action/interaction" (160)(authors' italics).

Strauss and Corbin see grounded theory as understanding "action pertaining

to a phenomenon" (163). In this research action was not the phenomenon

being studied, it was capability (i.e. that which enables action). Action was to

be studied, and interpreted, as one way of exploring and defining innovation

capability but system elements also needed to be considered. Accordingly,

actions, inactions and other factors were subject to the question 'what does

this piece of information tell us about innovation capability?'

A methodology employed later in the research was a unsystematic form of

action research. Unfortunately, it was episodic and a consequence of process

consulting interventions. However, it did serve an important role. For

example, it clarified that the diagnostic tool that was constructed from the

reference model was inadequate and led to the development of a new and

unexpected framework—the intervention tree (see Section 5.4.2 for a

discussion of this point).

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3.5 Research strategy

Prior to embarking on the research programme a 'research strategy map'

was prepared as shown in Figure 3.1. In the event, as discussed below, the

actual conduct of the research was significantly different.

Determinemethodology

Selectvoicesto beheard

Collectdata

Developtheory

ProduceReference

Model

ProduceAudit

TestAudit

DevelopIntervention

Process

TestIntervention

Process

Review,learn andconclude

Figure 3.1: research strategy map

The figure shows seven principal stages of the research (numbers 3,5 and 6

are iterative). Although research methods had been determined at an early

stage, the entire research process was not fully planned from the outset—a

great deal of planning was conducted on the way. It is this researcher's

contention that this was an effective way to proceed. An emergent and

deliberate research strategy was adopted to allow for the learning effect of

interaction between the material and the field (Mintzberg and Waters, 1983).

With the benefit of hindsight it is possible to review the research process as it

developed and this is presented as Figure 3.2.

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19971995 19961994 1998 1999

Academic

Change Agent

Company

Literature review - identify

theoretical framework

and key questions

Data Gathering -

defining 'innovation capability'

Peer reviews

Literature review -

developing an

intevention process

Instrument development - innovation capability audit (G2)

Training change agents

Enhancing the intervention

process through interaction with

the field

Testing the reference

model - the Pharma case

Determine research

methodologies

Develop a reference

modelDeveloping

an 'intervention

tree'

Exploring the

contingency dimension

Input

Input

1

2

3

4 5

6

7

8

9

10

11

12

Figure 3.2: hindsight map

The diagram covers the time-line of the research and locates 12 major

activities undertaken as to whether they were primarily 'academic'

(university based), 'change agent' (with internal/external interventionists) or

'company' (with managers and other company staff).

On the map of the research process above the activities are shown. The table

below outlines major activities, their value-added (to the research) and the

methodologies and methods used.

Table 3.3: major activities undertaken

Major activities Value-added Methods used

1 Literature Review Provided a provisional list of areas to beexplored to define innovation capability

Conceptual analysis andsynthesis to provideorienting and sensitisingconcepts

2 Determine researchmethodologies

Enable selection of appropriateresearch methodologies

Comparative assessment

3 Data Gathering Provided data for analysis Interviews, observationand action research

4 Developing a referencemodel

Provided an ideal-type model ofinnovation capability (G1) then (G2)

Adapted grounded theory

5 Peer Reviews Clarified concepts and questionedconclusions

Presentations, workshopsand peer discussion

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Major activities Value-added Methods used

6 InstrumentDevelopment—Designing theInnovation Capability Audit(G2)

Provided a means of 'measuring' thecomponents of innovation capability

Survey design

7 Training Change Agents Provided the context-specific help toenhance the development of innovationcapability in firms

Action research and dataanalysis (of audits on firms)

8 LiteratureReview—Developing anintervention process

Provided the nine-step interventionmodel

Conceptual analysis andsynthesis

9 Enhancing the interventionprocess with interaction withthe field

Provided learning for the developmentof the intervention tree (seeSection 5.4.2)

Data analysis and actionresearch

10 Testing the model—ThePharma case

Provided learning for an improvedintervention methodology

Interview and caseanalysis

11 Developing an interventiontree

Helped organisation move fromdiagnosis to organisation development

Comparative case analysis

12 Exploring the contingencydimension

Clarified the common features ofinnovation capability acrossorganisational configurations

Truncated case studies(see Appendix 8)

It is interesting to note that the hindsight map (Figure 3.2) above presents

several activities that were neither considered nor planned. For example, a

significant opportunity to test the intervention process in more than 40 firms

arose by chance. The actuality of the research process was untidy:

Mintzberg et al. (1998a) address the question of the unexpected twists and

turns of programmes in their discussion of emergent strategies, opportunity

and action in his description of how Honda broke into the US motor cycle

market. They report that "events took a surprising turn" (203) when the 50 cc

Supercubs that were used solely for personal transportation by the sales team

attracted so much attention that a Sears buyer asked to purchase some. This

confounded the sales team who were only attempting to sell large bikes to a

totally different market. The Supercubs were supplied and Mintzberg

comments "the rest is history" (204). On reflection, this researcher followed an

emergent strategy in part—although all planned stages were, in fact, fulfilled.

What actually happened was that opportunities occurred that it was believed,

at the time, could enhance the research process. Also, weaknesses in the

original design became apparent—specifically the lack of a coherent

intervention methodology and continuing questions about the possible

contingent nature of innovation capability.

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This researcher decided not to fight opportunities but to embrace them when

it appeared that the learning objectives of the research could be furthered

(Buchanan et al., 1998). However, he was aware that there are methodological

pitfalls in this stance. Opportunities are semi-randomised and are more likely

to be found where they are sought, and not, perhaps, where they are needed.

Rigour can be diminished, or lost, through opportunism. Imperfect data can

be misleading and biased. However, unexpected opportunities such as those

outlined above extended the scope of the research, and in the opinion of the

researcher, enhanced its contribution to the knowledge in the field.

Accordingly, they were, on balance, welcomed.

3.6 Data sources

The decision to adopt grounded theory as the primary research methodology

provided inspiration, discipline and clarity about how this research was to be

conducted. However, grounded theory requires hearing a wide variety

(preferably all) of the voices of actors involved in the phenomena being

studied "so that theoretical saturation is reached" (Strauss and Corbin,

1990b: 188). This could not be achieved. With a topic as broad as innovation

capability it would not be possible to meet the 'saturation' requirement.

Either the research needed to be narrowed or the techniques of grounded

theory adapted.

This researcher considered that it would be of interest to adapt grounded

theory and strive to use it with a big topic. This would be done in three ways.

Firstly, an illustrative, rather than a definitive, theoretical framework would

be developed from available data. Secondly, interdependencies, cause-effect

links and significance of factors would not be addressed (although they would

be noted in researcher's memos) since these could be misleading. Thirdly, an

attempt would be made to select data sources that were likely to provide

accelerated learning for the researcher. This was done using a data sources

matrix. Some available sources of learning are shown in Figure 3.3 below. The

axes indicate the quality and quantity of learning that it was considered would

flow to the researcher. Where there was a choice available a more potent

learning source would be selected.

139

INN

OV

AT

ION

CA

PA

BIL

ITY

INTERVENTION METHODOLOGIES

Top Manager

Interviews

Consultant Interviews

Academic Interviews

Action Research Projects

Case StudiesManager

Interviews

Participant Observer

Study

High Learning

Low Learning High Learning

Video Analysis

Documentation Analysis

Figure 3.3: assessment of data sources

Nine potential sources were placed on the matrix. The principal reasons why

these were included are summarised in the table below.

Table 3.4: rationale for inclusion of data sources

Source Purposes

1 Top managerinterviews

1 To understand how top managers conceptualise innovation capability

2 To assess the role of innovation within the firm's strategy

3 To see what sort of help a top manager might welcome

2 Manager interviews/focus groups

1 To understand how managers conceptualise innovation capability

2 To assess the blockages to innovation from managers' perspectives

3 Documentationanalysis

1 To explore the relationship between innovation and the formal processes ofa firm

2 To examine specific innovation cases

3 To consider the formal rhetoric surrounding innovation

4 Participant observerstudy

To learn about the difficulties of bringing ideas into being by participating ininnovative ventures

5 Video analysis 1 To examine the behaviours exhibited in groups during the process ofinnovating

2 To explore the utility of structured approaches and tools for facilitatinginnovation

6 Academic interviews To gain from the experience of academics on topics related to the research

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Source Purposes

7 Action researchprojects

1 To learn about the difficulties of bringing an idea into being by a facilitatoror change agent in an innovative venture

2 To work with managers on the task of enhancing innovation capacity

8 Case studies To review innovation capability holistically in real situations

9 Consultantinterviews

To learn about approaches and methods of intervention intended toenhance innovative capability

The researcher made use of all available data sources. Interviews were

conducted with managers and change agents using the interview schedule in

Appendix 1. The researcher sought to get beneath the surface of innovation

capability, working on the assumption that innovative processes were as

likely to be organic as mechanistic (Wheatley, 1994).

The selection of cases was a key issue. It would have been misleading to

develop an ideal type model from firms that were not innovative. A key

source of data was provided by the DTI-funded Partnerships with People

(PwP) research programme (DTI, 1996). As lead researcher on this initiative,

full access was available to case studies of 62 UK companies that were on the

DTI's list of innovative companies (there were a total of 131 on-line

documents on a database60). The DTI's criteria for inclusion on the list were a

superior new production and/or process introduction rate and peer review.

As the PwP interview schedule had been designed by the researcher this data

(primarily top management interviews and multi-level focus groups) was

added to the research database and supplements the other data described

above. In total, the researcher had access to 7092 data text units. The list of

companies included in the research data set can be found in Appendix 6.

Perhaps unusually, through contacts made in his professional work as a

strategy consultant, it was possible to collect 'live' data (sometimes recorded

using audio and video tapes) on decision-making elements in the innovation

process through his direct observation in management and project meetings.

Critical analysis of this 'real-time' research data from transcripts and/or field

notes provided a valuable source of data. In addition, the researcher had kept

notes, tape recordings, video tapes etc. from earlier consulting experiences

60 The DTI gave permission for the data from their study to be used for this thesis but

requested that company data should be treated as confidential.

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and these proved to be a mine of useful insights. In these cases there was no

assessment available of the firm's innovation performance, although cases

were reviewed on a case-by-case basis. A brief rationale for inclusion of these

cases is provided in Appendix 6.

In particular, it was considered that top team assignments provided valuable

research opportunities.61 Typically a team would meet for several days and

undertake a series of sessions to develop the competitive strategy of the firm.

Invariably this required weaving innovation into business planning. As the

facilitator of the event, the researcher had the opportunity to observe ideas

being born, evaluated, growing or being culled. There was an opportunity to

observe, first hand, the dynamics of commitment (Ghemawat, 1991). Several

groups gave permission for the researcher to capture the key learning points,

under conditions of strict anonymity.

The sources of the data set are summarised in the table below. This includes

data sources available in December 1998. Work is in hand to add to this

database.

Table 3.5: data set

Sources of data Data set

1 Top and senior manager interviews 71 Interviews

2 Manager interviews/focus groups 57 Interviews/groups

3 Documentation analysis 7 Analyses of in-company documents

4 Video analysis 45 hours of video tapes and 34 hours of sound tapes reviewed

5 Academic interviews 3 Interviews

6 Action research projects 6 Projects

7 Consultant interviews 11 Interviews

Total database documents 196 (some data on several documents)

3.7 Research techniques

The primary research tools used were two computer programs—SPSS and

NUD•IST. SPSS is a statistical package. It was used for straightforward

61 Especially as Easterby–Smith et al. (1991) notes "(g)aining access to the corporate board

room is exceedingly difficult for researchers " (45).

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analysis, cross tabulation and building a comparative database. As it is a well

known research tool its characteristics will not be discussed here.

NUD•IST is a program for qualitative analysis and it was mentioned by

Strauss and Corbin (1990a) as a useful tool for facilitating research using the

grounded theory methodology. The tool is derived from sociological

methodologies developed for the content analysis of media, conversations

and the like (Silverman, 2000). It enables text units to be coded and re-coded

into categories (they are assigned to nodes). As the coding process proceeds

new text units are added to existing nodes or new categories are developed.

The researcher is required to consider at each text unit as a separate item of

data and conceptualise from it. This process results in the development of a

theoretical framework that, literally, grows out of the analysis data and is

expressed in NUD•IST as a tree-root diagram. The programme also permits

the movement of clusters of nodes and exploring linkages. If used with

attention, NUD•IST provides a tool for meeting the indicator-concept

generation requirements of grounded theory.

Data were examined, categorised, coded and entered into NUD•IST using a

line-by-line analysis technique. The researcher, following suggestions by

Strauss and Corbin (1990a), attempted to give balanced attention to six areas:-

1. the phenomena

2. the context

3. intervening conditions

4. action/interaction strategies

5. evidence of underlying capability

6. consequences

The researcher was aware that greater methodological soundness could be

achieved if the coding process was undertaken by two or more researchers

independently reviewing the same data. This procedure was not adopted for

practical reasons. The coding process for this research required five months'

work and it proved impossible to find a qualified researcher willing to donate

this quantity of time to helping with the task. However, early coding

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examples were discussed with the researcher's supervisor to provide greater

objectivity.

As briefly noted above, the researcher's intention was to get beneath

descriptive and conceptual analyses and to strive to develop a

behaviourial-based model of innovation capability—in effect, to explore the

competencies, stances, attitudes, behaviours, routines, processes and

socialisation processes that provide and support innovation capability.

3.8 Development of a reference model and auditinstrument

A key moment in the research was the decision to develop a reference model

as a core intervention tool. The researcher considered that it would be useful

for managers to assess systematically their firm's innovation capability. In

order to do this a template can be helpful. Other models of innovation

capability had been published and examples are considered in Appendix 2.

A reference model is a derivative of an ideal type. Weber (1976) introduced

this conceptual device as a means of describing a quintessentially perfect

example of a characteristic of social institutions. Once the characteristics of an

ideal type are correctly specified, for example of a bureaucracy, it becomes

possible to match a case against the ideal type model and, hopefully, direct

attention towards organisational practices that either help or hinder the

organisation from being a perfect example of type (see Klein and Meeking,

1958 for an example of how this approach can illuminate a managerial issue).

As Burke et al. (1996) point out:

"a model that is comprehensive and based on sound theory andresearch enhances the efficacy of an organizational diagnosisand serves as a guide to actions to take as a consequence of thediagnosis" (42).

Developing the reference model proved to be challenging. A decision was

taken to limit the numbers of dimensions so that it would be acceptable to a

non-academic audience (Francis, 1998a). Bessant et al. (1994) had

demonstrated that such an approach was possible and described how he and

others had adopted a reference model approach in helping companies assess

the extent to which they were using continuous improvement principles and

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practices. This proved to be effective as a element in a diagnostic process. A

similar approach was adopted for this research.

Reference models can give an impression of certainty but the reality they

describe may be fluid, contingent and temporary (Silverman, 2000). Also,

such models tend to simplify, and can readily over-simplify, so that they

become misleading caricatures. A reference model tends to stand alone and

be reductionist in orientation, thereby portraying a picture of the world that

underemphasises connections, subtleties and wholes. Lastly, the words

'correctly specified' were used above but a reference model may be partially

correct or correct in some circumstances but not others. An incorrect, or

partially correct, reference model directs attention into areas that are

inappropriate and away from those that are significant. Accordingly, a

reference model can become a tool for misguiding rather than guiding.

Despite limitations on the use of a reference model its merits were persuasive.

For a researcher the development of a reference model provides a goal, a

process and a means of transmuting theory into practice. It also provides a

template that can be used as the basis of reflexive dialogue with client firms,

especially if managers are aware that the model is an approximation to be

challenged rather than an ideal to be striven towards blindly. If it has validity,

a reference model can alert managers to domains of adequacy and

inadequacy thereby providing them with conceptual stepping stones for

determining improvement goals. In addition, as experience builds,

comparative data becomes available that may illuminate trends and add to

the value of feedback provided for firms and the agencies seeking to help

them.

3.8.1 Development of an audit instrument

A reference model does not, in itself, provide an organisation development

tool that can be used for systematic diagnosis. However, it can provide the

foundation for an audit instrument—a widely used device for structuring data

gathering and data feedback. Procedures for using audits as an intervention

methodology have been described in the literature under the generic heading

of 'survey feedback' (Bowers and Franklin, 1977; Franklin, 1976). This

researcher had previous experience of developing and publishing audit

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instruments (Francis and Woodcock, 1994 and 1996; Francis and Young, 1991;

Francis, 1998a and 1998b) and was aware of design criteria and steps needed

to position diagnostic procedures within a wider intervention process.

There are two significant differences between an audit instrument and

research questionnaires. Firstly, it is a change agent, not a fully-trained

researcher, who is undertaking the diagnosis—sometimes in collaboration

with the client. Secondly, the primary objective of the data-gathering exercise

is to assist a company with an organisation development initiative—the

gathering of research data is an auxiliary aim.

The six design criteria adopted by the researcher for designing an audit

instrument are summarised in the following table.

Table 3.6: audit design criteria

Design criteria Rationale

1 Provide focus The audit must focus attention on problems, issues and/or development needsspecifically related to innovation capability.

2 Address significantareas

The audit must address issues that are important for the company toimprove—either for achieving strategic goals, facilitating renewal and/ordeveloping needed capabilities.

3 Possess sufficientvalidity

The audit results must have sufficient validity to provide a reasonable basis formanagerial decision taking (i.e. data and interpretations must be at least asgood as the company's 'normal' intelligence data).

4 Have re-framingpotential

The audit process needs to have the potential to facilitate a re-definition ofdeveloping innovation capability in the minds of mangers—a 're-framing'process.

5 Be linked to actionprogrammes

The results of the audit need to be able to progress into action programmes.These may be initiatives to develop or realise potential, an extension of currentinitiatives or remedial initiatives to address problems.

6 Be easy to administer The work involved in the process needs to be acceptable to all parties and beachievable with available resources.

The examination of nodes in the NUD•IST database provided a list of

elements that were used as the basis for writing the items in an audit

instrument. As will be described later in Chapter 4, 18 'components' were

identified in the second generation reference model (G2). Each item in the

questionnaire was intended to explore a different dimension of a component

and so the normal split-half reliability test was not deemed to be useful—since

each item, not each group, examined a distinct organisational feature.

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3.8.2 Development of an audit process

An audit instrument and an audit process are not one and the same. Indeed

sometimes an audit instrument may not be used at all. For example,

Bessant et al. (1993) describe the use of a mapping visit approach where a

trained investigator looks for artefacts and behaviours that indicate the

prevailing capability of the firm (in this case in relation to continuous

improvement).

Auditing approaches can be plotted on two dimensions. One is the degree of

specificity of the study. For example, a survey of the degree to which

environmentally friendly procedures are practised would be classified as

'issue specific'. A survey of organisational excellence would be classified as

'generic'. A second dimension describes the degree to which assessment

categories are predetermined. In a firm-specific approach the interpretative

framework emerges as company data is understood. A reference model

approach uses predetermined assessment categories and the organisation is

compared with this model.

It was possible to adopt several different diagnostic procedures for this

research that have been simplified to four in Figure 3.4 below.

147

Issue Specific Generic

Reference Model Based

Firm-Specific

OPTION 4Non-standardised

Assessment of Innovation Capability

OPTION 1Standardised

Assessment of Innovation Capability

OPTION 3Customised

Assessment of Innovation Capability

OPTION 2Assessment of

Innovation Capability as driven by the firm's strategy

Figure 3.4: possible diagnostic procedures

Each option offered advantages and disadvantages and these are shown in

the table below:

Table 3.7: audit design options

Option Description Advantages Disadvantages

1 Organisations use astandardised audit thatcompares their firm with abest practice model

1 Standardised

2 Low consultant skilllevel required

3 Comparisons possiblebetween firms

4 Lowest cost

1 Not context-sensitive

2 Done to the organisation ratherthan done with them

3 Assumes that there is one bestpractice model

2 Organisations articulatetheir competitive strategyand assess the extent towhich they haveappropriate innovationcapability

1 Strategy led

2 Deals with topmanagers' concerns

3 Relates innovationcapability tofirm-specific aims

1 Not innovation capability orientedper se

2 Requires high level facilitation

3 Results not standardised

4 High cost

3 Organisations use astandardised auditsupplemented with otherdata collection. The reportis firm-specific and drawsfrom a best practice model

1 Semi-standardised

2 Moderatelycontext-sensitive

3 Comparisons possiblebetween firms

4 Medium cost

1 Requires trained facilitators

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Option Description Advantages Disadvantages

4 Facilitators use anapproach that theydetermine is appropriate fora specified company at aspecified time

1 Highlycontext-sensitive

1 High cost

2 Very high level of expertiseneeded

3 Comparisons between firms notpossible

The least attractive option to this researcher was number 4—the overall aim

of this research was to develop a reproducible methodology. The researcher

was aware that he could formulate an interview schedule and supply a

recommended methodology for data collection/analysis but the quality of

the outcome would remain highly dependent on the skills of the facilitator in

the field. The second least attractive option was number 1—the approach that

used a standardised reference model as the sole device for diagnosis. The

principal reason this was rejected was that it had the propensity to

over-standardise.

The second most attractive option was number 2—the approach that started

with competitive strategy. The researcher envisaged a process that began

with the management of the firm articulating their competitive

strategy—both for the firm as a whole and product-market categories. Then

the question would be asked 'where do we need to be more innovative to

achieve our strategy?' This approach, as shown in the table above, has

significant advantages. The most significant benefit of a strategy-led approach

is that it does not treat innovative capability as 'a good thing' but a vital

component for the fulfilment of an organisational commitment. Despite the

potential benefits, eventually, this option was rejected. The primary reason

for rejection was conceptual. Since the researcher was arguing that high

innovation capability opened strategic doors then it would be wrong to limit

the exploitation of innovation capability to an existing strategic direction.

Despite the decision to abandon this option it proved possible to incorporate

some of the benefits in the approach used with the pilot sample of companies,

as discussed in Chapter 5.

Option 3 was selected. This proposed to use a standardised audit

supplemented with other data collection procedures to assess innovation

capability within a firm. The merits of this approach were that it was

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reproducible, focused on innovation capability as a valued resource but had a

(controllable) degree of customisation and/or context sensitivity.

A second key decision was taken at this stage—only one reference model

would be devised. There were arguments from contingency theory (see

Appendix 8) for developing multiple models that would cover, for example,

differences in the size of the organisation, core technologies, competitive

strategy, cultural tradition and the like. It may be that it is impossible to

devise a single intervention process that is valid in all cases.

After considerable thought, the researcher decided to share the view of

Tidd et al. (1997) that "there is some commonality around the things which

are managed—the key enablers—in successful innovation… how these

enablers are actually put together varies between firms but they represent

particular solutions to the general problem of managing innovation" (26). This

research, therefore, took a non-contingent approach and sought to define the

'commonalities' of innovation capability. However, the point has not been

lost because, as reported later in Chapter 5, the intervention process includes

a step when firms define their particular needs.

3.8.3 Improving the diagnostic tools

Once a pilot version of the audit tool was available, it was decided to review

progress. After this had been done an informed decision could be taken as to

whether to continue with the work thus far completed or 'go back to the

drawing board'. The three forms of review undertaken were:

1. Examining other reference models and audits of innovation capability tosee whether they contained elements that supported or contradicted thisresearcher's work (Appendix 2);

2. Sharing the draft reference model with managers. The researcher helddiscussions on early drafts with 17 managers who gave valuablecomments;

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3. Sharing the draft reference model with colleagues and peers who werespecialists in innovation management, strategy development and/or OD.The researcher presented a seminar for colleagues at CENTRIM (8attended), presented two seminars for the Institute for Personnel andDevelopment (11 Senior Personnel Officers and 46 Personnel Officers) andpresented a seminar at the Strategic Planning Society (17 strategy plannersattended). Again valuable comments were received.

The second generation audit (G2) incorporated the comments and feedback

received from peer reviewers. The G2 audit was revised five times over 18

months. A version was published in the USA (Francis, 1998a). The researcher

hoped that publication would open dialogue with a wider set of interested

specialists in the field (this did not, in fact, happen).

3.8.4 Extending the research team

One unusual feature of this research is that some activities were undertaken

by people other than the researcher himself. These were change-agents

working under the aegis of a cross-border initiative in Ireland (NORWESCO).

An opportunity occurred for the researcher to offer the data collection and

intervention methodologies developed for this research programme to a

group of enthusiastic change-agents. In the event the development of joint

projects with able collaborators proved to be a potent learning experience.

Their questions, comments and perspectives added to this research. From a

methodological viewpoint the formation of a task force has much to

commend it, as the interplay of diverse contributions provided a real-time

and detailed positive critique of evolving concepts and methodologies.

However, this strategy of using 'co-researchers' raises significant

methodological concerns. There is a risk that relatively untrained people62

make an unwarranted impact on the research process and that academic

disciplines are prejudiced. For this reason this researcher required all audit

data to be analysed by himself alone and he made interpretations personally.

Change agents were, therefore, not able to make any direct input into data

interpretation and theory building processes.

62 Change agents received four days of basic training and met for approximately four days a

year to deepen their understanding and develop their skills further.

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3.8.5 Statistical analysis

A decision was taken to view the statistical analysis of the audit as being of

less importance than its potential educational impact to client

companies—certainly during the early stages whilst relatively few cases were

available for analysis. The researcher was concerned that statistics and norms

present a specious but false impression of the objectivity of the approach. It

was also decided not to supply companies with statistics by the 6 domains or

the 18 components—but by the 56 elements (see Chapter 4). This had the

advantage that a distinctive company profile could be developed for each

company but the disadvantage that comparisons with the reference model

were difficult to make. On balance, it was felt that companies would receive a

more objective and useful feedback by going into detail in relation to the

56 elements but research data would be accumulated on an SPSS database and

could be re-structured once sufficient cases had been accumulated. Later, a

statistically-based approach could be developed if this were to be considered

to be helpful.

3.9 Interventions

The later phases of the research required entering companies (either directly

of through agents trained by the researcher) and seeking to facilitate a change

process that would enhance innovation capability. It was decided to adopt a

strategic business practice (Kotter, 1996) and develop a vision statement of

the final 'product' that would be offered to companies. The importance of

visioning is covered by Nutt and Backoff (1997) who identify that (quoting

Peter Block) "a vision provides a way for stakeholders to enter a 'possibility

space' that describes new ideas for an enterprise. So people can find a way to

become involved, the best visions are inspirational, value adding, significant

for key people, challenging but reachable, and energy releasing" (492).

The notion of helping "stakeholders to enter a 'possibility space'" proved

powerful and considered to be likely to help to "give the client insight… (and)

figure out what he should do about the situation" (Schein, 1988: 11).

It seemed logical to apply the principles of successful product development to

this endeavour (Millson et al., 1992; Cooper, 1994; Wilemon, 1998). A 'product

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specification' was attempted for the intervention process. This was amended

and developed several times during the enquiry and served as a tool for

focussing the action research phase. The first iteration of the product

specification (February 1996) was as follows:

'The product should have four63 distinct elements—an entry process, a

diagnostic process, a data feedback process and an action planning process'.

41 audits of companies followed by intervention were carried out64 by the

end of August 1999 and 943 people had completed the G2 audit. All

companies had fewer than 500 employees and were largely selected from the

engineering and manufacturing sector. The data from audits was placed on an

SPSS database and basic statistical procedures were undertaken. The intended

role of the audit was limited to providing one form of feedback to firms.

Nevertheless, analysis of patterns of responses did provide indications on

development priorities to enhance innovation capability.

3.9.1 Review of effectiveness

The review of the effectiveness of the interventions was undertaken in two

ways. Firstly, a workshop meeting was held with the majority of the

participating firms in Ireland in 1998. Detailed notes were kept from this

event that were considered when the researcher spent three days in Belfast

with colleagues from the University of Ulster reviewing the initiative. In

addition, NORWESCO sponsored an independent consultant to review the

process. This researcher had been invited to help define the questioning and

review procedure. The consultant's report provided a second, and particularly

interesting, evaluative input.

3.10 Research process as learning

Bourner (1995) describes four key elements of the research process;

reviewing the field, theory building, theory testing and reflecting and

integrating. He observes that "(i)t is quite possible that the four parts will not

63 By January 1997 the product had six elements: an entry process, a diagnostic process, a data

feedback process, a report generating process, an action planning process and a learningnetwork process'.

64 Six audits and interventions were completed directly by this researcher. The remainderwere completed by change agents trained by him.

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strictly follow the sequence in which they have been presented… you may

well find that you engage in some parts of the research process more than

once" (7).

This was true for this research. Ideas and frameworks were changed,

destroyed or extended through ongoing interaction with firms, advisers,

change agents and colleagues. The research process included product

development, prototyping, iterative learning and maintaining a dialogue

between theory and practice; cited by Leonard–Barton (1995) as typical steps

in innovation development.

Tranfield and Starkey (1997) cite Gibbons et al's work that suggests that "each

new configuration (of knowledge) becomes itself a potential source of new

knowledge production which is in turn transformed into the site of further

possible configurations" (Gibbons page 35 cited on page 4). They discuss

'mode 2' knowledge production that is "characterised by a constant flow back

and forth between the fundamental and applied, the theoretical and the

practical" (Gibbons page 19 cited on page 6). Adopting this perspective, a

researcher's work can be valid if it is a contribution to a stream of developing

knowledge and its value resides in its catalytic effect—rather than attempting

to resolve an issue once and for all.

This research was viewed as a looping process in which 'theory' was

developed, tested, reviewed and significantly redefined several times. The

Kolb learning cycle (Kolb, 1983b) provided a meta-level theory and the

original stimulus for the research design. Kolb argues that learning requires

four phases of mentation and action that follow each other in a beneficial

cycle. It is possible to begin a learning process at any point. An experience

needs to be followed by a period of reflection, re-conceptualisation and

experiment if 'deep' learning is to occur. Kolb's model is one of the most

influential frameworks for understanding a process generally referred to as

'experiential learning' (actually the title of Kolb's book) (Jones, 1981).

Kolb (1980) suggests that four stances are needed for effective learning:

convergence, divergence, assimilation and accommodation. This requires the

researcher to be able and willing to take different stances within the

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self—another looping process. Later, Kolb elaborated this concept into a

problem-solving cycle (Kolb, 1983a).

The Kolb learning cycle was beneficial to this research at two levels: firstly, it

led the researcher to seek to construct sequences of experimentation and

reflection; secondly, the intervention process was intended to be a learning

process so far as the companies were concerned and it was believed that the

intervention design would be stronger if it conformed to Kolb's model.

3.11 Limitations of the research method

During the discussion of methodologies in this chapter consideration has been

given to limitations of the research methods chosen. Significant limitations

include:

1. The criteria used for the selection of the research sample was notsufficiently robust. Although efforts were made to select highly innovativefirms by using a DTI list of innovative firms, the criteria for firms to beincluded on this list can be questioned.

2. The research was unable to look systematically at intervention for thedevelopment of innovation capability in larger firms—there is a SME focusin the empirical work undertaken. In addition, firms that undertook aninnovation audit were almost entirely from the manufacturing sector.

3. This research did not systematically considered non-behaviourial factors.Assets, financing, technology acquisition, intellectual property and similarissues have not been systematically considered.

Despite these limitations, and others mentioned in the text above, it is

considered that the research process provided insight into defining and

developing innovation capability, as will be described in the next chapter.

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Chapter 4Research findings

4.1 Introduction

In this chapter the findings of the empirical research undertaken for this thesis

are described. The chapter is structured in three sections.

1. The data collection process is outlined. This led to the first generationreference model (G1) and the development of a pilot audit instrument.

2. The components and elements of the second generation reference model(G2) are described.

3. The development of an intervention process using the G2 reference modelis described and the effects of interventions into companies are reportedupon.

In addition, the researcher used the available case material to explore a

theoretical issue raised in Chapter 2 concerning whether innovation capability

is a contingent or universalistic attribute. Six partial cases relating to each of

Mintzberg's organisational configurations (1998) were explored and analysed.

These cases were not systematically selected and the researcher considered

that they did not have sufficient methodological robustness to be included as

findings in this chapter. However, since the insights from this analysis are

provocative, and may lead to further research, these caselets and analysis are

included as Appendix 8.

4.2 Research design

In the previous chapter the methodology used for this research was

described. For clarity, relevant points will be reviewed below.

The theoretical review described in Chapter 2 provided an integrated model

of innovation capability encapsulated in Figure 2.5. This provided orientating

and sensitising concepts that were used to frame an interview schedule (see

Appendix 1). This provided the initial framework for data collection, with

theoretical insights adding to the data collection framework during the

progress of the research.

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Interview data was collected and supplemented from various sources. The

sources of data in June 1995 are shown in the table below.

Table 4.1: data set for G1 reference model

NUD•IST database contents June 1995 Numbers of cases

Interviews with consultants and facilitators (internal and external) 12

Interviews with managers 16

Analysis of company documents 2

Case notes 2

Action research projects 2

Observation reports/video tape analysis 1 (22 hours)

A semi-structured interview approach was adopted (rather than a totally

structured approach or a non-directive format). This was done for three main

reasons.

• Firstly, structure provided an opportunity for the researcher to makecomparisons between cases.

• Secondly, and more significantly, the use of structure added to researchquality. It was felt that a fully structured interview would be too confiningand, conversely as Easterby–Smith et al. (1991) note, "the 'non-directive'interview, where the interviewee talks freely… is… likely to produce noclear picture (and) poor data which is difficult to interpret" (75).

• Lastly, the 28 item interview schedule was too extensive for mostinformants. The researcher had to adapt the interview for informants'interests, experience and time availability.

The researcher categorised (coded) each text unit and placed it in a NUD•IST

database. The development of the G1 model took place between June and

September 1995 when it was decided to undertake a design freeze so that an

initial reference model could be explored with colleagues, practitioners and

managers. The database contained, at that time, 35 documents and 998 text

units.

Interacting with the NUD•IST database enabled a data structure to emerge.

Factors that 'helped' innovation capability were identified, named and

considered. The aim was to develop a provisional 'ideal type' model (as

described in Section 3.8). 'Hindering' factors provided a check that valid

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helping categories had been identified. 20 principal nodes (categories of data)

were identified, that could be clustered into four broad domains. This became

the first generation reference model of innovation capability (G1).

The researcher was aware that this form of analysis had disadvantages. There

was a risk that, in the desegregation process, important insights could be lost.

Categories were not clearly separated. In addition, the 'neat' division into 20

categories (termed 'components') was an over-simplification but, partly for

ease of explanation to managers, this format was adopted. An assumption

was made that innovation capability could be viewed as a gestalt, with a

variety of interdependent elements, a system of checks and balances and the

capacity to manage creativity, decisions, enactment and risk and the reference

model would contribute to understanding at least some of the elements.

It was realised that 20 components is a large number for an organisational

model. For example, one of the most widely used models, the 7Ss approach,

only has seven dimensions (Peters and Waterman, 1982) and Weisbord has

developed an influential six-box diagnostic model (Weisbord, 1984). This

researcher believed that managers need to pin-point strengths and

weaknesses within their firms of a complex capability and that an assessment

with a few parameters was unlikely to facilitate this.

Each component was named using active terminology (e.g. strong

implementation capability). This was to provide managers with a 'draft'

cognitive map of innovation capability using labels to which they could relate

readily. The titles of the components followed the advice of Higgs and

Ashworth (1996) who suggest that "organizational researchers can learn yet

another lesson from market researchers, who are often quite effective at

communicating study results through colorful use of language. Descriptive

terms such as 'young urban professional' or 'empty nester' convey research

results in an intuitive, understandable way that encourages broad

understanding of the concepts being measured" (33).

A test was devised for the purpose of defining a component. It needed to:

1. Have not less than 10 mentions as a helping characteristic in the NUD•ISTdatabase following a string-word search;

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2. Be defendable as a unitary category (e.g. 'Continuous Improvement andSupportive Leadership' would be unacceptable);

3. Be the most generalised description possible of specific organisationalattribute (e.g. 'Positive Climate' would be too broad and 'Ideas Listened toby First Line Managers' too narrow).

The first item in the test (achieving 10 or more mentions) helped to define the

component and, also, elaborate it. Illustrative data supporting each of the 20

components is presented in Appendix 3 with brief field notes and researcher's

memos to demonstrate the methodology used. For reasons of confidentiality

minor changes were made in some text units to avoid individuals or firms

being identified.

The G1 reference model provided a framework for a diagnostic questionnaire

(termed an 'audit'). This underwent nine revisions65 (often minor) as it was

tested and reviewed. Experience gained assisted in the development of the

second generation reference model (G2). The researcher had the opportunity

to teach the model to groups of practising managers undertaking an MSc in

Technology Management. Five students used the model for their

dissertations and provided valuable feedback.

As mentioned above, between 1995 and 1999 it proved possible to increase

the quantity of data in the database. The spread of the larger research sample

(it included a school, police service and two advertising agencies, for example)

extended and enriched the data-set (a list of consultants, companies and

organisations contributing can be found in Appendix 6). This provided an

opportunity to undertake a grounded theory research process with

substantially more data.

The revised test for defining a 'component' was that it:

1. had not less than 40 text units coded to the node;

2. corroborative references could be found from relevant literature toprovide an additional source of evidence for the durability of theconstruct;

65 Revisions were dated 3 and 5 October 1995, 22 November 1995, 12 December 1995, 20 and 27

January 1996, 20 February 1996, 17 March 1996 and 8 August 1996.

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3. Be defendable as a unitary category;

4. Be the most generalised description possible of specific organisationalattribute.

The second test was new. Even though the database was relatively large it

was considered to have merely scratched the surface of the topic. The search

for corroborative references provided a useful check-step and discipline.

4.3 The second generation reference model (G2)

The reference model will be presented to provide the reader with a mental

map of the whole before exploring the parts. For ease of explanation a wheel

diagram was developed (Figure 4.1) to show six domains (not developed

empirically) and 18 components (developed empirically).

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DIRECTION

CULTURE

CAPABILITY

STRUCTURE & PROCESS

I II

IIIIV

IIc Capable Implementation

IVc Fruitful Linkages

IIb Full Competences Portfolio

Ib Provides Strategic

Advantage

IVb Acquiring Multiple

Perspectives

IIa Exceptional Individuals

Va Apt Organisational

Form

VIa Guiding Mental Maps

Vc High Performing NP-PD

VIb Sound Decision Processes

Vb Supported Champions

Ia Innovating Leadership

IIIa SelectiveEmpowerment

IIIb Innovation Demanded

IIIc High Enrolment

IVa Continuous Learning

VIc Sustained Commitment

Ic Prudent Radicalism

LEARNING

DECISION-MAKING

V

VI

Figure 4.1: G2 reference model

The wheel approach to displaying the reference model had advantages and

disadvantages. Its format suggests an interdependence of elements and that

innovation capability can be viewed as a unitary capability. Also, it is possible

to develop a spider plot so that a present capability of an actual firm could be

mapped on to the model. However, several disadvantages of the wheel

format have been identified, as detailed below:

1. there is an unwarranted suggestion of tidiness (e.g. 3 components in eachof six areas);

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2. there is an inference that all components are equally important;66

3. the format presents a closed model that is difficult to adapt to the specificneeds of a particular firm;

4. no interdependencies between components are identified apart from ageneral domain heading which could be misleading;

5. there will be contention in the definition of domains and components andtheir definition. It is possible to develop and defend alternativecategorisations from the data set available;

6. There is an inference that companies can and/or should uniformly achievea standard that can be assessed;67

7. Some factors, possibly important, associated with organisationalinnovation were omitted as they were mentioned infrequently.68

8. Behaviours and activities could sometimes be categorised in two or morecategories.

66 This factor is considered particularly important. For example, one company had introduced

25 new products within 5 months and was a market leader in its industry. However, a shopfloor focus group included the following: "Q: Tell me about the systems you have for workingout ways to constantly improve things." A: "We work things out for ourselves to make lifeeasier… All the ideas come from above, they never ask us… They just want production...wehaven't got brains...they just don't care…We do things the best way for us, you've got to lookout for number one round here." "Q: How are the people here managed differently to howthey were two or three years ago?" "It's a lot worse. It's gone down hill in the last 10years… The attitude has become push...push... push…The supervisors used to talk to you,have breaks with you. They don't do that now." At least in this case it seems that a firmcan be an innovation leader without high enrolment, continuous improvement and the like.

67 In some cases three or four informants or informant groups, from different organisationallevels, described the same company. Perspectives sometimes showed considerabledivergence. For example, one managing director of a firm 'dedicated to innovation'described his firm's management style as to "give people freedom and responsibility… beresponsive to people's needs and be supportive but have demanding tough targets".Informants from a shop floor focus group from the same company observed: "You don't seeany managers on the shop floor. I've never seen the Chief Exec on the shop floor, the peoplewho know have gone. I wouldn't know our Board if they fell in front of me… New Managershave degrees, but no tact or compassion…My boss has known me for 8 years and doesn'tacknowledge me or probably know my name." Such examples demonstrate the difficulty ofdefining organisational characteristics in comprehensive rather than idealised ways. Inaddition, they raise the interesting notion that a firm can be innovative without being'well-managed'. In the case mentioned above, the firm were noted as an industry leader innew product development but there was evidence that the workforce were disaffected.However, strong management and performance disciplines enabled a range of new andimproved products to be delivered without the goodwill of the workforce.

68 13 additional categories were identified but not included in the reference model. These arelisted in the nodes report (Appendix 4).

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Despite the disadvantages of a wheel format, the decision to use it was

influenced by the enthusiasm of managers who received an initial

presentation of the model. There was evidence that the wheel offered an

efficient communication device. Accordingly, it was adopted as the way in

which the reference model would be presented.

Both the first and second generation reference models used the wheel format.

The G2 reference model had fewer components than the G1—18 as against

20, however, was not radically different. A previously unconsidered factor

(organisational form) was added. Others components were redefined, more

accurately named and/or elaborated. The titles of the components were

'toned down' to avoid hyperbole and care was taken to ensure that they

accurately described the component.

The 18 components of the G2 reference model were compared with the G1

components. The results of this comparison are shown in the table below.

Table 4.2: G2 components compared with G1

G2 components Related G1 components

Ia Innovating Leadership Ia Transformational Leadership

Ib Provides Strategic Advantage Ib Stretching strategic intent

Ic Prudent Radicalism IIIb Creative destruction

IIa Exceptional Individuals IIIa Exceptional individuals

IIb Full Competencies Portfolio Ic Dedicated innovation resources

IIIe Complete portfolio of competencies

IIc Capable Implementation IIIc Active internal networking

IVe Strong implementation capacity

IIIa Selective Empowerment IIa Empowerment practised

IIIb Innovation Demanded IIb Demanding expectations

IIIc High Enrolment IIc High enrolment

IVa Continuous Learning IIe Confronting learning

IVa Relentless continuous improvement

IVb Acquiring Multiple Perspectives IId 'Mastery' ethic

IVc Fruitful Linkages Id Strong external linkages

Va Apt Organisational Form

Vb Supported Champions IVd Honoured champions

Vc High Performing NP–PD IVb Effective new product/process development systems

VIa Guiding Mental Maps IIId Conceptual 'roadmap'

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G2 components Related G1 components

VIb Sound Decision Processes IVc Sound decision processes

VIc Sustained Commitment Ie Directed innovation initiatives

4.3.1 The G2 reference model: components and elements

NUD•IST constructs conceptual maps in the form of a pyramid (see Minto,

1987 for an explanation of this methodology). As a enhanced data set was

available, a decision was taken to add an additional layer to the analysis, as

shown in Figure 4.2 below:

Domain

Component1

Component2

Component3

Component4

x Elements x Elements x Elementsx Elements

Figure 4.2: domain, components and elements

In the figure 'x' represents a variable number. The addition of 'elements'

provided a further degree of complexity to the model. The added layer of

categorisation offered a richness of analysis that, in the opinion of the

researcher, provided a more useful tool for change agents and facilitators. In

total, 56 elements were identified for the 18 components. These are

summarised in the table below.

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Table 4.3: G2 components and elements

Components Elements

Ia Innovating Leadership (i) Authentic/close involvement (from leaders)

(ii) Bias towards innovation

(iii) Focused effort towards defined opportunity spaces

(iv) Enrolling leadership style

Ib Provides Strategic Advantage (i) External focus (sensing)

(ii) Coherent—emerging strategy/vision

(iii) Effective top teamwork

(iv) Innovation goals in business plans

(v) Performance measures assess innovation prowess

(vi) Innovation policies deployed

Ic Prudent Radicalism (i) Comprehensive analysis of change needs

(ii) Openness to new mind-sets

(iii) Effective change management

(iv) Restructuring of assets

IIa Exceptional Individuals (i) Analysis of needs for critical skills

(ii) Proactive HR policies (recruitment & retention)

(iii) Able people in innovation intensive roles

IIb Full Competencies Portfolio (i) Analysis of competencies needed

(ii) Co-ordinated competency development

IIc Capable Implementation (i) Effective transfer to routine organisation

(ii) Capable programme and project management

IIIa Selective Empowerment (i) Management style supports empowerment

(ii) Personal potential developed

(iii) 'Can-do' ethos (efficacy)

IIIb Innovation Demanded (i) High expectations from opinion leaders

(ii) Innovation goals set

(iii) Innovation recognised—rewarded

(iv) Kaizen institutionalised

IIIc High Enrolment (i) Open 3 way communication

(ii) Positive regard (for staff)

(iii) Commitment to company

IVa Continuous Learning (i) Enabling learning

(ii) Competencies (general) developed

(iii) Training in teamworking and problem-solving

(iv) Knowledge management

(v) Exploratory dialogue

(vi) Experimental initiatives

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Components Elements

IVb Acquiring Multiple Perspectives (i) Hearing specialists

(ii) Hearing 'out of field agents'

(iii) Hearing 'in-business agents'

IVc Fruitful Linkages (i) Gaining from external relationships

(ii) Close customer relationships

Va Apt Organisational Form (i) Innovation-enabling organisational design

(ii) Use of OD methodologies

(iii) Use of teams and adhoc groups

(iv) Inter-team co-operation

Vb Supported Champions (i) Legitimacy of the champion role

(ii) Intrapreneuring attitudes and skills

(iii) Effective sponsorship

Vc High Performing NP–PD (i) Managed NP–PD

(ii) Creative approaches in NP–PD

VIa Guiding Mental Maps (i) Tracking possible relevant possible maps

(ii) Map selection and development

VIb Sound Decision Processes (i) Fast/full information systems

(ii) Reliable decision-making processes

VIc Sustained Commitment (i) Sustained senior management attention

(ii) 'Roadblock' removal

This model was presented to managers, academics and change agents in

1998–99 to explore the benefits and disadvantages. The notion of elements

(rather than domains or components) was regarded as important by

managers as they felt that it provided a route to move from a conceptual

understanding of innovation capability to formulating an organisation

development programme. However, the definition of elements was broad

and some managers argued that they should be broken down further into

sub-elements. For example, one company had spent considerable effort in

encouraging skills in intrapreneurship and had developed a competency

profile with six categories of this single element. It is likely that hundreds,

perhaps thousands, of sub-elements could be identified.

In addition to this testing process a parallel activity was undertaken. The

categories developed by this research were compared with research

undertaken by others (see, for example, Ahmed, 1998). A series of

comparisons were undertaken which are summarised in Appendix 2. In

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summary, it was found that there were few cases where other researcher's

work could not be mapped on to the G2 reference model.

4.3.2 The G2 reference model: 18 components and 56 elements

Below the findings on each of the 18 components are summarised in the

order shown on the wheel diagram (Figure 4.1). For clarity, statistical data

related to the NUD•IST database has been omitted but can be found in

Appendix 4. A standardised format has been used to aid presentation of a

large quantity of analysis. For each component:

• Firstly, a descriptor statement encapsulates the research findings in asentence or phrase (Descriptor Statement);

• Secondly, a extract from a single case is given to introduce the construct.Comments on this material are included (Case Example);

• Thirdly, the principal dimensions of the component are outlined with thefindings drawn from all relevant cases. This includes the elements of thecomponent (Principal Dimensions of the Component);

• Lastly, supportive references are provided from academic andmanagement literature (Literature Support).

4.3.2.1 Domain I—direction

The three components grouped under this category were 'innovating

leadership'; 'provides strategic advantage' and 'prudent radicalism'.

Innovating leadership (Ia)

Descriptor Statement: 'The leader(s) demonstrates a strong commitment to

innovation'.

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Case example:

This comment was made by the managing director of a rapidly growing UK

company reflecting on his leadership approach. He commented:

"Ideas sort of bubble up somehow but I think it's the generalatmosphere in the organisation, it's seizing opportunities anddealing with them is a major celebration and we encouragepeople to use our IT system. Any contact they have with a clientthat results in additional business we say 'put it on the system,tell everybody about it'… everybody in the company knowsand there's a general motivational factor there. But I think a bitof leadership as well."

This comment illustrates a reoccurring theme in the data set. The leader saw

his role as facilitating (note the use of the term "encourage" in the quotation)

and energising ("a major celebration"). An external consultant, commenting

on the style adopted by this leader, observed that he "held the space so that

people could develop improved cognition" (defined as "the capacity to stand

back and see opportunities"). In addition, the leader encouraged sharing and

providing positive reinforcement through his encouragement of use of the

firm's intranet ("put it on the system, tell everybody about it"). This managing

director stated that he "wanted to share the emotion", suggesting that he saw

his role as inclusive rather than instrumental.

Principal dimensions of the component

The findings indicate that a task of a leader (or the power elite in a larger

enterprise) is to stimulate a superior flow of value-creating innovation

initiatives. This required acting as a role model and facilitator. It was

insufficient for a leader to be the source of innovation personally (except in

the smallest firms) as this stunted innovation capability elsewhere in the

organisation. One factor mentioned by some leaders was that, in uncertain

situations, the best understanding of a situation (and the best ideas of

opportunities or remedies) may not lie with top management. A managing

director captured this when he observed, "somehow an organisation needs to

be created that can find good answers to multiple, perhaps half-understood,

questions".

The analysis of the data-set suggested that 'innovating leaders' behaved in

ways that were authentic and close, biased (towards innovation), focused

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effort towards defined opportunity spaces and enrolled others in innovating

initiatives.

Visibility and accessibility was considered to be the extent to which the leader

was actively involved in distributed (not personally managed) innovation

initiatives. The significance of this was particularly apparent in the analysis of

video material. Frequently the leader was either physically present at key

stages or participants would refer to his/her attitudes and goals whilst

innovation was being undertaken. Accordingly, the leader was a pervasive

presence. Authentic/close involvement appeared to be adopted by the majority

of leaders; formalistic approaches were largely absent. In general, the leaders

appeared to be themselves, sharing dilemmas and feelings and engaging with

staff from a collegial stance. There were occasions when the leader became a

team member or contributor on an innovation initiative led by lower level

staff.

Bias (towards innovation) was extensively observed and commented upon by

informants. Leaders made sense of the world by advocating that innovation

was a key element in business success. Their stance, in general, was to 'want

to say 'yes' to anything sensible'. Interestingly, almost all leaders interviewed

were cautious as well as supportive of innovation: exemplified by the

comment "it's great to have ideas but they are not all good ideas. And even if

an idea is a good one the time has to be right".

Focusing effort towards defined opportunity spaces can be described as 'setting the

firm's innovation agenda'. However, this was generally collaborative as

leaders could not always provide clarity of direction in innovative situations

as they did not know what was "the right thing to do". However, they

described, or legitimised, needs and opportunities and focused effort on

making progress in defined opportunity spaces. For example, the CEO of a

pharmaceutical company said "we need to achieve 1000 by 2000" meaning

that by the year 2000 (the statement was made in 1995) 1000 days would be

the normal time taken to develop a new drug rather than roughly double

that at the time. From the 1000 by 2000 commitment many innovation

initiatives sprung. Leaders placed innovation initiatives within contexts,

including strategic, financial and resource-availability. They spoke of the need

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for balance, working on the whole of the value chain and matching initiatives

with "not overwhelming folk".

A leadership approach that was enrolling was found in most but not all cases

(see earlier footnotes in this chapter for contrary examples). The leader paid

attention to explaining contexts, encouraging staff to 'buy-in' and maintaining

a high degree of commitment. It was commented that this was especially

important in innovation since "by the time you have understood the rules of

the game they will have changed". There were cases where significant effort

was expended to facilitate enrolment—for example, one managing director

met all members of the workforce in a large company in small groups to

explain and discuss innovation initiatives at least twice a year.

Literature support

The role of the leader in an innovative organisation has been widely discussed

but less frequently researched systematically. References supporting the

conclusions of this research related to the component can be found in Allen-

Mills (1995), Bennis (1983), Bennis and Nanus (1985), Binney and

Williams (1997), Bratton (1995), Carroll (1993), Goss et al. (1993),

Harrison (1983a and 1995c), Heraculeous and Langham (1996), Jelinek and

Schoonhoven (1990), Kawasaki (1991), Mintzberg and Waters (1983),

Pascale (1994), Schumpeter (1961), Semler (1993), Stacey (1996), Taylor (1995),

Teal (1996), Tichy and Sherman (1995), Voss et al. (1994) and Zaleznik (1977).

Provides strategic advantage (Ib)

Descriptor Statement: 'Innovation is a key element in the organisation's

strategy—it enhances the firm's competitive strategy and/or its resource

base'.

Case example:

The researcher was able to observe a four day strategy workshop of the Zat

company in 1997 (company name and other details have been disguised at

the request of the firm). Zat is a major player in the retail grocery industry in

a European country (within the EU). It is the second largest firm of its type in

its home country. The firm had achieved rapid growth in its market share.

This is an extract from the researcher's field notes:

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'The workshop was titled 'Inventing the Future—Zat in 2002'.At the opening session of the workshop PB, the chief executiveofficer, positioned the event in these terms: "we are enteringanother phase in the development of the company. It is unusualfor us to create the opportunity to be together for such aconcentrated period of time. We must be inventive butrealistically inventive. Our goal is to expand the companywithout diminishing our essence. We will do this by targetingspecific market sectors and dominating them. At the moment Isee us attacking independents in the following segments:independent wine stores, independent cheese stores andindependent convenience stores. At the moment they haveapproximately 27% of the market. To be frank with you, I wantZat to put half of them out of business in five years! In order todo this we will have to change—this workshop is about takingthese guys out. That is what I want us to be inventive about".The following four days were spent in three workshop groups,each reviewing a different market sector. Structured analysistook place on industry changes, market drivers, competitorstrategies, profit drivers, unmet customer needs, the firm'sstrengths and weaknesses. At each stage ideas were generatedand recorded on post-it notes. By the time that strategic optionswere formulated (late on day two) each group had between 278and 414 ideas listed and categorised. A strategy was determinefor each product-market and a step-by-step implementationprogramme was prepared (with 109 separate activities listed).

This assignment provided an opportunity to observe the initiation69 of a

wave of innovation in major firm, although the extent to which the findings

could be generalised could not be tested. Of particular relevance were the

multiple connections made between the firm's competitive strategy and the

innovation agenda. Subsequently, selected innovation initiatives were

included in the firm's business plan.

Principal dimensions of the component

The research findings indicate that firms seek, with various degrees of

formalisation, to direct innovation capability towards outputs that enhance

their perceived strategic advantage (strategic advantage was perceived to be

a broader concept than competitive advantage as it included developing

existing and new capabilities and moving into new or different opportunities

spaces, technology- product- and/or market-determined). A close link

between innovation and strategic advantage provided a persuasive rationale

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for firms to commit resources to support selected innovation initiatives to

completion. A firm's 'innovation agenda' was, to some extent, confined by

existing policies (paths)—for example, in some cases, products were not

developed as single entities but as manifestations of an established brand.

The analysis of the data-set suggested that 'providing strategic advantage'

required an external focus, a coherent/emergent competitive strategy/vision,

effective top teamwork, innovation goals incorporated in business plans and

innovation policy deployment.

External focus refers to the commitment of decision-makers in a firm to

identify, assess and evaluate political, economic, social, technological, market

and competitive changes that may make an impact on the firm's strategies

and commitment decisions. This task was complex as, for example, a variety

of factors could interfuse in ways that were novel and/or rapidly emergent

(e.g. in connection with internet business opportunities). The findings show

that there is a commitment in innovative firms to scanning and trajectory

tracking, although much sensemaking regarding the external environment

was informal.

A coherent/emergent competitive strategy/vision sought to provide answers to

four questions. Where shall we compete? How shall we compete? What

competencies shall we develop (that can be leveraged for advantage in the

future)? What are the firm's collective intents and values? The research data

suggests that the degree of coherence of a firm's competitive strategy is

important. Innovation initiatives may take place in multiple locations in the

firm and there is a risk that they may be mis-aligned. A coherent competitive

strategy serves to align innovation initiatives. Also, any gap between the

selected strategy and the current actuality clarifies the need for new or

re-energised innovation initiatives.

Effective top teamwork can facilitate innovation as explained, for example, by an

informant who said: "(w)e were all very focussed on doing the same thing

and the priority was to get that thing done and not to maintain a position

69 In July 1998 the researcher was informed that two of the three initiatives planned in the

workshop had been rolled-out. One was discarded when market studies revealed that Zat'scurrent business model and image were disadvantageous in that specific area.

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outside that… each of us wanted to do the job and work together".

Innovation appears to require openness of thought amongst those in the

dominant coalition at the top of the organisation and the ability to manage

ambiguous and/or changeable horizontal relationships—both attributes are

helped by a consensus of ends and means shared amongst the members of

the firm's power elite.

The research indicates that, especially in medium-sized and large

organisations, it is important to have innovation goals incorporated in business

plans. This was especially true in diversified organisations where there was

pressure from corporate officers for operating divisions to do the things that

they said that they would do in their annual plan (all diversified firms in the

sample did this). Since the plan was always a full agenda it was likely that

innovation initiatives requiring resources would only be done if they were 'in

the plan'. Performance measures codified the ways adopted by a firm to

manage its resources, activities and outputs.

Innovation policy deployment provides a systematic process for enrolling parts

of the organisation in the application of corporate policies. The research

findings suggest that deployed policies can be a source of innovation since

groups in the firm are required to answer the question 'what do we need to

do to achieve the policy objectives?' For example, in one case, a policy

requiring improvements in customer service led to a new process being

developed and installed—to set target service levels for each different type of

customer. A very large number of innovation initiatives were undertaken

when they were incorporated in managers' objectives using some form of

Management by Objectives (MbO) approach.

Literature support

The role of the innovation within a firm's strategy has been widely discussed,

especially in the work of scholars of business strategy. References supporting

the conclusions of this research related to the component can be found in

Bart (1996), Barrett and Cooperrider (1990), Benton (1990), Bessant (1997a),

Bowman and Carter (1996), Butler et al. (1996), Byrne (1996), Coyne (1996),

Debackere et al. (1997), Francis (1992), Hamel and Prahalad (1994),

Hout et al. (1982), Johnson and Smith (1994), Kaplan and Norton (1996), Lane

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and Maxfield (1996), Miles and Snow (1978), Mill (1982), Millar and

Shamsie (1996), Mills (1985), Mintzberg (1994), Oram (1996), Porter (1980, 1985

and 1996), Raymond et al. (1996), Roper (1996a), Stevenson (1996),

Tang et al. (1996), Thomson (1996), Tregoe et al. (1989) and Utterback (1994).

Prudent radicalism (Ic)

Descriptor Statement: 'Radical change will be undertaken if needed'.

Example:

The following material was selected from a presentation given by the chief

executive of a multi-divisional company based in Bombay and active in

several countries in Southeast Asia:

"What we have to get away from is … right now we're thinkinglike we're part of a regular army, you know, that we have acamp, we've got tanks, we've got helicopters, we've got allthese tools and if we don't have the tools we can't fight; so that'swhy the American army lost in Vietnam. We have to think likethe Viet Kong, we have to think like guerrillas, that all we haveis an AK-47 and five bullets and we have to make each bulletcount—because your competition is like that. We are not in abusiness where it is difficult to come in; anybody can come in.So if we are not flexible and fast like the guerrillas, they aregoing to come and get us, it's as simple as that."

This chief executive was advocating that his company (he had recently been

recruited) needed to adopt change as an ongoing commitment, indeed an

ongoing passion. He believed that this required being agile and aggressive. A

few months later he implemented a wide set of initiatives that was described

as 'our transformation programme'. He asserted that agility, innovation,

aggression and 'continuous revolution' are interlinked and are, jointly,

requirements for success. At the time of the interview in 1997, India was

undergoing a period of rapid business development and there were many

new entrants into the firm's product-market areas.

Principal dimensions of the component

Radical change, in at least one element of the firm's value chain, was a

common characteristic of the companies in the research data-set.

Transformational change required (the most frequently mentioned activities

only) learning, un-learning, acquisition, adaptation and shedding of assets,

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organisational structural revisions, personnel changes, new or revised

policies, supply chain and logistic revision, cultural/normative change,

amended control systems and application of different technologies. Often a

combination of these were implemented. In order for new (sometimes

innovative) initiatives to be adopted there was a need to destroy, replace or

amend current policies, structures, goals and practices. However,

interviewees emphasised that this needed to be done with care (hence the use

of the word 'prudent' in the title of this component)—both to avoid wasting

the value of existing assets (including human assets) and to manage change

processes in ways that were efficient and acceptable to staff.

A review of the data-set suggested that 'prudent radicalism' required a

comprehensive analysis of change needs, openness to new mind-sets,

effective change management and restructuring of assets.

The comprehensive analysis of change needs was a frequent preoccupation of

managers. In some cases they did little else for days (for example, in a

workshop environment). Various devices were used to define change needs

including audits, studies and consultancy reports. Many innovations,

especially of process or paradigm, required multiple initiatives and it was

considered important that all aspects (especially indirect consequences and

risks) were considered in advance so that a comprehensive situational

appraisal was to hand.

Openness to adopt new mind-sets was considered to be required for 'stretching'

innovation initiatives. Interviewees spoke of 'mind-opening', 'thinking

outside the box', 'challenging the status-quo' and 're-conceptualising the

situation'. This requirement was accepted by several top management

groups, many of whom opted to attend seminars and workshops. In

addition, efforts were made to encourage more junior staff to 'open their

minds'—sometimes through 'off the wall' training initiatives.

Planned and effective change management was a characteristic of larger firms

although there was evidence that smaller firms had, informally, adopted

many of the principles of change management that have been well-publicised

in the business management press. Change management included the

development of a vision, building of consensus, identification of change

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champions, setting of change objectives, identification of milestones,

extensive communication, project management and definition of liaison

devices.

Restructuring of assets took many forms, from change of use of factories or

production lines to replacement of equipment, plant, services etc. and the

development of e-business experiments. In every case, asset restructuring

was seen as an element of a broader change management process.

Literature support

References supporting the conclusions of this research related to the

component can be found in: Abrahamson (1991), Beng (1993), Binney and

Williams (1997), Boyatzis (1982), Bratton (1995), Carroll (1993), D'Venti (1995),

Drucker (1994), Ghemawat (1991), Goss et al. (1993), Grove (1998),

Hou et al. (1991), Hurst (1995), Janis (1982), Kleindorfer et al. (1993),

Kotter (1996), Olins (1997), Rickards (1999), Semler (1993), Trist (1978) and

Wheatley (1994).

4.3.2.2 Domain II—capability

The three components grouped under this category were 'exceptional

individuals', 'full competencies portfolio' and 'capable implementation'.

Exceptional individuals (IIa)

Descriptor Statement: 'Outstanding people occupy key roles'.

Case example:

The observation below was made by the organisation development manager

of a multi-national chemical company. He said:

"There are certain tasks for which we need to employ the best inthe world. We have a 'rare and critical skills' strategy fordefining, finding and retaining R&D key staff".

This informant then went on to describe, in depth, how the company had

recognised the need to be world leaders in certain science application areas.

This, they believed, could be partly accomplished through employing 'the

best' people. Accordingly, the company's Human Resource Management

department had a established a 'rare and critical skills programme'. This was

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funded with million of dollars annually and sought outstanding individuals

globally, making them offers that it was difficult for them to refuse. Much

attention was paid to compensation, with considerable weight placed on stock

options. The company had achieved world leadership in several of its

products.

Principal dimensions of the component

This research indicates that the quality and motivation of key people makes

an important, sometimes critical, contribution to innovation capability (both

full-time employees and/or those on a time-limited contract). Interviewees

argued that there are situations where only a limited number of exceptional

individuals can make an exceptional contribution. This flowed from their

credentials, specific expertise and/or personal qualities. Two examples,

provided by informants, make the point. Only a small number of people

(estimated at 50 in the world at the time) could contribute creatively to a

research project employing the findings of the human genome project for the

development of a new pharmaceutical drug for the treatment of CJD disease.

Secondly, it was considered that there are fewer than 400 people in the world

who could produce a innovative and critically acclaimed ballet choreography

for the Royal Ballet. Technical idea generation was widely reported as

requiring specialist expertise (sometimes requiring teams of able individuals).

Not all rare and critical skills are professionally-based. Some individuals are

reported to be unusually effective in finding solutions to challenging

problems. Others act with skill in a managerial capacity, channelling the

resources of others to accomplish novel projects.

The analysis of the data-set suggested that 'exceptional individuals' required

analysis of the need for critical skills, proactive HRM policies for recruitment

and retention and able people in innovation intensive roles.

The analysis of the need for critical skills provides a basis for targeting search

procedures and determining what conditions need to be provided in the firm

in order to attract the 'right' people. In effect, the firm needs to market itself

to high potential recruits. One company defined its goal in this area as

"becoming the employer of choice" for such key staff.

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Proactive HRM policies for recruitment and retention are needed to implement

the activities mentioned above; specifically, competency need identification,

searching, selecting, inducting, motivating, rewarding and retaining

exceptional people in innovation-intensive roles. The roles of departments of

Human Resource Management varied significantly but in larger innovative

organisations (for example, SmithKline Beecham, the New York Police

Department and Thames Water) the task was well-resourced,

professionalised and committed to organisation development using

variations of the strategic partner role model.

Having able people/teams in innovation-intensive roles provided the quantity and

quality of human resource required. Several informants made the point that

innovation may require particular, sometimes rare, talents, knowledge-sets,

skills, motivations and/or accumulated experiences. Innovation patterns

change over time, requiring the re-allocation of talented individuals to new

tasks. In some cases teams, rather than individuals, were the focus of

concern—especially in international or global companies where the

development of centres of excellence was a common strategy for

institutionalising innovation across multiple product lines.

Literature support

A considerable amount of attention has been paid to organisational

resourcing, with relevant literature being produced by human resource

management specialists. References supporting the conclusions of this

research related to the component can be found in Argyris (1994),

Coles (1996), Collins (1996), Delery and Doty (1996), Fox and Webb (1997),

Gill et al. (1993), Goldberg (1983), Hertzberg (1966), Kelley and Caplan (1993),

Lane and Maxfield (1996), London and Higgot (1997), Lumpkin and

Dess (1996), Maslow (1965), McGovern (1994), Pemberton and Herriot (1993),

Quinn et al. (1996), Scarborough (1996), Schein (1978), Scott and Bruce (1994),

Tampoe (1993) and Ulrich (1997).

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Full competencies portfolio (IIb)

Descriptor Statement: 'All necessary competencies70 are available or being

made available (specifically norms, assets, technologies and skills)'.

Case example:

The observation below was made by a senior manager in a multi-national

chemical company. He observed:

"R&D found it was very helpful to define the need for fasterdevelopment of new products as 'improving development cycletime'. In R&D eight distinct proficiencies were identified. Thesewere strategic technologies, smart scanning, portfolio and assetmanagement, product development expertise, informationmanagement, risk management, company-wide influence andexternal customer influence) and a process-owner identified foreach."

This company had invested several person years of time (facilitated by

leading consultants) in considering how to improve the innovation process

from an R&D perspective. The final list of 'proficiencies' had been condensed

from a much larger number (more than 100) and had been agreed at top

level. The company recognised that merely identifying a proficiency was

insufficient: a managed development process was needed. In order to

co-ordinate this a 'process owner' was appointed who was answerable to top

management and could call upon considerable resources.

Principal dimensions of the component

The deliberate development of 'hard' and 'soft' competencies, either together

or separately, was noted in most cases. 'Hard' refers to competencies that

require changes in systems, equipment, processes, investments, asset

utilisation and the like. For example, one company in the research sample

linked sites around the world with a company-specific CCTV satellite system

to enable teams to engage in transnational interactive work (a process

innovation). This required investment in the hardware and the development

of new behaviourial skills amongst team members ('soft' competencies).

70 The researcher is aware that definitional problems have resulted in a variety of meanings

ascribed to the term 'competencies' resulting in the term being obscure, ambiguous orcontradictory. However, this is the word that managers use and has, accordingly, beenadopted in this work.

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In smaller firms managers the assessment process was less formal, in effect

managers asked themselves 'what do we have to be good at to get this

done?' Some larger firms adopted a systematic audit procedures

(e.g. technology audits). Not all innovation initiatives required significant

competency development, especially if they emerged from a continuous

improvement process. However, some innovations required the

development of new, enhanced or extended 'hard' competencies. For

example, an electronics firm seeking to develop greater expertise in new

product development needed to develop competencies in stage-gate decision

making, fast-track NPD and early-warning of delay that has been reported

upon elsewhere (Bessant and Francis, 1996). Firms saw that it was necessary

to possess, have access to, or develop all of the needed competencies, as

noted by an informant who said "if you lack something critical you've got a

weak link. It can scupper you."

Asset upgrading was, in some cases, as simple as providing a new machine or

upgrading computer software. At a meta-level many firms undertook an

assessment of asset development needs related to the firm's espoused

strategies—in particular related to technologies. Only a few firms used formal

methodologies for technology appraisal, technology portfolio analysis,

technological trajectories assessment, technology bench-marking and

procedures for matching technological capability with product-market

strategies. However, even informal assessments of asset development needs,

flowing from business planning decisions, could have far reaching

consequences; for example, the move to digital transmission in television

broadcasting required considerable asset investment for an advertising

company and acquiring skills in the use of different technologies (digital video

tape editing, for example).

The analysis of the data-set suggests that 'full competency portfolio' requires

analysis of total competency requirements and co-ordinated competency

development.

The analysis of total competency requirements required the development of a

conceptual map of what might be needed, although, typically, this would be

changed over time. The analysis generally had implications for firms' budget

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provisions and resource allocation decisions. In one case, the specification of

needed norms, assets, technologies and skills provided a coherent

developmental plan for the organisation.

Co-ordinated competency development was practised with different degrees of

formalisation. The example mentioned above, related to the company-specific

CCTV satellite system, indicates that a series of commitments and initiatives

were needed to enact a relatively straightforward innovation. This was

commonplace. It was stated, revealingly, by one informant that "the secret is

that you need to get all of your ducks in a row". By this she meant that

developing partial competencies or not correctly timing multiple competency

development would result in the required portfolio of competencies being

unavailable or sub-optimised. This was considered difficult to manage since

firm-, process- or project-level competencies often required initiatives across

the organisation, invariably involving several line managers except in micro

enterprises.

Literature support

The findings of this research broadly support the contentions of theorists who

advocate a resource theory of the firm (see Chapter 2). References supporting

the conclusions of this research related to the component can be found in

Aviel (1996), Bessant and Francis (1996), Boyatzis (1982), Butler (1992),

Butler (1992), Chiesa et al. (1996), Christensen (1997), Coombs (1996),

Dai (1995), Dess et al. (1995), Galbraith (1973), Grupp (1994), Hales (1995),

Hamel and Prahalad (1994), Johnson and Kaplan (1987), King (1995),

Lloyd (1994), Mitrani et al. (1992), Nakamoto (1996), Prahalad and

Hamel (1990), Sculley (1988), Szanto (1994), Tanouye (1995) and

Utterback (1994).

Capable implementation (IIc)

Descriptor Statement: 'Ideas are successfully transformed into action

programmes'.

Case example:

The transcript below is an extract from a discussion between two managers in

a firm that designs and manufactures complex product systems:

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Manager A: "Okay. Let's assume that's a 'go' decision and a 'go now'decision."

Manager B: "The first thing that's going to happen then, is that the proposalthat will be put back to JC (John Cole, Director), at which point the firstthing that will happen will be the appointment of a programmemanager. Realistically, unless everything turns upside down, that willbe Jeannette to continue. And with that she will get her defined taskand budget."

Manager A: "Right."

Manager B: "From there she has got to turn that in the normal programmeform into work packages and assign various people to the team. Nowat the moment, up to that point it's fairly self-contained because it'sonly involving the people that have been working on the initial part.Then under PM (project management) methodology, that should thenbe assigned as work packages to TLs (team leaders) who take on thedesign to cost. It's an assigned work package for which you areresponsible for an assigned task and assigned budget."

Manager A: "And the assigned task includes success criteria?"

Manager B: "It should represent a total package with deliverables."

Manager A: "Right, okay. Understood. All the parameters."

The process being discussed here is a project management approach that

integrates the work of up to fifty teams working on the development and

manufacture of a complex electronic and mechanical product. Key points

included the appointment of a programme manager (Jeannette), adoption of

resource planning methodologies and the imposition of an detailed project

management system that standardised planning and delegation of tasks (as

work packages) to team leaders. These were seen as essential procedures for

transforming an idea into a project.

Principal dimensions of the component

Implementation of innovation initiatives was a major preoccupation with

companies. It was pointed out that implementation processes can be highly

issue-specific and demanding. As one informant put it "it's far easier to come

up with an idea than get it done". The quantity and complexity of

implementation requirements varied widely. For example, a health club

decided to install do-it-yourself fat monitoring meters in locker rooms. All

that needed to be done to implement the idea was to raise a purchase order,

instruct suppliers and arrange when the equipment was to be installed. In

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contrast, a pharmaceutical company changed its role in relation to the

diabetes from being a supplier of drugs to offering a full disease management

to governments for an annual fee per 100,000 of population. In this case, the

implementation of the idea required setting up an entirely new business with

specialised assets in a pioneering area. Implementation issues were described

by informants in ways that can be conceptualised as on Figure 4.3.

Incremental Transformational

Low Asset Intensiveness

High Asset Intensiveness

Routine Adaptation

Major Programme /

Project

Systemic Change

Programme

Figure 4.3: asset intensiveness and innovation requirements

On this figure the vertical axis represents the degree to which the idea

requires an intensity of commitment of assets. The horizontal axis represents

the extent to which the systems and routines of the organisation require

systemic change. Certain tasks of implementation (for example, fat monitors

at a health club) were performed by the routine adaptation systems of the

organisation, generally through a form of management by objectives

approach. More demanding innovation initiatives required programme and

project management. Ideas that are asset intensive and transformational (for

example, the diabetes health management system) required a multi-faceted

change programme.

The analysis of the data-set suggests that 'capable implementation' requires

effective transfer to the routine organisation and capable programme/project

management.

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The effective transfer (of innovation initiatives) to the routine organisation was seen

most clearly with innovations in product, where a new or different product

was developed and passed over to the routine part of the organisation for

production and roll-out. In a manufacturing environment, for example, there

were frequent comments about difficulties due to the lack of handover time,

inadequate design for manufacture, tooling problems and the like. Roll-out of

an innovative product from manufacturing into a distribution chain or for a

customer required a launch strategy that included marketing, sales and

logistics activities. It was pointed out, for example, by one informant that new

or improved products "needed to be sold to our distributors, the stores, the

magazines that influence customers, the customers themselves and the

regulatory authorities". In some cases 'roll-out' procedures could be

demanding, resource intensive and require multiple, choreographed and co-

ordinated initiatives.

Project management was used as a methodology to manage episodic tasks.

Where projects were large software programs were used to drive coherent

project management. Programme management provided, in a few cases, a

meta-level process for achieving broad objectives involving multiple projects.

Work packaging was used to define the content and scope of work to be

performed and to break this down into tasks that could be carried out by

work groups, matrix teams, organisational units and/or ad hoc groups.

Ownership clarification was universally implemented to determine the

allocation of responsibilities and authorities to named individuals or, less

frequently, groups. Monitoring was used to check performance and identify

where remedial or supplemental initiatives are required.

Literature support

Literature related to project management, distribution and marketing is

relevant. References supporting the conclusions of this research related to the

component can be found in Ayas (1996), Brady (1995), Brundenenius (1994),

Cusumano and Selby (1996), Fisher (1995), Frame (1994), Galbraith and

Nathanson (1978), Hamilton (1997), Harwood (1992), Hendry (1989),

Holt (1991), Karlsson and Ahlstrom (1996), Kawai (1992), Neale (1991),

Rickards (1999), Riccardi et al. (1996), Schwartz (1991), Taylor (1911),

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Tidd et al. (1997), Walton (1997), Warren (1994) and Wheelwright and

Clark (1992).

4.3.2.3 Domain III—culture

The three components grouped under this category71 were 'selective

empowerment', 'innovation demanded' and 'high enrolment'.

Selective empowerment (IIIa)

Descriptor Statement: 'Able people are encouraged to take initiatives

themselves'.

Case example:

The interview extract below is with a senior officer in a US police force that

was noted for adopting an innovative strategy.

71 'Culture' is a term that has been used loosely and uncritically in many contexts. Here the

researcher follows the view of Maanen and Barley (1985) who state "…the presence ofculture is displayed by the identification and elaboration of such matters as language…,totems, taboos, signifying codes, work and leisure interests, standards of behavior (andcharacteristic deviance), social classification systems, and jural procedures… From thedescription of these various domains, the analyst infers the pattern(s) said tosimultaneously knit the society into an integrated whole and to differentiate it fromothers" (32). Accordingly, the term culture is used from a sociological perspective.

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Researcher: "Have you adopted any form of empowerment strategy, ofenhancing the role and sense of powerfulness of people lowerdown in the organisation?:

Respondent: "In 1984 we were one of the first, probably the first, policedepartment in the country to embrace the philosophy ofempowerment. We had a programmatic, which eventuallybecame a city-wide, programme. Beginning about 1989, 1990,we went the whole hog. In the prevailing community policingphilosophy of the time the idea was to empower the policeofficer. The police officer was to become, in effect, the chief ofhis or her beat. We tried to give them the maximum resources,tremendous discretion, they were basically able to make theirown hours, to address problems as they saw them, we putmore focus on the police officer. We inverted the typical powerpyramid throughout the agency. In the long run we found thatwas not effective. The basic problems was that you wereasking a 23, 24, 25-year-old officer who was at minimum ahigh-school graduate and probably had a little bit of collegeeducation to be a police executive within his or her limitedscope, limited jurisdiction… Some of them did it with aplomb.After Commissioner B came in, we did an analysis of what waswrong… We found that the level of the pyramid where mostof the authority should be invested, and discretion, was at theprecinct commander level. They were older, they wereexperienced, they had the education, they had the skills toproperly use that authority and discretion… One of the thingsthat we have done, is to empower the precinct commanders, togive them the maximum control over the resources available.They are now the chief of the precinct. And we've said to them'You know what we are going back to the old days; the copworks for you again, you don't work for the cop'."

In this interview the senior police officer described difficulties in applying the

principle of empowerment. He made the point that it was beneficial to

empower employees who are able and willing but it can be dysfunctional to

empower those who are not. It was clear, at least in this case, that

empowerment was not a panacea and inappropriate use of the managerial

strategy can result in a decline in the organisation's effectiveness, including its

innovation capability. Later in this interview it was stated that innovation

required that a co-ordinated (i.e. not piecemeal) set of values was adopted.

Ideas could come from below but needed to be assessed in the context of the

overall organisational strategy.

Principal dimensions of the component

Most firms studied were following a strategy of empowerment, generally as

a deliberate policy, although, often, "avoiding the e-word"! The rationales

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offered for adopting empowerment had two principal elements. Firstly,

managers argued that innovation initiatives should not be solely owned by

top management since that would reduce the quantity and, arguably, the

quality of innovation undertaken. Secondly, top management considered that

the best place to take an initiative was, often, close to the opportunity, rather

than remotely, since enthusiasm and knowledge were located there. Policies

of empowerment required a change of style, especially from management as

the following quotation makes clear: "(t)he dictatorial approach has

gone—mushroom management has gone—now everyone knows where

problems lie as information is shared… Last year's strategic plan was bottom

up." Empowerment was usually supported by training and represented a

major shift in culture for many firms. There were contingent changes in

structure, power relationships, accountabilities, communication,

decision-making and, occasionally, personnel.

The analysis of the data-set suggests that 'selective empowerment' requires

that the prevailing management style supports empowerment, personal

potential was developed and that there was a generalised 'can do' ethos.

A management style that supports empowerment was widely, but not universally,

adopted. This was not easy to achieve since it required changes of attitude

and behaviour, especially from the firm's ruling elite. Some behaviourial

routines needed to be unlearned and others acquired. It was considered that

managers needed to move in largely the same stylistic direction. Of particular

importance was the adoption of a set of values that could be broadly

categorised as 'theory Y'72 (McGregor, 1960). At the team leader level almost

all companies were redefining the roles of supervisors into acting as coaches,

facilitators and patrons.

The development of personal potential was often considered necessary for those

being empowered since, it was argued, they needed to be capable of coping

constructively with a larger opportunity space made available. Sometimes

imaginative methods were used to develop the sense of self, personal power

and inner resourcefulness with forms of outward bound training being the

most common.

72 Only one company actually used the Theory X, Theory Y terminology.

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A generalised 'can do' ethos provided confidence in permitting and

encouraging the development of ideas. A collective sense of 'organisational

empowerment' appears to enhance collective efficacy, thereby supporting

innovation. One informant put this vividly when he said that many things

changed after the management team "grabbed hold of our own destiny".

Literature support

Literature relevant to organisational culture provides insight. References

supporting the conclusions of this research related to the component can be

found in Ashkenas et al. (1995), Bhalla (1995), Binney and Williams (1997),

Block (1987), Burdett (1991), Burgoyne (1995), Coyne (1996), Curteis (1997),

de Bono (1999), DTI (1994), EBC (1997), Gallwey (1974), Grapper (1996),

Herman and Korenich (1977), Ketchum and Trist (1992), Pfeffer (1994),

Senge (1992) Schonberger (1996), Sell (1997), Semler (1993) and Tichy and

Cohen (1998).

Innovation demanded (IIIb)

Descriptor Statement: 'People are required to innovate—there is an expectation

placed upon people that innovation is a core component of their role'.

Case example:

The conversation below is part of a transcript of a meeting of the senior

management team of a company marketing perfumes and related goods.

Managing Director:

"I think that this is a very interesting point. We sell 10% moreperfume today than ten years ago. It is very important todistinguish between the growth of the retail business and theshare of different channels of distribution. It is also possible thatwithin different product categories the story is very different.The range of products is very different. I encourage everyone tobe very clear as to what the issues are (MD goes to the flipchart).

"Take gifts to spouses and partners. The image was that thesegifts were a very high proportion of sales. The reality is that it is35-40% (writes on flip chart).

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"Another category is women to women (writes a figure on flipchart). What seems to me to be important is that the percentageof women to women giving is the same but the products havechanged.

(Reflectively) "What has changed is the pattern of women towomen giving. Is the reason for the change economic or social?"

Horace:

"It's young women who do this. It's a type of social experience."

Managing Director:

"We need to be very clear about this, and we are not (seriouslyspoken). I think that it is a responsibility of all of the seniormanagers in this room to have a deep understanding of socialforces and broad market trends. There is a gradualdiversification of the market. The interesting question is what ishappening in the women to women giving area? We need tounderstand this if we are going to roll-out the right newproducts in ways that catch tomorrow's markets."

In this section of the meeting the managing director led a reflective

conversation on the nature of market trends in the firm's products. He paid

attention to factors affecting purchasing patterns and assertively made the

point that he expected senior managers to have a deep understanding of

market trajectories. It appeared that he was demanding their commitment to

a broad process of defining opportunity space for innovation. This

expectation was repeated several times in the meeting

Principal dimensions of the component

The data available indicated that senior managers 'pushed and pulled' staff

towards being innovative. They attempted to manage the regime of

expectations in the company so that innovation was expected, sometimes (as

in the case extract above) demanded.

Generally, firms had a management by objectives (MbO) system,

supplemented by frequent informal sessions. This was widely used to drive

innovation once a decision was taken to commit the firm to a particular

initiative. The acquisition of an objective focused a manager's efforts,

provided legitimacy for committing resources, provided a monitoring regime

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and acted as a discipline. The appraisal interview was used as a driver of

innovation in some larger firms, but infrequently in smaller concerns.

The principal formal methodology used for heightening expectations that

innovation was expected was the adoption of continuous improvement or

kaizen philosophy (Imai, 1986). This provided an overarching value system, a

source of inspiration and a tool kit. Informally, the expectations of peers

sometimes established expectations of innovation-supportive behaviours,

especially in firms in knowledge-intensive industries

The analysis of the data-set suggested that 'innovation demanded' required

high expectations from opinion leaders, innovation goals were set, innovation

was recognised and rewarded and that continuous improvement (kaizen)

was institutionalised.

High expectations from opinion leaders legitimised, encouraged and cajoled

employees to be innovative. This could be effective at every level—there are

many specific cases (more than 200 examples) where shop floor workers

were innovative. Expectations could become a dimension of culture, forming

an element of the normative structure of the firm. New employees were

socialised into adopting such behaviours.

When innovation was included in goal setting processes it had the effect of

focusing attention on improvement areas and the identification and

realisation of opportunities. Innovation goals were explicitly included in some

objective setting and appraisal systems, especially where these were based on

the balanced scorecard approach (Kaplan and Norton, 1996). The data set

suggests that objective setting is a common way that innovation initiatives

are managed within firms.

Recognition and reward for innovation provided reinforcement, both for the

person being rewarded and others who aspired to gain similar benefits. Few

of the companies studied provided outstandingly lucrative innovation specific

rewards; rather the emphasis was on recognition and honouring innovation.

When continuous improvement (kaizen) was institutionalised it legitimised the

involvement of everyone in the organisation in innovation. The CI approach

was frequently combined with team-based management. However, it was

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not perceived as simple to install and maintain as multiple changes in values,

attitudes, behaviours and norms were required.

Literature support

Additional material can be found in motivation theory and organisational

sociology. References supporting the conclusions of this research related to

the component can be found in Bratton (1995), Coyne (1996), Delery and

Doty (1996), Drucker (1994), Fiol (1991), Goffee and Jones (1996), Kaplan and

Norton (1996), London and Higgot (1997), Neale (1991), Pearson (1997),

Roethlisberger and Dickson (1939), Tampoe (1993), Tichy and Sherman (1995)

and Tranfield and Starkey (1997).

High enrolment (IIIc)

Descriptor Statement: 'The firm's culture supports novel ideas and getting new

things done'.

Case example:

The following quotation is from notes taken during an interview with the

manager of an international computer company's UK operation:

"A manager's role is to motivate staff and colleagues. By andlarge we are a highly motivated and committed team. Thiscompany is particularly good at pulling teams together for aspecific sales project where expectations and tasks are set earlyon. This sort of project has to deliver a solution that fits. Theaction-oriented, task-focused culture makes this happen.Leadership comes from within the team, not necessarily basedon status but someone takes the lead 'who will get the bricksout of the way' and allows the team to get on with it… Thesystem encourages everyone to contribute and it is a challengeis get more people taking the lead. Formally teams are recruitedon technical skill mix not personality. Behaviour is dealt with aswe go along… There is a strong culture of 'what you measure iswhat you get' so team goal-setting is very important. There willbe a need to develop the ability for people to cope withambiguity. The concept of virtual teams, virtual resources in aculture of flexible innovation will evolve, it is not something thatcan be managed or controlled."

This informant was suggesting that culture was pervasive and could enrol

staff. Culture was shaped by many factors, including leadership style,

empowerment policy, motivation, team building, goals, measures and

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individual skills. She considered the firm's culture provided a foundation for

the multiple initiatives and suggested that "it is not something that can be

managed or controlled". This organisation was frequently developing new

solutions to client's problems and was project organised. The quantity of

innovation initiatives was high and the specific attributes of the culture

described above were seen by this informant as the bedrock of innovation.

Principal dimensions of the component

An analysis was undertaken of 62 cases in order to indicate possible

dimensions of culture in innovative firms. The results of this analysis are

given in Figure 4.4 below:

21

18

1212

9 98

7 76 5 5 5

4 43 3 3 3 3

0

5

10

15

20

25

Open

Performance-orientated

Communicative

Developmental of People

Fair

Trusting

Involving everyone

Empowering

Supportive

Honest

Challenging (targets)

Responsive

Listening

Innovative

Delegating

Celebrating

Partners

Leaders

Flexible

Promote enjoyment

Figure 4.4: cultural factors

'Openness' was mentioned most frequently, followed by 'performance

orientated'. The firms appear to be people-orientated and 'hard-nosed' at the

same time. Openness was seen by informants as key to enrolment. In one

case, the top managers of a company offering high-level professional

(consulting) services identified that the competitive strategy of the firm

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"requires change in leader behaviour, myths, stories, symbols,

communication patterns, power bases and structures, rites, habits, routines,

change expectations, status, rewards, aspirations, discipline—the sociology of

the business".

The analysis of the data-set suggests that 'high enrolment' requires open 3

way communication, positive regard (for staff) and commitment to the

company.

Open 3 way communication was described as being necessary to build a unity of

purpose—a sense that meanings are shared. This point was made by one

manager who said, "success over recent years has created a culture of

openness to ideas and opinions that are listened to, reviewed and acted

upon". Blame minimisation was said to be an important norm as inevitably

difficulties occurred during innovation initiatives and these needed to be

confronted as problems, not personal criticisms providing employees acted

with diligence and commitment. In firms that reported progress in this area,

raising a problem was seen as a sign of strength. One firm made this a key

element of its culture development: "we decided we had to remove the blame

culture, if someone makes a mistake and admits it, then no blame accrues but

he or she must help work out how it happened so that it can be prevented in

future". Openness in lateral and upwards communication was cited as being

important as it permitted sensitive or critical issues to be dealt with directly by

those with the authority to resolve the matter.

Positive regard was described as enabling people in the firm to feel that their

contribution was valued. There were many examples. One firm thought of a

novel way to do this: "we wanted all staff to feel part of the firm—everyone,

including drivers, has a personal business card." It was stated as important

that such initiatives need to arise from a real (not fabricated) respect from

managers towards employees. The perception of fairness was deemed to be

important by the majority of firms. One managing director put it this way,

"our approach is to treat everyone fairly and with respect. We work hard at

being consistent in this."

Commitment to the company was a generalised characteristic that was observed

in most, but not all, of firms surveyed. Commitment appeared to liberate

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enthusiasm that could be directed towards innovation and provide an

'energising force'. There were suggestions that a high level of commitment to

the company helped to reduce perceived risk levels associated with

innovation and support people though, inevitable, set-backs.

Literature support

Literature related to communication and persuasion is particularly relevant to

this topic. References supporting the conclusions of this research related to

the component can be found in Baker (1980), Barrett and Cooperrider (1990),

Block (1987), Coyne (1996), Curteis (1997), Fiol (1991), Granell et al. (1997),

Hastings (1993), Harrison (1983a), Heraculeous and Langham (1996),

Leonard–Barton (1995), Litwin et al. (1978) and Schein (1986, 1996 and 1997).

4.3.2.4 Domain IV—learning

The three components grouped under this category were 'continuous

learning', 'acquiring multiple perspectives' and 'fruitful linkages'.

Continuous learning (IVa)

Descriptor Statement: 'Learning and knowledge management processes

support the firm's innovation agenda'.

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Case example:

The following description was provided by a senior manager in a global

information company:

"Training is key in our Technical Department, changes such asthe move from Windows to NT or changes to their ownproducts, mean that the department has to quickly re-trainpeople in the new skills. This is done through formalexternally-sourced courses and through CBT and workbookself-learning methods. There is a structured approach todeveloping people. Sales Department have a developmentprogramme to train in new skills. The sales force have toaddress more technical problems than they used to, issues ofintegrating our products with existing systems and the productis itself more technical than it used to be. There is a programmefor passing on skills within the department, learning from eachother. In Client Training there is now a structured programmethat means that people are getting up to speed much faster andare therefore more productive. The downside is that they arethen looking to move on more quickly than they were, ofteninto other parts of the business. Account teams were introducedin 1990-91 as the basic way of working. It had to be driventhrough, it took a lot of management time, with workshops,case studies learning programmes to develop the understandingbehind the reasons for working together. It has not always beeneasy, technical and sales staff are very different people but itnow works very well, team incentive schemes have helped pullthe teams together. It has improved customer satisfactionlevels."

In this interview extract, training and the management of learning were used

to facilitate the innovation process, especially the deployment of changes in

processes (such as the move from Windows to the use of the NT platform).

The use of managed learning processes was reported to have assisted

individuals to cope with specific process changes and with broader contextual

challenges, such as the "sales force have to address more technical problems

than they used to".

Principal dimensions of the component

The notion that training can be a multi-purpose driver of innovation

capability was widely accepted. Training was seen as one of the few

systematic tools available for a company to 'feed the minds' of employees. It

can be a mechanism for effecting socialisation and/or persuasion. Frequently,

progressive ideas were introduced through formal training programmes. In

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addition, it was suggested that the experiential formats commonly used

promoted a sense of personal power (efficacy) amongst participants. Since the

company was paying for the event, and generally sanctioned the curriculum,

legitimacy accrued to the content of training programmes. Moreover,

training programmes could provide an opportunity for people in different

parts of the organisation to form informal bonds. Such networks were

influential in the innovation process as they provided an informal distributed

support structure for initiatives. Expertise was thought to have 'a half-life'

although the redundancy rate varies by task or profession. It was considered

that those at the cutting edge of a firm's innovation (i.e. are dealing with

initiatives which require commitment decisions, are key differentiation factors

or have a significant effect on the cost structure of the firm) need to maintain

a high level of expertise, with frequent updates of theory and practice.

The analysis of the data-set suggests that 'continuous learning' requires

enabling learning, competency development, training in team-working and

problem-solving, knowledge management, exploratory dialogue and

experimental initiatives.

Enabling learning assisted directly in the development of innovation initiatives

in several ways. Some firms established an innovation intent (i.e. an area of

opportunity) that required learning to be "sized and scoped", and/or an

innovation initiative was selected that required learning to proceed on an

innovation process, and/or learning acted as a generalised source or stimulus

of innovation initiatives.

Competency development helped provide the necessary motivation, attitudes,

skills and body of knowledge for tasks to be fulfilled in a superior way (see

Klemp Jr., 1980 for further explanation). Almost all firms studied had invested

significantly in training and employee development (2% of emoluments was

typical). One manager summarised the underlying principle by observing

that "people on top of the job are more likely to come up with good ideas".

Training in teamworking and problem-solving was undertaken by the majority of

firms. The skills of working in teams and using a team context for identifying

and solving problems were widely considered to be important. This required

a facilitating and coaching style from team leaders. Such training sometimes

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included aspects of creativity skills, including brainstorming, idea generation,

idea evaluation etc. Generalised 'team effectiveness tool-kits' were used

formally in some teams (e.g. time was set aside for a brainstorming session)

but, more frequently, a team approach became part of the firm's normative

structure.

Knowledge management consisted of activities undertaken by firms, especially

those in 'knowledge-intensive' industries, to develop, codify, store and share

knowledge systematically or develop a context in which this could be done.

Multiple learning and sharing processes were in place in a few firms using

formal and informal methods for dissemination and knowledge enrichment.

Most companies in the database had not adopted highly structured

approaches, although the topic was discussed and means to effect knowledge

management were being sought.

Exploratory dialogue was a widespread activity, often enabled but not

intensively structured. In essence, it consisted of people 'who got together to

talk things through'. The combination of exploiting a spread of experience,

open dialogue, building on others' ideas and exploring issues was cited as

being related to innovation intensity.

Experimental initiatives were found in some cases. Activities were undertaken

to try out ideas or, simply, to become involved in an field of endeavour. The

underlying theory of action was 'there comes a point when you have to get

involved'.

Literature support

There is an enormous body of literature on learning organisations and

training methodologies but much is professional rather than academic.

References supporting the conclusions of this research related to the

component can be found in Argyris (1977), Barrett and Cooperrider (1990),

Bennett and O'Brian (1994), Bentley (1992), Boyatzis (1982), Carnell (1990),

Culbert (1975), Ghoshal et al. (1992), Henderson and Lentz (1996),

Jackson (1998), Mayo and Lank (1994), McNally et al. (1996), Morgan (1993b),

Musson et al. (1997), Nolan (1979 and 1984), Pedler et al. (1991), Senge (1992

and 1996) and Tichy and Cohen (1998).

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Acquiring multiple perspectives (IVb)

Descriptor Statement: 'People with specialised expertise and/or distinctive

perspectives are valued, accessed and influential'.

Case examples:

In a confectionery firm a middle manager made the following statement:

"I believe there is more feeding up of ideas than down. There isplenty of opportunity to put forward ideas and implementideas. Often this happens at the Monday meeting of seniormanagers. The manager to team leader meetings are chaired inrotation and not solely by the manager. This has brought aboutmuch more individual involvement. These meetings are run inan informal way. Such regular meetings help everyoneunderstand each others' problems and help foster a moresupportive attitude/approach from everyone. Positions andstatus within the firm are not seen to be of importance,everyone has a role to play within the team. Doors are alwaysopen therefore people feel able to talk freely about issues.People on the shopfloor see quite a lot of the MD. Supervisors'meetings have now progressed from the initial moan and groansession to very constructive meetings in which supervisors arefeeding up new ideas and suggestions for improvements. Thefact there are no unions is a good thing because managementwork directly with the staff, there are no intermediarycomplications. There is no problem in challenging the MD'sideas".

This informant suggested that there were no significant impediments to a

flow of ideas up the organisation and that there were several mechanisms

and routines by which this was achieved.

Principal dimensions of the component

The principal function of the activities described in this component was to

inform anyone who could participate in an innovation initiative of different

viewpoints, thereby enabling situations and opportunities to be considered

from multiple perspectives. This was not considered easy to do.

Knowledge-holders could be reluctant, unavailable, uncommunicative or

incomprehensible. Potential knowledge-acquirers could be influenced by

negative stereotypes, or be ignorant, rushed or dismissive. The sharing of

specialised knowledge or complex arguments presented a demanding

communication task. This could be accomplished more readily if 'knowledge

masters' were valued. It was suggested that innovative organisations need to

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recognise opportunities (and threats) quickly and rapidly—and effectively.

Firms were engaged in learning about the four areas shown in Figure 4.5

below.

OpportunitySpace

Customer Needs - Actual

and Potential

Firm's Advantage Potential

Firm's Strategic

Intent"What we

want to do"

"What we could do"

"What customers want"

"What will benefit us"

Figure 4.5: areas for learning

All four areas were explored interactively, generally by the firm's power elite,

and can be considered as more than a scanning process since substantial

learning was involved. Interestingly, there was evidence that such questions

were addressed widely, especially in organisations in which it was felt that top

management were open to influence.

The analysis of the data-set suggests that 'acquiring multiple perspectives'

requires hearing subject specialists, out-of-field agents and in-business agents.

Hearing subject specialists meant learning from those who had expertise in

relevant industries and/or insight into potentially relevant technological or

market trajectories. Subject experts (e.g. scientists) were deemed to have

relevant knowledge but significant decision-making could not be passed to

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them as, it was considered, they could be limited by narrow thinking,

adopting partisan viewpoints and/or making errors of judgement. Industry

specialists aided trajectories to be tracked thereby assisted in the identification

of signals that may affect strategy and/or operations. Mechanisms for

identifying, processing and selecting information from industry specialists

assisted in scenario development and exploration.

Hearing 'out-of-field' agents was relevant for similar reasons to those given

above. An 'out-of-field' agent was someone whose experience came from a

different perspective—for example, one firm invited a head teacher from a

local school to undertake a diagnostic audit. Several firms deliberately

'hunted' for ideas. This they saw as a deliberate act with a quarry in mind. In

some cases naivete was considered the main contribution but new

perspectives, generally through the use of consultants, advisors or critical

friends, introduced different business models and a wide variety of

perspectives and suggestions. Considered particularly valuable were people

who understood unconsidered technologies that may influence the firm in the

future. In addition, a few firms systematically gathered information and ideas

from suppliers and representatives of downstream channels.

Hearing in-business agents refers to facilitating and hearing the views of those

who actually do the work of the organisation, especially those in the

operating core and/or customer-facing areas. This was a major wellspring of

innovation in most firms. As has been mentioned above, ideas and

intrapreneurship can be widely distributed across in organisations.

Mechanisms for capturing ideas, bringing them to the attention of

decision-makers and the openness to consider them were considered

important.

Literature support

The body of literature on the learning organisation, especially that related to

appreciative enquiry techniques, is relevant. References supporting the

conclusions of this research related to the component can be found in

Argyris (1993), Augsdorfer (1994), Bennett and O'Brian (1994), Bessant and

Francis (1999), Burnett et al. (1995), Bushe (1995), Casey and Pearce (1977),

Cooperrider and Srivastva (1987), Easterby–Smith (1997),

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Ghoshal et al. (1992), Janov (1994), Lave and Wengler (1991), Leonard and

Rayport (1997), Mintzberg et al. (1998a), Schroeder et al. (1989),

Simonton (1992), Waterman Jr. (1992) and Weisbord and co-authors (1992).

Fruitful linkages (IVc)

Descriptor Statement: 'People in the firm are inspired and enabled by contacts

with other organisations'.

Case example:

The interview extract has been taken from an interview between the

researcher and a line manager responsible for installing ISO 9000 into Roda,

an international cleaning company based in Hong Kong.

Respondent: "Initially I needed a consultant to come out and really look atthe system that Roda had. I had to have a consultant who hadindustry experience plus a good deal of exposure to ISO 9000.And that was the starting point. We had to identify some majorprojects which we would use for trail blazing."

Researcher: "Did you have a philosophy of how to introduce it?"

Respondent: "There was a lot of work to do by way of analysis—that waslargely myself with the help of the consultant. They told me inDecember that it was decided by the Board that it was going togo ahead and I contacted the consultant who I thought wasright, having met him in England—there were no consultantsin Hong Kong who had the necessary industry experience.That was very important and given the fact that I didn't have ahuge amount myself and from there the consultants sent meover things to look at before he came over, that was inOctober. Which I did. I looked at a lot of information andreading material about the subject and then it was trying todraw lots of flow charts of the system that Roda had andwhere things fitted in."

Researcher: "And how did you find other members of the organisationresponded to it?"

Respondent: "At this stage they weren't involved very much at all. For tworeasons: the Directors had said all along that it was going to bereviewed after each consultant visit to see whether it ispractical. So to begin with I wanted to have all the Rodasystems on paper as I saw it for the consultant then to comeover to look at it and to expand the areas of the quality systemwhich I didn't have enough knowledge of. And he had a verygood working knowledge of quality and systems."

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Researcher: "What were your feelings as you were working through this?"

Respondent: "We identified one plant manager that would be very good athelping to implement this type of system. It felt good when wegot the thing moving. We sent this guy on a five-day LeadAuditor course to learn more about the system itself and thepitfalls that it can entail. But also the initial ideas of auditing sothat it made a review of the industry possible."

This interview presented an example of one kind of interaction between an

organisation and external organisations. In this case the consultant was acting

as a holder of specialist knowledge and transferring relevant knowledge into

the firm. It demonstrates the significant role that interdependent relationships

can play in stimulating and progressing innovation initiatives.

Principal dimensions of the component

External linkages were described as an important element in the development

of innovation capability and were generally context-specific. A linkage

provided a flow of ideas, perspectives and information over time.

Accordingly this component is closely linked with the preceding component

(IVb) but here the focus is on the conduit itself rather than receptivity. There

were many illustrations. For example, the Wool and Sheep Institute of

Romania reported on an initiative to form learning linkages with the

International Wool Secretariat in the UK. A firm in Malaysia sought to form

close informal bonds with key representatives of the regulatory authorities to

facilitate the development of the business.

Linkages could be categorised by purpose, including: learning, influencing,

procuring, alliance-building and selling. In each category examples were

given. Learning relates to formal relationships with knowledge providers,

informal learning relationships (sometimes with peers) and learning from

customer input. Influencing is concerned with gaining favour and signalling

the value of the firm and its products. Procuring includes suppliers,

service-providers and knowledge resources (e.g. consultancy reports).

Alliance-building refers to contractual relationships between firms established

for mutual benefit. Selling is the managing a persuasive connection with

current and potential customer groups. Effective linkages backwards (into the

supplier network), forwards (into the distribution network) and sideways

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(into the partner network) were seen as related to innovation capability by

many firms.

The analysis of the data-set suggests that 'fruitful linkages' required gaining

from external relationships and sustaining close customer relationships.

Gaining from external relationships required having effective processes for

finding linkages and maintaining those that, collectively, met the

organisation's needs in terms of learning, influencing, procuring,

alliance-building and selling. This required building multiple generative

relationships. Such linkages were often developed in several places within the

firm.

Sustaining close customer relationships was ubiquitous. Studying present, lost

and potential customers was an important source of learning for almost all

companies. However, simply listening to customers was insufficient for some.

As one informant put it, "if we just talk to our customers we won't hear the

voice of those who we want to be our customers". In larger companies

considerable resources were generally devoted to hearing 'the voice of the

customer', using a range of market research techniques.

Literature support

There is an emerging body of literature on learning networks and alliances.

References supporting the conclusions of this research related to the

component can be found in Bessant (1997b), Bessant and Francis (1999),

Butler (1992), Chaston (1995), Christensen (1997), Doz and Hamel (1998),

Leonard and Rayport (1997), Morris and Westbrook (1996), Nicholson (1992),

Tan et al. (1999), Voss et al. (1994), Webster (1996) and Wiggins (1955).

4.3.2.5 Domain V—structure and process

The three components grouped under this category were 'apt organisational

form', 'supported champions' and 'high performing new product and/or

process development (NP–PD)'.

Apt organisational form (Va)

Descriptor Statement: 'The form of the organisation helps, not hinders,

innovation'.

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Case example:

This is an extract of an interview with the manager of an advertising agency:

"We moved from a very hierarchical style of management to alinear approach. In past people only felt responsibility for onelittle bit but the ad industry is a holistic industry thereforepeople must have a holistic approach and feel that overallresponsibility… we believed the old way of working was notthe best way for the company or the people within thecompany. We needed a holistic approach and functionalstructures do not give that. After much consultation with staff, ittook a year from the conception of idea to implementation. Werecognised major change for people, and for the industry, thead agency operating in multi-functional teams, therefore neededto spend time getting it right and in preparing people for thechange. We linked the change in working practice to move ofoffices which facilitated teams to sit together. We recognisedpeople would take time to get used to the new approach andtherefore invested heavily both in time and money to make itwork. Now there is a much more holistic approach to business,people feel greater responsibility for entire campaign ratherthan seeing their input in isolation. There is a greater flow ofideas as people committed to the campaigns of their team. Also,there is a greater understanding of the different areas of workinvolved therefore more supportive to each other in the teamsand keener to help each other out if there's a problem."

In this example organisational changes are linked with meeting a requirement

to maintain an appropriate conceptual framework for innovation ("we

needed a holistic approach") and to meet a requirement for "a greater flow of

ideas". The organisational changes required multiple re-alignments;

specifically, of roles, affiliations, objectives, power-relationships and

knowledge sets.

Principal dimensions of the component

The majority of companies studied that had undergone organisational change

in the previous five years and were pursuing a common pattern. This had five

characteristics (pursued differently in firms). Companies were developing

team-based organisations, improving lateral relationships (especially related

to processes), using adhocracies, flattening structures and forming

partnerships with other organisations. One aim of initiatives was to enhance

innovation capability but other aims were pursued as well; specifically,

cost-reduction, motivational improvement, faster response-time and the

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development of participative management practices. Some large firms were

seeking different benefits (although the pattern described above could be

implemented as well). These firms sought to overcome the potential

disadvantages of 'balkanisation' into SBUs or fractals. Companies were:

building core competencies across business units, re-configuring business

units flexibly and developing cross-company management processes.

The analysis of the data-set suggests that 'apt organisational form' requires

innovation-enabling organisational design, use of organisation development

methodologies, the use of teams and adhoc groups and the development of

inter-team co-operation.

Innovation-enabling organisational designs were widely implemented. Many

'traditional' aspects of organisation were considered to inhibit innovation.

These included excessive formalisation, over-centralisation, rigid control

systems, slow decision-taking, lack of horizontal management and excessive

'balkanisation' (strategies formulated independently by small units within a

larger organisation to the detriment of the whole). Organisational designs

and enabling mechanisms were adopted that sought to mitigate potential

blockages and facilitate innovation.

The use of organisation development methodologies provided a means of

systematically collecting data about the innovativeness and effectiveness of

organisational units. This facilitated discussion that could lead to the

implementation of policies and practices that encouraged creativity,

opportunism, problem-solving and other generative processes. Here the role

of linkages such as Business Link (see IVc above) were sometimes important

as they acted as catalysts and provided, in some cases, suitable intervention

methodologies.

The use of teams and adhoc groups was widespread, almost ubiquitous. All cases

studied used team-based management approaches and firms established ad

hoc teams to manage innovation tasks, often using a multi-disciplinary

approach. As will be suggested in Appendix 8, the establishment of adhoc

groups is a significant means of accomplishing innovation. This happened

both formally and informally.

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The development of inter-team co-operation was significant as innovation

initiatives frequently required the co-operation of people across an

organisation's dominant structure, perhaps in an agile manner. As has been

discussed earlier, innovation initiatives often involve multiple actors who

need to co-operate in defining tasks as well as fulfilling them. In some firms

studied considerable efforts had been made to build inter-team co-operation

by reducing the effect of negative stereotypes and building enabling

mechanisms such as joint problem-solving meetings.

Literature support

Literature related to organisational design and development is relevant.

References supporting the conclusions of this research related to the

component can be found in Ashkenas et al. (1995), Ayas et al. (1994), Barrett

and Cooperrider (1990), Benton (1990), Blau (1962), Burgelman (1983),

Burgess (1994), Burgoyne (1995), D'Venti (1995), Eisenhardt and

Brown (1999), French and Bell Jr. (1995), Greiner (1972), Harrison (1995c),

Hersey and Blanchard (1977), Kanter (1983), Ketchum and Trist (1992),

Larson (1988), Maslow (1965), Pfeiffer and Jones (1978), Schein (1988),

Waterman Jr. (1992), Weisbord (1984) and Woodward (1970).

Supported champions (Vb)

Descriptor Statement: 'People with good ideas are encouraged to drive them

through'.

Case example:

This example is from an interview with the director of research for a

merchant bank:

Researcher: "So how do new markets, new ideas, new products getdeveloped?"

Respondent: "It is generally by a strong entrepreneur who has the strengthof personality and a loud voice. And a bullying manner. He hasto try to prove that he can make money in this area. One of theproblems in not being able to forecast what revenues may bein a particular area is that an attempt to prove a promising areacan be made with little investment in analysing theopportunity. However, since the opportunity may not exist,the whole thing is often based on judgement."

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This short extract from a longer interview indicates the role of the individual

intrapreneur in some forms of innovation. A case for undertaking an

innovation has to be made assertively and persuasively. In some cases, the

advantage may be speculative and so the intrapreneur needs to influence the

policy makers of the firm.

Principal dimensions of the component

The role of champions (those who drive ideas and initiatives through

organisational indecision and hindrances) and sponsors (members of the

firm's power elite who selectively support champions) was seen as an

important element in the innovation process by all except micro-firms (where

the role was generally played by the owner/manager). However, three

significant difficulties were described in implementing the concept. Firstly, it

was considered that just because someone believes passionately in something

does not mean that it is right for an organisation to support the proposal.

Secondly, since the act of gaining support for an idea was seen to be a process

of selling rather than explaining, it was considered likely that any potential

disadvantages would be understated by the advocate. Thirdly, depending on

champions to manage change "can be a hit and miss strategy" and the

question was asked "what happens if our firm needs to focus its innovation in

a particular area but a champion does not emerge?" Despite these concerns,

firms considered that championing ideas can be functional for the

organisation and had organisational legitimacy. In a few cases champions

were institutionalised, for example, by the allocation of a percentage of the

working week to personal projects. Sponsorship from a senior person within

the organisation was deemed necessary where there were policy implications

or significant resource commitments were required. Sponsorship provided

motivation for those involved, assigned resources and supplied a route into

the formal planning processes of the firm.

The analysis of the data-set suggests that 'supported champions' requires

legitimacy of the champion role, intrapreneuring attitudes and skills and

effective sponsorship.

Legitimacy of the champion role was seen as an enabling factor. The implicit

(sometimes explicit) mental model of the change process held by the power

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elite of the firm needed to incorporate the notion of champions, or the term

'intrapreneurs' was occasionally used. Particularly important was the firm's

status system and its mythology. If those who championed ideas were

honoured, or had positive stories told about them, this had the effect of

legitimising the role.

Intrapreneuring attitudes and skills were considered to include skills in

assertion, influencing, bootlegging, project planning, presentation,

alliance-building and project management. In larger companies some, or all,

of these skills were promoted by training programmes. However, there was

little evidence that a coherent approach had been defined or implemented.

The facilitation of intrapreneurial attitudes and skills was piecemeal.

Effective sponsorship was observed at the senior management level and

considered to include opportunity identification, coaching, supporting,

networking, critiquing and promoting. It was suggested that indifference or

lack of attention from senior managers dampened innovation initiatives as

people needed to feel 'appreciated'. The data related to this point suggest that

the sponsorship role is pursued largely informally.

Literature support

There is a relatively small body of research that deals with champions and

sponsorship of ideas. References supporting the conclusions of this research

related to the component can be found in Augsdorfer (1994), Beng (1993),

Burgelman (1983), Collinson (1993), de Ven and Angle (1989), Dean (1987),

Hatch (1995), Hendry (1989), Lumpkin and Dess (1996), Maidique (1980),

Peters and Waterman (1982), Pinchot (1985 and 1996), Reich (1991),

Roper (1996a), Schön (1963) and Sharpe and Keelin (1998).

High performing New Product–Process Development (NP–PD) (Vc)

Descriptor Statement: 'Processes for new product and/or process development

are fast, effective and efficient'.

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Case example:

The extract below is from an interview with the managing director of a sports

equipment manufacturing company:

"New product lines are introduced twice per year… Companyactivities are split into business units covering five mainproducts lines and pilot self-managed teams have beenestablished. There have been significant reductions in non-valueadded activity and defects. Following the successful pilot,further 'P12' teams (Product, Innovation, Process Improvement)were introduced and are now operating for individual products.Management confidence has increased in the team approach,improved performances in new product introduction, qualityand productivity. Initiatives include removal of shop floor'supervisors', building of (PI2) teams with the support of topand middle managers to mentor and provide additional skills asrequired. There has been a 20% reduction in staff cost for sameturnover; typical product process cycle times reduced from 6/8days to 2 days. There are regular team briefings on newproducts and targets, including 'off-site' meetings."

This extract from a case interview demonstrates that there were multiple

initiatives underway at the same time. Some initiatives were integrated with

others. The processes described, including the PI2 teams mentioned, had

overall targets—in this case relating to costs and cycle times. New product

development was viewed as a process and interrelated with others. Part of

the task of developing processes was maintaining communication and

deployment of policy, hence the 'regular team briefings'.

Principal dimensions of the component

The development of new products and/or processes was seen as the visible

hand of innovation. Most firms said that they were dependent on the speed

and appropriateness of their new/improved product and process

development routines to provide to create value and increase efficiency. The

following seven stages were observed:

1. Identifying was a 'tuning-in' stage to possibilities and constraints. Twoprincipal forms of needs were identified as drivers—one set coming fromcustomers and others (external) and the other from the company'sstrategy (internal).

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2. Creating involved the discovery of an idea that may be original, dormant,used in other contexts or available to be copied. Idea elaboration took theidea to the point where it could be evaluated by those who tookcommitment decisions within the firm.

3. Committing was the strategic decision-making process that combines theallocation of resources with a 'gathering of political will'. At this stage theproposed initiative became a legitimate project.

4. Developing was the process of transforming the idea into a saleableproduct, with all that was involved—including deployment of resources.At this stage there was a need to maintain a conceptual dialogue with thepossibilities and constraints as these sometimes changed quickly.

5. Evaluating was a ongoing decision-making process that was sometimesformalised to define decision-moments. It operated at two levels. Levelone answered the question 'shall we proceed with this?' Level twoanswered the question 'what, if anything, do we need to do differently?'

6. Positioning was making decisions about how the product was to bemarketed. This affected development, packaging etc.

7. Routinising was the process of handover of the innovation project to theoperating core of the business.

These stages were conceptually identifiable but were generally blurred,

truncated, repeated and/or elaborated in practice. In general, they confirmed

the model described in Section 2.4.1.

The analysis of the data-set suggests that 'high performing NP–PD' requires

skills in the areas listed above (managed NP–PD processes) and the use of

creative approaches.

Managed NP–PD processes was seen in many firms but varied greatly in

elaboration and format. In some cases, e.g. in the pharmaceutical industry, a

great deal of effort had been and continued to be invested in defining the new

product development process. In other firms new product or process

development was not isolated but integral to the organisation's routines

(e.g. in the case of a software company). Smaller firms adopted ad hoc

processes based on a project management approach.

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Creative approaches refers to the use of creativity tools, methods and processes

across all of the stages of the NP–PD process. This was often informal but

opportunities were constructed for creative endeavour. The use of

semi-structured creative approaches was observed in multiple cases.

Creativity seemed to be promoted by the use of simple questions on many

occasions, such as "Are there any other ways we could do this?", "What are

the real smart guys doing that we are not?" or "If we started again what

would we do?".

Literature support

There is a discrete area of literature related to new product and process

development and creative approaches. References supporting the conclusions

of this research related to the component can be found in Ayas et al. (1994),

Ayas (1996), Bessant and Francis (1996), Bierly and Chakrabarti (1996),

Buisson et al. (1996), Butler (1992), Chryssochoidis and Wong (1995),

Collinson (1993), Cook and Lunt (1996), Cooper (1994), Corso and

Rangone (1996), Jonash and Sommerlatte (1999), Karlsson and

Ahlstrom (1996), Littler and Leverick (1995), Millson et al. (1992),

Mitchell (1989), Prince (1980), Rickards (1974 and 1997), Schonberger (1996),

Schön (1983), Trott (1998), Ulrich (1997) and Wilemon (1998).

4.3.2.6 Domain VI—decision-making

The three components grouped under this category were 'guiding mental

maps', 'sound decision processes' and 'sustained commitment'.

Guiding Mental Maps (VIa)

Descriptor Statement: 'Theories of development and practice guide innovation

agendas'.

Case example:

The interview extract below is with a senior officer in a US police force.

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Researcher: "It seemed to me that what you said earlier indicates that someof the metaphors that you use for managing the departmentcome more from the business world than from other policedepartments. How did you develop your conceptualisation ofwhat business you were in? Where were your inspirations?"

Respondent: "Let me back up a bit and describe the types of changes thathave taken place because they are multifaceted… We havedeveloped eight crime-reduction, or quality of life strategies.These are policy documents based on an analysis ofpast-practice and describe the dimensions and scope of theparticular crime problem. There is an analysis of our resourcesand insight from our years of experience and the best mindsthat we can put together. So, for example, the first strategy wasa gun strategy—getting guns off the streets. We looked at thescope of the problem, got as much data as we could on thescope of the problem, and analysed our past practices: why arewe only making the kind of level of gun arrests that we were?How could we do better? We needed to look at resources,personnel, in terms of organisational change. In order toaccomplish those goals that would achieve our ends. The policydocuments are flexible—they lay out a city-wide plan—butthey are flexible. These policy documents are sufficientlyflexible to adapt to the landscape of crime at the local level…That was basically a top management conceptualisation. Theconceptualisation as to where we should be going and whatour goals and objectives really are, to my view, is worked outbetween the Commissioner and the Mayor. With a lot of inputfrom the private sector."

In this extract from the interview it seems that the development of policy

(statements about stances and rules to be adopted by members the

organisation in defined categories of situations) had a major impact on

patterns of innovation. The Commission of Police questioned many

assumptions made by his predecessor and developed a range of different and

radical policies. These provided a shared intellectual architecture for change.

Individual initiatives were positioned within this larger frame. Gaps in the

organisation's ability to deliver the policies became issues on the innovation

agenda.

Principal dimensions of the component

Although the term 'mental maps' was not used by informants, the practice of

using them was ubiquitous. Some mental maps were standardised—for

example, ISO 9002, Investors in People, Enterprise Planning and the European

Quality Model of organisational excellence. Other mental maps were

organisation specific, like the example given of the American police

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department at the beginning of this section. Mental maps also varied in their

scope, some being group or department specific whilst others encompassed

the organisation as a whole. Maps also vary in the extent of innovation

required to adopt them. A preliminary conceptualisation of the dimensions of

mental map making is shown in Figure 4.6 below.

Degre

e of S

tanda

rdisa

tion

High

Low

Scope of Map

Single Group Organisation Wide

Deg

ree

of I

nnov

atio

n R

equi

red

Low

High

ISO 9002

Team-Based Management

Use of New Accounts Package

Statistical Quality Control

Virtual Organisation Product Development

Figure 4.6: types of maps

On this framework illustrative 'mental maps' have been tentatively

positioned. Since maps have the effect of providing a shared intellectual

architecture they play a major role in targeting of innovation capability within

a firm. Maps provide a (hopefully tried and tested) way of accomplishing

complex or generic goals and they align the actions of actors involved. Some

firms spent a long time considering which maps to adopt. This was for three

main reasons. Firstly, a choice had to be made when there were rival

mapping processes. Secondly, a commitment to a map could require

considerable expenditure of time and other resources. Thirdly, the

implications of adopting a map can be broad and there can be unintended

consequences.

Not all maps are standardised. A few were developed entirely by firms

whereas the majority were adapted from 'off-the-shelf' maps. In effect, the

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map provided an outline and the detailed local 'innovation terrain' was

surveyed by the firm.

The analysis of the data-set suggests that 'guiding mental maps' requires

tracking relevant possible maps and map selection and development.

Tracking relevant possible maps was undertaken by managers who "wanted to

keep up to date with the latest thinking". Models, concepts, frameworks,

developmental processes, case examples and standard approaches provided a

portfolio of possible mental maps. Sometimes these were deliberately sought,

for example from business schools. Smaller firms acquired maps less

formally, perhaps from Business Link advisers and the like.

Map selection was a commitment by the company to adopt a particular map.

Consultants were mentioned as advocates. Map development refers to the

customisation or elaboration of maps for the specific organisation. As

mentioned above, larger firms occasionally prepared a novel set of maps.

Literature support

Relatively little has been written on the role of maps in innovation although

the body of literature related to sensemaking is highly relevant. Weick (1997)

describes the nature of maps in the following terms: "(t)he explorer cannot

know what he is facing until he faces it, and then looks back over the episode

to sort out what happened, a sequence that involves retrospective

sensemaking. But the act of exploring itself has an impact on what is being

explored, which means that parts of what the explorer discovers

retrospectively are consequences of his own making. Furthermore, the

exploring itself is guided by preconceptions of some kind…" (400).

Brown (1978) suggests extending "the concept of paradigm to stress its

pragmatic institutional aspects, not merely its cogitative ones. Thus we could

speak of paradigms for discourse and conduct, and even for organizational

behavior…" (373). He suggests that a way could be found "for the empirical

study of how new paradigms within specific organizations are generated and

what conditions must be present for a paradigm shift" (373). Hanson (1996)

describes the impact of a new mental map: "TPM (total productive

management) is today's umbrella, yet there is more to this than simply fresh

energy. This is TQM with teeth! This is the route to single-minded cost

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reduction. One Japanese management team described its vision of the process

the company was going through as building on a foundation of TQM (likened

to mental fitness) with a new concentration on TPM (described as physical

fitness)" (8).

Sound Decision Processes (VIb)

Descriptor Statement: 'Sound decisions are taken about supporting selected

innovation initiatives'.

Case example:

This interview was with organisation development manager in an

international pharmaceutical company.

Respondent: "I think people get very invested in major projects that they'reinvolved in and in our business, historically at least, hopefullynot so much in the future, you can be talking about ten-yearinvestments or more maybe if you go right back intodiscovery, and it's very difficult to drop that investment, walkaway from it, just because you don't have novelty anddistinction from the competition…"

Researcher: "And you have, I know, a formalised decision-making processwith stages and gates to go through and so on."

Respondent: "I mentioned I think the MAP process—Market Align Planningprocess that we have which is supposed to focus ourdevelopment effort and make sure that we're taking intoaccount very critically the market demands. I think that hasreally helped us to filter some of the compounds we have indevelopment—or it will do… I think when it comes to helpingpeople to understand how to make an organisation work,especially a knowledge-based organisation like we have whichis about information creation and sharing, I probably ought tothink more about the organisation is a brain because I think it'sthe collectivity, your knowledge, information, expertise whichwe need to tap into. It's not a mechanical, structural thing thatmakes the organisation work. It's the information flow aroundthe organisation."

In this interview the respondent highlights the importance of

decision-making. He points out that decision-making is particularly

demanding, partly because of sunk costs and emotional attachments.

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Principal dimensions of the component

The research findings on this topic suggest that decision-taking is one of the

most challenging of all activities in innovation management. This was for four

main reasons. Firstly, the probable outcome and consequences of some

decisions was unknowable or speculative (uncertainty). Secondly,

decision-makers may not be in the best position to assess the relevant factors

(complexity). Thirdly, the window of opportunity for decision-making may

be time-bound (urgency). Lastly, a coalition of support may be needed

(buy-in). It was possible to characterise decisions on the basis of the degree of

their complexity, uncertainty, urgency and the need for buy-in from multiple

stakeholders. This is shown in Figure 4.7 and two illustrative decision profiles

have been drawn—one for a pharmaceutical compound and the other for a

fashion garment.

High Complexity

High Urgency

High UncertaintyHigh Buy-In Needed

Which drug shall we develop?

What dresses will teenagers be wearing this Christmas?

Figure 4.7: illustrative decision profiles

Within each of these categories there were subsets of difficulties. Including,

amongst other factors, lack of recognition of a decision requirement, personal

inadequacy, human processes, lack of information and/or the inherent risk

profile of the proposal. To some extent these are inevitable, although

information systems, decision-support methodologies, superior resources,

human processes and risk-management assessments reduced difficulties in

some cases.

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It was pointed out that "taking the right decision was one thing; taking the

right decision at the right time was another". Speed of decision was perceived

as important for both product and process innovation. Speedy

implementation could provide first- or early-mover advantage for product

innovations and yield maximum benefit to the organisation for process

innovations. In addition, innovations in market positioning and/or business

paradigm were described in the same terms, for example for firms facing

decisions about the effects of the internet.

The analysis of the data-set suggests that 'sound decision processes' requires

fast-full information systems and reliable decision-making processes.

Fast-full information systems provided those taking decisions with timely,

evidence-based, comprehensive and comprehensible information so that they

could form a rich-picture of the decision context and requirement.

Reliable decision-making processes enabled informants, stakeholders and

decision-makers to explore options and come to a defendable decision. This

required assessing complex situations, performing analyses, incorporating

hard and soft data, developing scenarios, seeing unexpected combinations

and making clear decisions.

Literature support

Research on organisational decision-making is generally relevant. References

supporting the conclusions of this research related to the component can be

found in Coggan (1998), Dean (1987), Dess et al. (1995), Evans and

Wurster (2000), Ghemawat (1991), Henderson (1994), Houlder (1996),

Janis (1982 and 1989), Magee (1964), Mathews (1995), Roberts (1992),

Schumpeter (1961), Sharpe and Keelin (1998) and Vroom and Yatton (1973).

Sustained Commitment (VIc)

Descriptor Statement: 'Initiatives will be supported by commitment'.

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Case example:

The case example is from a hotel manager of a large hotel in Macau:

"We really felt that we wanted to break away from thetraditional idea of having a restaurant area and a kitchen. Wewanted to start building the idea of the food village concept…What we want to do is take away some of the kitchen area andleave part of the restaurant where chefs can cook in differentstyles—Thai, Chinese, Indian or USA—whatever… We want tofit in with market trends… But also with our food court concept,what we don't want to do, what has been pointed out, is to losethe strong local market in the evening. We want to create whatwe call a 'bi-style'. During the daytime, breakfast and lunch, itconcentrates on quick, efficient service. We can look at all thepossible electronic help that we can get—pre-printed bills,swiping through your credit card before you sit down, usingcomputer technology. We are taking labour costs down andputting that into food and ensuring that the computerisationhelps serve our guests… We have to investigate widerknowledge of Asian food. We need to go to Singapore to askthe Singapore chefs 'what are people eating in Singapore?' Weneed to go to Bangkok and ask the chefs there the samequestions. We are catering for an Asian market and yet we havenot fully investigated all the possibilities by talking to ourcolleagues. In summary, we want to provide a food courtexperience that provides an innovative menu, wide choice, andit's perceived to be value for money. Complemented by goodservice. We need to have a coffee shop workshop to develop indetail. Exactly like this—to go away and go through all theissues and really focus on them."

The hotel manager was speaking about the resources that needed to be

deployed in order to implement the new model for the hotel's coffee shop.

This was perceived to require sustained commitment from management,

including senior management. A large number of actions were deemed to be

required and the continuing attention and support of top management was

perceived as a critical element.

Principal dimensions of the component

The maintenance of top management commitment to support innovation

initiatives was observed to be significant. Momentum slowed if management

lost interest, reduced their attention level or became distracted with other

priorities. Some initiatives were said to have languished as they "were moved

to the back burner" or "fallen off the radar screen". Managers provided

support and exercised a monitoring role that was, in most cases, routinised. In

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examples of unsuccessful innovations available for study, the absence of

senior management commitment was a common feature.

The analysis of the data-set suggests that 'sustained commitment' requires

sustained senior management attention and roadblock removal.

Sustained senior management attention enabled the continuity of an innovation

initiative to be maintained and retain its status as an important activity despite

set-backs, alternative priorities and varied difficulties. Monitoring by top

management generally provided enhanced motivation and control. It was

stated that periodic re-energising was necessary when initiatives 'got lost' or

when new phases of activity were embarked upon.

Roadblock removal was the removal of initiative-specific hindering factors. The

aim was to 'clear the way' so that resources could be deployed as and when

needed. 'Blockages' could exist in sub-systems that were removed from the

locus of innovation—perhaps in personnel policies, finance systems or

priority-setting criteria.

Literature support

The role of senior managers in promoting innovation has been discussed

extensively in literature on strategic leadership. References supporting the

conclusions of this research related to the component can be found in

Becker et al. (1996), Bennis (1983), Binney and Williams (1997), Fisher (1995),

Francis and Woodcock (1996), Goleman (2000), Harrison (1995c), Iansiti and

West (1997), Semler (1993), Schein (1996), Stokes et al. (1998), Tichy and

Sherman (1995), Warnecke (1993), Wheatley (1994) and Woodcock and

Francis (1990).

4.4 Using the reference model in organisationdevelopment interventions

The reference model described above provided a conceptual structure for

interventions into firms. A diagnostic questionnaire (the 'Innovation

Capability Audit G2') was devised and developed through six versions. The

latest can be found in Appendix 5. Interventions were undertaken to provide

experience of how a diagnosis (based on the reference model) could support

an organisational development programme aimed at enhancing innovation.

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The process for structuring interventions was devised. Its principal

methodological steps are summarised in Figure 4.8.

Entry

InnovationAudit

Top ManagerInterview

Focus Group

ReportGeneration

Feedback tocompany

ActionPlanning

Deployment ofdevelopmentinitiatives

Ongoingsupport

Figure 4.8: structure of intervention

Nine steps are shown in this framework. The reference model provided the

conceptual framework for the diagnostic steps (innovation audit, top

manager interview and focus group). Report generation drew upon the same

data set and provided the content for the feedback meeting. Action planning

was intended to flow logically and be followed through with a series of

initiatives, supported by the continuing involvement of a facilitator and,

whenever possible, learning group activities.

4.4.1 Findings from interventions

As described in Chapter 3, firms were recruited that sought to develop their

innovation capability. Two major reviews of the effects of interventions were

undertaken. A two-day workshop was organised with representatives from

11 participating companies. This was supplemented by a report from an

external agency commissioned by NORWESCO, the sponsoring agency. The

findings of both will be summarised below, after a discussion of a specific case

example that illuminates the actual, rather than the idealised, intervention

process.

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Figure 4.9 shows a simplified 'map' of one intervention (into company P, a

consulting organisation based in Hong Kong).

Agenda set by Auditfindings

Agenda set by Auditfindings

Facilitator plansfeedback

Many iterations

Champion appointedand project planned

Detailed profectplanning

Learning Process,sometimes

formalised intoaction learning group

Detailed articulationof business

development needs

Training or coachingif deemed necessary

Opinion leadersundertake

communication

Revised assessmentof MD and companydevelopment needs

Firmcommits to

process

Innovation Audit

Top ManagerInterview Focus Group

1st ReportGeneration

Feedback toMD andothers

Initial Approachto MD

Facilitatorattempts to 'sell

the benefits

2nd ReportGeneration

'Education' aboutinnovation from

facilitator

MD reactsand engagesin dialogue

Developmentof a newvision of

what the firmcould be

Involveopinion

leaders inf irm

Involve peers

Search forinitiatives

Reviewagainstfirm's

strategicplan

Impactassessment

on otherbusinessareas

Initiatives defined

Widerenrolment

Initiativeundertaken

Change needsidentified(including

behaviourial)

Assessment ofMD's interests

Possiblesupport of

peers

Figure 4.9: intervention process (actual case)

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It is apparent from the diagram that the intervention process was more

complex than the idealised nine step template (Figure 4.8). From an analysis

of this, and other, interventions the following findings were noted:

1. The theoretical sequence of steps shown in Figure 4.9 above was followedbroadly in practice. Interventions did move from entry, to diagnosis, tofeedback, to action planning and implementation. However, there wereloops and overlaps in the actual process.

2. Companies required a higher degree of 'education' than was expected.For example, the facilitator spent nearly six hours with company P helpingthem understand the drivers, sources, nature, targets and benefits ofinnovation. The facilitator sought to open new possibilities and providedifferent ways of interpreting situations. This 'educational' processprovided an important element in unfreezing the existing mind-sets of thefirms' power elite (Lewin, 1947).

3. Following the feedback process into company P, the managing directorundertook an extended dialogue with multiple individuals. In other firmsthe persons chosen for dialogue, and the time spent on the task, dependedupon the particular managing director or senior manager acting aschampion to the initiative. In the case of company P, the managingdirector sought many opportunities to consider issues arising from thefeedback interview. In the presence of the researcher he discussed thefindings with, amongst others, his dentist (met socially), a businessconsultant, a stranger met in a bar, the office secretary, a visiting salesmanand the managing director of a similar firm. In these discussions themanaging director posed a series of questions and sought varied views.When asked about this behaviour he said, "you've put forward anargument, supported by facts, that the way that I think about my businessis sometimes narrow, sometimes wrong. You might be right. But I can'ttake it on your say-so. I need to check it out and, if I agree in the end, Ineed to re-adjust my brain".

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4. An unexpected amount and intensity of internal discourse was provokedby the data feedback process. In the case of company P, this served threemain purposes. Firstly, the managing director used dialogue as anopportunity to "develop his thinking". Secondly, a new or different way ofseeing the business development need was considered to be a processrequiring participation of members of the firm's power elite and otheropinion leaders—it could not be accomplished by one person. Lastly, themanaging director felt that he needed to extend his knowledge about thepractical implications of thematic points raised in the diagnostic feedback.For example, he had received feedback that indicated 'innovationobjectives were not set'. He felt that he needed to know what this meantin practice and whether examples could be found. He also needed togauge the significance of the observation and the assess the urgency ofremedial action.

5. The managing director and his immediate team in company P, over aperiod of five weeks, developed a view of what their organisation neededto become over the next year or so (this was a firm with 29 directemployees). This was not a conventional business strategy developmentprocess since external factors, like products and markets, were notconsidered. Rather the focus was on internal resource development. Theyelaborated a vision of the future that had new elements, differentelements and different priorities than before. The managing directorserviced this process by asking the question frequently, "what will thismean we will do differently in the future?" The visioning process waslargely unstructured but pervasive; it was the dominant lunch time topic,for example. The process observed was 'sensemaking', as described byWeick (1995). On three occasions, however, the group met for a four hoursession to progress the sensemaking process formally.

6. As a consensus developed on the future of company P, the search forinitiatives became increasingly visible. Managers asked, 'what can we doabout this?' The answers to this question facilitated the elaboration of avision and served to provide an organisation development map.Sensemaking and map-making were, frequently, coincidental.

7. The search for initiatives was unexpectedly extended. In order to beaccepted, an initiative had to be understood, selected, affordable,perceived to be effective, promoted by one or more champions andcapable of being integrated within the other systems of the firm. It wasnot easy to find initiatives that met all these criteria. Different initiativeswere 'visited' by the managing director and senior staff who "talked themthrough'. Initiatives were adopted as commitments in the last of theformal sessions described above.

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8. An unexpected issue was 'how much to do?' Although innovationcapability was perceived as significant for company P, there were manyother issues to be progressed at the same time. The managing directorspent 50 minutes on one occasion reflecting on the merits of undertaking aprogramme to develop innovation capability and a programme toimplement ISO 9002. From his perspective these initiatives were rivals, inthat he felt that he only had sufficient resource to undertake one majororganisation development initiative at a time.

The researchers' memos (as above) led to the development of a richer picture

of the intervention process and had implications for the roles played by

facilitators who needed to become more involved as coaches and facilitators

than had been initially considered. These insights were conveyed to

facilitators through briefings and training programmes.

4.4.2 Reviewing interventions

As mentioned in Chapter 3, at an early stage the reference model and

intervention process were adopted by a body in Northern Ireland who used

it as the basis for interventions in to small and medium sized firms, principally

in the manufacturing sector. Eleven facilitators from NORWESCO (the name

of the co-ordinating body) were trained by this researcher and Professor John

Bessant in the specific intervention methodology. This enabled a wider

number of companies to be included in the data set. On the 20th and 21st of

February 1998 the managing directors of eleven companies that had

participated in the innovation initiative met to review their experience in a

workshop designed by the researcher.

During this workshop an assessment was made by each participant of the

benefits that had flowed from participation in the process. Eleven items were

identified, as shown in the table below:

Table 4.4: participants' evaluation

Benefits listed by participants

1 receiving constructive criticism from others

2 sharing experiences with other managers (people who have a similar experience)

3 receiving coaching from an experienced mentor: on my own problems

4 discussing, and becoming clearer about weaknesses and strengths

5 focusing on real difficulties

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Benefits listed by participants

6 building my self-confidence through getting support from others

7 receiving input from people not in my industry

8 getting new thinking on a persistent problem

9 through discussion, realising what is really important

10 admitting my weaknesses

11 realising that my problems are shared by others

Despite probing, on this occasion, it proved impossible to get firms to list

negative features! From the group discussion that followed the identification

of the benefits it was frequently emphasised that the interactions that

accompanied the process had added the greatest value (points 1, 2, 3, 4, 6, 7, 8,

9, 10). A series of dialogues enabled confidence to be built, new or different

perspectives to be gained and re-framing to take place.

Despite the enthusiasm of the participants, this feedback alerted the

researcher to a significant issue—that none of the benefits listed was specific

to innovation capability (although item 7 in the list might be an exception).

Since innovation was the purpose of the intervention, the impact of the lack

of innovation-specific benefits was confronting in the extreme.

The researcher explored this issue with the managing directors present at the

workshop who took the view that the key issue that concerned them was not

innovation per se, but "what to do to move their business forward". This

could and would include anything, from reducing tax liabilities, to retaining a

key employee or solving a persistent problem with a product. Participation in

the Innovation Audit Process had provided ideas for what to do to move

their business forward—and this was deemed sufficient to justify their

involvement in the process.

4.4.3 The NORWESCO review

In 1998 NORWESCO requested that a consulting organisation, Peter Quinn

Consultancy Services, undertook an impartial review of the interventions

conducted in Northern Ireland and Eire. 12 companies were visited and the

owner/manager interviewed in each case. The researcher had full access to

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the findings on a confidential basis.73 Accordingly, only general learning

points will be summarised here.

The report said "It was found that the programme's multi-faceted approach

enabled companies to focus on what best met their needs. Some companies

focused on the results of the audit and concentrated all subsequent activities

on them: other companies invested considerable energy in the networking

and derived most benefit from it; whist the expertise of the facilitator(s) was

used as the main source of input in other cases" (21).

It went on to say "in general, the innovation audit was seen as valuable to

seven companies, but less significant for the other (5) companies. The plant

manager of one company was sceptical about the way in which the audit had

been conducted and, as a result, he queried the validity of the results…

interviewees in two companies were unable to comment on the audit as there

had been changes in personnel and they had not seen the results of the audit.

On the other hand, two companies (both in the same sector) used the results

of the audit as the basis for all of the initiatives they implemented" (22).

It was clear that a standardised approach was not appropriate for all

companies. The report makes clear that effectiveness of the intervention

process was strongly influenced by the time availability, skills and

acceptability of the nominated facilitator. Following these comments the

training for facilitators74 (given by this researcher and Professor John Bessant)

was extended and, for later cases, facilitators worked, where possible, in pairs.

4.4.4 Learning from all interventions

It proved possible to extend understanding of the effects of interventions

through six forms of review. The sources of information are shown in

Table 4.5 below and learning points summarised.

73 A letter from the first company to participate in the programme is shown as Appendix 7. It

summarises the benefits of the intervention.74 Facilitator training included: the theory and practice of action learning, role plays,

data-feedback skills, intervention stages and observation of the researcher conducting anintervention for one firm.

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Table 4.5: review of activities

What was done 'Positive' points 'Negative' points

1 Review workshopwith ManagementInstitute at theUniversity ofUlster (3 days)

• Innovation legitimised and'now on management'sagenda'

• Diagnosis highlightedspecific areas forimprovement

• Intervention led to learningnetworks beingestablished

• 'Harder' aspects of innovation (e.g. specifictechnologies) insufficiently addressed

• Initiatives not seen as distinctively innovationenhancing (e.g. team building)

• Requires significant change of managementapproach

• Unclear relationship with other categories oforganisation development, especially qualityimprovement

2 Interviews within-companyfacilitators (2)

• Structured interventionprocess

• Specific initiativessuggested

• Initiatives too broad (e.g. develop effective adhocteams

• Needs leadership from the top includingsupportive behaviours

• Requires cultural change that is difficult toaccomplish

3 Interviews withexternalfacilitators (6)

• Structured interventionprocess provided roleclarity for facilitators

• Management interested inthe topic

• Education required to understand thesignificance of proposed initiatives (this is notstructured at present)

• Lack of exemplars that demonstrate goodpractice

• Unproven relationship between innovationcapability and business performance

4 Input from DTIInnovation Unit(1)

• Strong reference model

• Comprehensive set ofbehaviourial indicators

• Elaborate model is hard to sell

5 Review with theDepartment ofInnovation, IESABusiness School,Caracas,Venezuela

• Strong and comprehensivereference model

• Important business area

• Under-structured intervention process

• Lack of an end-point

• Lack of exemplars that demonstrate goodpractice

6 Supervisor'scomments

• Reference model based ongrounded theory

• Dependent on professional skills and flexibility offacilitators

In general, the review feedback was positive about the reference model and

the audit procedures based upon it. Weaknesses were found in the content

and structure of interventions. Six main development areas have been

identified:

• There is a need to clarify the differences, if any, between theimplementation of a programme to develop innovation and other formsof business improvement activity;

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• At present, the reference model applies to the organisation as a whole butit may be that some parts of the organisation need to be more innovativethan others;

• Innovation can be assisted by the acquisition of enabling technologies andrelated assets. Although this is incorporated in the reference model at ageneral level it is probable that specific guidance is needed;

• Little help is given, at present on the topic of targeting (see Section 2.6).This requires that innovation and strategy formulation are seen asinterdependent activities. This is not formally included in the interventiondesign at present;

• The lack of readily available exemplars (e.g. videos) diminishes theperception of benefit;

• A significant amount of 'education' is needed across the organisation. Thiscould facilitate cultural change. At present interventions are focussed onthe top management group. It is probable that the organisation, ratherthan the power elite, should be the unit of intervention.

4.4.5 The current situation

At the time of writing 49 companies have undertaken an innovation audit

with supportive facilitation. In April 2000 the researcher was informed that

funds had been allocated to put 30 new companies through the audit and

intervention process.

Work is underway to address the weaknesses noted above and this will be

commented upon in Chapter 5. A 'report generator' has been developed that

pulls relevant improvement suggestions from the NUD•IST database and

provides a semi-customised report to facilitate data feedback. Facilitators

meet regularly to discuss methodologies and have undertaken further

training. The SPSS database is beginning to provide a source of comparative

data, as more firms are added. However, companies undertaking the

innovation capability development programme are not selected as being

highly innovative and so reliable statistical norms or comparisons are not

available.

It can be seen that this research is work in progress so far as the intervention

activity is concerned. However, the fact that 30 additional companies have

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committed themselves to participate indicates that, despite its inadequacies, it

has been perceived as a worthwhile endeavour. The researcher is committed

to taking this programme forward.

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Chapter 5Discussion and conclusions

5.1 Introduction

In this chapter, the research is discussed and conclusions are drawn. In

addition, learning points are described and theoretical, methodological and

practical issues considered. The academic relevance and positioning of the

research is clarified and the specific achievements of this research are noted. It

is hoped that this discussion, and the conclusions drawn, will increase the

usefulness of the thesis to its readers. The chapter is presented in eight

sections.

• Firstly, the work is reviewed against the overarching objective(significantly contributing to knowledge in the field) and the four specificobjectives listed in the introductory chapter.

• Secondly, the seven constructs described in Chapter 2 as possibly beinghelpful in understanding the field of developing innovation capability arereconsidered in the light of the research conducted. Trends and commonfeatures are identified. The relationship between innovation, strategy andoperations is discussed and a 'triple helix' model suggested. This sectionconcludes by discussing the question, 'is the notion of innovationcapability helpful?'

• Thirdly, adaptive theory is assessed as a potentially useful framework forthis form of research. This research is considered in relation to Layder’s(1998) key features of adaptive theory. The use of adaptive theory forresearch of this type is reviewed.

• Fourthly, the G2 reference model of innovation capability is reviewed todetermine to what extent it reformulates established perspectives oninnovation capability. Aspects of the G2 model that were 'surprising' tothe researcher are noted.

• Fifthly, learning about interventions intended to enhance innovationcapability is summarised. A model for developing innovation capability,the 'intervention tree', is introduced and described.

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• Sixthly, the relationship between contingency theory and the findings ofthis research are reviewed. This section considers the researcher's decisionto develop a universalistic rather than a contingent model of innovationcapability.

• Seventhly, comment is made on broad theoretical issues. In addition, theresearcher reflects on undertaking a study for a PhD on an unusuallybroad and applied topic. The researcher reflects on his learning fromundertaking the research.

• Lastly, suggestions for further research are made.

5.2 Review against objectives

As noted in Chapter 1, this research has a pragmatic bias. It belongs to the

school of doctoral studies (Easterby-Smith, 1991) that considers a useful

outcome from research to be a worthwhile endeavour. Nevertheless, the

research makes a distinctive contribution to academic knowledge as it fills a

gap identified by Wolfe (1994) who stated:

" Though several (typologies of organisational innovational(stet) approaches) have been proposed … no broadly acceptabletypology or check-list of attributes has emerged" (418).

This research provides such a typology. Whether it will become broadly

accepted has yet to be determined.

In addition to striving to make a distinctive and significant contribution to

knowledge in the field, four specific objectives were set (in Chapter 1). These

were:

1. Can innovation capability be described?

2. What are the attributes of a firm with high innovation capability?

3. Can a means be found to 'audit' innovation capability?

4. Are there ways that innovation capability can be developed?

In relation to objective one, the description of innovation capability contained

in the G2 model, and elaborated in the previous chapter, represents the main

contribution of this research to the emerging body of knowledge on

firm-specific innovation.

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In relation to objective two, this researcher argues that the principal attributes

of high innovation capability are incorporated in the G2 reference model. The

18 components and 56 elements provide the most comprehensive definition

of the dimensions of high innovation capability available.

In relation to objective three, the diagnostic process developed from the G2

model was drawn from organisation development models and survey

feedback methodologies. A questionnaire based on the G2 model was

devised, supplemented by interviews and focus groups and provided a

means to 'audit' innovation capability. At the time of writing this has been

used in almost 50 companies.

In relation to objective four, the researcher has suggested ways in which

innovation capability can be developed within certain categories of firms

(SMEs). It was shown that survey feedback needed to be supplemented with

skilful and flexible facilitation. Following this conclusion the researcher

reflected on the implications for management research and developed a

comprehensive change model (discussed below) that has yet to be tested.

From this brief review, it can be concluded that all objectives set in chapter 1

have been achieved, at least in part.

5.3 The theoretical context of innovation capability

The review of relevant theory and empirical research in Chapter 2

(summarised in figure 2.5) concluded that seven constructs might be helpful

in understanding the field. These were: a strategy diamond (2.5.5), a five-

stage process model of innovation (2.4.1), defining innovation capability as

having 10 attributes (2.7.2), the NATS framework (norms, assets, technologies

and skills) (2.7.3), targeting innovation on 4Ps (product, process, position and

paradigm) (2.6.2) , double loop learning (2.9) and considering innovation

capability as a contingent, not a universalistic, set of attributes (2.8). Each

construct is listed in the tables below and the findings of this research are

discussed in each case.

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Table 5.1: relevance of this research: conclusion one

Theoreticalconstruct one Explanation Conclusions from this research

Strategy Diamond In Chapter 2 it wassuggested that thestance taken towardsstrategy formulationand enactment partlydetermines a firm'sinnovation agendaand, consequently,innovationmanagementprocesses. Fourschools wereidentified—strategicplanning,resource-based,entrepreneurial andinnovativeorganisation.

This research found few differences between firms adoptingalternative strategic models. All firms demonstrated an intentas to what markets they sought to serve and whatproducts/services they wished to offer. Such product/marketstrategies were open to change but, generally, withinboundaries of chosen competitive strategies and commitmentsto brand integrity. Speculative investments in resourcedevelopment were found, but were made within the context ofperceptions of probable product-market opportunity spaces.The role of the entrepreneur was seen in its pure(Schumpeterian) form in smaller firms but has been replacedby a facilitative leadership style in most of the larger firmssurveyed. The role of the intrapreneur was significant in manycases. Most organisations, including firms withknowledge-intensive products, had sought to become moreinnovative organisations, both by encouraging 'bottom-up' or‘middle-up-down’ innovation and removing organisationalimpediments. Similarities between firms were more significantthan differences—firms sought to innovate for product-marketopportunities and acquire an enhanced resource-base; also,they were, to some extent, responsive to entrepreneurs andintrapreneurs.

Table 5.2: relevance of this research: conclusion two

Theoreticalconstruct two Explanation Conclusions from this research

Innovation as afive-stage process

In Chapter 2 it wassuggested thatinnovation could bedescribed as aquasi-systematicprocess moving fromidea to exploitation.

This research confirms that a process model provides arealistic framework for conceptualising certain forms ofinnovation. It is most apt when describing product andpositional innovation. Small-scale innovation in process isless systematic. Organisations undertaking large-scaleprocess innovation or a form of process re-engineering adopta project management framework driven by provocativelearning and/or functional or specialist intrapreneurs and/orconsultants. A form of kaizen process frequently drove small-scale process innovation. Innovation in paradigm (orbusiness model) was less systematic and can be defined as aleadership act, although multiple discussions were typicalbefore a commitment decision was made.

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Table 5.3: relevance of this research: conclusion three

Theoreticalconstruct three Explanation Conclusions from this research

High innovationcapability has 10attributes

In Chapter 2 it wassuggested a firm thatdemonstrates highinnovation capabilityinnovation hasmultiple initiatives thatcan be described as:ubiquitous, ample,creative, directed(partly), fast, efficient,selectively adopted, fitinto the organisation,create value andbuild competencies.

This research suggests that the list of 10 attributes provide ahelpful definition but they did not apply in every case.

Some firms confined innovation to the top of the organisationor the technostructure and did not seek ubiquitousinnovation. In a few firms the high number of innovationinitiatives was perceived as negative as organisationalresources were over-stretched, customers reacted negativelyand/or individuals came under excess stress. Creativity waswidely found and widely valued. Increasing creativity, forexample through the personal development of managers,was seen as a device for enhancing innovation capability.Innovation initiatives were frequently directed from a firm'sstrategic intent and deployed through a form of managementby objectives system. Indeed, the firms that had the mostcoherent and stretching strategies appeared to be the mostinnovative. Innovation frequently happened becausesomeone was being paid to do it! Speed of implementation didnot emerge clearly as an issue from this research, exceptwhen innovation was undertaken through a projectmanagement structure. Some firms were wary of rapid change,preferring a 'slowly but surely approach'. Efficiency ofinnovation was not generally measured, except broadlythrough budgeting procedures. In general, timetables weredrawn up by management agreement. The selection ofproposals was mostly determined in management meetings.The key criterion used to determine whether a proposal wasaccepted was its perceived ability to create value conditionalon resource availability, fit with existing programmes andperceived risk. Some initiatives were specifically undertakenas stepping-stones to developing the firm's portfolio ofcapabilities.

The 10 attributes provided a useful preliminary checklist anda consciousness-raising device. The pace of industry changeappeared to be a key driver, as firms sought to have a highrate of value-creating innovation in relation to their rivals. Thelist was not systematically investigated in this research andmust be considered to be speculative.

Table 5.4: relevance of this research: conclusion four

Theoreticalconstruct four Explanation Conclusions from this research

Developinginnovationcapability requiresattention to norms,assets,technologies andskills (NATS)

In Chapter 2 it wassuggested that theNATS frameworkprovides a format tounderstand specificattributes ofinnovation capability.

The NATS framework provided the researcher with a templatefor coding the characteristics of innovative firms. It was foundthat attributes could generally be divided into norms, assets,technologies or skills. The NATS approach appeared to beparticularly helpful at the level of the work group, cell,department or process. In addition, the NATS frameworkprovided a helpful structure for facilitators as they sought tohelp firms to develop innovation capability.

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Table 5.5: relevance of this research: conclusion five

Theoreticalconstruct five Explanation Conclusions from this research

Innovation can betargeted on the4Ps—product,process, positionand paradigm

In Chapter 2 it wassuggested thattargeting wasimportant—answeringthe question 'whereshould innovationcapability bedeployed?' and fourareas of potentialapplication wereidentified.

This research found that firms, periodically, targetedinnovation capability on each of the 4P areas. However,different parts of the organisation were involved, sometimes incomplex ways. Firms that mass-produced products generallyhad specialised adhocracies to perform the tasks (e.g. anR&D department). Firms that created bespoke, complexand/or knowledge-based products had distributed productdevelopment routines across the organisation. Processescould be developed in multiple ways—driven from the top, byan overarching methodology (e.g. TPM), by middle managers,by contractors and/or from 'the shop floor'. Innovation inposition seemed to require specialised skills and larger firmsgenerally established symbiotic relationships with advertisingagencies to provide this input. Innovation in business modelor paradigm was seen as a leadership and strategic actdetermined by the power elite of the firm, apparently througha 'political' process. Sometimes internal champions fromoutside the power elite proved highly influential. The role ofan entrepreneur (in the Schumpeterian sense of the term)seemed significant. S/he sometimes acted as a force forre-conceptualisation of the business model(s) used by thefirm.

Table 5.6: relevance of this research: conclusion six

Theoreticalconstruct six Explanation Conclusions from this research

Double LoopLearning

In Chapter 2 it wassuggested thatintentional learningfrom experiencewould enhance afirm's innovationcapability.

There was evidence that firms deliberately engaged inlearning through reflection but did not describe it as such.Regular meetings of top teams 'reviewed' initiatives andreflected on their performance. In addition, reviews wereundertaken as a routine part of project management.Learning happened but was either informal (often referred toas 'experience' by informants) and/or codified intoprocedures, processes or routines. Whether firms wouldbenefit from more intensive or structured learning processeswas not determined by this research.

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Table 5.7: relevance of this research: conclusion seven

Theoreticalconstruct seven Explanation Conclusions from this research

Innovationcapability may be acontingent, not auniversalistic, set ofattributes

In Chapter 2 it wassuggested thatinnovation capabilitymight be a contingentrather than auniversalisticproperty. Variouscontingency modelscould be relevantbased on size,industry, nature ofwork, maturity of firmor some otherintervening variable.

This research did not offer an opportunity to explore fully theapplication of contingency theory in relation to innovationcapability. However, preliminary work was undertaken toapply Mintzberg's configurational model to selected cases(see Appendix 8 and below). A key insight was that mostorganisations construct an adhocracy when they seek toinnovate. Facilitative stances and processes included:enabling learning, open dialogue, management commitment,a relationship with a wider innovation agenda, prudent butprogressive decision-making, an over-arching conceptualmap, a process for development of ideas into action, thesustaining of an affirmative consensus amongst opinionleaders, that proposed innovation initiative were seen as 'doable', use of the disciplines of project management, that thoseconcerned took pains to understand issues in depth, thatperspectives and frameworks (sometimes) were changed, thatpeople involved were capable and it was recognised thatmuch work was needed to turn an idea into a successfulinnovation initiative.

The findings from this preliminary research suggest thatinnovation proceeds in largely similar ways in differentorganisational configurations, at least for the initial phases ofinnovation process.

5.3.1 Trends and common features

The research data and findings have been reviewed to see whether trends

and/or common features can be identified. Seven key points emerged:

1. Innovation is, almost invariably75, a highly person-centred activity.Although certain forms of innovation (R&D or CI, for example) can beroutinised they can only be partly mechanised. The person remainscentral.

2. Senior management generally consider achieving and sustainingcompetitive advantage, not innovation, as an overarching goal. Thisrequires the capacity to offer valued products and/or services with asufficiently low cost-base to provide adequate margins. It is to these endsthat innovation capability is directed. Achieving and sustainingcompetitive advantage is seen as a moving target: firms perceive a need todevelop their offers at least as fast as their rivals do. Innovation capabilityis deemed to be important if it can enhance strategic flexibility and createvalue.

75 In a few cases, for example in pharmaceutical research, aspects of the innovation process had

been automated.

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3. Innovation can be a disintegrative force. Maximum exploitation of latentinnovation capability requires a degree of decentralisation; withoutalignment of innovation initiatives the integrity of policy and strategy canbe undermined. There may be, therefore, an inherent tension betweeninnovation and deliberate strategies.

4. Innovation can offer dignity to the individual. One perspective oforganisational life suggests that it can become a 'psychic prison' (Easterby-Smith et al., 1991). Participating in innovation provides an opportunity forthe individual to use elements of creativity—both in the production ofideas and their execution. Accordingly, involvement in innovation can beseen as a form of valuing of the individual.

5. Innovation requires decisiveness in situations characterised by levels ofrisk and uncertainty. This is demanding on decision-makers as managerialtools and methodologies are of limited help: uncertainty cannot beeradicated.

6. Innovation capability is akin to a river that needs to be deep andwide—although the quantity of capability needed is affected by theindustries within which the firm operates. Certain styles of managementare more likely to facilitate the development of innovation capability thanothers and these, to some extent, can be developed systematically (see thediscussion of the intervention tree below).

7. Some targets of innovation capability are related more to businessdevelopment rather than 'traditional' management. The skills of theentrepreneur and the intrapreneur are important. Entrepreneurshiprequires an uncommon blend of personal aptitudes and competencies thatcan be difficult to develop and retain, except at the apex of anorganisational unit. Effective entrepreneurship and intrapreneurship is asignificant asset for the development of innovation capability.

5.3.2 Innovation and other processes in the firm

As mentioned above, a useful analogy for innovation capability is to see it as

a river that should be deep, fast flowing but tamed in that its energy is put to

use. Freeman (1994) used a similar metaphor as he observed "the fastest

growing firms are distinguished by their capacity for a flow of incremental

innovation as well as (more rarely) outstanding success with a radical

innovation" (81). The analogy is apt as some approaches to understanding

business policy (Mintzberg, 1994) describe strategy as a flow of commitment

decisions, in effect a river of choices and consequences flowing through time.

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Firms have to do more than innovate. They determine policy and manage

routine operations. These meta-processes are affected by chains of choices

and consequences—they are also rivers. The innovation and the strategy

rivers join at many places but their confluence may be turbulent. Operations

flows with the other two and, again, has distinctive characteristics.

It appears that there are distinctive values, processes and outcomes of

strategic, operational and innovation streams of decision and action within

firms (Tang, 1999). Essentially, strategy is concerned with constructing value

and determining identity, innovation with the discovery and exploitation of

possibilities and operations with timely construction and delivery of valued

'products'. It is possible to conceptualise these as strands of a helix, shown in

the 'triple helix' diagram below in Figure 5.1.

Strategy

Innovation

Operations

Figure 5.1: helix model

A firm that possesses high innovation capability needs the capacity to

integrate innovation with the other two rivers of choice and decision. This

may require managing for requisite tension. Innovation is presented by the

helix model as a web of processes of dynamic interaction, interfacing,

sometimes uneasily, with strategic decision-making and operational

effectiveness (Hurst, 1995). Each strand makes its distinctive contribution to

building and sustaining the competitive advantage of the firm, although this

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may change in significance and intensity over time. This model of an

organisation has its roots in Marx's viewpoint of the functionality of conflict in

driving social entities forward (Coser, 1956). The three strands can be seen as

competing for dominance but a firm requires each to be strong and for

conflicts to be creative.76 Enabling mechanisms may be needed between

strands, although this was not investigated in this research. For example,

innovation can be linked with operations through application of the principles

of organisational agility (Bessant et al., 1998).

5.3.3 Is the notion of innovation capability helpful?

As discussed in Chapter 2, defined broadly, innovation capability can be seen

as underpinning many changes undertaken by an organisation. These may

include developing a simple tool to extract the last drop of ink from a tube,

introducing team briefing as a means of improving internal communication

and developing the technology to access the internet from a mobile phone

anywhere in the world. It is right to question the notion of 'innovation' itself

and ask 'is such a broad category useful?'

The largely positive responses of firms to the innovation capability

development programme described in Chapter 4 suggest that the answer is

'yes'—at least for the time being. It is not claimed that innovation

management demands a wholly separate set of competencies—many of the

attributes of effective innovation management are elements of a wider

managerial skill set. However, the competencies are distinctive in emphasis,

objective and effect and, in the opinion of this researcher, justify separate

treatment. It should be noted that, in firms studied, innovation was

interwoven with other activities in ways that were difficult, or impossible, to

separate.

The scope of the topic is wide and the development of innovation capability

can be reduced to being expressed as a set of slogans. At present the topic is

fashionable but fashions change. The notion of innovation capability itself

may be subject to innovation. For example, notions of generic innovation

76 The development of a team provides an interesting analogy emphasising the importance of

difference. Belbin (1981) showed that an effective team requires individuals with differentpersonal qualities. When the 'right' mix is present the team is stronger than anyindividual.

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capability described in this thesis may need to be elaborated by application

areas over time (e.g. specifying innovation capability for finance specialists or

innovation capability in insurance companies).

5.4 The use of adaptive theory

In Chapter 1 (1.7) the following comment was made, 'the approach adopted

(in this research) to link theory to empirical research was 'adaptive theory' …

reinforced and extended by Layder (1998) who … argued that an ongoing

dialogue between theory and data gathering/interpretation is constructive'.

Partly because of the novelty of Layder's approach, it is useful to reflect on

the benefits of using adaptive theory as an overarching method for research

of this kind.

Adaptive theory was seen as appropriate for research of this type, although it

should be noted that Layder does not explicitly discuss management research

in his book. Adaptive theory legitimises indeed advocates the use of grand

and middle-range theories as sensitising and orientating concepts. Also it

encourages the use of grounded theory for producing sound

indicator-concept linkages. In the opinion of this researcher, the primary

benefit of adaptive theory is that it committed to (critically) building-on

existing theory and empirical research rather than considering each situation

as context-specific. This means that, with appropriate caveats, it should be

possible for managers and their advisers to take the outcomes of research,

see its relationship with previous studies, and apply the research findings to

their particular situation (Layder describes this as a 'transituational' research

outcome (133)).

Layder (1998) describes 8 key features of adaptive theory (132-133). Assessing

this research against Layder's list of key features in table 5.8 below offers

arguments that support the characterisation of this research as adaptive

theory. It is important to note that Layder himself comments that, at this

stage, the "philosophical and methodological context … (is) … fairly sketchy in

form" (133).

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Table 5.8: this research and adaptive theory

Layder's comments on thenature and scale ofAdaptive Theory

Relevance to this research

1 "Adaptive theory is a syntheticapproach …" (132).

The seven 'potentially helpful constructs' that were described inchapter 2, and reviewed above, were drawn from strategicmanagement, innovation theory, organisation theory, organisationdevelopment literature and learning organisation models amongstothers. The research methods included quantitative analysis,qualitative analysis, case studies and action research. Accordingly,both in the selection of orientating concepts and in the choice ofmethods a synthetic approach was adopted for this research.

2 "Adaptive theory is 'middlerange' in terms of immediatefocus" (133).

This research can be said to have resulted in a 'middle range' theory.The scale of the theoretical model generated is neither grand (c.f. therole of innovation as a driver of socio-economic change) nor is itcontext-specific (c.f. the history of innovation in the Brighton Co-operative Society 1960-75). Middle range theories offer generalisedexplanations that may be applied in defined conditions. That is trueof the G2 reference model.

3 "Adaptive theory both shapes,and is shaped, by theempirical data that emergesfrom research. It allows thedual influence of extant theory(theoretical models) as well asthose that unfold from (andare unfolded in) the research"(133).

This feature of adaptive theory is strongly characteristic of thisresearch. The seven 'potentially helpful constructs' that weredescribed in chapter 2, formed the basis for the initial research tool(Appendix 1). However, the analysis using the NUD•IST databaserequired the researcher to construct a theoretical model, ground up,from the data itself. In the course of doing this, and captured inresearcher's memos, unexpected theoretical and conceptual modelsand frameworks were noted to aid in explaining and exploringindicator-construct linkages. The "dual influence" referred to byLayder (133) was strongly practised.

4 "Adaptive theory uses bothinductive and deductiveprocedures for developingand elaborating theory (133).

Deductive processes were dominant during the early phases of theresearch when the questionnaire was being developed (appendix1). The researcher was seeking to develop a set of soundassumptions that could be used to formulate a structured empiricalenquiry. Later the centre of gravity of the research shifted so thatinductive processes became dominant, as the reference modelsemerged from the coding process on the NUD•IST database. A similarpattern was observed when the interventions were considered. Theresearcher began with deduction (drawing from texts in theorganisation development literature) and, following fieldwork,inductively reflected on the efficacy of these.

5 "It rests on an epistemologicalposition which is neitherpositivist nor interpretivist"(133).

In Chapter 3 (3.4.1) this researcher wrote: "it was considered thattoggling between positivism and phenomenology offered a fruitfulphilosophical stance as it opened a wider range of perspectives thatcould be considered in the data interpretation process". This issimilar to the view expressed by Layder (1998) who wrote: "Adaptivetheory adopts a position on the nature of social science which isneither positivist or interpretivist. Traditional positivism fails torecognise that the social world is constituted by the actions ofmeaning-conferring human beings … although adaptive theoryrejects positivism in general, it does not reject the view that there arephenomena in the social world that bear some similarities with thosein the natural world. … social phenomena must be treated asrelatively 'impersonal' and as possessing an objective or'transpersonal' and transituational character" (139-140).

6 "It embraces both objectivismand subjectivism in terms of itsontological presuppositions"(133).

Layder (1998) wrote: "adaptive theory endorses an epistemologicalposition which incorporates both the 'internal' subjective point of viewof social interaction while simultaneously appreciating that suchactivity always takes place in the context of wider social settings and

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Layder's comments on thenature and scale ofAdaptive Theory

Relevance to this research

contextual resources" (140). The researcher considers that the G2reference model is an example of work that takes such anepistemological position. In the G2 model subjective meanings, socialsettings and resource context are included and intermingled.

7 "It assumes that the socialworld is complex, multi-faceted(layered) and denselycompacted" (133).

Layder (1998) wrote: adaptive theory attempts "to produce anenhanced or more accurate rendering of the nature of social reality… secondly, the adequacy of knowledge is reflected in theformulation and presentation of ever-more powerful explanations ofsocial phenomena" (142). Although these are lofty ambitions, in asmall way this research aspires towards them. The development of areference model with 56 elements (greater in number than any othermodel studied) demonstrates a commitment to understanding a'densely compacted' topic.

8 "It focuses on the multifariousinterconnections betweenhuman agency, socialactivities and socialorganization (structures andsystems)" (133).

In this regard this research failed to achieve the potential of adaptiveresearch. Although some were identified in the definition ofcomponents the researcher was aware that many interconnectionswere not investigated systematically.

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It must be noted that the perspective of the researcher on the applicability of

adaptive theory is limited as he became aware of the approach when it was

first published, more than three years after the research had been started. It

supported the researcher's already chosen stance to strive to maintain an

ongoing dialogue between theory and the interpretation of empirical data

and assisted the researcher to draw flexibly from disparate bodies of

knowledge and practice. Before adaptive theory became available the

researcher was aware of a conceptual tension between a commitment to the

principles of grounded theory and the fact that his mind was, in fact, being

opened, orientated and informed by a range of pre-existing theories and

research findings. Layder (1998) saw this tension as a result of excessive

commitment to a doctrinaire conceptual and methodological framework as

the following quotation illustrates:

"… grounded theory has certain built-in limitations. First, as Ihave pointed out, it too rejects the contribution of generaltheory and, in my view, this simply impoverishes itsexplanatory potential (its power and scope) in an unnecessaryand inflexible manner. Such a waste of good theoretical ideascan be avoided and the overall goal of cumulative knowledge(rather than disparate and isolated fragments) can be served byaccommodating general theory. Secondly, although groundedtheory is good on depicting the lived experiences and subjectivemeanings of people, it does not have an adequate appreciationof the social-structural or systematic aspects of society" (19).

From the perspective of this researcher, adaptive theory was both liberating

and affirmative. The freedom to use pre-existing theory as orienting concepts

meant that accumulated scholarship in the relevant fields of study could be,

legitimately, put to use, rather than treated with suspicion. Secondly, Layder

emphasised the need for a researcher to be aware, proactive, critical but not

dismissive. This positioning of a researcher as a craftsman, rather than a

technician, was felt to be affirmative. However, the researcher did note that

adaptive theory, being quintessentially synthetic in nature, required

considerable personal discipline since maintaining a balanced internal

discourse between established theory, new theory and the lifeworld was

demanding.

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5.5 The G2 Model - an assessment

The G2 model offers a significant contribution to an emerging body of

scholarship on firm-specific innovation. However, its contribution is

evolutionary, not revolutionary. There have been numerous other studies

that provide frameworks for the assessment or auditing of innovation

capability. In Appendix 2 seventeen frameworks developed by other

researchers are compared with the findings of this research. This researcher

noted that 'all components (in the G2 model) receive support from other

researchers although no other researcher has developed a model that

contains all of the components and/or elements found in this research'.

Accordingly, the most significant advantage of the G2 model is its

comprehensiveness.

Despite the fact that much of this researcher’s work confirmed that of others,

several specific findings were ‘surprising’. The most significant of these are

described below:

• The G2 model links innovation and strategy symbiotically (component Ib).The breadth, depth and significance of the interconnectivity betweeninnovation and strategy were surprising as much of the existing literatureon innovation focused on operational processes, new productdevelopment and the like (see Chapter 2). This research clarified the keyrole of innovation as a servant of strategy and, sometimes, its master.Interestingly, the strategic significance of innovation is receiving moreattention and has found full expression in a recent book (Hamel, 2000) asindicated by the following quotation: "(I)n the age of revolution we willsee competition not only between business models, but betweeninnovation regimes" (26).

• In the G2 model project and programme management were identified asnecessary management disciplines and skill sets (component IIc). This wasimportant, as some approaches to innovation had portrayed it as flowingfrom a chaotic, inspired or organic organisation (see Chapter 2). Thisresearch found that creativity and commitment needed to be balancedwith structured planning and competent execution.

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• A component in the G2 model (IIIa) deals with 'empowerment'. Thisresearch shows that there is a complex relationship between thedecentralisation of power and innovation capability. Most, but not all,firms in the research sample adopted, at least in part, empowermentphilosophies in order to increase the quantity and commitment toimplementation of (generally small-scale) innovation initiatives. However,even in 'empowered firms' some innovation initiatives floweddownwards from the firm's power elite because of their scope, scale, risklevel, policy implications, radical intent or for some other reason. In thesecases employees were disempowered in the sense that they were requiredto implement predetermined policies. Empowerment emerged from thisresearch as an episodic state, rather than a once-and–for-all commitment.

• Component IVa includes a reference to 'exploratory dialogue.' Thisemerged as a significant issue. It appeared that dialogue was needed forfive major purposes. Firstly, it served to elaborate under-developed ideas.Secondly, it provided an informal filter to reduce the quantity of ideasconsidered. Thirdly, dialogue provided a means by which commitment,and therefor 'political will' could be won. Fourthly, it enabled groups ofpeople to determine what short-term roles they needed to play to 'movean idea forward'. Lastly, dialogue that led to affirmation could strengthenthe resolve of the idea champion(s). Interestingly, there were many caseswhen exploratory dialogue was structured, generally around apresentation and/or a paper, thereby providing elements of formality in aprocess often characterised by informality.

• In Component Va the notion of 'adhocracy' is introduced (discussed inAppendix 8). The research found that when people became involved in theearly or uncertain stages of an innovation initiative they generally formedan adhocracy – a flexible, creative, project-based and temporaryorganisational form. This even happened in the case of a mass-transit railsystem that was dedicated to conformance and predictability. The capacityof managers and other staff to adopt markedly different mind-sets andplay distinctive roles was related to innovation capability. For example, amanager may need to spend a morning meticulously checking records ofsafety inspections and the afternoon 'blue-skying' ways in which newtechnologies could be adapted to give enhanced customer service. His orher capacity to contribute to both tasks required the recognition of a needfor situational flexibility, willingness to change roles and the possession ofa portfolio of appropriate skills.

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• Component VIa deals with the topic of 'mental maps'. This researcher hadnot considered the relevance of conceptual maps in relation to innovationbefore the data from the empirical research became available (although hewas familiar with some of the literature on sense-making as discussed inChapter 2). An example helps to explain the concept. In a water utilitycompany, driven by a variety of pressures, a top management decided tocommit the organisation towards being 'friendly to the environment'. Thiscould be said to be a 'vision statement'. Shortly thereafter managersbegan to visit organisations that had a record of significant environmentalimprovements. Through learning and discussion domains of opportunitywere described - a 'map' was prepared. The 'map' provided 'spaces forjourneys' and led to many innovative initiatives, aided by organisationallegitimacy, clarity of intent, resource availability, appropriate exemplarsand shared understanding of the map itself. It is interesting to note thatmost managers were readily able to draw a picture of the organisation'spast, present and future journey towards environmental improvementusing the metaphor of a map.

An examination of the G2 reference model as a whole reveals a complex

picture. Innovation capability is seen to be the result of a complex interplay

between norms, competencies, behaviours, interactions, meanings,

structures, processes, institutions, mythologies, disciplines, technologies, sets

of knowledge, power brokers, challenges, alliances, decision-rules and

resource allocation decisions. Moreover, although innovation capability is an

organisational property it is only partly systemic in nature. Built into an

organisation with high innovation capability is a recognition that some

innovation initiatives come 'from outside the box' and will challenge

orthodoxies, perhaps de-constructing and re-constructing systems and

paradigms.

Managing in such an environment, this researcher argues, requires a

somewhat specialised set of competencies that can be, in part, inferred from

this research. It would be premature to suggest a definitive list but it is likely

that an 'innovation-capable' manager will:

• imagine radically alternative futures;

• on balance, be a successful gambler (i.e. take judicious risks in uncertainsituations);

• focus energy and resources on a distinct innovation agenda;

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• hunt actively for new ideas and frameworks;

• encourage and enable others to be creative in the finding and exploiting ofideas;

• adopt organisational forms flexibly according to the stage of developmentof an idea.

Although this list is speculative and incomplete, it is sufficient to demonstrate

that the competencies required are more typically found in entrepreneurs

than amongst traditional managers (Spencer and Spencer, 1993). It seems

likely, therefore, that organisations that seek to increase their innovation

capability by reducing or eliminating G2 blockages will need to integrate

entrepreneurial individuals, polices and practices into organisations that have

often been unsympathetic hosts to such values and behaviours in the past.

5.5.1 Use of the reference model

The G2 reference model offered a structured format for exploring innovation

capability and provided the core framework in the diagnostic process. Many

discussions with managers took place during its use in firms. In reflecting on

these exchanges, three significant research issues were identified. These will

be expressed as questions:

1 Why are managers not more interested in the reference model?

One interesting puzzle arising from the research process was that

managers rarely attempted to critique the model but were not keen

to understand more about it. The typical reaction was for the

manager to receive a presentation explaining the components, ask

one or two questions and then ask to move on to data relevant to

their particular firm. When asked about this apparent lack of interest

the researcher was told that 'the model was fine', 'as a broad-brush

thing it feels OK' or a similar observation. Further discussion on this

point suggested that, as one manager put it, "it's too daunting. There

is too much to get right. I want to know about things that I can do".

The researcher concluded that the model presented an emotional

hurdle to some managers. As one manager put it, "it's not a hill to

climb, its Everest". Another manager said, "56 elements! I could deal

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with 6 or 8 but 56 is about 50 too many". It may be that the model, in

an attempt to be universally applicable, has simply become too large.

If this is the case then it could be rejected based on size alone.

These observations have implications for this research and for the use

of models generally. They pose a dilemma for researchers and

change agents. If models are comprehensive they can become

complex, perhaps impenetrable. If they are simplistic they fail to

capture the rich picture of the management task.

This researcher's primary response to the problem was to provide

firm-specific feedback, highlighting lower performing components

and elements—in effect, providing priorities for the firm.

Unfortunately, this meant that the researcher adopted a filtering role,

although decision rules were implemented to reduce the subjectivity

inherent in this. The number of elements that it is reasonable to

describe may vary with the audience. An organisation development

specialist in a large organisation may value the breadth of the model

(all of those consulted did (4)). However, an owner-director of a small

engineering firm could find a short list of priority areas for attention

more beneficial (this was found in practice). On balance, it was

considered that the full model did need to be shown, but care had to

be taken in its presentation. There is a need for greater

understanding of the role of a third-party interventionist in

facilitating organisational innovation.

2 Are all of the components really equally significant?

In the reference model all components are given equal weight. This

seems unrealistic. It is unlikely that all components will be equally

important. Moreover, the relative significance of components is likely

to change according to factors affecting the firm. For example, when

a company undertakes a major innovation initiative that provides

novel challenges it is likely that having an appropriate portfolio of

competencies is critical. This is less likely to be true when incremental

innovation is proceeding within current organisational arrangements

(Freeman and Soete, 1997). The relative weighting of components

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was a topic of concern for managers as they engaged in sense-

making dialogues. They frequently asked the question 'which of

these (components or elements) is really important to us?' At

present, there is no standardised way of helping managers to weigh

the significance of the reference model feedback to their firm's

specific needs.

3 Are the elements too broad?

For each of the components identified a list of elements were

identified. In total, 56 elements were identified for the 18 components.

A few managers considered that generic skills should be synthesised

from elements, thereby enabling skill clusters or competencies to be

identified. These managers pointed out that, for example 'listening to

specialists' (IVb) and 'tracking possible maps' (VIa) required similar

skills. If skills could be identified then innovation capability could be

developed, at least in part, through systematic training and/or new

or amended routines. This research did not have the necessary data

to develop valid competency profiles. However, the notion offers the

intriguing possibility that it may be possible to use methodologies

from competency-based analysis (Boyatzis, 1982) to develop tested

programmes for the systematic enhancement of innovation

capability.

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5.6 Interventions intended to enhance organisationalinnovation capability

No matter how comprehensively and correctly innovation capability is

described it will remain an intellectual framework unless developed in

organisations. Third party intervention can sometimes make a useful

contribution to the development of innovation capability through

consciousness-raising, diagnosis, facilitation, education, action planning and

the provision of specific techniques. The research demonstrated that

development of innovation capability is not straightforward and six

significant learning points emerged.

1. As innovation capability is a generalised attribute firms lack a readymeans of knowing whether they possess it or not. Since there are nocommon standards it is easy to come to a conclusion that 'we are fairlygood, probably' and make other, more specific, developmentprogrammes a higher priority.

2. Innovation capability is a relatively complex construct. It takes time toappreciate it and identify specific application areas. Investment of the timeto raise consciousness about the depth and breadth of the concept can bedifficult to justify.

3. Interventionists developing innovation capability tend to be evangelical.They can adopt the position 'you may not know it but you need moreinnovation'. However, innovation can be fragmenting, divergent andrisk-laden—so business owners and managers are, properly, cautious.There can be a mis-match of values and expectations betweeninterventionists and target firms.

4. Once a company accepts that its innovation capability requiresdevelopment it can be difficult to know what to do next. Deeply imbeddedcultural factors, power positions, systems, routines, norms, rewardstructures, skills or other factors may need to be changed—probably in aco-ordinated manner. Such root and branch change is difficult toconceptualise, enact and assess.

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5. Many techniques for developing business and management skills havebeen developed but these tend to be stronger on the development ofrational and systematised skills and processes, rather than developing thepersonal and organisational flexibilities needed to enhance innovation. Forexample, installation of a TQM capability in a firm is a relativelystraightforward, if demanding, endeavour. In contrast, mastery of theambiguity, messiness and divergent nature of innovation is less easy todevelop and integrated proven training techniques are scarce.

6. Innovation capability remains a latent resource until it is targeted andused. Targeting may be different for each firm. In this developinginnovation capability is unlike other programmes, for example totalquality management which has specific outcomes and metrics. The burdenof strategic decision-making is not reduced by heightened innovationcapability—indeed it may mean that more demanding choices must bemade.

More generally, from the limited case research undertaken, it emerged that

multiple paths can be taken to develop innovation capability. This means that

firms need to select a configuration of paths that are appropriate to them. It is

not easy to determine which paths are appropriate since, as one informant77

put it, "there are many roads to Rome". One, speculative, way of describing

the paths is shown in Figure 5.2 below:

77 Hugh Chapman, Managing Director of Veeder Root Ltd. 16 June 1996.

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Innovation through deliberate strategy

Innovation through organisational re-design

Innovation through individual empowermentInnovation through work

group development

Innovation through rewards,

culture and system

STRATEGY

FORM

KINETICCI

IDENTITY

Figure 5.2: paths for development of innovation capability

In the figure five paths for the development of innovation capability are

suggested. These are illustrative, not comprehensive. It is possible for firms to

innovate through deliberate strategy ("we will enter the cellular phone

market"), form ("we will establish market-facing divisions with the power to

develop their own strategies"), kinetics ("we will recruit great people and let

be creative"), CI ("we will empower groups to take initiatives after due

process") and identity ("this organisation succeeds because we value

innovation than rivals").

The notion of paths is speculative but offers a provisional format for helping

firms to develop a policy for the development of high innovation capability.

In addition, research could be undertaken into the paths, relevant

preconditions and effects. None of the paths is straightforward; innovation

capability will remain difficult to develop. Moreover, once acquired it can be

lost.

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5.6.1 An 'intervention tree'

From a detailed analysis of two cases78 in which the company had been

striving to develop innovation capability for some years, it proved possible to

produce an 'intervention tree'. This does not have the status of a research

finding and is an extrapolation from existing practice. It provides a

preliminary model for systematically developing innovation capability. As far

as the researcher is aware there are no models available that have a similar

degree of internal complexity. The tree (Figure 5.3) drawn as a NUD•IST

diagram is shown below.

Diagnostic Process

Data Feedback

Programme to Remove

Identified Blockages

Generic Innovation Capability Development

Programme

Training in Innovation

Specific Skills

Improve Customer

and Potential Customer Feedback

Establish Ad Hoc Teams

for Innovation

Reward Innovation Initiatives

Develop Effective Project

Management

Elaborate the Firm's Vision

and Intent

Put Innovation on the Top

Team Agenda

Develop Em

powerm

ent Policies

Recruit Great People

Manager H

orizontal Processes

Build Top Team Strategic Skills

Maintain Controls D

riving Innovation

Each Group Establishes Innovation Plan

Encourage Personal Mastery

Audit Innovation Capabilities

Assess Com

parative Innovation Performance

Develop Seam

less Innovation to Operations Links

Explore Potential Technologies

Appraise Innovation Perform

ance of Teams &

Individuals

Structure Firm for Innovation A

dvantage

Other Initiatives Identified by Audit

Level A

Level B

Level C

Level D

Level E

D1 D2 D3 D4 D5 D6 D7

E1 E2 E3 E4 E5 E6 E7 E8 E9 E10 E11 E12 E13

Customisation for Organisational

Form(s)

Customisation for Firm's Strategic

Intent

4Ps Targeting

Figure 5.3: intervention tree

This diagram suggests the structure of a programme to help a firm develop

innovation capability. Diagnostic and data feedback processes (levels A and B)

are standardised entry activities but adapted for a firm's dominant form(s)

78 The cases were SmithKline Beecham R&D and Thames Water. The researcher spent five

days interviewing in the first company and three days in the second.

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using Mintzberg's organisational configurations (Mintzberg, 1998) as

contingency factors appear to be relevant in later stages of innovation

processes. Senior management consider which of the 4 Ps (product, process,

position or paradigm) are apt targets for the exploitation of innovation

capability as shown in Table 5.9 below.

Table 5.9: relevance of the 4Ps framework

P When relevant

Product When timely introduction of products or product enhancements could provide robust competitiveadvantage for the firm.

Process When reduced cost-structures, faster cycle times, improved problem-solving or betterresource-utilisation could provide robust competitive advantage for the firm.

Position When improved market sentiment or loyalty towards the firm (or its products and services) couldprovide robust competitive advantage for the firm.

Paradigm When technology or top management creativity could enable new business models to becreated or adopted that could provide robust competitive advantage for the firm.

Level C introduces a new element. Initiatives relating to clearing specific

'blockages' are identified. These can be addressed as company-specific

initiatives (indicated by a box on the left of the diagram). Some of these

initiatives may draw from a generic innovation development curricula

(shown on the right of the diagram).

The notion of a generic innovation development curricula (partly customised

for Mintzberg's six organisational configurations) provided a new perspective

for this researcher. At this stage, the model is speculative although follows the

developmental process adopted by the two case companies. Level D

represents those activities that firms would be wise to undertake first and the

activities of level E come later. It offers a step-by-step developmental,

hopefully generative, process for firms and facilitators. A rationale for

selecting the seven entry-level (D) activities is briefly explained table 5.10

below.

Table 5.10: intervention tree activities (level D)

Activity Rationale

D1 Training in Innovation-Specific Skills Develops key skills (e.g. opportunism, ideafinding, idea generation, idea evaluation, risk-management, accepting challenge, supportbuilding, project management etc.).

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Activity Rationale

D2 Improve Customer and Potential Customer Feedback Increases and deepens customer and potentialcustomer feedback.

D3 Establish Ad Hoc Teams for Innovation Develops skills and legitimises ad hocteamwork.

D4 Reward Innovation Initiatives Reinforces recognition, status and other formsof reward for innovation initiatives.

D5 Develop Effective Project Management Develops capability for managing innovationinitiatives from firm commitment to delivery.

D6 Elaborate the Firm's Vision and Intent Shares a firm's vision (in general, what it wantsto become) and intent (how it will gain andsustain advantage), allows conceptual maps tobe developed, sets an innovation agenda andaligns initiatives.

D7 Put Innovation on the Top Team Agenda Enables a consensus about the firm'sinnovation agenda to be developed andshared amongst members of the firm's powerelite. Also, enables education about thedrivers, sources, processes, targets andenablers of innovation capability.

Level E activities follow once level D activities have been undertaken. Again, a

brief rationale for the 13 level E activities is provided in the table below.

Table 5.11: intervention tree breakdown (level E)

Activity Rationale

E1 Develop Empowerment Policies For all firms, except micro-enterprises, empowermentstrategies can increase the flow of innovation initiatives.

E2 Recruit Great People It is an error to believe that anyone can do everything.Individuals with excellent skills and personal innovationcapacity are needed in key roles.

E3 Manage Horizontal Processes Most (except work-group) innovation initiatives requireeffective horizontal liaison, project and processmanagement across boundaries within and without the firm.

E4 Build Top Team Strategic Skills Top teamwork, at the SBU level, is a key driver of innovationand aligns initiatives. Teamwork between SBU managementteams in larger firms, and with alliance and/or co-operatingpartners, is necessary to avoid parochial thinking andlimited capacity to exploit potential synergies.

E5 Maintain Controls Driving Innovation The firm's control systems (objectives, measures, financialappraisal techniques, success criteria and MIS reportingprocess) need to support innovation in the firm.

E6 Each Work Group Establishes andInnovation Plan

Organisation-wide innovation development plans are too'broad brush' for work groups. Team specific innovationdevelopment programmes are required.

E7 Improve Personal Mastery The term 'Personal Mastery' refers to individuals capacity tobe innovative as individuals and includes stressmanagement, creativity development, influencing skills andtolerance of ambiguity.

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Activity Rationale

E8 Audit Innovation Capabilities This includes auditing to aid the development of thegeneric innovation capability and additional audits oftechnological, market, competitive and otherindustry-relevant change drivers.

E9 Access Comparative InnovationPerformance

Firms can benefit from establishing an assessment processto determine how innovative they are compared with (theupper quartile of) rivals.

E10 Develop Seamless Innovation toOperations Links

This is particularly important for product and processdevelopment in order to manage the transfer of innovationinitiatives to 'routine' parts of the organisation. It should benoted that routine processes can be the target of multipleinnovation initiatives intended to simplify, improve, increasespeed, reduce cost structures, enhance flexibility, reduceenvironmental impacts etc.

E11 Explore Potential Technologies Firms can benefit from gaining hands-on experience ofpotential that could be significant in contributing toinnovation.

E12 Appraise Innovation Performance ofTeams and Individuals

The firm's performance management system needs torecognise, direct and support innovation. It was interestingto note that some firms are using the Balanced Scorecard(see section 4.3.2.3) in order to provide a coherentstructure for doing this.

E13 Structure Firms for InnovationAdvantage

The firm's structure needs to provide appropriate controland co-ordination devices to manage assessment ofdrivers, inspiration sources, idea development, programmeand project management etc. As suggested below, this caninclude the capacity of an organisation to change formaccording to the requirements of the moment.

It must be emphasised that applying this framework would require flexibility

as it is based on too few cases to provide more than a set of hints about what

could be done to enhance innovation capability. However, it does provide a

tentative step-by-step methodology. In order to apply this approach in

practice, it would be necessary to elaborate each of the activities listed. There

are many training and development methods that could be used, or adapted,

for this purpose.

5.8 Contingency theory and this research

In Chapter 2 (2.8) this researcher noted that 'innovation capability may, at

least in part, may be affected by the rate and sophistication of industry

evolution, a firm's accumulated experience in innovation practice, firm's size,

the scope of innovation undertaken, degree of formality and/or other

factors. If this is correct then innovation capability may, at least in part, be

contingent upon situational factors and not a universalistic property'.

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The argument that contingency factors shape the requirement for innovation

capability, its nature and its functions is persuasive. The data set generated by

this research provided an opportunity to begin to explore whether

innovation capability was best considered as having a universal set of

attributes, or whether it needed to be viewed from a contingency perspective.

Only a small number of 'lightweight' cases were examined (see Appendix 8)

and the conclusions of this aspect of the research must be regarded as

tentative.

The contingency model adopted was that of Mintzberg et al. (1998). The

researcher had the opportunity to study one example of each of the six

organisational configurations and, contrary to his expectation, found many

(16) points of similarity. This was considered sufficient to justify adopting a

universal model for this research, although, as noted above in the discussion

of the intervention tree, contingency factors have a role in 'customising'

diagnoses and the development of change strategies.

The absence of evidence from this research supporting clear demarcation

between contingency categories could be a result of the choice of Mintzberg's

model rather than another. However, this is unlikely as Mintzberg's model

integrates much of the earlier work in the field. A more likely explanation can

be drawn from an examination of the cases in Appendix 8.

It appears from this research that organisations are capable of adopting more

than one form. This 'morphing ability' has been identified by others and is,

for example, discussed in a recent work (Harryson, 2000) whose framework

(185) describes innovation series of journeys with four possible directions

(north – large organisational unit, east – organic and heterachic, south – small

organisational unit and west – mechanistic and hierarchic). According to

Harryson, innovation initiatives tend to start in the Southwest (small and

organic organisational form) and move to the Northeast (large and

mechanistic organisational form). Harryson's process-oriented model helps to

explain why this research suggests that innovation is, to some extent,

independent of contingency factors. The nursery of innovation initiatives is, in

Harryson's terms, the Southwest – characterised by "loose creativity

networks for invention and internalisation of knowledge" (185). These can

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appear in any organisation, from the entrepreneurial form to the machine

bureaucracy. The dominant configuration becomes increasingly significant as

the journey Northeast proceeds and an innovation initiative is elaborated,

integrated, enabled, codified, routinised and exploited.

Although Harryson's work was not available to the researcher for use as an

orienting concept (it was published in the year 2000) the G2 model largely

supports his metaphor, especially components IIIc, Va and Vb. In addition,

this research extends the applicability of the constructs embedded in

Harryson's model. His case examples draw from significant product

innovations in large firms. Many innovation initiatives studied by this

researcher were small-scale and targeted elsewhere than at product

innovation. However, a similar pattern is discernible with ideas being found

or born in "loose creativity networks for invention and internalisation of

knowledge".

This research suggests that organisational contingency factors are not

absolute but are conditional, at least in part, on the type of work being

undertaken at the time. However, there is a paradox that merits explication.

This can be expressed as a question: if the innovation capability can be

described as a universal property then why is that firms are primarily

innovative in their area of competence? This research suggests that although

processes maybe similar the skills and knowledge of the people involves

needs to be context-specific. So, a team of pharmaceutical scientists can devise

a new drug and a team of imagineers can develop a new concept for a theme

park but pharmaceutical scientists cannot design an innovative theme park

(although they may a contribution). The importance of context-specific

knowledge is partly reflected in the G2 model (components IIa and IVb) but

could be explored further by other researchers.

5.9 Theoretical discussion

In addition to the points made above, this research illuminated a wider

theoretical issue in relating management studies to the social sciences,

specifically sociology, for which there are no satisfactory answers at present.

The problem was detected in broadly positive reactions of managers to the

G2 model itself and weaknesses in the take-up of innovation capability

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development initiatives. It seemed that the research was stronger in diagnosis

than in helping managers know what was the best thing for them to do next.

The problem can be summarised this way: extant theoretical positions and

related methodologies are strong in allowing a researcher to describe and

understand the present. However, they are relatively weak in facilitating the

development of new and better ways to do things. In short, social science

research has a phenomenological bias that can be internally innovative but is

weak in facilitating novelty.

This phenomenological commitment is not surprising considering that the

roots of the social sciences are conditioned by precepts such as those stated by

Naegele (1961) who wrote about sociology that "(i)t confronts the world

(within and without) in order to make discoveries … Discoveries are not

made about the world as a whole … Sociology, then, involves a characteristic

image, or alternative set of images, concerning one part of the larger order of

'the world' that can be increasingly known" (5). Naegele sees forming a

'characteristic image' as a goal of sociology. This is more than descriptive but

rooted in phenomena that can be observed (like gender role behaviour) or

inferred (like social cohesion). Indeed, faithfulness to the reality studied is

considered by some to be what puts the science into social science

(Silverman, 2000).

In their discussion of grounded theory Strauss and Corbin (1990a) concur and

elaborate. They state "(a) well-constructed grounded theory will meet four

central criteria for judging the applicability of theory to a phenomenon: fit,

understanding, generality and control … it should also be comprehensible

and make sense both to the persons who were studied and to those practising

in the area" (23). This stance firmly roots study in existing phenomena with

the injunction that the findings must "make sense … to the persons who were

studied" - giving emphasis to the descriptive nature of research endeavour.

Organisations have been become better understood as a result of such

research. But management requires more than description; it requires action.

Managers take and enact decisions that shape futures. Their preoccupation is

with what might be done to improve, mitigate 'problems', gain advantage,

exploit assets, lever knowledge within a web of constraints, regulations and

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non-negotiable driving forces. In short, management is committed to creation

of value despite difficulties in a messy context. As Revens (1982) put it "(i)n the

widest sense management embraces both the setting of a goal and the

manipulation of resources to achieve it. A person who sets goals but makes

no effort to achieve them is not a manager" (151).

It is relevant to ask the question 'to what extent does description imbued with

phenomenological exactitude aid managers to, in Revens' words, 'set goals

and manipulate resources?’ From this research, the answer it would seem to

be generally 'partly'. The reasons for this become clearer when an

intervention is considered over time as is shown, simplistically, in Figure 5.4

below.

Last Month

Today 3 Months Time

Next Year Three year's in the

future

Organisation as a working

entity

Managerial learning

following feedback

Action Planning

Review of options

Implementation of Action Plans

Enrolment of multiple

stakeholders

Organisation as a new working

entity

Figure 5.4: intervention over time

The study of an organisation as an entity can be undertaken relatively

efficiently and effectively using methods rooted in phenomenology.

Managers can be helped to make sense of their current reality using methods

from survey feedback, counselling and sensemaking (see, for example,

Barrett and Cooperrider, 1990). However, at this point, as Goodfield (1999)

puts it "there is a situation of insight without action" (17). Choices need to be

made about whether to do anything, what to do and how to do it; options

need to be reviewed and action plans formulated. Here existing theory and

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research findings are relatively weak, but not inconsequential. Case studies,

examples of practice, bodies of judicious prescription (e.g. Deming, 1986) can

be generally helpful but also be marginally relevant, superficial, obscure or,

possibly, misleading. However, once choices are made (by a manager) about

what to do the situation improves. There are many studies about how to

enrol others and manage implementation (see, for example, Miller, 1980). In

short, a commitment to phenomenology provides least practical benefit when

futures are being constructed since, by definition, no phenomena exists at that

time.

This point is illuminated by considering a common theme that occurred

during the intervention process of this research. There would come a point in

the feedback interview when managers would say something like "well, I buy

the analysis but what do we do to improve? What will work for us?" Here,

the researcher drew from three sources of guidance. Firstly, other managers

could provide a source of craft-based wisdom on what was likely to be

effective; secondly, accumulated caselets offered possible stratagems

although, generally, in circumstances that were not directly comparable;

lastly, 'progressive' principles (like team working) were espoused with the

intent that they could be considered for adoption.

It is notable that the researcher could not, in this case, provide a taxonomy of

action options with a reasonable estimate of costs, implications and benefits in

which the contingencies (i.e. contexts in which they may be relevant) were

explicitly defined. Although, it should be noted that such taxonomies have

been successfully developed where more specific behavioural-based

organisation development is planned (see Caffyn et al., 1997 for an example).

The relative weakness of current social science theory, and related empirical

research, to provide authoritative help to managers that enables them to

construct progressive futures is a matter of concern. One reason is that

research is frequently considered to be a process of description in pursuit of

understanding within the boundaries of an academic discipline. In the case of

innovation capability, such a commitment to a single academic discipline is

questionable. The components of innovation capability, as reflected in the G2

reference model (see Chapter 4), would require input from several academic

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disciplines to achieve sufficient understanding to supply the kind of

decision-support input outlined above. Table 5.12 illustrates the problem.

Table 5.12: need for a multidisciplinary approach

In order to understandaction planning options in:

The following discipline(s) orbodies of practice is/are relevant:

selecting individuals with requisite talent and competencies Psychology

developing innovation in groups Social Psychology

developing the organisation as an innovative organism Sociology

constructing a supportive organisational ideology Anthropology and sociology

devising appropriate measures and managementinformation systems

Economics and cybernetics

directing innovation capability towards worthwhile ends Decision theory, politics and strategic studies

managing change and skill development Education and organisation development

This is a skeletal list but it illustrates that several disciplines and bodies of

practice have relevance. One conclusion is that the topic (innovation

capability) would benefit from researchers adopting a multidisciplinary

perspective to enhance the utility of theory and empirical research to provide

authoritative decision-support for managers. However, that conclusion has

two disadvantages. Firstly, the scope of expertise needed by a single

researcher exceeds that which can be reasonably expected. Secondly, it could

be expected that each of the academic disciplines (but not bodies of practice)

in the table above would remain committed to grounding their research in

phenomena and, thereby, be limited.

This researcher considers that one way to develop scholarship in the field of

innovation studies, and more generally, in management studies, is to adopt a

two-pronged approach.

The first change would require the routine formation of teams that contain

requisite theoretical and research skills. The research output would be

developed through a multi-disciplinary process of synthesis and, therefore, be

a team property. This could involve significant upheaval; not least in the

academic status system that rewards individual scholarship. In addition, many

methods texts would need to be amended since, at present, they deal the role

of the individual researcher. However, such a move would not be

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revolutionary as there are examples of scientific and social science teams that

have followed this pattern, for example the Chicago school (Layder, 1993).

The second change is profound and would need to be extensively debated

before being adopted. In essence, it would require a limited decoupling of

research from being grounded in phenomena when change is required. This

form of research would focus on possibility and probability. The centre of

gravity of insight would move from past and present to the future. A key aim

would be to assist managers to take better decisions. Such a shift in emphasis

could require the development of methodologies similar to those used in

military studies (McNally et al., 1996) so that management is studied, by

researchers, as a practice of action rather than the result of action.

Although speculative, this two pronged approach could help to redress the

relatively low status of management research mentioned in the introduction

to Chapter 3. It carries with it the risk that theoretical objectivity could be

prejudiced by a commitment to be useful to managers in a decision-support

role. But it should be noted that this researcher is advocating a limited

decoupling of research from description only in relation to one element of the

management process—designing the future.

5.10 Learning for the researcher

As discussed in Chapter 3, the research described in this thesis is broad in

scope and rooted in a commitment to 'make a difference'. It is fruitful, at this

stage, to consider the merits and demerits of this form of research, especially

in relation to the requirements of a PhD programme. A significant advantage

of undertaking research into a topic that was broad in scope was that it

proved possible to address important questions that had multiple aspects. The

research reached out from CENTRIM and researchers, consultants and

managers in several countries made inputs.

There were many rich sources of theory and empirical research findings that

provided orientating concepts. There was no shortage of inspiration! The

profligacy of relevant input proved to be a disadvantage as well, since almost

everything that had been written in fields as disparate as strategy,

organisational behaviour, creativity development, organisation development

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and so on was relevant. As a researcher it was easy to feel overwhelmed and

consider that, no matter what studies were undertaken, there would always

be a huge backlog of unread but important material.

An advantage of seeking to 'make a difference' was that the researcher had

an opportunity to receive a great deal of 'user' comment and feedback on his

emerging work. This provoked profound reflection as comments came from

the lifeworld of practitioners rather scholars whose competencies generally

did not include managing organisations. However, the commitment to 'make

a difference' led to a tendency to limit research and theorising to that deemed

acceptable to 'clients'. In such circumstances, it would be easy for a researcher

to serve practice rather than the development of knowledge; in effect, to

become a consultant rather than a scholar.

The primary aim of this researcher was avoid potential pitfalls and create a

flow of learning, action and reflection, as proposed by Kolb (1983b).

Reviewing the loops of learning that took place during the research process

confirmed that Kolb's proposition is more than a theoretical construct—it

happens in practice.

However, in the experience of this researcher, Kolb's cycle is too tidy. He

assumes that learning is the dominant process whereas, in this case,

unlearning was as an important, if not more important, motif.

An example makes the point. During his years as a consultant the researcher

was required to take a view quickly when faced with situation that required a

diagnosis. He would adopt the attitude "I'll do the best I can in the time

available". This stance towards data may be advantageous to a consultant; it is

counter-productive if adopted by a researcher. In order to school himself to

ponder the real significance of data this researcher had to become aware

when his intellectual habit of expediency kicked in and fight the tendency to

stray from a dedication to an emerging understanding of the research ethic

and good practice. The experience of this researcher is supported by

Steele (1975) who comments, "the problem of change is really a two-step

process: unlearning old solutions and then developing more appropriate

ones" (45).

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A more accurate model of this researcher's learning process would be to

imagine five cups standing on a table. The first is labelled 'theory', the second

'sagacity', the third 'action', the forth 'map-making' and the fifth, which is full,

is labelled 'prejudice'. The theory cup needs to kept full through interacting

with ideas, constructs and perspectives. The second, sagacity, is already partly

full—it represents the researcher's accumulated past insights and

'common-sense'. The aim is to use sagacity to avoid flights of fancy or

seduction by partisan ideas and fill the cup to the brim. The third cup, action,

is empty—at the start of the research. The aim is to fill it by trying to make

ideas work in the real world. The forth cup is close to that described by Kolb

as reflection—but it is reflection that concludes with new perspectives,

insights and connections—maps. The learning process seems to follow a

sequence: try to fill the theory cup, sip the sagacity cup to test the theory, take

action, produce a map and avoid being tainted by prejudice.

Rather than follow a neat Kolbian cycle, the actual process of learning

required jumping from one cup to another, sometimes driven by expediency

or opportunity. Progress benefited from a degree of deliberate structure. If,

for example, the researcher needed to fill the map-making cup he would seek

an opportunity to give a presentation on his research and the requirement to

present forced the map-making process. Seen from this perspective, the

learning process can be managed, in part, as a series of tasks each, hopefully,

contributing to an emerging body of significant academic work.

The analogy suggests that all cups need to be kept as full as possible, with the

exception of the last. When this happens there can be a constructive dialogue

between cognition, awareness, action and sensemaking without a structure of

attributed meanings that are, probably subconsciously, negating the learning

process.

5.11 Suggestions for further research

The findings of this research provide a springboard for other initiatives. Some

suggestions for further research have been mentioned above. More extensive

proposals are listed below.

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The single most useful task would be for another researcher to replicate the

research process described in this thesis with a different group of cases and

see whether a similar reference model emerges.

Further research could include:

1. The application of contingency models to the reference and interventionmodels. It may be that certain innovation processes are little affected bycontingency factors (e.g. idea discovery) whereas others (e.g. productdesign) are more influenced by contingency factors. It would be importantto understand more about the effects of organisational configuration, sizeand other variables to all stages of the innovation process (seeAppendix 8).

2. It must be expected that some components of innovation capability areinterrelated. It has not been possible to assess the degree ofinterdependency in this research. Further research could be conductedinto statistical and other relationships between components and elements.

3. Although identified weakly in the data, it is probable that there areextensive processes of 'socialisation' operating in innovative firms.Innovation capability emerges from the research (at least in part) as asocial phenomenon. From a sociological perspective the process ofsocialisation acts to align values, goals, attitudes and practices. This isprobably a multi-level process operating at the team, departmental, taskgroup and organisational levels. It would be useful to examine the role ofsocialisation in relation to the development and sustaining of innovationcapability.

4. The reasons why interventions to develop innovation capability haveachieved patchy acceptance are unclear although this researcher hasspeculated above that methods of management research are inadequatefor exploring possible futures. There has been insufficient researchundertaken into the facilitating and hindering factors that assist innovationdevelopment programmes.

5. There is a relatively un-integrated collection of innovation-specificdevelopment technologies and tools available. Without a specialisedinnovation capability development 'technology' being available it isdifficult for a change agent to facilitate the process of moving from adiagnosis to a development plan. Research could be undertaken toidentify, test and disseminate a specific tool-kit, dealing with theambiguity, messiness and divergent nature of innovation. Theintervention tree (figure 5.3) offers an initial framework for this purpose.

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6. The helix notion (see Figure 5.1) is capable of elaboration. In someorganisations, for example in centralised integrated bureaucracies likeairlines or supermarkets, there appears to be significant differentiationbetween the helixes as operational and innovation processes are largelyseparated. In other organisational forms, for example in adhocracies likesoftware producers or film makers, there seems to be a complexinterfusion between routine and innovation processes and considerableblurring of function. This speculation could be tested in further research.

7. Distinctive models, methodologies and tools may used to developcorporate (rather than business unit) strategies. Issues such as industrypositioning, portfolio evaluation and parenting philosophies have beenconsidered to be important (Kay, 1993). The researcher was unable toconsider specific characteristics of innovative corporations but has littledoubt that a different pattern of innovation attributes would be neededthan the G2 model. What this would be presents an interesting researchquestion.

8. In this research a position has been taken that there can be an inherentconflict between deliberate strategy and innovation initiatives. Thisremains hypothetical. It could be that strategy should be the dominantaligning force in an organisation and that innovation should be a servant,rather than an equal partner. A significant benefit of a strategy-ledapproach is that it does not treat innovative capability as 'a good thing'but a component for the fulfilment of a strategy. In this thesis, theresearcher has argued that since high innovation capability openedstrategic windows of opportunity it would be wrong to align innovationcapability always to an existing strategic direction. The interdependenciesof strategy and innovation could be explored further.

5.12 Thesis structure and research limitations

This thesis describes an extensive research programme that underwent

several stages. The question has been asked, 'if this thesis were to be

considerably reduced in size then what elements should be omitted?'

The researcher considered this by asking: 'what elements of the thesis are

essential?' Essential elements of the thesis are presented below with a brief

rationale in each case. The list can be seen as revised chapter headings.

• Introduction and overview

• 'Seven helpful constructs' – existing models and frameworks that help usunderstand innovation capability.

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• Adaptive theory and grounded theory – underpinning the integrity of theresearch programme.

• The G2 model – the full exposition of the researcher's findings.

• The relevance of contingency models – offers important theoreticalinsights.

• The intervention tree - a springboard for further research.

• The G2 Audit Instrument – an opportunity for other researchers to testthis research.

By implication, much of the remaining story of the research could be omitted,

including the background to the 'seven helpful constructs', the discussion of

methodological options, the G1 reference model and the detailed comparison

with other scholars' work (as this did not lead to a redefinition of this

research).

Even in its complete form the research is replete with limitations. Throughout

this thesis these have been made explicit where relevant. Seven classes of

limitations can be identified.

1. The research is behaviourally biased and minimises other factors.

2. The method chosen for coding data results in categories achieving thesame status—they are all considered as equally important. Such anassertion of equality of significance cannot be justified.

3. No systematic attention has been paid to the relationship betweeninnovation capability and commercial performance. It can be argued thatthis is the most significant limitation of all. Firms have a right to ask "if I doall the things that are suggested will I have a more profitable and securebusiness?" The answer is "we don't know". Although the data set wasderived largely from the DTI's list of innovative firms there is no way ofknowing whether a similar pattern would have been found innon-innovative and/or less profitable firms.

4. The cases were predominately UK based. This prevents issues of nationalcharacter and national systems of innovation from being considered. Onlyunsystematic efforts could made to include firms from Japan, Hong Kong,Indonesia, Saudi Arabia and the USA.

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5. The effects of interventions have been superficially analysed. Mostresearch effort in preparing this thesis was invested in developing thereference model. As discussed above, the effects of interventions has beenpatchy, for reasons that are not fully understood. With nearly 50 casesavailable it would be possible to conduct a detailed study.

6. The researcher felt there was another limitation that was difficult to codify.In the fieldwork devoted to this project the researcher frequently felt asense of energy, excitement and optimism in innovative teams andorganisations. He recalls commenting after one interview that "there's nosense of tiredness. Their tails are up and wagging". When conceptualisingfrom interview data it proved difficult, sometimes impossible, to capturethis spirit. The researcher sometimes wished that he could add verbatimquotations and video clips to the reference model components—as thesebetter conveyed the essence of the phenomena under investigation thanthe words used. It may be that the research process was insufficientlysensitive for the topic being studied.

7. In Chapter 2 it was mentioned that some scholars considered innovationto be other than a rationally managed process. Rather, they considered itto be connected with attention, values, will and meaning. This can bedescribed as a 'spiritual perspective'. Proponents consider thatmanagerialist solutions ignore or deny the importance of 'heart'. Forexample, Harrison (1995) observed, "I have never in all my years as aconsultant seen anyone change an organisation in any fundamental waythrough rational planning. Plans have their place, of course, but themanagers I have seen deeply influence their organizations' charactersalways operate by intuition, guided by strongly held intentions" (173). Theapproach developed in this thesis is based on an assumption that themobilisation of talent, processes, alignment and skills enable innovation tobe managed. However, it could be valuable to explore an alternativeperspective: that innovation thrives in a situation in which people areconnected with their inner resources, break out of mechanical thinkingand combine in ways that could be described as 'led by the heart' (see, forexample, Ouspensky, 1957).

5.13 Concluding remarks

In Winston Churchill's memorable phrase this feels like "the end of the

beginning". Writing a thesis about innovation capability was an innovative act

in itself. A fragment of an idea grew into a proposal and then into a

commitment. The highs and lows of the process mirror the emotional

demands of any innovative initiative. The major investment, in this case, was

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time and opportunity. The thesis could not have been achieved without a

significant commitment—opening new doors and closing others. The nature

of innovation is always thus: a combination of hope, aspiration, choice,

tribulation and creation.

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Appendix 1Interview schedule

The interview schedule was developed from the theoretical review (see

Chapter 2). The researcher adopted, where possible, the critical-event

interview technique described in Boyatzis (1982).

Briefing statement

"I am undertaking research into 'innovation' and I am gathering views of

anyone concerned with an aspect of innovation.

By the term 'innovation' I mean an idea that is put into practice and used to

benefit someone. It does not have to be a brand new idea—just new to the

people using it. It could be to do with the products that the firm produces,

how it does things, how it markets its products and how it is organised. The

important thing is that I am not just asking about finding ideas: I want to ask

about how ideas are applied and benefits gained.

Do you have questions about the way that I am using the word 'innovation'?

Can I give you examples to make it more clear?

As we discuss the topic I would like you to reflect on your direct

experience—either as a manager, a participant, a facilitator or a recipient. It

will help if, as we talk, you give me actual and real examples and we have the

opportunity to discuss these in depth. I will ask questions but if you feel that

there is an important aspect that I am not asking you about please raise this. I

will be recording this conversation but your comments will be

confidential—although I would like your permission to quote anonymously

from the transcript of your interview. Is that OK with you? Do you have any

questions before we get started?"

The questions

1. There is a lot written and discussed about 'innovation' these days. Is itcorrect to separate innovation from other things that are done in anorganisation? What, in your own words, would you say were the thingsthat make innovation different or special?

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2. Every firm has to decide what markets it wants to sell in to. In your directexperience, has innovation helped a firm to achieve a improved marketposition? What happened? Are there any examples that you can think ofwhere innovation has hindered the firm from doing this? Again, I wouldlike to know what happened.

3. Some firms try to use innovation to help them to become stronger in thefuture by building their resource base—this would make the firm capableof doing things in the future that it cannot do at the present. Can youthink of examples where this has happened? Are there examples whereinnovation has hindered a firm from doing this?

4. Sometimes it seems that innovation happens because a few people,perhaps only one, has the motivation and skills to drive it forward. Canyou think of examples where this has occurred? What happened?

5. Do you think that it is possible for a firm to encourage innovationgenerally—so that it becomes a 'way of life'? Can you give me examplesfrom your direct experience of this? What did management do that eitherhelped or hindered the development of innovation as 'a way of life'?

6. Firms need to do more than innovate—they need to set strategies anddevelop business plans. Also, of course, they need to perform routineoperations. How do you see innovation fitting with business planning andoperational effectiveness? Is there conflict? Are different kinds ofmanagement needed for innovation and operations? Can you help me tounderstand how these different activities fit together?

7. Innovation starts with an idea—no matter where it comes from. What isyour experience of where ideas come from and how they are generated,or acquired? Again, I would like to discuss real examples.

8. Ideas, in themselves, can be just notions unless they are adopted. What isyour experience of how ideas are reviewed, selected and adopted?

9. When a firm adopts an idea it needs to be implemented—that is peopleand resources have to be assigned to do the work needed. What can youtell me about the process of implementation?

10. Firms can implement good ideas but this is not sufficient. Ideas need to beyield benefits—perhaps in the market or within the firm. What can youtell me about the process of reaping benefits from ideas? In particular, Iwould be interested in examples of ideas that have been successfullyexploited and those that were not.

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11. I'm interested in the learning process that may accompany innovation. Inyour experience do firms learn how to innovate better through trial anderror or some other way? Is learning important? Why? How is it bestfacilitated? What can impede learning?

12. Can we move on to looking at the factors that help innovation inorganisations? Firstly, I'd like us to think about the organisation's culture.What attitudes, practices or routines help and hinder innovation? Do theseapply in every situation? If not, why not?

13. I'd like us to think about the organisation's assets. How important toinnovation are facilities, equipment, investment and so on? Why? Arethere certain sorts of ideas that require more asset intensity thanothers—what are they?

14. Now the organisation's technologies. (By the way, I think that atechnology is a proven methodology for getting complex thingsdone—not just a science-based approach). How important to theinnovation process are specialised technologies? How are newtechnologies acquired?

15. Next, I'd like to ask about skills (by this I mean the capacity of individualsor teams to perform difficult things to a consistently high standard). Howimportant to the innovation process are specialised skills? Are genericskills (like finding ideas) important? What would you say were the mostbeneficial skills (for innovation)?

16. Some organisations have tried to enable everyone in the firm to beinnovative. Do you know of any examples where this has happened?What were the benefits? How was it managed? What, if any, were thedisadvantages? What can prevent this from happening?

17. I'm interested in how organisations can ensure that there is a sufficientsupply of innovative ideas. What, in your experience, are the ways inwhich a firm can ensure that a sufficient quantity of innovation takesplace? What can prevent this from happening?

18. Innovation and creativity can be close companions. How have firms triedto increase or release the creativity of people? What has been theirexperience of doing this?

19. Sometimes innovation is required by senior management—using atop-down approach. Can you think of examples where this hashappened? What occurred? What were the results?

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20. In today's world it has been argued that firms have to innovatequickly—that is to exploit the potential of an idea without delay. What areyour views about the importance of time in innovation? Can you think ofexamples of where a firm has attempted to accelerate the pace ofinnovation? What occurred? What were the results?

21. Innovation can be costly. Is it important to be efficient when innovating?In your experience, can this be done? How? What were the results ofintroducing an efficiency orientation into the innovation process?

22. Firms can innovate in areas that aren't important to their future—so thatthey become diverted from what is important. What is your experiencesof attempts to target innovation on the most important issues confrontinga firm? How was it done? What happened?

23. It may be that not all ideas suggested can be adopted. So some ideas haveto be culled. What is your experience of this process? How was it done?What happened?

24. An innovation may be good for one firm but not another. How, in yourexperience, do firms develop an innovation agenda for their particularneeds? What is your experience of this? How was it done? Whathappened? Are there disadvantages in only choosing innovations that fit?What are they?

25. Just six more questions to go! Let's talk about innovation in the productsand services that a firm offers. How, in your experience, is this managed?What are effective and ineffective processes?

26. Now I'd like to ask about innovation in the processes of a firm (that is theway that work is organised to get things done). How, in your experience,is process innovation managed? What are effective and ineffective ways todo this?

27. Sometimes firms can be innovative in ways that they approach a marketor signal the characteristics of the products and services that they offer. Doyou have any experience of innovation in marketing? What are effectiveand ineffective ways to do this?

28. Firms can be innovative in the way that they define theirbusiness—sometimes called 'the business model'. For example, somefirms are redefining themselves at the moment as internet businesses. Doyou have any experience of firms that have tried to do this? How? Whathappened?

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29. Thank you very much for answering my questions. Before we close isthere anything about innovation in organisations that I have not asked?

30. And the last—personal—question, what does it feel like to be involved ininnovation? What does it mean to you?

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Appendix 2Auditing innovation effectiveness—a reviewof alternative models

In this appendix relevant research and interpretative frameworks presented

by others are reviewed and compared with the findings of this research. The

appendix concludes with a table that shows support available for the

components of the G2 reference model.

There have been many studies that provide frameworks that are applicable to

the assessment or auditing of innovation capability. These include studies at

the national level, at industry level and at the firm-specific level. Since this

research was concerned with firm-level innovation, audits that take a

national, regional, technological or industry perspective have not been

reviewed. A simple framework was developed by the researcher for

categorising innovation audits at the level of the firm and is shown in

Figure A2.1 below.

Innovation OutputsInnovation Capabilities

NP- PD

Total System

AUDITING NP-PD PROCESS

EFFECTIVENESS

AUDITING ORGANISATIONAL

INNOVATION CAPABILITY

AUDITING ORGANISATIONAL

INNOVATION PERFORMANCE

AUDITING NP-PD PERFORMANCE

Figure A2.1: audit categories

Innovation audits can be categorised as whether they focus on capabilities or

outputs, shown on the horizontal axis in the figure. Also, they can be

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categorised into audits that consider the new products/processes

development (NP–PD) or the organisation as a whole—shown on the vertical

axis.

Figure A2.2 below locates an illustrative selection79 of audit approaches in a

four-box matrix with the same vertical and horizontal parameters as the

figure above by the name of the key researcher. For clarity, this research is

also positioned (as 'Francis'). The work of other researchers was reviewed

and compared with the G2 reference model as described in Chapter 4. This is

reviewed in alphabetical order of the lead writer.

Innovation OutputsInnovation Capabilities

NP- PD

Total System

ArchibugiChiesa

Siegel

Coombs

de Ven

Francis

Burgleman

Trott

Amabile

DeutschmanDoyle

Dooley

Tang

Johne & Snelson

Ahmed

Kao

Rothwell

McGourty

Figure A2.2: other researchers

Ahmed

Ahmed (1998) describes the results of a survey of innovation in firms

undertaken "in order to identify best practice… 21 (companies) ultimately

participated" (49). Based upon the percentage sales from new products and

the success/failure rate participating companies were grouped into three

innovation categories—high, medium and low.

79 The selection of frameworks and audits were those suggested by researchers at CENTRIM,

University of Brighton who were asked to provide a full list of examples.

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Ahmed notes that "(i)n the main all these companies were able to pinpoint

four areas of innovation to which they paid detailed attention: (1) product

innovation; (2) process innovation; (3) organisational innovation; (4) service

innovation" (50-51). This confirms three of the four targets of innovation

capability discussed in Section 2.6.

Ahmed briefly describes 25 characteristics of highly innovative firms. The list

is detailed and equivalent to the level of elements rather than components in

this research. Ahmed's 25 characteristics are described below and compared

with the results of this research.

Table A2.1: comparison of G2 and Ahmed's framework

Ahmed'scharacteristics

Comments or related components and elements fromG2 reference model

1 Innovation as a plank of strategy Component Ib, element (iv) Innovation goals in business plans

2 Clarity in goals for innovation Component Ib, element (v) Performance measures assessinnovation prowess

3 Value of people Component IIIc, element (ii) Positive regard (for staff)

4 Culture of innovation Component IIIb, element (i) High expectations from opinion leaders

5 Cross-functional interaction Component Va, element (iv) Inter-team co-operation

6 Freedom and space to innovate Component Vb, element (ii) Intrapreneuring attitudes and skills

7 Reporting structures and ideachannels

Component IVb, element (iii) Hearing 'in-business agents'

8 Innovative process distinctions This element was not found by this research. Ahmed suggests thathighly innovative firms make a distinction between "different typesof innovations… to produce different trajectory strategies" (53).This seems reasonable but was not detected by this research.

9 Customer interaction andstimulation

Component IVc, element (ii) Close customer relationships

10 Importance of execution Component IIc, element (i) Effective transfer to routine organisationand (ii) Capable programme and project management

11 Pressure for action Component IIIb, element (ii) Innovation goals set

12 Importance of trying Component IVa, element (vi) Experimental initiatives

13 Importance of sharing, of the bigteam

Component Va, element (iv) Inter-team co-operation

14 Importance of celebration Component IIIb, element (iii) Innovation recognised—rewarded

15 Importance of challenge andstretch

Component IIIb, element (i) High expectations from opinion leaders

16 Managing the external andinternal image

External image building was not found to be significant in thisresearch. Internal image building is covered in Component Ia,element (ii) Bias towards innovation

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Ahmed'scharacteristics

Comments or related components and elements fromG2 reference model

17 Importance of managing in thelong term

This element was not found by this research. It is possible this wasbecause the data collected was from SBU-level informants ratherthan corporate-level. Long term commitments may be the result ofcorporate policies.

18 Social interaction Component IVa, element (v) Exploratory dialogue

19 Work environment: design andlayout

Not found as significant

20 Importance of a culture of'equals'

Component IIIc, element (ii) Positive regard (for staff)

21 Effective processing of ideas Component IVb, element (iii) Hearing 'in-business agents'

22 Keeping and buildingknowledge

Component IVa, element (iv) Knowledge management

23 Accepting failure Component IIIa, element (i) Management style supportsempowerment

24 Rewarding failure and success Component IIIb, element (iii) Innovation recognised—rewarded

25 Importance of an internalstructure of entrepreneurship

Component Vb, element (i) Legitimacy of the champion role

Twenty-one of Ahmed's characteristics were similar to those found in this

research. This provides a degree of confirmation for the G2 research model.

Unfortunately, Ahmed does not provide any description of his research

methods and so the value of the confirmation is impossible to assess fully.

Archibugi

Archibugi and Pianta (1996) developed a method of assessing innovation

through the submission and exploitation of patents. This was not seen as

being relevant to this research and has not been reviewed.

Burgelman

Burgelman et al. (1996) take a strategic approach to innovation auditing and

devote five pages to the topic. Burgelman et al. argue that "an audit must

address at least three questions:

1. How has the firm been innovative in the areas of product and serviceofferings and/or production and delivery systems?

2. How good is the fit between the firm's current business and its innovativecapabilities?

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3. What are the firm's needs in terms of innovation capabilities to support itslong-term business and corporate competitive strategies?" (8)

They suggest that there are two targets for innovation auditing—the business

unit and corporate level. At the business unit level they define innovativeness

as timing of market entry, technological leadership or followership, scope of

innovativeness and rate of innovativeness (8). In their view, this requires five

attributes shown in Table A2.2 below:

Table A2.2: comparison of G2 and Burgleman's framework

Burgleman's attributes Comments

1 Resources available for innovative activity. Covered in component IIb—Full CompetenciesPortfolio

2 Capacity to understand competitors' strengthsand industry evolution with respect toinnovation.

Covered in component Ib—Provides StrategicAdvantage

3 Capacity to understand technologicaldevelopments relevant to the business unit.

Covered in component IVb—Acquiring MultiplePerspectives and component Ib—Provides StrategicAdvantage

4 Structural and cultural context of the businessaffecting internal entrepreneurial behaviour.

Covered in component Va—Apt Organisational Formand component Vb—Supported Champions

5 Strategic management capacity to deal withinternal entrepreneurial initiatives.

Covered in component Ia—Innovating Leadership,component Vb—Supported Champions andcomponent VIc—Sustained Commitment

Burgelman et al. note that their list is not exhaustive and they argue that

"strategic management capacity" to channel resources is critically important

(9). Their analysis of corporate innovation capability is similarly narrow,

focusing on the scope and rate of new products, scope and rate of new

business development and timing. In this case, resource availability, strategic

scanning, technology forecasting, corporate culture and the management of

synergies/portfolios are identified as components. The stance towards

innovation auditing taken by Burgelman et al. adopts a checklist approach

with 33 items. It is underdeveloped—general managers are asked to rate their

firms on such vague attributes as 'dominant values and definitions of success'

and 'business unit level management capacity to assess relatedness of

entrepreneurial initiatives to unit's core capabilities' (10). However, the

strategic focus of the audit provides clarity and it is likely that it would

provide useful discussion points for a firm's top team in assessing their

investment in innovation capability.

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Chiesa

Chiesa et al. (1996) described the development of a technical innovation audit.

This was seen as being too narrow in focus to be relevant to this research and

has not been reviewed.

Coombs

Coombs et al. (1996) describe the development of a literature-based output

indicator. Coombs et al. looked through trade journals, identified innovations

and categorised them. In total, 941 innovations were coded and placed in a

database. This proved useful for identifying patterns of innovation, by sector,

size of firm, etc. A six category model for classifying innovations was

presented:

• new or decisively changed product with a completely new function orfunctions;

• new or decisively changed product with a different technology but thesame functionality as before;

• a modestly improved product;

• a new or improved accessory product or service;

• a product with a product or service differentiation;

• a process innovation.

The approach taken by Coombs et al. examines the outputs of innovation

activities, largely in terms of products offered. It provides an accessible

methodology for examining patterns of innovation so far as potential

customers are concerned. The literature-based output indicator cannot assess

the value-added of an innovation since the criteria for selection was a

published invitation to purchase rather than actual purchases. As the work

deals with outcomes rather than internal qualities, it was not considered to be

directly relevant to this research.

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Cook

Cook et al. (1982) report on the Siegel Scale of Support for Innovation that

suggests that nine variables are significant in developing and sustaining the

capability to be innovative. The nine elements are shown in Table A2.3 below:

Table A2.3: comparison of G2 and the Siegel scale

Siegel scale of support for innovationcomponents Comments

1 innovation climate Draws attention to cultural elements. Included indomain III of this research.

2 job satisfaction Little evidence from this research that this factor isdirectly related although indication that esteem isheightened by participation in innovation initiatives

3 nature of work Too broad for this research.

4 managerial style Covered by component Ia—Innovating Leadership

5 promotional opportunities No supportive evidence

6 organisational satisfaction Unclear as to meaning; probably related tocomponent IIIc—High Enrolment

7 compensation/remuneration Covered in component IIa—Exceptional Individualsand component IIIb—Innovation Demanded

8 working conditions No supportive evidence

9 teamwork relationships An element of component Va—Apt OrganisationalForm

10 personal characteristics Unclear as to meaning; but believed to be covered,in part, in component IIa—Exceptional Individuals

This list was compiled in the late 1970s and provided a early review of the

underlying components of innovation capability. However, its utility is

largely historic caused by the broad-brush approach, lack of concern for

strategy and exclusive focus on human factors.

de Ven

de Ven et al. (1989) examined, in great depth, the processes by which an

innovation proceeds through a firm. Incorporated in the design was an

extensive questionnaire (de Ven and Chu, 1989) that was "used as one of

several measuring instruments" (55) in the research process. This was called

the Minnesota Innovation Survey and aimed at collecting data from

individuals about their involvement in a specific innovation. Much of the

questionnaire is designed in ways that make quantitative analysis possible,

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although there are several free-form questions that require later coding. Part

one of the Minnesota Innovation Survey has 51 questions that deal with the

scope of the innovation, its demands, the role and influence of the

respondent, problems encountered, leadership, culture, rewards,

communication, conflict resolution, performance management and outcomes.

In addition, there are demographic questions about the respondent and

questions about his/her views on the degree of support for innovation,

resources available and the legal, economic, technological and demographic

environment. Part 2 of the questionnaire has 20 questions related to

inter-group co-operation including sharing of objectives, co-

operation/competition, trust, communication, conflict-resolution and

outcomes.

The Minnesota Innovation Survey is a significant instrument and gains in

stature as it has been extensively statistically analysed. However, the

instrument was designed to examine factors which affect the organisation's

performance of a predetermined innovation initiative and factors that relate

to committing the firm to adopting an innovation policy are largely omitted.

Accordingly, it has not been reviewed in detail.

Deutschman

This approach examined the relationship between mission and innovation. 75

senior managers from large Canadian enterprises were interviewed. The

study examined the firms' behaviour on 15 dimensions cited by

Deutschman (1994). These are shown in Table A2.4 below:

Table A2.4: comparison of G2 and Deutschman's framework

Deutschman's items Related G2 components

1 * Seeking out and delighting difficultcustomers

Partly covered in component IVc—FruitfulLinkages

2 Striving constantly to build customer loyalty Partly covered in component IVc—FruitfulLinkages

3 Promoting the cannibalisation of one's ownproducts within the firm

Not covered explicitly but relevant to the topicsmentioned in component Ib—Provides StrategicAdvantage

4 * Using small teams for projects Covered in component Va—Apt OrganisationalForm

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Deutschman's items Related G2 components

5 Willing to make critical technologicaldecisions ahead of the competition

Covered in component Ia—InnovatingLeadership and component VIb Sound DecisionProcesses

6 Accepting constant reorganisation as away-of-life

Covered in component Ic—Prudent Radicalism

7 Undertaking co-operative ventures withrivals

Covered partly in component IVc—FruitfulLinkages

8 * Fostering an 'egalitarian' culture Partly covered in component IIIc—High Enrolment

9 * Striving to sell highly differentiatedproducts/services

Covered in component Ib—Provides StrategicAdvantage

10 Promoting the use of electroniccommunication across the firm

Not covered

11 * Placing an extraordinary emphasis onrecruiting the 'right' people

Covered in component IIa—ExceptionalIndividuals

12 * Sharing key strategic information with allemployees

Partly covered in component IIIc—High Enrolment

13 Glorifying, honouring and celebrating thepeople who create new products andservices

Covered in component Vb—SupportedChampions and component IIIb—InnovationDemanded

14 * Helping employees become worldrenowned experts in their fields

Covered in component IVa—ContinuousLearning

14 Granting employees time to learn throughsabbaticals

Possibly covered in component IVa—ContinuousLearning

Innovative firms, according to Deutschman, showed high usage of the

behaviours marked with an *. As shown in the table there is a considerable

overlap between this research and that of Deutschman.

Dooley

Dooley et al. (1998) have developed a 'Systems Innovation, Change Levers,

Innovation Audit' that explores "five broad enablers, which act as catch-alls to

incorporate a vast array of positive elements, distilled from the existing

approaches" (3). These are Organisation & Group Leadership; Strategy &

Performance; Empowerment & Groups; Re-engineering and Improvement

and, finally, Learning and Communications.

Dooley et al's audit contains 56 questions, shown in Table A2.5 below. It

demonstrates two differences with this research. Firstly, some questions are

normative (they appear to assume that there pre-defined organisational

attributes that facilitate innovation) and, secondly, some questions relate to

broad organisational topics rather than innovation specific issues. However,

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the intent is directly comparable with this research and so the audit items will

be reviewed in detail.

Table A2.5: comparison of G2 and Dooley et al's framework

Dooley et al's audit questions Comments

1 The organisational structure supports group-basedmanagement.

Covered by component Va—AptOrganisational Form

2 The organisational structure adapts well to changes in thebusiness environment.

Covered by component Va—AptOrganisational Form

3 The organisational structure is flat. Normative question

4 Management encourages individual staff/groups to take risks. Not shown to be accurate—seecomponent IIIa—SelectiveEmpowerment

5 Various levels in the organisation have input into the decisionmaking process.

Covered by componentIVb—Acquiring MultiplePerspectives

6 The management style supports the goals and strategiespursued by the organisation.

Not innovation specific

7 The management adopts a consensus and shared approach todecision making.

Not innovation specific

8 Senior management communicates the same vision and goals. Covered by componentIb—Provides Strategic Advantage

9 Management are receptive towards innovative approaches tochange.

Covered by componentIa—Innovating Leadership

10 Management are effective at initiating and driving innovativechange.

Covered by componentIa—Innovating Leadership,Ib—Provides Strategic Advantageand IVc—Sustained Commitment

11 Management are proactive (rather than reactive) about change. Covered by componentIa—Innovating Leadership

12 Senior management are highly visible in driving innovation. Covered by componentIa—Innovating Leadership

13 The organisation chart is utilised as an effective tool forcommunication.

Not innovation specific

14 The strategic plan or informal management strategy for change iseffective.

Covered by componentIb—Provides Strategic Advantage

15 All employees have access to the strategic plan (if written down orverbally communicated).

Covered by componentIb—Provides Strategic Advantage

16 The process for creating and reviewing organisational strategy iseffective.

Covered by componentIb—Provides Strategic Advantage

17 The correlation between organisational goals and currentdevelopments is high.

Covered by componentIb—Provides Strategic Advantage

18 All staff in the organisation participate in strategy formulation. Normative question

19 Benchmarking is carried out as part of the process of derivingorganisational goals and strategies.

Partly covered by componentIVb—Acquiring MultiplePerspectives

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Dooley et al's audit questions Comments

20 Current measures of performance are effective towards fosteringchange.

Covered by componentIb—Provides Strategic Advantage

21 The strategies and measures of performance are regularlycommunicated to staff.

Covered by componentIb—Provides Strategic Advantage

22 There is a good fit between measures of performance andcurrent developments.

Covered by componentIb—Provides Strategic Advantage

23 The strategies and performance measures adapt to reflectemergent changes in the business environment.

Covered by componentIb—Provides Strategic Advantage

24 Shop floor employees and office staff engage in work-groupactivity.

Not innovation specific

25 Project groups are cross-functional based. Covered by component Va—AptOrganisational Form

26 Project groups participation represents a diagonal slice of theorganisation.

Covered by component Va—AptOrganisational Form (but notdemonstrated in this research assignificant)

27 New ideas and problems are easily harvested from allemployees.

Covered by componentIVb—Acquiring MultiplePerspectives

28 A high level of autonomy and discretion is allowed to individualemployees.

Covered by componentIIIa—Selective Empowerment

29 There is delegation between senior and junior staff members. Covered by componentIIIa—Selective Empowerment

30 Employees work offers the optimal variety of tasks. Not innovation specific

31 Employees have the opportunity to exchange help and respectamong fellow employees.

Covered by component IIIc—HighEnrolment

32 Employees have a sense of meaningful contribution to theinnovation process.

Covered by componentIIIa—Selective Empowerment

33 Employees have the prospect of a meaningful future,advancement and higher compensation.

Partly covered by componentIIIb—Innovation Demanded

34 Employees share in the improved productivity of the organisation. Partly covered by componentIIIb—Innovation Demanded

35 The organisation has an appropriate balance betweentransformational and 'Quick-Win' change projects.

Partly covered by componentIb—Provides Strategic Advantage

36 The organisation has new projects starting and old onesfinishing on an ongoing basis.

Partly covered by componentIb—Provides Strategic Advantage

37 There is an appropriate balance between proactive and reactivedevelopments.

Partly covered by componentIb—Provides Strategic Advantage

38 There is appropriate use of modelling tools for projects. Covered by componentIIc—Capable Implementation

39 There is appropriate use of planning tools for projects andresources.

Covered by componentIIc—Capable Implementation butdefined more broadly

40 The organisation uses external change agents (consultants, etc.)appropriately.

Covered by componentIVb—Acquiring MultiplePerspectives

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Dooley et al's audit questions Comments

41 Management encourages 'thinking outside the box'. Covered by componentIVb—Acquiring MultiplePerspectives

42 A sense of urgency is maintained towards 'on-going' innovation Covered by componentVIc—Sustained Commitment

43 Critical information regarding ideas, problems and projects isreadily available to facilitate the decision making process.

Covered by componentVIb—Sound Decision Processes

44 The incremental improvement process is effective. Covered by componentIIIb—Innovation Demanded

45 The innovation management process is effective. Covered by component Vc—HighPerforming NP–PD

46 The organisation effectively ranks the individual developmentscontribution to the achievement of its current goals.

Unclear

47 Employees have the opportunity to learn and continue learningon the job.

Covered by componentIVa—Continuous Learning

48 The training process for staff is effective. Covered by componentVIa—Continuous Learning

49 The management development process is effective. Covered by componentVIa—Continuous Learning

50 The staff review and reward process is effective. Covered by componentIIIb—Innovation Demanded

51 The recruitment process is effective. Covered by componentIIa—Exceptional Individuals

52 There is low turnover among office staff. Not innovation specific

53 Difficult change is openly discussed and accepted. See component IIIc—HighEnrolment for related factors

54 Information on problems raised, ideas generated and projectstatus is accessible.

Covered by componentIVb—Acquiring MultiplePerspectives

55 Information on strategies, measures of performance and customerrequirements are accessible.

Partly covered by componentIb—Provides Strategic Advantage

56 Information concerning the decisions taken by managementregarding the entire innovation process is accessible.

Unclear

Dooley et al. report on their use of this audit with eight firms in Ireland. They

note

"These (the surveyed firms) organisations have a sense ofcommitment and they support all levels of the organisation tothe achievement of this goal. The key mechanism for achievingthis consensus is through the use of cross-functional teams and aconsensus based management team. There is a continuousdesire to develop the organisation and the success of this ismeasured through feedback systems and review mechanisms.The organisation is aware of its key measures which thecustomer values and constantly articulates these through theobjectives, strategies and performance measures" (11).

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The breadth of this study and the multiple ways that Dooley et al. related

organisational attributes to innovation capability provided a useful

comparative framework for this research.

Doyle

Doyle (1997) developed a model with six dimensions. It included strategy,

culture, resources, networking capabilities, processes and systems and market

orientation (6). 16 questions were identified and these are shown in

Table A2.6 below with comments.

Table A2.6: comparison of G2 and Doyle's framework

Doyle's questions Comments

1 Does the organisation have a clear strategy for innovation withdefined goals and target markets?

Covered in component Ib—ProvidesStrategic Advantage

2 What emphasis is given to ensuring innovations have synergywith current market and technological expertise?

Considered to be covered incomponent Ib—Provides StrategicAdvantage

3 How are innovation efforts organised in terms of structure? Covered in component Va—AptOrganisational Form

4 How do you achieve a learning organisation—keeping up todate with technological, market and environmental changes?

Covered in componentIVa—Continuous Learning andcomponent IVb—Acquiring MultiplePerspectives

5 How would you describe the culture of the organisation, itsbasic beliefs and assumptions?

Question is not innovation specific

6 How do you achieve an entrepreneurial and creative climate? Covered in domain III (allcomponents)

7 How does the company identify the core competencies that it willneed in the future?

Covered in component IIb—FullCompetencies Portfolio.

8 How does it plan and organise to acquire these key skills? Covered in component VIa—GuidingMental Maps and IIc—CapableImplementation

9 How are budgets for innovation planned and safeguarded? Covered in component Ib—ProvidesStrategic Advantage andVIc—Sustained Commitment

10 How do strategic alliances with other companies contribute toinnovation?

Covered (not extensively) incomponent IVc—Fruitful Linkages

11 How important are partnerships with suppliers, customers, andemployees in innovation?

Considered to be covered incomponent IVc—Fruitful Linkages

12 How is the process of innovation (ideas, development etc.)planned and co-ordinated?

Covered in component Vc—HighPerforming NP–PD.

13 How do you achieve fast time-to-market? Suggested in componentIIIc—Capable Implementation.

14 How customer-led is the organisation? Covered in component IVc—FruitfulLinkages

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Doyle's questions Comments

15 What role does marketing and customer insight play in theinnovation process?

Covered in component IVc—FruitfulLinkages

16 How does the marketing department interface with otherfunctions in the business?

Not directly covered in the G2reference model

Johne and Snelson

Johne and Snelson (1988) adopted the 7Ss framework for auditing purposes

as they considered it to be "particularly helpful in exploring the intricacies of

product development tasks" (227). They studied 20 UK and 20 US firms in

1986-7 in four manufacturing sectors and describe the characteristics of

'leading product development firms' and 'less successful innovators'.

The approach identifies that 'leading product innovators' use a blend of 'old'

and 'new' product development approaches. Their summary analysis is

quoted in full in Table A2.7 below (230) and comments from this research

added:

Table A2.7: comments on Johne and Snelson's framework

Old product development New product development Comments

Strategy Top management determinesexplicit plans and budgets fordevelopment work

Top management sets broadobjectives for organic growth

The new productdevelopment descriptorstatement is largelyconfirmed by this research.Broad objectives wereused to target innovationcapability (domain I)

SharedValues

Top management fostersunderstanding of the need forproduct evolution

Top management fostersunderstanding of the needfor really new products

The new productdevelopment descriptorstatement is confirmed bythis research. Leaders actas role models and enrolothers (component Ia)

Style Top management is supportivebut does not meddle indevelopment projects.Progress is checked regularly.

Top management isintimately involved, often ona day-to-day basis

The new productdevelopment descriptorstatement is confirmed bythis research. Closeleadership involvementwas used as an innovationdriver (component Ia)

Structure Top management uses theexisting organisation whichacknowledges the need tomanage updates within amatrix of responsibilities

Top management uses neworganisational forms such asbusiness teams to nurtureimportant developmentsoutside the mainstreamorganisation

The new productdevelopment descriptorstatement is confirmed bythis research. Neworganisational forms wereused (component Va)

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Old product development New product development Comments

Skills There is efficient productplanning using sophisticatedmarket analysis techniques

Techno-commercial ideageneration, screening andtesting in concept.Development work oftenbased on new technology

Skills were not identified inthis research down to thislevel of specificity

Staff Existing line managers areused with some staff advice.When project leaders areappointed they may be quitejunior but receive acommission from topmanagement

An intrapreneur is allowed toselect his own team withwhom rewards are shared.Failures are viewed as alearning experience

The new productdevelopment descriptorstatement is not confirmedby this research.Empowerment wasconfined (component IIIa)

Systems Loose-tight usingsimultaneous or rugbyapproach. More tight thanloose

Loose-tight usingsimultaneous or rugbyapproach. More loose thantight

The new productdevelopment descriptorstatement is largelyconfirmed by this research.Flexible organisationalforms were widely found(component Va)

The approach of Johne and Snelson is distinctive. They argued that successful

innovation requires the management of paradoxes. This did not emerge as

clearly from this research although the paradoxical nature of some elements

could be explored as a research question.

Kao

Kao (1996) published an innovation audit that consists of 40 questions divided

into eight sections. Kao's audit was intended to help managers to reflect on

their firm's innovation (he uses the term 'creativity') capability using the

metaphor of a Jazz Band. Kao's view is that "(w)hat management must do,

above all, is to define, establish, and provision a trustworthy environment"

(55).

Kao's approach is intended to facilitate reflection rather than provide

measurements. 11 of the audit questions explore the progress of recent

innovation initiatives, 7 questions consider a firm's creativity system, 5

questions review a firm's benchmarking prowess, 6 questions address people

issues and 11 questions assess knowledge management, innovation

performance and other general issues. Kao does not quote from research

papers nor does he provide extensive references. However, his work

emphasises a characteristic of an innovative enterprise that is rarely discussed;

he writes of the importance of "clearing the mind", described as "focused

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reverie" (43). Kao draws from the work of artists and Buddhist scholars and

writes of the need to allow people the space to enter a part of themselves that

is in tune with natural creative forces. This was not confirmed by this research

although related elements were noted in each of the three elements in

component IIIa.

Koester

Koester and Burnside (1992) describe the development and testing of the

Work Environment Inventory (WEI). This instrument has been under

development since 1984, primarily by Teresa Amabile. Survey items were

derived from interviews with 203 R&D scientists who were asked to tell two

stories—one about an event that was high in creativity and the other about

an event that was low in creativity. The stories were subjected to a content

analysis, and those items which concerned 'environmental characteristics' (70)

were abstracted. A principal-axis factor analysis was conducted and eight

factors emerged with an eigenvalue greater than one. The eight factors are

shown in Table A2.8 below:

Table A2.8: comparison of G2 and WEI framework

WEI components Comments

1 organisational encouragement Covered in component IIIc—High enrolment

2 supervisory encouragement Largely covered in component IIIc—High Enrolmentand component IIIa—Selective Empowerment

3 work group support Covered in component IIIc—High Enrolment

4 challenging work Not covered in the G2 reference model but noted inthe additional node list

5 workload pressure (not too much) Not covered in the G2 reference model

6 freedom (in deciding how to accomplish a task) Considered in component IIIa—SelectiveEmpowerment

7 organisational impediments (freedom from"destructive criticism, turfism, political problems,and unfair evaluation". (75))

Largely covered in component IIIc—High Enrolment

8 sufficient resources Covered in component IIb—Full CompetenciesPortfolio

This work focused on the environmental factors that facilitate creativity

(rather than innovation) and drew its original items from research scientists

(rather than every part of the firm).

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McGourty

McGourty et al. (1996) studied 14 'best of breed' companies included 3M, Bell

Labs and other large firms with a distinguished record of innovation. Senior

executives were interviewed using the critical incident method. Data was

analysed from focus groups. Four innovative behaviourial clusters were

identified:

1. Inquisitiveness: searching purposefully for useful new ideas, expertise,technologies and continuously experimenting;

2. Advocating: encouraging, championing, challenging (the status quo);

3. Collaborating: frequent, open, wide-ranging communication;

4. Goal Directedness: work towards specific technological goals, setobjectives and monitor towards them.

The authors assert that "(f)ostering of these behaviours leads to subsequent

modification in organizational culture—to a more innovative culture" (364).

Although it was not straightforward to effect a comparison it appears all of

the G2 components are represented in McGourty's work.

Rothwell

Rothwell (1994) suggested "from the many studies of industrial innovation,

including studies of success, studies of failure and comparisons between

success and failure, the following success factors can be derived" (33).

Rothwell's factors provided a useful check list and are shown in Table A2.9

below.

Table A2.9: comparison of G2 and Rothwell's framework

Rothwell's success factors Comments

1 Good internal and external communications Covered in component IVc—Fruitful Linkages andcomponent IIIc—High Enrolment

2 Willingness to take on new ideas Covered in component Ic—Prudent Radicalism

3 Treating innovation as a corporate-wide task Covered in component Ib—Provides StrategicAdvantage

4 Careful project management Covered in component IIc—Capable Implementationand component Vc—High Performing NP–PD

5 Effective implementation Covered in component IIc—Capable implementation

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Rothwell's success factors Comments

6 Up-to-date equipment Covered in component IIb—Full CompetenciesPortfolio

7 Strong market orientation Covered in component Ib—Provides StrategicAdvantage

8 Good technical support to customers Not considered relevant

9 Presence of key people including productchampions and technology gatekeepers

Covered in component IIa—Exceptional individualsand component Vb—Supported Champions

10 High and developing human capital Covered in component IVa—Continuous Learning

11 Top management support for innovation Covered in component Ia—Innovating Leadership

12 Long-term strategy in which innovation plays akey role

Covered in component Ib—Provides StrategicAdvantage

13 Commitment to major projects Covered in component VIc—Sustained Commitment

14 Organic organisational form Covered in component Va—Apt Organisational Formand see Appendix 8 for a further discussion of thispoint

15 Top management acceptance of risk andtermination criteria

Covered in component Ic—Prudent radicalism andVIb Sound Decision Processes

16 "Creation of an innovation-accepting,entrepreneurship-accommodating culture" (36).

Covered in component IIIc—High Enrolment

The 16 elements in Rothwell's model (with the exception of number 8) fit well

with the results of this research.

Tang

Tang (1999) published an inventory that used a distinctively different

framework from this researcher. He sees innovation as a flowing process of

projects or initiatives that can be enabled or blocked by "six mutually

interacting constructs" (41). These are: project raising and doing, knowledge

and skills, behaviour and integration, information and communication,

guidance and support and the external environment. Tang's perspective on

innovation is that "managing innovation calls for a mindset and a style of

leadership that is different from running routine operations" (43) and his

description of a firm with a high capability for innovation largely confirms the

results of this research, which is especially interesting as Tang undertook his

study in Singapore. However, as he points out, his "data set is not

organisation specific" (49) but it is larger than this researcher's with 871 cases.

There are 48 items in Tang's audit. 44 of these could be fitted into the G2

model. The remaining 4 did not. These items were: "our top managers don't

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value employees' opinions much", "my work is intellectually stimulating and

challenging", "I frequently encounter non-routine and challenging work in my

organisation", "In my organisation people show great interest in their work"

and "if my new idea is not accepted I can try it elsewhere in the organisation".

It can be concluded that this research has largely confirmed Tang's work.

Trott

Although not presented in the form of an audit, Trott (1998) identifies nine

organisational characteristics that he suggests "facilitate the innovation

process" (35). Trott's nine characteristics are:

Table A2.10: comparison of G2 and Trott's framework

Trott's components Comments

1 Growth Orientation—a commitment to long-termgrowth rather than short-term profit.

Not directly connected with innovation. Forexample, an electrical utility has long-termgrowth but need not be innovative. However,Trott considers that the actual policies adoptedby senior managers play a significant role—apoint included in component Ib—ProvidesStrategic Advantage

2 Vigilance—The ability of the organisation to be awareof its threats and opportunities.

Covered in component Ib—Provides StrategicAdvantage

3 Commitment to Technology—the willingness to investin the long-term development of technology.

Covered in component Ib—Provides StrategicAdvantage

4 Acceptance of Risks—the willingness to include riskyoptions in a balanced portfolio.

Covered in component Ib—Provides StrategicAdvantage

5 Cross-functional Co-operation—mutual respectamong individuals and a willingness to work togetheracross functions.

Covered in component IIIc—High Enrolmentand component Va—Apt Organisational Form

6 Receptivity—the ability to be aware of, to identify andto take advantage of externally developedtechnology.

Partly covered in component IVb—AcquiringMultiple Perspectives

7 'Slack'—an ability to manage the innovation dilemmaand provide room for creativity.

Not found to be important in this research

8 Adaptability—the readiness to accept change. Covered in component Ic—Prudent Radicalism

9 Diverse Range of Skills—a combination ofspecialisation and diversify of knowledge and skills.

Covered, in part, in IIa—ExceptionalIndividuals

Comparative assessment

The models and audits considered above offer a useful but unsystematic

sample and provide support for the G2 reference model. Table A2.11 below

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shows which components are supported, at least in part, by other researchers

in the field.

Table A2.11: comparative assessment

Components Support from

Ia Innovating Leadership(authentic/close involvement (from leaders); bias towardsinnovation; focused effort towards defined opportunityspaces; enrolling leadership style)

Ahmed, Burgleman, Siegel,Deutschman, de Ven, Dooley, Johne &Snelson, Kao, Rothwell, Tang

Ib Provides Strategic Advantage(external focus sensing; coherent—emergingstrategy/vision; effective top teamwork; innovation goals inbusiness plans; performance measures assess innovationprowess; innovation policies deployed)

Ahmed, Burgleman, Deutschman,Dooley, Doyle, Johne & Snelson, Kao,McGourty, Rothwell, Tang, Trott

Ic Prudent Radicalism(comprehensive analysis of change needs; openness tonew mind-sets; effective change management; restructuringof assets)

Deutschman, Kao, McGourty, Rothwell,Trott

IIa Exceptional Individuals(analysis of needs for critical skills; proactive hr policies(recruitment & retention; able people in innovation intensiveroles

Siegel, Deutschman, Dooley, Kao,Rothwell, Tang, Trott

IIb Full Competencies Portfolio(analysis of competencies needed; co-ordinatedcompetency development)

Ahmed, Burgleman, Doyle, Kao,Amabile, Rothwell

IIc Capable Implementation(effective transfer to routine organisation; capableprogramme and project management)

Ahmed, Dooley, Doyle, Rothwell, Tang

IIIa Selective Empowerment(management style supports empowerment; personalpotential developed; 'can-do' ethos (efficacy))

Ahmed, Siegel, de Ven, Dooley, Johne& Snelson, Kao, Amabile, Tang

IIIb Innovation Demanded(high expectations from opinion leaders; innovation goalsset; innovation recognised—rewarded; kaizeninstitutionalised)

Ahmed, Siegel, Deutschman, de Ven,Dooley, Doyle, Amabile, Tang

IIIc High Enrolment(open 3 way communication; positive regard (for staff);commitment to company)

Ahmed, Siegel, Deutschman, de Ven,Dooley, Doyle, Kao, Amabile, McGourty,Rothwell, Tang, Trott

IVa Continuous Learning(enabling learning; competencies (general) developed;training in teamworking and problem-solving; knowledgemanagement; exploratory dialogue; experimentalinitiatives)

Ahmed, Deutschman, Dooley, Doyle,Johne & Snelson, Kao, Rothwell, Tang

IVb Acquiring Multiple Perspectives(hearing specialists; hearing 'out of field agents'; hearing'in-business agents')

Ahmed, Burgleman, Dooley, Doyle,Kao, McGourty, Tang, Trott

IVc Fruitful Linkages(gaining from external relationships; close customerrelationships)

Ahmed, Deutschman, Doyle, Kao,Rothwell, Tang

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Components Support from

Va Apt Organisational Form(innovation-enabling organisational design; use of ODmethodologies; use of teams and adhoc groups; inter-teamco-operation)

Ahmed, Burgleman, Siegel,Deutschman, de Ven, Dooley, Doyle,Johne & Snelson, Kao, McGourty,Rothwell, Tang, Trott

Vb Supported Champions(legitimacy of the champion role; intrapreneuring attitudesand skills; effective sponsorship)

Ahmed, Burgleman, Deutschman, Kao,McGourty, Rothwell, Tang

Vc High Performing NP–PD(managed NP–PD; creative approaches in NP–PD)

Dooley, Doyle, Kao, Rothwell

VIa Guiding Mental Maps(tracking possible relevant possible maps; map selectionand development)

Doyle, Kao

VIb Sound Decision Processes(fast/full information systems; reliable decision-makingprocesses)

Deutschman, Dooley, Kao, Tang

VIc Sustained Commitment(sustained senior management attention; 'roadblock'removal)

Burgleman, Dooley, Doyle, Rothwell

It can be seen that all components receive support from other researchers

although no researcher has developed a model that contains all of the

components and/or elements found in this research.

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Appendix 3The first generation reference model (G1)

In Chapter 4 the findings of the research were presented and the second

generation reference model (G2) described. The first generation reference

model was briefly mentioned. In this appendix the G1 reference model is

described in more detail as it demonstrates some of the techniques used for

coding and developing indicator-concept links (as discussed in Chapter 3).

The 20 components of the G1 reference model are described below with the

researcher's field noted where appropriate.

Ia transformational leadership

The results of the text search for 'lead' found 73 text units. The word was

mentioned in 44% of the cases. A study of these units was undertaken with

the aim of identifying a small number of learning points (five were arbitrarily

selected). The purpose of the study was limited. It was not intended to

capture everything that could be said about leadership; rather to use the data

to identify distinctive features the specific role of leadership in relation to

innovation capability.

Table A3.Ia: transformational leadership

Code Evidence Context Field notes

RX "I think the success he has is that he combinesthe western management dream of introducingsystem, and the rational aspect of running thebusiness. A very typical Chinese managerwould be sort of more emotional, more lackingthe discipline of systems, procedures andhaving clear policy. I think Poon has a mixture ofboth the Chinese leadership, the caring, and Ithink he's probably right. Sometimes you needto be more forceful as the leader with managerwho would be sort of come forth and try newthings".

This observationwas made about aChinese leaderworking in the FarEast noted forhaving developedan innovative andsuccessful servicebusiness.

Innovation leadershiprequires a blend of rationalsystems, forcefulness andemotional alignment withemployees.

AT "If it was appropriate for somebody else to do itwas needed it. If it was appropriate to listen tosomebody else in the group because they knewmore about it there was no problem in doingthat. It wasn't 'face' problems or anything likethat, it was just everybody working together andthe best person to solve the problem took thelead at that time".

This seniormanager isdiscussing anincident when heworked in a highlyinnovative team.

Innovation leadership canbe more open and flowingthan the traditional notion ofthe resolute and drivingboss. Listening, co-operation and sharingpower are key skills.

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Code Evidence Context Field notes

PC "Ideas sort of bubble up somehow but I think it'sthe general atmosphere in the organisation, it'sseizing opportunities and dealing with them is amajor celebration and we encourage people touse our IT system. Any contact they have with aclient result in additional business. We say "putit on the system, tell everybody about it"…everybody in the company knows and there's ageneral motivational factor there. But I think a bitof leadership as well."

This reflection isfrom a managingdirector of arapidly growingUK company.

Innovative leadership isconcerned with developinga conducive context and thesystems to support them.Leading by example is atelling method as behaviourcommunicates moreeffectively than words.

VP "very often they would come up with a betterplan than I had. Now this was a very difficultchange for me, personally, because I alwayswanted to lead very quickly, I was very impatient,and people thought I was a very authoritativeand dictatorial person, which I guess I was,which I never thought I was; and I thought ofmyself as this enlightened, liberal, nice guy(!)"

This reflection isfrom a leader whohas taken chargeof a number ofcross-functionaltask forces withextensiveinnovation goals.

Innovation leadershiprequires differences inpersonal style that can behard to accept. There is noguarantee that the mostsenior person will have thebest ideas!

CP There is a "meeting process which takes placeevery Wednesday and Friday mornings. Thesestrategy meetings last from about 7 to 10 in themorning. Each week, at one of the twice-weeklymeetings, all of teams in a particular division aregathered together in our strategy centre…wecall it 'the war room'"

This observationis from a largedivisionalisedorganisationnoted for its highlevel of radicalinnovation.

The management ofattention in a largeorganisation requiresappropriate processeswhich gather together keypeople and create a criticalmass of commitment.

The findings on the role of the leader emphasise that there was a symbolic

aspect to the role. A key task of the leader was to assure a flow of innovation

initiatives rather than attempt to direct and manage every innovation activity.

This was presented in forceful terms by some—see CP's comments in the

next section. It was interesting to note that the word 'control' was not used by

any of the informants.

Ib stretching strategic intent

The results of the text search for 'competitive/strategy' found 36 text units.

The word was mentioned in 26% of the cases. As before, a study was

undertaken of these units with the aim of identifying illustrative learning

points.

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Table A3.Ib: stretching strategic intent

Code Evidence Context Field notes

PO "One of the issues that I get extremely worriedabout is that managers, particularly when theyget into large organisations, become more andmore introspective and inward-looking and lessconcerned about the competitive element whichis effectively what they're there from. And I thinkthat in its own way has a big impact on theamount of introversion which is demonstrated byan organisation."

This observation wasmade by a changeagent who is employedon a contract basis tofacilitate innovation inclient firms.

The challenges of theexternal world,specificallycompetition, need tobe felt if innovation isto be targeted in waysthat add value to thefirm.

VP "I think we're talking about using a different wayof looking at our what we thought wereinnovative ideas and been prepared to kill themfor commercial reasons. They may still betechnically innovative but they're not actuallyyielding a distinctive product we have to havethe grace to walk away from them and put ourresources into something which is truly distinct."

This reflection was madeby a manager in apharmaceuticalcompany.

Investment ininnovation needs tobe targeted atachieving competitiveadvantage. Thispresents difficultdecision-makingdilemmas.

DOC "it's necessary to realise the opportunities ofpotential synergies between the differentbusinesses in the firm. The questions include:what does it mean? How to do it? What comesfirst? How to avoid excessive costs? People willbe called upon to show that they are moving inthe required direction."

Presentation by acorporate CEO to of thesenior managers of anewly acquiredsubsidiary.

This large companyhas several operatingdivisions that mayhave synergisticopportunities. Thegroup CEO is setting across-businessinnovation agenda.

JL "…make them do psychology, sociology,understanding consumers in a way that theydon't understand them. We're dealing withyoung people a great deal and the averageage of our marketing people—40? You needsome 18-year-old brand managers who'll tellyou what the language is, what the hipmessages are".

An experienced generalmanager in a FMCGcompany.

A great deal ofspecialised study isneeded tounderstand potentialmarkets and define acompetitive strategy.

LS "…we want to expand our range of newspapersand confectionery etc and put the 109 smallnewsagents shops in Dartford out of business!We need to make their businessesunprofitable!"

This was said by asenior manager of alarge supermarketchain.

Once a strategic goallike this is set, it is aspur to innovation.

The findings on strategic intent draw attention to the close and multiple

linkages that exist between the firm's competitive strategy and its innovation

agenda—both in terms of the number of innovations needed, their priority

and choices about what is done and what is not done. Some senior managers

see innovation as an expensive and significant capability that needs to add

value to the firm (Porter, 1985). If the firm had a strategy that drove its

innovation agenda (at least in part) this provided a strong incentive.

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Ic dedicated innovation resources

The results of the text search for 'resources' found 31 text units and was

mentioned in 28% of the cases.

Table A3.Ic: dedicated innovation resources

Code Evidence Context Field notes

VP "there's been a shift towards devotingresources to leapfrog compounds and leapfrogtherapies and somehow that vision, that missionmust have opened a lot of doors."

This observation wasmade by a seniorinternal change agent.

Allocating resourcesbuilds a 'head ofsteam' for innovation.

MI "The second hazard is to do with acquiring andaligning resources."

A senior manager in afirm making complexproduct systems.

If resources are notavailable they hazardan initiative.

UY "There is nothing that we can do unless we'repulling together and have put the resources ofthe company behind us. And so we've got to tryto create an environment in which innovationcan flourish."

Input from the managerof a researchdepartment.

Resource allocationsupports sharedcommitment.

VP "the change that's brought is the way wemaintain current capability but needs to operatethrough these project teams that have come atthe moment which are multi-disciplinary, tend tobe fairly short-life."

This observation wasmade by a seniorinternal change agent.

Resource deploymentcan be managedflexibly (throughproject teams).

CD "We must either have the capability to manageit, or we believe we can hire the people to do it(which is a questionable thing)."

Presentation by a MD toall of the seniormanagers in hercompany.

Resource shortagescan prevent initiativesfrom proceeding.

The findings on resources indicate that the presence, or absence, of resources

plays a significant role on the management of innovation, especially the

decision-making process. In order for certain kinds of innovation to be

successful a process was needed that got together a critical mass of people

and enabled them to work together with sufficient intensity. An investment

of time and frequently of other assets as well was required.

Id strong external linkages

The results of the text search for 'external linkages' found 30 text units and

was mentioned in 20% of the cases.

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Table A3.Id: strong external linkages

Code Evidence Context Field notes

LX "We come back to responsiveness to customerrequirements."

Top team member of aFMCG company.

It is essential to havea fast reaction tochanges in marketrequirements.

BT "Innovation places a lot of pressure on thesupply chain. Sometimes the suppliers can'tcope."

MD of a products-offeredfirm.

The management ofinnovation extendsinto the supply chain.

CP "Mr X has been a student of management formany, many years. He has also sought toeducate himself outside and developrelationships and to pick the brains of some oftop and most innovative business brains. Thishas been learning the lessons that businesshas to offer and applying them. I think hascontributed to the success all along—and themore he did, the more he learned—the morewilling he was to reach out, the more willing theoutsiders were to reach in."

This observation is froma senior manager in alarge divisionalisedorganisation who isspeaking about theChief Executive.

Multiple sources oflearning need to beused.

KM We've actually done a lot of jobs in China at aloss, just to gain experience. A China job wewould have accepted whereas if we wereoffered the same job in Hong Kong we wouldhave said no. Because we want to get somepractical experience and build up outopportunities for learning."

Observation from thehead of HR for amulti-national firm.

Experiment in newenvironments is aspur to innovation.

LNB "We will build strategic alliances with competitorcompanies. The boundaries of the organizationbecome fuzzy and networking and alliancebuilding skills are needed."

Senior manager in achemical company.

The development ofmultiple alliances,joint ventures andother forms ofpartnership hasbecome important forthe management ofsome forms ofinnovation. Either thecapabilities do notexist or the blend ofcultures is seen to beconstructive.

The findings on linkages suggest that, even for the largest firms, there is a

need to form various forms of partnerships. Often these are with groups of

consultants, for example, for process innovation in the information systems

area. It is not clear what the potential benefits and risks are from the research.

However, partnerships have been used at all stages of the innovation process,

from gathering ideas through to exploitation.

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Ie directed innovation initiatives

The results of the text search for 'direction/initiative' found 83 text units and

was mentioned in 46% of the cases.

Table A3.Ie: directed innovation initiatives

Code Evidence Context Field notes

AT "And everybody agrees that that's a wayforward which may not be the right way forward,but if everybody agrees that that's the waythey're going to go on at least we get a bit ofdirection."

Comment from the chiefexecutive of a servicecompany based inMalaysia.

Direction is, maybe,more important thandoing exactly the rightthing.

PO "But if your organisation is purely about beinginnovative then you're heading in the directionof being the mad inventor with the shed at theend of the garden that little loud bangs comeout of on a Sunday morning."

This observation wasmade by a changeagent who is employedon a contract basis tofacilitate innovation inclient firms.

Too much innovationwithout alignment canbe dysfunctional.

VP "in a structured organisation, something whichis appropriately operating as, as you say, amachine bureaucracy or whatever, I think sort ofa management-led directed approach tochange is probably appropriate. And to try toeffect change in any other way is probably verydisruptive to the organisation."

Comment by a seniorinternal change agent.

The types of directionthat are appropriatevary withorganisationalconfigurations.

CP "That was basically a top managementconceptualisation. That gave us the directionwe should be going in"

This observation is froma senior manager in alarge divisionalisedorganisation.

Innovation beingfocused from the top.

UY "Any firm, decisive decision may well knock thepea off the top of the egg. This would make itrun away in one direction. Therefore, the key isto do nothing. We get there by communication.The action of setting a target or identifying asingle direction to move in means that you aremissing the whole point. We are knocking thepea off the top of the egg."

Input from the managerof a researchdepartment.

Direction can focus onthe wrong things andundermineresponsiveness—especially in highlyvolatile environments.

The findings on the direction of initiatives suggests that hands-on direction is

sometimes needed but this must be sensitive to the needs of the process and

the task. Despite a participative approach was advocated by many

informants, it did seem important that senior managers took a direct interest

in innovation initiatives. Even if people lower down the organisation felt

empowered, their motivation appeared to wane unless those with high status

in the organisation gave support.

302

IIa empowerment practised

The results of the text search for 'empowerment' found 65 text units and was

mentioned in 39% of the cases.

Table A3.IIa: empowerment practised

Code Evidence Context Field notes

CP "In 1984 we were one of the first to embrace thephilosophy of empowerment. Beginning about1989 we went the whole hog. We tried to givethem the maximum resources, tremendousdiscretion, they were basically able to maketheir own hours, to address problems as theysaw them. We inverted the typical powerpyramid. In the long run we found that was noteffective."

This observation is froma senior manager in alarge divisionalisedorganisation noted forits high level of radicalinnovation.

Empowerment is not afoolproof prescriptionfor facilitatingeffectiveness orinnovation.

HL "I would interpret empowerment to mean 'takingone step forward towards the control of yourlife'. Many people are aware that they have thispower, they have the potential, or maybe theydo but they don't know how to go about taking afirst step. I believe that empowerment is withinthe grasp of everyone."

Observation by achange agent based inthe Far East.

Without empowermentit is difficult to see howpeople could becontributors to aninnovation process.

DS "ask people and teams in an organisationwhether they feel, or whether they have theidea or the opinion that they are able to create,in their work, what they want to create in theirwork; so whether they are able, whether theyfeel that they are empowered to do it, orwhether they feel powerless."

Observation by achange agent based inHolland.

Personal power andcreativity are closelyrelated.

WW "I think that to say I empower my staff is acomplete paradox. The minute you talk aboutempowering someone else you'vedisempowered them. It is about creating theconditions in which they can take their power."

Observation by achange agent in a largeUK public body.

Empowerment cannotbe a strategy. It can,however, be enabled.

AP "The centre has responsibility without power.There is no power to back that. It's based on therelationship issue and if you actually have to tryand achieve something and they are notpersuaded of what you want them to do and youfail to persuade them, you actually can't doanything."

Marketing co-ordinatorin a large FMCGbusiness.

Empowerment makesit difficult to deploycentralised strategies.

The findings suggest that empowerment is desirable from an innovation

perspective when conditional autonomy is taken by those who are willing

and able. This was especially true for those organisations that were embarked

upon continuous improvement as this requires significant initiatives to arise

form the middle and bottom of the organisation. However, as CP pointed

out, empowerment can undermine organisational coherence and undermine

alignment.

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IIb demanding expectations

The results of the text search for 'objectives' found 31 text units and was

mentioned in 22% of the cases.

Table A3.IIb: demanding expectations

Code Evidence Context Field notes

AT "Our process includes formally signing-offinnovation objectives as done. Setting timeframe for objectives to be completed. Discussionof success criteria which can be applied to eachobjective."

Comment from the chiefexecutive of a servicecompany based inMalaysia.

Building innovationobjectives into theperformancemanagement systemcan be effective.

AT "I think the team was successful because wewere all of a same mind and we all had the sameobjectives and we were all on the samewavelength and we were all Scots. But that'sonly part of it. We were all very focussed ondoing the same thing and the priority was to getthat thing done and not to maintain a positionoutside that."

As above. Shared and alignedobjectives areimportant.

LM "For as long as it takes. I think generally youwould find that the brainstorming session wouldtake about two hours. The process is that we putideas down on paper as they come out and thengo back and re-examine them to see howappropriate they are to specifics and yourobjectives."

LM is a senior executivein an advertising firmnoted for its innovativesolutions to client'sneeds. LM is discussinghow ideas aregenerated.

Objectives structureidea generation andact as a check ofrelevance.

KM "So that immediately seemed like a good ideaand we set some objectives to get some of ourown people to do the training."

Observation from thehead of HR for amulti-national firm.

Setting objectivestransforms a proposalinto a commitment.

CP "There has really been a tight bond betweenthe centre in terms of 'Let's get this job done'.The conceptualisation as to where we shouldbe going and what our goals and objectivesreally are."

This observation is froma senior manager in alarge divisionalisedorganisation.

Goals and objectivesneed to be aligned.

The nature of the expectations that surround employees appeared to affect

behaviour. In part expectations flowed from the organisation's leadership and

in part from peers and co-workers. The type and nature of expectations can

be seen as an element of organisational culture. Innovation was weaker

where people were not expected to innovate, set innovation objectives or

appraised on their innovation prowess.

IIc high enrolment

The results of the text search for 'involvement' found 37 text units and was

mentioned in 30% of the cases.

304

Table A3.IIc: high enrolment

Code Evidence Context Field notes

AT "I'm in a team just now where we have peoplewho are very capable and very co-operativeand very focussed and unselfish about howthey approach the problem."

Comment from the chiefexecutive of a servicecompany based inMalaysia.

Innovation needs ahigh level ofco-operation betweenpeople.

KM "So there is an openness about usingtechniques that help with creativity and I thinkcertainly amongst everybody at the seniorexecutive, they all have a go at it and I thinkthat's developed a feeling that there's nobarriers, no one who says 'I'm not creative' inthe department."

Observation from thehead of HR for amulti-national firm.

Co-operationencourages informalidea generation.

JJ "around sheer creativity and we were talkingabout it yesterday, which is how do we getpeople to dream and how can we tune them intoa process in our organisation which says youare 18, you are this, you are this, you are this."

Observation by the headof organisationdevelopment in a majorinternational company.

Creativity tools canassist in thedevelopment ofco-operation.

WW "I have a preference for pre-oedipal situations,that is one-to-ones. But of course that won't doin organisational life and so I really have tohave had to consciously try and overcome thatand get into group situations and not avoidthem, even though my best work is done inone-to-one situations."

Observation by achange agent in a largeUK public body.

It may be that deeppsychological issuesaffect how peopleco-operate.

VP "I think when it comes to helping people tounderstand how to make an organisation work,especially a knowledge-based organisation likewe have which is about information creationand sharing, I probably ought to think moreabout the organisation is a brain because Ithink it's the collectivity, your knowledge,information, expertise which we need to tapinto."

Comment by a seniorinternal change agent.

Co-operation isespecially important inknowledge intensivefirms.

The findings on enrolment suggest that co-operation, generally, was

facilitative of innovation. There is a possibility that this is especially true in

firms in knowledge-intensive industries or where there is a requirement for a

larger-than-average number of ideas. The key test appeared to be how

co-workers reacted to people who wanted to take initiatives. Active helping

facilitated innovation whereas uninterest, disinterest or ridicule were

hindering factors.

IId respect for mastery

The results of the text search for 'technical ability' found 49 text units and was

mentioned in 35% of the cases.

305

Table A3.IId: respect for mastery

Code Evidence Context Field notes

CP "In my opinion, this is the first administration, inmy experience, the top executives not onlyhave a very high regard for the experience, theexpertise, and the perception of people in thefront line but they reach out to them. Thesepeople contribute as much to these strategiesas the management did."

This observation is froma senior manager in alarge divisionalisedorganisation.

Accessing experiencein the firm is key tosuccess.

AT "I then accepted the problem as mine as welland we worked together. And I just had an ideabecause I was looking at it from an entirely laypoint of view: why don't you do it like this? Andsuddenly the whole problem was solved andeverybody accepted that, if not the perfectsolution, but that was an easy way to solve theproblem."

Comment from the chiefexecutive of a servicecompany based inMalaysia.

A highly experiencedspecialist can usemultiple perspectivesfor solving a problem.

JJ "Some of the techniques, some of the processesand some of the challenges have got to bedifferent, I mean technical challenge. You aretalking about technical possibilities. Can weengineer this in this way? But it still requiresingenuity. Thinking from a different perspective."

This comment by thehead of an internalorganisationdevelopment group istalking about theintegration of technicalskills intoproblem-solving groups.

Problems that requiretechnical input needto be managed inspecific ways.

CD "It means that if you are trying to solve acustomer's technical requirement, that you haveto be, really, an expert on that industry, and thatyou have to read all the same journals and youhave to travel to the conferences, and you haveto know that if Xantix is really the best fibreboard in the world or not."

Comment by the MD of adivisionalised firmtalking about the needto be technicallyproficient.

There is no substitutefor deep technicalcompetence.

MI "a high level of technical expertise is needed soit is vital to maintain strong functional groups.Managing the co-ordination andinterdependencies between these groups iskey."

A senior manager in afirm making complexproduct systems.

Technical capabilitiesneed to be alignedacross functions.

The findings on 'mastery' suggest that there are certain types of tasks for

which a high level of technical skill is essential. With some tasks multiple types

of technical skills must be integrated. Top managers frequently come from a

non-technical background—in this research they were predominately

marketing or financial specialists. However, the decisions that they take

involve commitment to technologies and 'expert' solutions. A respect (but not

an unconditional respect) for expertise was deemed facilitative.

IIe confronting learning

The results of the text search for 'challenge/learning' found 59 text units was

mentioned in 37% of the cases.

306

Table A3.IIe: confronting learning

Code Evidence Context Field notes

JJ "it's a state of organisation of mind. I think it'sabout having a culture that encourages risks,that learns, that doesn't blame people whenthings go wrong, so long as they learn from theexperience."

Observation by the headof organisationdevelopment in a majorinternational company.

Learning is affectedby the organisation'sculture—what islegitimate.

JL "I think the thing you've got to understand—andI'm sure you will—is that we're learning in thisprocess."

An experienced generalmanager in a FMCGcompany.

Processes canprovide (double loop)learning.

KM "If you are overworked with what you've got, itdoesn't promote you to be innovative. There isalways a learning curve with new things. But ifyou take the business process re-engineeringstuff there are already people interested in itand as people get more keen, so I'll putpressure on to make sure that we've got arespond."

Observation from thehead of HR for amulti-national firm.

Learning happenswhen it is seen asfunctional by theindividual.

AP "We're now learning you get more efficiency ifyou put the regional people together. Youknow, if we get like people together—and that'swhy it is quite important to put I think smallergroups together, people who've got similardisciplines and similar challenges and similarfocus, I think that's the sort of thing we've got todo."

Marketing co-ordinatorin a large FMCGbusiness.

Communities ofpractice form usefullearningopportunities.

KM "If there is somebody who I feel will give me a bitof intellectual stimulation, then I'll meet them,even thought there I not a pragmatic reason fordoing it."

Observation from thehead of HR for amulti-national firm.

Opportunities forlearning need to betaken, even thoughobjectives cannot beset.

The findings on learning indicate that there are multiple sources of learning

and this can be a direct input into the innovation process. Significant forms of

learning were those that shook the existing mindset of key people, confirmed

a tentative view, elaborated a perception, provided inspiration or caused

alarm ("look what x company are doing. They will have us for breakfast if we

don't…"). Extensive customer understanding was widely cited as a driver of

innovation. There was evidence that informal communities of practice formed

to share insights and distribute learning. The role of workshops and training

events was substantial, having an unfreezing as well as a educational function.

IIIa exceptional individuals

The results of the text search for 'individual' found 60 text units and was

mentioned in 39% of the cases.

307

Table A3.IIIa: exceptional individuals

Code Evidence Context Field notes

JJ "I think as an individual you have to be nearlyan insatiable learner. You have to be insatiablyinterested. I think that to me, I'm always findingsomething new, something interesting".

Observation by the headof organisationdevelopment in a majorinternational company.

Talent in a specificarea is notsufficient—thereneeds to be ageneralisedcommitment tolearning.

HL "they will run into the same problems as we facein the west; big organisation, and empty life, andthe alienation of individuals. Is there, kind of, abody of wisdom which exists in the world whichelevates, which once tapped into, elevates theindividual who becomes acquainted with it".

Observation by achange agent based inthe Far East.

In this observation,coming from anoriental frame ofreference, the notionthat some peoplehave greater life force(Chi) is seen as acontribution toinnovation.

DS "It's mainly about the power of your ownpotential… if you release the potential of theindividual, or the team or the organisation, youget powerful; the individual gets more powerful,or the team gets more powerful, or theorganisation gets more powerful; and withpowerful I mean powerful in order to createwhat you really want to create".

Observation by achange agent based inHolland.

The correspondenceof group andindividual will,combined with asense of personalpower, provides thefoundation forinnovation.

VP There are certain tasks for which we need toemploy the best in the world. We have a 'rareand critical skills' strategy for defining, findingand retaining R&D key staff".

Comment by a seniorinternal change agent.

There are someinnovation-intensetasks for which veryhigh levels ofindividual skills arerequired.

PO "there are three or four people who are highlyskilled who have been recruited by thechairman because their thinking happens to bemore or less identical to his who he will trust toget on with it. The way autocrats often work andthe rest of the organisation is probably run fairlyautocratically".

This observation wasmade by a changeagent who is employedon a contract basis tofacilitate innovation inclient firms.

Organisations mayneed a few highlyinnovative peopleand a larger numberof doers.

The findings on exceptional individuals suggest that there are two, possibly

complementary, ways of integrating the exceptional individual into the

organisation. Firstly, a limited number of outstandingly talented people may

be required. Secondly, the personal creative and proactive power (efficacy) of

people is not fixed: organisations can facilitate its development. Relevant

topics included: valuing of outstanding talent; release of individual potential

and people taking responsibility for their own learning.

308

IIIb creative destruction

The results of the text search for 'change' found 88 text units, of which 41

were directly relevant to the topic. The word was mentioned in 54% of the

cases.

Table A3.IIIb: creative destruction

Code Evidence Context Field notes

PD "Our strategy is 'kill and eat'. That helps us inthe short term but we can never develop anintegrated product line. We never have thetime—we're too busy out looking for anythingthat moves to kill it! But it becomes a way oflife—very difficult to change."

Comment by the chiefexecutive of amanagement consultingcompany.

Attitudes and culturalfactors can be asignificant barrier tothe development ofinnovative practices.

WW "To tell you the truth I'm really thinking of thebeginning of Kenneth Clark's Civilisation, youknow, his idea that you need some degree ofstability and confidence and yet civilisation doesor has in the past advanced at times ofwar—which I would equate with turbulence. Imean the thought that creativity is associatedwith war is repugnant to me, but some sort ofturbulence anyway."

Senior change agentspeaking about thefacilitation of innovation.

Identifies the positivebenefits ofuncertainty.

VP "It isn't a matter of sharing the analysis and thehypothetic—or at least that's not the firststage—the first stage is to do what I wasdescribing which is to say are they feeling theneed for some change? Are they alreadywrestling with that kind of problem? And I think itreally is a matter of is there a felt need by theclient that needs to be there before I can get inand say, well here I've got not the solution buthere I've got a methodology that will help me toresolve the issue."

Comment by a seniorinternal change agent.

The notion of a 'feltneed' mentioned byVP is interesting. He issuggesting that thereneeds to be bothconsciousness of theneed and willingnessto address it.

CD "You have to take a small part of the companyand you say, "this company will change this wayin the next twelve months" and then you do it,and you make mistakes, and you getdiscouraged, and you get up and do it again.Then when that group has then changed and isproven to be successful you go to the nextgroup. This will take five years, if we're lucky. Ifwe're unlucky it will take ten years. I mean,you're not going to walk out of here tomorrowand all of a sudden all is sweetness and lightand … no, no, this is going to be a very difficultprocess".

Presentation by a MD toall of the seniormanagers in hercompany.

Radical changerequirespersistence—it is away of life. And thereare times when it isvery difficult.

309

Code Evidence Context Field notes

AW "middle managers are not seen as spare and soautomatically subject to delayering/downsizing.They have key roles in coaching and mentoringand acquiring/imparting knowledge. They forthe bridge between the 'airy fairy' ideas at thetop and the rough folk who do things. Thebusiness has some 5—7 'grades'/levels ofhierarchy. Every person has 20 days training ayear. Looking for return on this investment in themedium to long term both to change the culturefrom pre-privatisation 'guardian' to a commercial'trader' attitude and to enable people tosuccessfully take on new business".

Internal change agent ina public utilitiesbusiness.

Training andproviding a valid roleare seen as methodsfor facilitating a majorchange of collectivemind-set.

The findings on prudent radicalism suggest that the attitudes of people within

a firm can be a major barrier to change. Without a change in cultural factors

innovation capability is stunted. There seemed to be less concern about

redundancy in hard assets like plant, equipment, systems etc.

IIIc active internal networking

The results of the text search for 'networking/inter-team relations' found 58

text units. The word was mentioned in 33% of cases.

Table A3.IIIc: active internal networking

Code Evidence Context Field notes

BB "the process of innovation has to be informal.Research is changing—today many morepeople are involved and there is much morereaching out. There is an increasing teamorientation—3rd Generation R&D."

The interviewee is thechairman of aninternational innovationnetwork based inWashington DC.

Inter-team workingseems to beincreasingly importantin science-basedindustries.

EX "An organisation that is vastly innovative cantransfer that innovation internally to itself andhas a capacity for transformation."

The head of an internalorganisationdevelopment unit in apharmaceuticalcompany.

Transformationrequires internalinnovation (i.e. ofpeople and systems).

DS "I believe, is that we all have a big wish toexpress our full potential, and that's in fact what,our driving force as individuals, but also as ateam, that will, everybody's longing for. And ofcourse, that's what you, I mean it will beformulated in different ways but that's also whatyou will find in, the eastern traditions when it'sabout spirituality, or Yoga but of course also inhumanistic psychology."

Observation by achange agent based inHolland.

Networking meetssome of man's deeperneeds.

310

Code Evidence Context Field notes

CD "When I was purely a local person, I thought itwas silly to have ex-pats because we local guyscould do what they could do; but when I went toKL and I went to Berlin, and I then had to run aglobal organisation, I realised that expatriatesbring a certain international perspective andcertain skills that locals will never have unlessthey work outside their home country for manyyears, like I did."

The informant is MD of amulti-national company.

Diversity strengthensthe organisation'scapacity to beinnovative.

CP "all of the divisional directors gathered togetherin our strategy centre. The command andcontrol centre, we call it 'the war room', is ahi-tech facility modelled on the war room at thePentagon. We have projection screens,interactive video capability and all sorts ofgizmos and

gimmicks."

This observation is froma large divisionalisedorganisation noted forits high level of radicalinnovation.

Resources andtechnologies can aidnetworking.

The findings suggest that internal organisational networking supports

innovation—facilitating what is being called a project- or process-driven

organisation. This appears to be more important than a simple human

resource management tool as it promotes cross-organisation communication,

learning and the development of mutual support.

IIId conceptual road map

The results of the text search for 'theories/maps' found 32 text units and was

mentioned in 19% of the cases.

Table A3.IIId: conceptual road map

Code Evidence Context Field notes

VP "The lesson is that a conceptual map is theplatform and then initiatives can be taken inareas identified. These map on to three strategyareas—improving Discovery-developmentinterface; fast cycle-time development andscience based marketing."

This observation wasmade by a seniorinternal change agent.

A conceptual mapprovides a structurefor innovation andsets priorities forimprovement.

MI "CODAX methodology has just been launchedinto the company. The problem we've currentlygot, these people predominantly work formechanical design, electrical design. Not toomuch of a problem there. But within the productspecialists, they then work, going back to ourstructure, matrix, our product specialists—he intheory and these people are responsible forthis product area. And they work or try to workthrough this. It's a pig to be where the mainproblem is."

A senior manager in afirm making complexproduct systems.

Unless 'a theory' hasbeen tested it cancreate its ownproblems.

311

Code Evidence Context Field notes

DD "Now I could draw it down for you a million timeson a piece of paper and you say to me: is thisright? and I'll say absolutely, it's right. We've gotbits which are there but they are not linking. It'slike saying, very crudely again, you know, whatdo we take to make a house? We've very nearlygot it right and we've got the ingredients but wehaven't got the cake, we haven't baked it."

Marketing director of amulti-national company.

Conceptual maps canshow where systemicweaknesses lie.

KM "There is a story going around that people onlyremember 20 per cent of what they hear. I thinkthat is a flat-earth theory. If those were thefigures given in a marketing presentation, you'dnever buy the product. It's just not good enoughat the moment. We are still navigating by thestars but in an organisation, how much time canyou actually spend on analysis? Still I feel thatthe whole area is inadequate."

Observation from thehead of HR for amulti-national firm. He isspeaking about currentapproaches to trainingand development.

Without a theory itseems easy to feellost.

CP "For the first time we are ahead of the curve onthis. We used to be highly responsive. Now weare plotted direction and projected into thefuture what the future needs will be. What weexpect are issues and our problems to be. Thatis five years down the road. And we're workingtowards addressing those things now."

This observation is froma senior manager in alarge divisionalisedorganisation.

If a firm has anoperating theory ofhow things needs tochange this can alignindividual initiatives.

The findings on mental maps suggest that 'theories of action' influence what

managers and other opinion formers pay attention and decide to do. Maps

serve to determine the organisation's reality and appear to play a key role in

aligning innovation practice with innovation capability. The roles of maps are

not straightforward. Three important elements can be identified: firstly, a

map can give confidence that an innovation proposal has been 'well thought

through' (this is especially important with process innovation); secondly,

maps provide a form of low-risk intellectual simulation enabling ideas to be

elaborated and tested prior to commitment; lastly, maps provide a tool for

managing engagement, alignment yet permit local initiative. From this

viewpoint they enable, in part, a fractal organisation to operate (Warnecke,

1993).

IIIe full competencies portfolio

The results of the text search for 'competencies' found 51 text units and was

mentioned in 26% of the cases.

312

Table A3.IIIe: full competencies portfolio

Code Evidence Context Field notes

JJ "it's about having available technologies andprocesses that are competent."

Observation by the headof organisationdevelopment in a majorinternational company.

In order to facilitate aninnovation theorganisation'sinfrastructure needsto be competent.

DS "strengthening the organisation's position waspersonal services, cost structure, the thirddimension is this business of enhancing theefficiency and effectiveness, capability of peopleand systems, and the fourth is to do withstrengthening the organisation's position fortomorrow."

Observation by achange agent based inHolland.

Multiple capabilitiesare needed tofacilitate innovation.

CP "All these systems are integrated,comprehensive, and they fit together very well.We have developed eight strategies. These arepolicy documents based on an analysis ofpast-practice and describe the dimensions andscope. There is an analysis of our resourcesand insight from our years of experience andthe best minds that we can put together."

This observation is froma large divisionalisedorganisation noted forits high level of radicalinnovation.

Policy and resourceavailability is veryclosely integrated.

VP "R&D found that it was very helpful to define theneed to develop a faster development of newcompounds as 'improving cycle time'. InDiscovery nine distinct proficiencies wereidentified (e.g. strategic technologies, smartscanning, portfolio and asset management,drug development expertise, informationmanagement, risk management, company-wideinfluence and external customer influence) anda process owner identified for each."

Comment by a seniorinternal change agent.

Very systematic.Provides the basis forcomprehensiveplanning.

JL "So if you look at the process by which we gainintelligence, then set it in terms of priority, addour judgement to it about resources, prioritising,moving it up the chain of command for action,that's a combination of people in the line andour people working as closely together as theycan."

An experienced generalmanager in a FMCGcompany.

Resource availabilityis a factor indecision-making.

The findings on portfolio of competencies topic suggested that there needs to

be (ready) access to necessary competencies and other resources. If this is not

possible then progress on the innovation initiative is hindered or, perhaps,

rendered impossible.

IVa relentless continuous improvement

The results of the text search for 'CI and/or continuous

improvement/kaizen' found 55 text units and was mentioned in 41% of the

cases.

313

Table A3.IVa: relentless continuous improvement

Code Evidence Context Field notes

CD "Professional standards … again, if we havequality staff, we must have the highestprofessional standards, and that meanstraining, that means development."

Presentation by a MD toall of the seniormanagers in hercompany.

Development is seenas an investment inexcellence.

KM "I am always interested in new theories and newconcepts because I don't feel that what we'llhave got is quite right. Part of it is my owninterest in things that are new."

Observation from thehead of HR for amulti-national firm.

Learning is apartnership with theindividual playing arole.

VP "I think so and it's not even kind of OD as I'vethought about it five years ago. It's much moreabout situational problem-solving, learning. I'mnot even sure that the old-style trainingapproach that we still have is very valid as wemove forward. I suppose there'll always be abasic educational need, I don't decry that, but toattempt all our learning and all our educationthrough conditional training probably isn't away forward. It is more of a part-action learningprocess."

Comment by a seniorinternal change agent.

Notions aboutdevelopment arechanging. There isincreasing use ofaction research andmaking learning anintegral element ofwork tasks.

LX "It has to touch every part of the organisation.The starting point is to get buy-in from the rest ofthe staff. Invariably there is a trainingprogramme to get the process launched. Peopleare helped to think about their own roles. Youget T shirts, badges and so on."

Member of the top teamof a FMCG business.

Training is a devicethat prepares peoplefor a change.

JL "I took it upon myself to work with the very best inthe field, get to know them and see how theywork and try to adapt much of that."

An experienced generalmanager in a FMCGcompany.

Learning from thebest is a tactic fordriving innovation.

The findings indicated that continuous improvement is an element in keeping

individuals in touch with new thinking. From this innovation can spring. CI

requires the individual to be proactive—both to identify opportunities to

improve and in taking initiatives. The role of training and development is, in

part, to stimulate a commitment to CI processes.

IVb effective new product–process development systems

The results of the text search for 'NPD' found 87 text units. The word was

mentioned in 49% of the cases.

Table A3.IVb: effective new product–process development systems

Code Evidence Context Field notes

RE "There are three levels of innovation: keepingbrands contemporary, using new technologicalplatforms and going outside of the existingproduct range. We did the first and second well.The third was tougher."

A general manager in aFMCG company.

Product development,technology evaluationand marketdevelopment areinterdependent.

314

Code Evidence Context Field notes

BT "We have innovation overload at the moment.The sales force are suffering from indigestion.We were producing so many new products thatwe couldn't absorb them and so we werecherry-picking and not making the most of theinnovation that we have made. We have had tochange the policy and focus on doing the rightamount of innovation."

MD of a products-offeredfirm.

NPD output needs tomeet the capacity ofthe firm.

LM "Our principle is not innovation but maintaininga revenue base. Our clients are looking for newand innovative ways of promoting or positioningtheir products; so in turn we have to be thesource of new ideas so as to meet thoseexpectations."

LM is a senior executivein an advertising firmnoted for its innovativesolutions to client'sneeds.

NPD is not an end; butthe means to an end.

VP "The MAP process—Market Aligned PlanningProcess that we have which is supposed tofocus our development effort and make sure thatwe're taking into account very critically themarket demands.

I think that has really helped us to filter."

This observation wasmade by a seniorinternal change agent.

Close relationshipswith market factors areessential in NPD.

CD "We must have only quality products; I mean, Idon't want any compromises on this score: weare building a world-class company and everystone in that foundation has to be solid. So, youknow, if you find out later on that one of yourproducts is a health hazard, we should drop it,even if it means you blow your budget for theyear."

Presentation by a MD toall of the seniormanagers in hercompany.

Many factors,including the currentportfolio of the firm,affect decisions aboutproduct development.

The findings on NP–PD suggest the management of new products and

processes occupies significant attention in some organisations. The approach

'more is better' was not generally followed in the case companies. Rather,

there is an effort to target innovation capabilities within defined policies. In

some cases management tools and processes were used to provide added

discipline.

IVc sound decision processes

The results of the text search for 'decision-making' found 48 text units and

was mentioned in 31% of the cases.

315

Table A3.IVc: sound decision processes

Code Evidence Context Field notes

KM "And you make a decision about whether tocarry on. There is a cost in undertaking areview. Even if it is only 60 per cent of what itwas, do you let that carry on and squeezeanother bit out of it or start a new learningcurve? You have got to prioritize. There is areally cost in refurbishing. You have your ownschedule for refurbishing products and thensomething will blow up and you re-prioritizeaccordingly."

Observation from thehead of HR for amulti-national firm.

Decision-making andinnovation (especiallyproduct innovation)are closelyintertwined.

UY "And so therefore the traditional managementphilosophy of 'extract the root of the problem,go from the specific to the general, make adecision about the general issue and thenapply that to the specific' often doesn't work inrunning a research department. Because in theprocess of abstracting from the detail you havealready over-simplified the problem too muchand therefore your answer is not going to beparticularly useful. Therefore, instead of movingup and moving back down again, you have tosort of swim through the porridge from thespecific to the specific without being able togeneralise very much. The other thing is that inthe process of abstraction, since this is a peoplebusiness, it's the people that are the problem,not the structures. It is very difficult. We need tothink of the organisation as a life-form ratherthan a machine. Clearly there are times whensystems are appropriate but the methodology isnot easily codified. The essence of our businessis decision-making within short time constraints.That is the nature of the market."

Input from the managerof a researchdepartment.

This radical point ofview has interestingimplications. UY issuggesting thatstriving to come to aplanned decision is afalse aim; there aremany relateddecisions and eachmust be tackled on itsmerits so a decision'emerges'.

PC "So therefore the key decision is who becomesthe team running each of the divisions."

This reflection is from amanaging director of arapidly growing UKcompany.

Sometimes the mostimportant decision isabout who is makingit, rather than what isdecided.

CD "having decided which products and serviceswe want to be in, we then design a deliverysystem. Very simple to say, a very hard thing todo. Lining up the logistics, the finances, thepeople, the distribution, our customer feedbackand support, the whole thing—we have todesign that properly, and we have to design it ina flexible way, not in the traditional 'bigcompany' way."

Presentation by a MD toall of the seniormanagers in hercompany.

Decisions requiresubordinate decisionsfor them to beenacted.

PA "The insight is that ideas are ample. It's thedecision making and implementation that'stough."

Senior manager in arapidly expandingservices company.

Decision making iswhere the'heart-ache' reallyresides.

The findings on decision making suggest that this presents a high level of

challenge. There was a view from some managers that decision-making was

316

the critical activity. Decisions need to be taken about multiple issues including:

what to do, what not to do, what enabling resources need to be developed,

how things can be done effectively, how initiatives fit with others, how

resources can be used to best effect and so on.

IVd honoured champions

The results of the text search for 'champions/project leaders' found 77 text

units and was mentioned in 44% of the cases.

Table A3.IVd: honoured champions

Code Evidence Context Field notes

MI And who's responsible for getting together theplan, this plan, championing, being thechampion? This is a key issue."

A senior manager in afirm making complexproduct systems.

The role of thechampion can beinstitutionalised.Individuals areidentified and giventhe role of champion.

CP "it is quite common that in a room packed with allthe big-shots, and "I'd like to introduce to you toSmith. He did some good work last week. Whydon't we give him a big hand?" All the chiefs arestanding up, giving him an ovation. Plus there isa reward system. What we're doing issupporting the champions."

This observation is froma senior manager in alarge divisionalisedorganisation.

Honour and statusneeds to go tochampions. This canbe institutionalised ina number of ritualbehaviours.

LX You have to walk the talk. You will need to havea policy lead by leaders. They have topersonally put customers first, to encourage afollow through of ideas—especially from frontline staff. Research shows that up to 80% ofideas can be implemented."

MD of a FMCG company. There can be anexpectation onpeople that they needto operate aschampions.

MI "Well one of the things I've put on therequirements for all the team leaders is that theirfinal submission has to include not only theinvestment and recurring costs, but also animplementation timescale that ties up with it andwhat we can actually do in that timescale—andtheir own (bearing in mind that they're doing itas a sub-team) their own risk analysis of thatachievement."

A senior manager in afirm making complexproduct systems.

The role of thechampion can bespecified. Tasks,responsibilities andexpectations can bedefined and codifiedtechniques (in thiscase risk analysis)applied.

DS "the model is about how to create a creativeorganisation instead of a reactive organisation,and it's based for what I call dynamics. What Icall the dynamics of action—that's just beingeffective, getting good results, making moneywhatever; in order to be successful in action,you need to be clear on your relationships, youneed to have a clear vision and you have to beconnected with what I call the essence, theessence of the organisation, you might also callthe true values."

Observation by achange agent based inHolland.

Being a championneeds a closepersonal relationshipwith the intents of thebusiness.

317

The findings suggest that the role of the champion can be legitimate and

significant. The champion is expected to be opportunistic and make proposals.

The roles of the champion can be specified and may vary between

organisations—more devolved power appears to be allocated to champions

in less integrated organisations. When championing happens strategy

formulation is, in part, driven from the middle of the organisation.

IVe strong implementation capacity

The results of the text search for 'implementation' found 34 text units and was

mentioned in 29% of the cases.

Table A3.IVe: strong implementation capacity

Code Evidence Context Field notes

PA "The insight is that ideas are ample. It's thedecision making and implementation that'stough".

Senior manager in arapidly expandingservices company.

Implementation is akey element ininnovation.

JJ "But it starts with a number of experts—so-calledexperts—like top management saying, putting ahypothesis together and then gettingimplementers together and saying: prove it,disprove it, challenge it, develop it, codify it."

Observation by the headof organisationdevelopment in a majorinternational company.

Those who implementcan add greatly to theinnovation process. Iftheir input is gatheredat the start of theprocess it can add toa conceptualstimulation.

VP "There's a… dimension there to do with culturewhich is encouraging risk-taking, beingdemanding and people feeling that things willhave to change. And an area here to do withapplication which is to do with taking goodquality decisions—we don't want any moreC5s—having a rapid decision-making, andbeing able to implement—those are important."

Comment by a seniorinternal change agent.

Implementationcapacity is part of asystem for supportinginnovation. Thisinformant issuggesting that thereis a close linkbetweendecision-making andimplementation.

MI "There are always far more ideas available thanthere is the capacity to effect them. It is in theapplication of ideas and implementation that thereal difficulties occur. We seem to be muchbetter at identifying a need or requirement thanwe are at actually mobilising effort to make thishappen."

A senior manager in afirm making complexproduct systems.

Identifyingimplementation is acritical issue.

318

Code Evidence Context Field notes

RE "We are lacking the 'baptism of fire' selection ofprojects process that 3M use. This means thatwe take too much on and can't implementsatisfactorily."

A general manager in aFMCG company.

Over-stretchingresources inhibitsimplementationeffectiveness. It isimportant to ensurethat (in so far as ispossible) this is donewithout over-optimisticprojections of theease or prospects foran innovationinitiative.

The findings on implementation indicate the critical role of these activities

within the innovation process. Implementation takes place after there is a

commitment to an idea. However, only so much can be undertaken at once

and implementation frequently requires multiple actions taken in multiple

parts of the firm.

319

Appendix 4NUD•IST database—node statistics

Data from 196 documents were placed on to the Q.S.R. NUD•IST Power

version, revision 4.0 program. The node codes are shown below, with paths

identified.(1) /G2(1 1) /G2/I Direction(1 1 1) /G2/I Direction/Ia Innovating Leadership(1 1 1 1) /G2/I Direction/Ia Innovating Leadership/Authentic-close leader behaviour(1 1 1 3) /G2/I Direction/Ia Innovating Leadership/Bias Towards Innovation(1 1 1 5) /G2/I Direction/Ia Innovating Leadership/Focused Effort Towards Defined Opportunity Spaces(1 1 1 6) /G2/I Direction/Ia Innovating Leadership/Enrolling Leadership Style(1 1 2) /G2/I Direction/Provides strategic advantage(1 1 2 1) /G2/I Direction/Provides strategic advantage/External Focus (Sensing)(1 1 2 2) /G2/I Direction/Provides strategic advantage/Coherent-Emerging Strategy-Vision(1 1 2 3) /G2/I Direction/Provides strategic advantage/Effective Top Teamwork(1 1 2 4) /G2/I Direction/Provides strategic advantage/Innovation Goals in Business Plans(1 1 2 5) /G2/I Direction/Provides strategic advantage/Performance measures assess innovation progress(1 1 2 6) /G2/I Direction/Provides strategic advantage/Innovation Policies Deployed(1 1 3) /G2/I Direction/Ic Prudent Radicalism(1 1 3 1) /G2/I Direction/Ic Prudent Radicalism/Comprehensive Analysis of Change Needs(1 1 3 2) /G2/I Direction/Ic Prudent Radicalism/Openness to 'New' Mind-Sets(1 1 3 3) /G2/I Direction/Ic Prudent Radicalism/Effective Change Management(1 1 3 4) /G2/I Direction/Ic Prudent Radicalism/Restructuring of Assets(1 2) /G2/II Capacity(1 2 1) /G2/II Capacity/IIa Exceptional Individuals(1 2 1 1) /G2/II Capacity/IIa Exceptional Individuals/Analysis of Need for Critical Skills(1 2 1 2) /G2/II Capacity/IIa Exceptional Individuals/Proactive HRM for Recruitment and Retention(1 2 1 4) /G2/II Capacity/IIa Exceptional Individuals/Able People in Innovation Intensive Roles(1 2 2) /G2/II Capacity/IIb Full Competencies Portfolio(1 2 2 1) /G2/II Capacity/IIb Full Competencies Portfolio/Analysis of Competencies Needed(1 2 2 3) /G2/II Capacity/IIb Full Competencies Portfolio/Co-ordinated Competency Development(1 2 3) /G2/II Capacity/IIc Capable Implementation(1 2 3 1) /G2/II Capacity/IIc Capable Implementation/Effective Transfer to Routine Organisation(1 2 3 3) /G2/II Capacity/IIc Capable Implementation/Capable Programme and Project Management(1 3) /G2/III Culture(1 3 1) /G2/III Culture/IIIa Selective Empowerment(1 3 1 1) /G2/III Culture/IIIa Selective Empowerment/Management Style Supports Empowerment(1 3 1 2) /G2/III Culture/IIIa Selective Empowerment/Personal Potential Developed(1 3 1 6) /G2/III Culture/IIIa Selective Empowerment/'Can-Do' Ethos (Efficacy)(1 3 2) /G2/III Culture/IIIb Innovation Demanded(1 3 2 1) /G2/III Culture/IIIb Innovation Demanded/High Expectations from Opinion Leaders(1 3 2 2) /G2/III Culture/IIIb Innovation Demanded/Innovation Goals Set(1 3 2 3) /G2/III Culture/IIIb Innovation Demanded/Innovation Recognised-Rewarded(1 3 2 4) /G2/III Culture/IIIb Innovation Demanded/Kaizen institutionalised(1 3 3) /G2/III Culture/IIIc High Enrolment(1 3 3 1) /G2/III Culture/IIIc High Enrolment/Open 3 way communication(1 3 3 2) /G2/III Culture/IIIc High Enrolment/Positive Regard (for staff)(1 3 3 5) /G2/III Culture/IIIc High Enrolment/Committment to Company(1 4) /G2/IV Learning(1 4 1) /G2/IV Learning/IVa Continuous learning(1 4 1 1) /G2/IV Learning/IVa Continuous learning/Enabling Learning(1 4 1 2) /G2/IV Learning/IVa Continuous learning/Competencies (Generalised) Developed(1 4 1 3) /G2/IV Learning/IVa Continuous learning/Training in Teamworking and Problem-Solving(1 4 1 5) /G2/IV Learning/IVa Continuous learning/Knowledge Management(1 4 1 6) /G2/IV Learning/IVa Continuous learning/Exporatory Dialogue(1 4 1 7) /G2/IV Learning/IVa Continuous learning/Experimental Initiatives(1 4 2) /G2/IV Learning/Acquiring Multiple Perspectives(1 4 2 1) /G2/IV Learning/Acquiring Multiple Perspectives/Hearing Specialists(1 4 2 2) /G2/IV Learning/Acquiring Multiple Perspectives/Hearing 'Out-of-Field' Agents(1 4 2 3) /G2/IV Learning/Acquiring Multiple Perspectives/Hearing In-Business Agents(1 4 3) /G2/IV Learning/IVc Fruitful linkages

320

(1 4 3 2) /G2/IV Learning/IVc Fruitful linkages/Gaining from External Relationships(1 4 3 3) /G2/IV Learning/IVc Fruitful linkages/Close Customer Relationships(1 5) /G2/V Organisation(1 5 1) /G2/V Organisation/Va Apt Organisational Form(1 5 1 1) /G2/V Organisation/Va Apt Organisational Form/Innovation-Enabling Organisational Design(1 5 1 2) /G2/V Organisation/Va Apt Organisational Form/Use Of OD Methodologies(1 5 1 3) /G2/V Organisation/Va Apt Organisational Form/Use of Teams and Ad Hoc Groups(1 5 1 4) /G2/V Organisation/Va Apt Organisational Form/Inter-Team Co-operation(1 5 2) /G2/V Organisation/Vb Supported champions(1 5 2 1) /G2/V Organisation/Vb Supported champions/Legitimacy of Champion Role(1 5 2 2) /G2/V Organisation/Vb Supported champions/Intrapreneuring Attitudes and Skills(1 5 2 3) /G2/V Organisation/Vb Supported champions/Effective Sponsorship(1 5 3) /G2/V Organisation/Vc High performing NP–PD(1 5 3 1) /G2/V Organisation/Vc High performing NP–PD/Managed NP–PD Processes(1 5 3 3) /G2/V Organisation/Vc High performing NP–PD/Creative Approaches in NP–PD(1 6) /G2/VI Decision Making(1 6 1) /G2/VI Decision Making/VIa Guiding Mental Maps(1 6 1 1) /G2/VI Decision Making/VIa Guiding Mental Maps/Tracking Relevant Possible 'Maps'(1 6 1 3) /G2/VI Decision Making/VIa Guiding Mental Maps/'Map' Selection and Development(1 6 2) /G2/VI Decision Making/VIb Sound decision processes(1 6 2 1) /G2/VI Decision Making/VIb Sound decision processes/Fast, Full Information Systems(1 6 2 2) /G2/VI Decision Making/VIb Sound decision processes/Reliable Decision-Making Processes(1 6 3) /G2/VI Decision Making/VIc Sustained commitment(1 6 3 1) /G2/VI Decision Making/VIc Sustained commitment/Sustained Senior Management Attention(1 6 3 4) /G2/VI Decision Making/VIc Sustained commitment/Roadblock Removal(1 7) /G2/Non-G2 Factors(1 7 1) /G2/Non-G2 Factors/Systems supportive(1 7 2) /G2/Non-G2 Factors/Outsider challenged(1 7 3) /G2/Non-G2 Factors/Harvesting ideas(1 7 4) /G2/Non-G2 Factors/Clear Values Base(1 7 5) /G2/Non-G2 Factors/Downside of Innovation(1 7 6) /G2/Non-G2 Factors/Creative problem solving(1 7 8) /G2/Non-G2 Factors/Stress(1 7 9) /G2/Non-G2 Factors/Fast-agile(1 7 10) /G2/Non-G2 Factors/Non-compliant(1 7 11) /G2/Non-G2 Factors/Co-operation with Suppliers(1 7 12) /G2/Non-G2 Factors/Creative exploitation of assets(1 7 13) /G2/Non-G2 Factors/Political Sensitivity(1 7 14) /G2/Non-G2 Factors/Special context(1 7 15) /G2/Non-G2 Factors/Resources(1 7 16) /G2/Non-G2 Factors/Higher Consciousness

The table below summarises the content of the qualitative database. Data for

each element in the G2 model are given.

Table A4: node statistics (G2)

Components Elements NUD•IST statistics

Ia InnovatingLeadership

(i) Authentic/closeinvolvement (fromleaders)

Total number of text units retrieved = 66. Retrievals in46 out of 196 documents, = 23%. The documents withretrievals have a total of 1634 text units, so text unitsretrieved in these documents = 4.0%.

(ii) Bias towardsinnovation

Total number of text units retrieved = 64. Retrievals in43 out of 196 documents, = 22%. The documents withretrievals have a total of 1715 text units, so text unitsretrieved in these documents = 3.7%.

(iii) Focused efforttowards definedopportunity spaces

Total number of text units retrieved = 68. Retrievals in37 out of 196 documents, = 19%. The documents withretrievals have a total of 1367 text units, so text unitsretrieved in these documents = 5.0%.

321

Components Elements NUD•IST statistics

(iv) Enrollingleadership style

Total number of text units retrieved = 50. Retrievals in36 out of 196 documents, = 18%. The documents withretrievals have a total of 1375 text units, so text unitsretrieved in these documents = 3.6%.

Ib ProvidesStrategicAdvantage

(i) External focus(sensing)

Total number of text units retrieved = 94. Retrievals in27 out of 196 documents, = 14%. The documents withretrievals have a total of 1409 text units, so text unitsretrieved in these documents = 6.7%.

(ii)Coherent—emergingstrategy/vision

Total number of text units retrieved = 324. Retrievals in55 out of 196 documents, = 28% The documents withretrievals have a total of 2773 text units, so text unitsretrieved in these documents = 12%.

(iii) Effective topteamwork

Total number of text units retrieved = 77. Retrievals in43 out of 196 documents, = 22%. The documents withretrievals have a total of 2190 text units, so text unitsretrieved in these documents = 3.5%.

(iv) Innovation goals inbusiness plans

Total number of text units retrieved = 79. Retrievals in27 out of 196 documents, = 14%. The documents withretrievals have a total of 1233 text units, so text unitsretrieved in these documents = 6.4%.

(v) Performancemeasures assessinnovation prowess

Total number of text units retrieved = 43. Retrievals in26 out of 196 documents, = 13%. The documents withretrievals have a total of 1050 text units, so text unitsretrieved in these documents = 4.1%.

(vi) Innovation policiesdeployed

Total number of text units retrieved = 57. Retrievals in37 out of 196 documents, = 19%. The documents withretrievals have a total of 1621 text units, so text unitsretrieved in these documents = 3.5%.

Ic PrudentRadicalism

(i) Comprehensiveanalysis of changeneeds

Total number of text units retrieved = 62. Retrievals in42 out of 196 documents, = 21%. The documents withretrievals have a total of 1823 text units, so text unitsretrieved in these documents = 3.4%.

(ii) Openness to newmind-sets

Total number of text units retrieved = 61. Retrievals in30 out of 196 documents, = 15%. The documents withretrievals have a total of 1558 text units, so text unitsretrieved in these documents = 3.9%.

(iii) Effective changemanagement

Total number of text units retrieved = 46. Retrievals in30 out of 196 documents, = 15%. The documents withretrievals have a total of 1142 text units, so text unitsretrieved in these documents = 4.0%.

(iv) Restructuring ofassets

Total number of text units retrieved = 41. Retrievals in26 out of 196 documents, = 13%. The documents withretrievals have a total of 1457 text units, so text unitsretrieved in these documents = 2.8%.

IIa ExceptionalIndividuals

(i) Analysis of needsfor critical skills

Total number of text units retrieved = 43. Retrievals in27 out of 196 documents, = 14%. The documents withretrievals have a total of 1271 text units, so text unitsretrieved in these documents = 3.4%.

(ii) Proactive HRpolicies (recruitment &retention)

Total number of text units retrieved = 51. Retrievals in28 out of 196 documents, = 14%. The documents withretrievals have a total of 1222 text units, so text unitsretrieved in these documents = 4.2%.

322

Components Elements NUD•IST statistics

(iii) Able people ininnovation intensiveroles

Total number of text units retrieved = 45. Retrievals in26 out of 196 documents, = 13%. The documents withretrievals have a total of 1240 text units, so text unitsretrieved in these documents = 3.6%.

IIb FullCompetenciesPortfolio

(i) Analysis ofcompetencies needed

Total number of text units retrieved = 79. Retrievals in30 out of 196 documents, = 15%. The documents withretrievals have a total of 1289 text units, so text unitsretrieved in these documents = 6.1%.

(ii) Co-ordinatedcompetencydevelopment

Total number of text units retrieved = 46. Retrievals in15 out of 196 documents, = 7.7%. The documents withretrievals have a total of 606 text units, so text unitsretrieved in these documents = 7.6%.

IIc CapableImplementation

(i) Effective transfer toroutine organisation

Total number of text units retrieved = 60. Retrievals in24 out of 196 documents, = 12%. The documents withretrievals have a total of 1235 text units, so text unitsretrieved in these documents = 4.9%.

(ii) Capableprogramme andproject management

Total number of text units retrieved = 48. Retrievals in22 out of 196 documents, = 11%. The documents withretrievals have a total of 1034 text units, so text unitsretrieved in these documents = 4.6%.

IIIa SelectiveEmpowerment

(i) Management stylesupportsempowerment

Total number of text units retrieved = 190. Retrievals in82 out of 196 documents, = 42%. The documents withretrievals have a total of 3238 text units, so text unitsretrieved in these documents = 5.9%.

(ii) Personal potentialdeveloped

Total number of text units retrieved = 103. Retrievals in50 out of 196 documents, = 26%. The documents withretrievals have a total of 2059 text units, so text unitsretrieved in these documents = 5.0%.

(iii) 'Can-do' ethos(efficacy)

Total number of text units retrieved = 59. Retrievals in39 out of 196 documents, = 20%. The documents withretrievals have a total of 1383 text units, so text unitsretrieved in these documents = 4.3%.

IIIb InnovationDemanded

(i) High expectationsfrom opinion leaders

Total number of text units retrieved = 44. Retrievals in32 out of 196 documents, = 16%. The documents withretrievals have a total of 1177 text units, so text unitsretrieved in these documents = 3.7%.

(ii) Innovation goalsset

Total number of text units retrieved = 41. Retrievals in30 out of 196 documents, = 15%. The documents withretrievals have a total of 1303 text units, so text unitsretrieved in these documents = 3.1%.

(iii) Innovationrecognised—rewarded

Total number of text units retrieved = 73. Retrievals in56 out of 196 documents, = 29%. The documents withretrievals have a total of 2274 text units, so text unitsretrieved in these documents = 3.2%.

(iv) Kaizeninstitutionalised

Total number of text units retrieved = 59. Retrievals in32 out of 196 documents, = 16%. The documents withretrievals have a total of 1213 text units, so text unitsretrieved in these documents = 4.9%.

IIIc High Enrolment (i) Open 3 waycommunication

Total number of text units retrieved = 71. Retrievals in46 out of 196 documents, = 23%. The documents withretrievals have a total of 1538 text units, so text unitsretrieved in these documents = 4.6%.

323

Components Elements NUD•IST statistics

(ii) Positive regard (forstaff)

Total number of text units retrieved = 55. Retrievals in39 out of 196 documents, = 20%. The documents withretrievals have a total of 1416 text units, so text unitsretrieved in these documents = 3.9%.

(iii) Commitment tocompany

Total number of text units retrieved = 44. Retrievals in33 out of 196 documents, = 17%. The documents withretrievals have a total of 1238 text units, so text unitsretrieved in these documents = 3.6%.

IVa ContinuousLearning

(i) Enabling learning Total number of text units retrieved = 46. Retrievals in28 out of 196 documents, = 14%. The documents withretrievals have a total of 1415 text units, so text unitsretrieved in these documents = 3.3%.

(ii) Competencies(general) developed

Total number of text units retrieved = 76. Retrievals in50 out of 196 documents, = 26%. The documents withretrievals have a total of 2061 text units, so text unitsretrieved in these documents = 3.7%.

(iii) Training inteamworking andproblem-solving

Total number of text units retrieved = 58. Retrievals in31 out of 196 documents, = 16%. The documents withretrievals have a total of 1277 text units, so text unitsretrieved in these documents = 4.5%.

(iv) Knowledgemanagement

Total number of text units retrieved = 67. Retrievals in40 out of 196 documents, = 20%. The documents withretrievals have a total of 2200 text units, so text unitsretrieved in these documents = 3.0%.

(v) Exploratorydialogue

Total number of text units retrieved = 74. Retrievals in39 out of 196 documents, = 20%. The documents withretrievals have a total of 1548 text units, so text unitsretrieved in these documents = 4.8%.

(vi) Experimentalinitiatives

Total number of text units retrieved = 56. Retrievals in24 out of 196 documents, = 12%. The documents withretrievals have a total of 1341 text units, so text unitsretrieved in these documents = 4.2%.

IVb AcquiringMultiplePerspectives

(i) Hearing specialists Total number of text units retrieved = 44. Retrievals in31 out of 196 documents, = 16%. The documents withretrievals have a total of 1223 text units, so text unitsretrieved in these documents = 3.6%.

(ii) Hearing 'out of fieldagents'

Total number of text units retrieved = 47. Retrievals in29 out of 196 documents, = 15%. The documents withretrievals have a total of 1433 text units, so text unitsretrieved in these documents = 3.3%.

(iii) Hearing'in-business agents'

Total number of text units retrieved = 64. Retrievals in42 out of 196 documents, = 21%. The documents withretrievals have a total of 1402 text units, so text unitsretrieved in these documents = 4.6%.

IVc Fruitful Linkages (i) Gaining fromexternal relationships

Total number of text units retrieved = 46. Retrievals in21 out of 196 documents, = 11%. The documents withretrievals have a total of 705 text units, so text unitsretrieved in these documents = 6.5%.

(ii) Close customerrelationships

Total number of text units retrieved = 130. Retrievals in65 out of 196 documents, = 33%. The documents withretrievals have a total of 2403 text units, so text unitsretrieved in these documents = 5.4%.

324

Components Elements NUD•IST statistics

Va AptOrganisationalForm

(i)Innovation-enablingorganisational design

Total number of text units retrieved = 75. Retrievals in49 out of 196 documents, = 25%. The documents withretrievals have a total of 1948 text units, so text unitsretrieved in these documents = 3.9%.

(ii) Use of ODmethodologies

Retrievals in 42 out of 196 documents, = 21%. Thedocuments with retrievals have a total of 1950 text units,so text units retrieved in these documents = 4.7%.

(iii) Use of teams andadhoc groups

Total number of text units retrieved = 147. Retrievals in78 out of 196 documents, = 40%. The documents withretrievals have a total of 3376 text units, so text unitsretrieved in these documents = 4.4%.

(iv) Inter-teamco-operation

Total number of text units retrieved = 52. Retrievals in33 out of 196 documents, = 17%. The documents withretrievals have a total of 1210 text units, so text unitsretrieved in these documents = 4.3%.

Vb SupportedChampions

(i) Legitimacy of thechampion role

Total number of text units retrieved = 46. Retrievals in32 out of 196 documents, = 16%. The documents withretrievals have a total of 1182 text units, so text unitsretrieved in these documents = 3.9%.

(ii) Intrapreneuringattitudes and skills

Total number of text units retrieved = 40. Retrievals in22 out of 196 documents, = 11%. The documents withretrievals have a total of 892 text units, so text unitsretrieved in these documents = 4.5%.

(iii) Effectivesponsorship

Total number of text units retrieved = 46. Retrievals in27 out of 196 documents, = 14%. The documents withretrievals have a total of 973 text units, so text unitsretrieved in these documents = 4.7%.

Vc High PerformingNP–PD

(i) Managed NP–PD Total number of text units retrieved = 85. Retrievals in32 out of 196 documents, = 16%. The documents withretrievals have a total of 1511 text units, so text unitsretrieved in these documents = 5.6%.

(ii) Creativeapproaches in NP–PD

Total number of text units retrieved = 228. Retrievals in42 out of 196 documents, = 21%. The documents withretrievals have a total of 1890 text units, so text unitsretrieved in these documents = 12%.

VIa Guiding MentalMaps

(i) Tracking possiblerelevant possiblemaps

Total number of text units retrieved = 57. Retrievals in24 out of 196 documents, = 12%. The documents withretrievals have a total of 1335 text units, so text unitsretrieved in these documents = 4.3%.

(ii) Map selection anddevelopment

Total number of text units retrieved = 172. Retrievals in41 out of 196 documents, = 21%. The documents withretrievals have a total of 2001 text units, so text unitsretrieved in these documents = 8.6%.

VIb Sound DecisionProcesses

(i) Fast/full informationsystems

Total number of text units retrieved = 54. Retrievals in27 out of 196 documents, = 14%. The documents withretrievals have a total of 1203 text units, so text unitsretrieved in these documents = 4.5%.

(ii) Reliabledecision-makingprocesses

Total number of text units retrieved = 65. Retrievals in34 out of 196 documents, = 17%. The documents withretrievals have a total of 1424 text units, so text unitsretrieved in these documents = 4.6%.

325

Components Elements NUD•IST statistics

VIc SustainedCommitment

(i) Sustained seniormanagement attention

Total number of text units retrieved = 45. Retrievals in28 out of 196 documents, = 14%. The documents withretrievals have a total of 1278 text units, so text unitsretrieved in these documents = 3.5%.

(ii) 'Roadblock'removal

Total number of text units retrieved = 44. Retrievals in27 out of 196 documents, = 14%. The documents withretrievals have a total of 1066 text units, so text unitsretrieved in these documents = 4.1%.

326

Appendix 5The innovation capability audit

G2 V2.8

HOW INNOVATIVE IS YOUR ORGANISATION?

In any firm it is important for new ideas to emerge and (if they a good ideas)they need to be applied quickly and effectively - for the benefit of customers,employees and owners.

We call this process ‘innovation’. This questionnaire will provide informationneeded to strengthen innovation in your company.

Please fill out this questionnaire with care and honesty - the intention is to benefiteveryone. Individual results are never identified by name and are strictlyconfidential.

Below you will find a definition of the company being reviewed by this survey.Keep this in mind throughout. (If the box has not been completed please definethe part of the company that you are reviewing in the box before you proceedfurther).

INSTRUCTIONS FOR COMPLETION

Below you will find 56 statements. Look at each statement and circle theappropriate number in each case.

Please answer each statement - even if you give a subjective opinion.

The statements may appear to be repetitive - but there are subtle differencesbetween them - so consider each item separately.

It helps us to analyse the results if we know what level you are in the firm. Pleasetick your job category below

ARE YOU A… Tick hereOwner / Top ManagerSenior ManagerManagerCraftsman / TechnicianCore Worker - Operator Other (please state)

G2 V2.8

Look at each statement and circle the appropriate response in each case:-

This statement is true:

1 to little or no extent2 to a slight extent3 to a moderate extent4 to a great extent5 to a very great extent6 totally

1 This company searches for very creative people to fill key jobs 1 2 3 4 5 6

2 There is excellent communication – everyone talks to everyone 1 2 3 4 5 6

3 People are expected to develop new ideas - it’s part of the job 1 2 3 4 5 6

4 A great deal of time is spent planning how this firm needs to change 1 2 3 4 5 6

5 The new recruits who join the firm bring lots of ideas 1 2 3 4 5 6

6 I can talk openly to senior managers 1 2 3 4 5 6

7 Co-operation between teams enables problems to be solved quickly 1 2 3 4 5 6

8 Managers frequently ask employees for ideas 1 2 3 4 5 6

9 From time to time managers survey everyone to find out how the firm could improve 1 2 3 4 5 6

10 You can rely on top managers to support new ideas 1 2 3 4 5 6

11 There are very talented people in all key jobs 1 2 3 4 5 6

12 People have been trained to solve problems in teams 1 2 3 4 5 6

13 Customers are actively involved in the development of new products 1 2 3 4 5 6

14 People frequently get together to discuss ideas 1 2 3 4 5 6

15 Projects are managed very effectively 1 2 3 4 5 6

16 People are evaluated on whether they implement new ideas successfully 1 2 3 4 5 6

17 This company is developing the capabilities neededto succeed in the future 1 2 3 4 5 6

18 Managers are always looking for ways to encouragefresh thinking about how things are done 1 2 3 4 5 6

19 Top management direct people’s efforts to where new ideas are needed to help the firm move forward 1 2 3 4 5 6

20 Lots of people are involved in thinking about what could be doneto develop the firm 1 2 3 4 5 6

21 We often try ‘experiments’ to learn from trial and error 1 2 3 4 5 6

G2 V2.8

22 The company’s leader is tough on anything that blocks change 1 2 3 4 5 6

23 New ideas and techniques are carefully studiedto see whether they should be adopted 1 2 3 4 5 6

24 Individuals are encouraged to take initiatives themselves- providing they operate within guidelines 1 2 3 4 5 6

25 Almost everyone welcomes change in this company 1 2 3 4 5 6

26 Ideas are rapidly implemented across the firm 1 2 3 4 5 6

27 The way the company is structured helps - not hinders -new ideas to be implemented 1 2 3 4 5 6

28 Top managers inspire all employees to be creative 1 2 3 4 5 6

29 The top management group operate as an effective team 1 2 3 4 5 6

30 Top managers take personal responsibility for major initiatives 1 2 3 4 5 6

31 Those who develop new products and processesare very creative 1 2 3 4 5 6

32 People from outside the firm are invited to question the waywe do things to help us to re-think what we do 1 2 3 4 5 6

33 People who drive through changes are given respect 1 2 3 4 5 6

34 People with new or different ideas are greatly valued 1 2 3 4 5 6

35 There is a clear plan to develop the firm 1 2 3 4 5 6

36 Everyone understands what contribution they canmake to help the company move forward 1 2 3 4 5 6

37 Decisions about launching a new product (or service)are only taken after careful consideration 1 2 3 4 5 6

38 People with good ideas can get the resources neededto implement their proposals 1 2 3 4 5 6

39 Temporary teams are formed to get new things done 1 2 3 4 5 6

40 A great deal of time is invested in developing people’s skills 1 2 3 4 5 6

41 We implement the principle that lots of small ideas, taken togetherare a good way to help the firm to develop 1 2 3 4 5 6

42 If one person has specialist knowledge (anywhere in the firm)others can quickly access it 1 2 3 4 5 6

43 Effective planning takes place before changes are introduced 1 2 3 4 5 6

44 We all work to a business plan that sets challenging objectives 1 2 3 4 5 6

45 If needed, major changes will be implemented quickly 1 2 3 4 5 6

G2 V2.8

46 People with up-to-date skills are highly valued 1 2 3 4 5 6

47 We have frequent contacts with industry associations,universities, consultants etc. 1 2 3 4 5 6

48 This firm can take an idea and quickly turn it into somethingthat customers want to buy 1 2 3 4 5 6

49 People in this firm are committed to a clear path to progress(e.g. total quality management, e-commerce etc.) 1 2 3 4 5 6

50 The firm’s information systems enable fast and effectivedecisions to be made 1 2 3 4 5 6

51 When something new needs to be done people can have all thetraining that they need to get them ‘up-to-speed’ quickly 1 2 3 4 5 6

52 In this company there is genuine respect for each employee 1 2 3 4 5 6

53 There is a ‘can-do’ spirit in this firm(people feel able to get things done) 1 2 3 4 5 6

54 People are encouraged to develop their self confidence 1 2 3 4 5 6

55 Recently there has been a review of whether this firm is makingbest use of new technologies 1 2 3 4 5 6

56 Everyone is open to new ways of thinking 1 2 3 4 5 6

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Appendix 6List of companies and individualscontributing to the research

A list of companies and individuals contributing to the research is given

below. In some cases, by the request of the company, the name has been

disguised. In many cases several interviews and/or focus groups took place

within each company. Permission was given by the DTI for companies in the

Partnerships with People database to be used for this research on a

confidential basis. These are marked with a * below. A brief rationale is given

for the inclusion of other companies in the sample

ABC Construction Plc.............................................. Introduced resource planning

Abingdon Kindergarten*

Airedale Springs Ltd*

Anglian Water Services Ltd*

Anita Lo .................................................................................................Change agent

Appor Ltd*

Aresty Institute.....................................................................................Change agent

Aylesford Newsprint Ltd*

Balfour Beatty Civil Engineering Ltd*

Bartle Bogle and Hegarty Plc*

Baxi Partnership Ltd*

Benihana of Tokyo (London Unit)...............................Harvard case as innovator

Bernard Matthews Plc*

Birds Eye Ltd*

Brick and Tile Ltd*

Britannia Label and Print Ltd*

Britannia Music Co Ltd*

British Chrome and Chemicals Ltd*

British Airways Plc*

Bull Information Systems Ltd*

Case & Sons Ltd*

Cola Inc.........................................................................................................FT feature

Colt International Ltd*

Concord Sylvania Lighting Ltd*

Construction Plc .............................................Construction process improvement

332

Dartington Crystal Ltd*

David Crawford ...................................................................................Change agent

Domnick Hunter Ltd*

Dunlop Cox Ltd*

East-West Insurance Hong Kong .........................Market leader in new segment

Elida Fabergé UK Ltd*

Elkay Electric Ltd*

Elmwood Sensors Ltd*

Energy Research Ltd............................................................ World-class laboratory

Express Engineering Ltd*

Facilitate Inc........................................................................Process innovation (MIS)

Fastech Ltd*

FMCG BV ............................................................. INSEAD case study as innovator

Games Inc ..................................................... 2nd to market leader in new segment

GSM Graphic Arts Ltd*

Gt Western Packaging Ltd................................. Recommended by Business Link

Hansonne BV...........................................Market leader in science-based industry

Hay Consulting Ltd*

Herga Electric Ltd*

Heywood Williams Ltd*

Hip-Hop Club....................................................................... Pioneer in new market

Hosiden Besson Ltd .......................................New Product Development process

Howbess Environmental Ltd ............................ Recommended by Business Link

HP Computer Peripherals Ltd*

IDV Ltd*

Industrial Research Institute............................................................. Change agents

Integrated Systems Ltd*

International Hotel........................................Strategic commitment to innovation

Island Records Ltd*

J&J Orthopaedic Ltd*

Jakarta Land.......................................................................... Pioneer in new market

Jardine Engineering Corporation...............Strategic commitment to innovation

Jardine Fleming ........................................Innovation award for financial services

Jasper Guilder—Change Agent ........................................................Change agent

Johnson Controls Ltd*

Karimore International Ltd*

Kay O'Neill Ltd*

333

Kwik-Fit Holdings Plc*

La Merdera Cafe—Caracas..........................Strategic commitment to innovation

Labelgraphics (Glasgow) Ltd*

Leyland Trucks Ltd*

LGG Charlesworth Ltd*

Litton Interconnect Ltd*

Londonderry Farm Equipment Ltd .........................NORWESCO recommended

Lui Hong-Tuang .................................................................................Change Agent

McCormick Consulting Hong Kong................................. Pioneer in new market

MTRC Hong Kong......................................Highly rated underground rail (1996)

New Dimension Painters Ltd*

Nortel Ltd*

NE Enterprises...................................................................... World-class laboratory

New York Police Department............................................ Innovative police force

Oscar David..........................................................................................Change Agent

Ove Arup Plc*

Perfumes International Plc.............................................................Company report

PowerCo (Company Document) ....... Customer service process re-engineered

Print 'n Press Ltd*

Public Relate Co Ltd......................................................Reputation amongst clients

Reliance (Hong Kong)......................................................... Pioneer in new market

Ritchie Bent ...........................................................................................Change agent

Sears Roebuck Inc .........................................Strategic commitment to innovation

SmithKline Beecham R&D ..........................Strategic commitment to innovation

Spa Health Club, Kowloon .....................................................New age health club

Terry Hutton.........................................................................................Change agent

Thames Water Plc................................................................................... FT comment

Tinsley Wire Ltd*

TR Fastenings Ltd*

United Distillers Plc .......................................Strategic commitment to innovation

Wrigley Company Ltd*

Zat Plc.................................................................Market leader through innovation

334

Appendix 7Letter from Fleming Agri-Products Ltd.

335

336

337

Appendix 8Innovation capability—a universal orcontingent attribute?

As discussed in Section 2.8, both the G1 and the G2 reference models were

developed as a unitary framework but, as such, their utility was questionable.

It is known that organisational forms vary (Woodward, 1970) and various

contingency models have been proposed. Suggested contingency factors

include size, age of firm, national culture, market diversity, technology, type

of innovation, masculine/feminine disposition, competitive strategy, rate of

industry change, degree of predictability of routines, industry history, value

systems of the firm's power elite. Innovation capability could vary by these, a

combination of these, or other, contingency dimensions.

The data set provided an opportunity to begin to explore whether innovation

capability was best considered as having an universal set of attributes, or

whether it needed to be viewed from a contingency perspective. Only a small

number of 'lightweight' caselets could be examined and the conclusions of

this aspect of the research must be regarded as indicative and tentative.

The contingency model selected was that of Mintzberg et al. (1998b). The

researcher had the opportunity to study one example of each of these six

organisational configurations. The cases selected for detailed analysis were

(names and details have been disguised at the request of the firms):

Table A8.1: organisational configurations

Configuration Case selected Study undertaken

Entrepreneurial form Quintock Estates—a company run by thefounding entrepreneur that has built asuccessful property business.

3 days observation of the entrepreneurassessing the developmentopportunities of a newly purchasedestate (participant observation)

Machine form Rely Rail—an underground railwaycompany.

2 days interviewing directors and staffconcerned with the introduction of anew safety management system (survey)

Professional form Alb Consultants—a firm of strategy andmanagement consultants.

6 days working with the professionals inthe firm to review strategy and formulatea revised strategic and organisationdevelopment plan (action research)

338

Configuration Case selected Study undertaken

Diversified form Generic Holdings—a corporation with 5strategic business units.

8 days working with the top team in SvenFreight to review strategy and formulatea revised strategic and organisationdevelopment plan (action research)

Innovative form Cooker Workshop—a team establishedfor one week to design a new range ofcookers.

5.5 days working as the facilitator of theevent (action research)

Missionary form Holistic Holidays—a company that offersalternative holidays in Greece andIndia.

12 days observation and interviews withdirectors and staff members repeatedtwice (participant observation)

An analysis was undertaken to assess how innovation capability was

demonstrated in each of the organisational forms.

339

8.1 Innovation in an entrepreneurial organisation(simple structure)

In July 1997 Quintock Estates purchased the Jolly Estate in North Wales. This

was the fifth estate that Quintock Estates had purchased. The founder of the

company, Harry Quintock allowed this researcher to follow him for three

days whilst he met with farmers, land owners, representatives of the local

enterprise board, quarrying firms and local entrepreneurs. HQ was keen to

develop an innovate strategy to exploit the newly acquired asset. He made

the following comments about his business approach:

"Management and other capabilities are not separate in mybusiness: they are tied in. I have major opportunities in relationto finance. If we wanted to we could lay hands on severalmillion pounds. I run a small business that has become a largebusiness. There isn't a strategic capability at the top—apart frommyself—nor is there a depth of management in the middle. Wedon't have enough management—we have the knowledge andthe capital. Our focus is on tangible assets. Land is the moststable asset—they are not making any more! No one cancompete with you. But I knew bugger all about agriculturewhen I brought my first estate in Wales: but I did know abouttenants. They are, if you are careful, unpaid caretakers and theyimprove your property. Also it's tax free. We also know thattenanted property is not seen as an attractive investment bymost—the average rate of return for estates is below 4%. Itseemed to me that the model of tenancy was a goodone—where we do far better than 4%. The old model was to leta farm for generations for next to nothing. That makes nosense. My strategy was to find bright ways try to release thestore of value in the asset. The Jolly purchase required a newstrategy. We want to find opportunities to do things thatfarmers don't think of. The Jolly required a major strategicchange. The major problem is finding the time to findopportunities—but, more importantly, to make things happen.It requires energy—usually my energy—and that is the thingthat is scarce. The Jolly was the first vacant possession estatethat we had brought. It was the first sizeable farm that we hadbrought."

A tension between HQ's desire to adopt an innovative strategy and his wish

to limit his personal commitment is clear. This tension underlies much

strategic decision-making in Quintock. HQ defines himself as the agent of

strategy, management and problem-solving in the business. Again this is

recognised; as he said "I've run a small business that has become a large

business. There isn't a strategic capability at the top—apart from myself—nor

340

is there a depth of management in the middle. We don't have enough

management—we have the knowledge and the capital."

HQ's prowess as a decision-taker in asset exploitation opportunities has

received positive comment in the business press. The tacit nature of his

decision-making process was apparent: as HQ said regarding the purchase of

the Jolly (a £1m investment) "It was much of a hunch. It smelt right. I don't do

complex sums."

HQ spent most of the time he was observed defining and testing the shape

and nature of the 'opportunity space' provide by the new estate. This evolved

with learning and considering the impact of external factors, some of which

were unpredictable or speculative. This is shown conceptually in Figure A8.1

below.

Known opportunity

space

Possible opportunity

space

Potentially Disadvantageous

Potentially Advantageous

Decisions Today

Unknown opportunity

space

Learn and seize

Learn and avoid

Avoid

Define and exploitWait, define and avoid

Wait, define and exploit

Figure A8.1: clarifying opportunity space

Decisions were taken by HQ, or postponed, as the researcher observed.

These were generally (approximately 11 decisions out of 18) based on

341

hard-to-make assessments where data was difficult to obtain, untrustworthy

or contradictory. It was significant that learning was needed (especially in

relation to 'unknown' opportunity space). The decision-making process was

made more intricate as some decisions/commitments either opened

opportunities or closed them at some points in the future. Even this was

speculative as the impact of decisions could not always be predicted. The

opportunity space presented by the Jolly Estate was defined over a three day

period. Complex trade-offs were made as illustrated by Figure A8.2 below.

On the vertical axis of the chart there is the extent to which HQ and his

organisation are believed to possess the necessary competencies. On the

horizontal axis are positioned (very approximately) the likely economic

returns.

New Competencies

Required

Existing Competencies

Sufficient

High Probability of High Economic Returns

Low Probability of High Economic Returns

Exploitation of Mineral Rights

Forestry

Summer Lets for Grass Parks

Long Term Farm Lets

Property Tenants

Craft Workshop

Development

Environmental Power

Generation

Fishing Lake

Road Tolls

Sale of Properties

Land Fill Site

Roadside Little Chef (turn-off

from road) Fishing Holiday

Facilities

Shooting Rights

Zone A

Zone B

Zone C

Zone D

Zone E

Zone F

Figure A8.2: exploitation options

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HQ's definition of opportunity space (portfolio of opportunities) was divided

by the researcher into six 'zones' (A to E). Different exploitation strategies

were determined by HQ for each of the zones, although he was not conscious

of this at the time. This diagram was shown to HQ who remarked "I hadn't

realised it but that's the way that I think. It's relating everything to

everything else that is the hard part. Just deciding what to do about one of

the things is easy. Getting the right mix is what it is all about. But the key

thing for me is actually getting the things done as they need to be done

without me being constantly on someone's back and nagging them. I don't

have the time. It's got to be the right thing, the prudent thing, the yielding

thing and the do-able thing". It is, perhaps, significant that HQ spent several

hours redrawing the chart as he said "if I can get it right the whole thing

becomes more manageable".

In total, 14 categories of uses for the Estate and related assets were identified.

These are shown on the chart. Some of these uses were practised at the time

of the research and some were speculative. HQ faced the task of deciding the

best uses for the assets, knowing that some uses for some assets might

preclude others. For example, letting land for farming on a long-term let

might prevent the later use of the land for mineral extraction or developing a

fishing lake.

From an innovation process perspective, it is generally considered that a form

of innovation funnel is the most efficient way to conceptualise the innovation

process (Ciborra and Patriotta, 1998). In this case the notion of an innovation

funnel was simplistic. HQ was attempting to create a total business model and

he avoided seeing innovation initiatives in isolation. Moreover, the

innovation process for Quintock was characterised by an independence of

thought, willingness to learn and periodic intransigence. HQ took a pride in

exploiting an opportunity that others had missed. He juggled a complex set of

personal and business factors including his own interest, judgements about

the suitability of potential partners, legal options and creative choices. HQ

conformed well to Mintzberg's description of the entrepreneur. His

organisation, being highly dependent on him, was, indeed, a simple structure.

343

8.2 Innovation in an machine organisation (machinebureaucracy)

Rely Rail is a government-owned corporation that operates a city mass transit

railway. In 1996 the researcher had the opportunity to interview directors and

staff who had introduced a new safety management methodology—an

innovation in process for the corporation.

The corporation's documentation contained the following mission and values

statement: "safety is of paramount importance. We do everything we can to

reduce risks to a minimal level. No-one in the Rely Rail can be

complacent—running a railway is inherently dangerous and incidents occur.

Our mission is to manage risks so that accidents will be infrequent and cause

the least possible damage. Safe operation requires constant vigilance. An

unlikely combination of circumstances can prove to be catastrophic. A task

may be completed 10,000 times correctly and then a momentary lapse of

attention causes a major accident."

Like other railways, until 1990 Rely Rail had adopted a policy towards safety

that was 'compliance driven'—meaning that railway management's objective

was to meet the requirements of external regulators. Analysis of major

accidents and experience in other industries (especially in chemical

manufacture) showed that a compliance-driven approach provided only a

basic safety standard. More was needed. Accordingly, an innovative 'risk

management' policy was adopted by Rely Rail in 1995 to assess all hazards in

the existing railway. A total of 541 potential hazards were identified and

individually assessed—93 of these were ranked as 'unacceptable' and

remedial action taken in each case.

The new safety management system at Rely Rail was based on five principles:

1. Safety management must be proactive—aiming to prevent accidents thathave not yet happened

2. Management effort must be focused on specific safety objectives—11crucial safety tasks were monitored

3. Everyone running the railway must have personalised and documentedsafety responsibilities and receive comprehensive safety training

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4. There must be a climate of active safety awareness in every part of theRely Rail's operations—frequent communication was essential

5. Safety was too important to be left to an individual's discretion—vigorous,painstaking and impartial monitoring was essential.

The development of the new policy and practices for safety management is

illustrated in Figure A8.3 below:

Top Team

Ministry of Transport

Safety Working Group

Management Forum

Staff

1993 1994 1995

Global Safety

Seminar

Working Group given

Terms of Reference

Recruitment of New Safety

Director

Extensive Study

Trips and Seminars

Several Consulting

Groups Used

Partnership formed with Government Rail

Inspector

Briefing to

Managers

Initial Report and

Presentation

Top Team Review

Policy Agreed

SOPs Developed by Function Heads

Training and Communications

Planned

Roll-out to StaffStaff Reps join Working Group

Figure A8.3: an example of process innovation

The implement of new policies and procedure took two years and was

initiated by a seminar on 'trends in global safety' given by an external

specialist consultancy. The new approach was rolled-out in 1995. Key features

of this process innovation are shown in Figure A8.4 below.

345

Active Involvement of Decision-Makers

and Opinion Leaders

Formation and Empowerment of Ad

Hoc Group

Project Management of the Change Process

Learning and Exemplars for all

Actors

Ownership of Project by The CEO and Top

Team

Recruitment of 'Heavy Weight' Safety

Director

Figure A8.4: elements of a process innovation

There was a high degree of interdependency between these six elements in

this example of a process innovation. One of the respondents commented

that "getting all of the things right is like links in a chain, if one is weak the

whole thing falls down. If you introduce change in an organisation like this it

can be done but you have to do it right. It has to be thought through and in a

form that people expect. There are a lot of people who can make a

contribution. There is a lot of accumulated expertise here. We need to get that

input but in a way that we can cope with. It's all too complex to do

willy-nilly."

Rely Rail was undertaking multiple process innovations at the same time as

this example. The initiative described had high visibility and was driven by

the top management group. However, it was described as "following a typical

route. This is the way that we make changes here. If things are done well they

are implemented without a problem. But the process has to be right".

Rely Rail was a machine type of organisation from the perspective of

Mintzberg's organisational forms. Roles were very clearly defined and

346

individuals were held accountable, sometimes in law, for the fulfilment of

their defined responsibilities and tasks.

8.3 Innovation in an professional organisation(professional bureaucracy)

Alb Consultants specialise in strategy formation and are based in Boston,

USA. The company had 15 consultants in 1997, most of whom had senior

management experience and were trained at one of the premier Business

Schools in the USA. They were founded by Alan Bloomberg, Lou Stein and

Bernard Rudge in 1979 and the company title contained the initials of their

first names. At the time of the research investigation in 1997 the Chief

Executive Officer was Dr Rudge, the other two founders having retired

recently. The company was established to apply strategic positioning theory

(this was new at the time) and had a successful track record of working with

major clients around the world.

Dr Rudge conducted a strategic appraisal of business in 1996 and noted that

more than 50% of global consulting revenues went to the top 30 consulting

firms in 1996—the industry was being increasingly dominated by large

players. He also observed that the products and services offered by Alb were,

to use his expression, "stuck in a bit of a time warp".

Dr Rudge invited this researcher to conduct a strategy development

programme for his company based on Francis (1992). In total, six days were

spent on this process with all 15 consultants present over two long-weekends.

The aim was to develop 'a deep consensus about Alb's ends and means for

the future of the business'.

Ten four-hour mini-workshops were held. They covered industry scenarios

(including technologies), market dynamics, structural profitability,

competitors, external perspectives, values, strategic ideas, strategic options,

competitive strategy and implementation commitment. The workshops

provided a structure for the strategic development process requested by the

company's CEO.

During the first session of the initial workshop this researcher invited each of

the participants to say where s/he believed that Alb should develop in the

347

next five years. The participants (individually) were asked to assess the

degree of change needed and whether Alb should move towards a packaged

or interdependence offer. Figure A8.5 below maps the result of this exercise.

Radical Change Needed

Incremental Change Needed

Superior Packaged Products

High Degree of Client Interdependence

1

4/6

2

3/9/11

5/12

7/10

8/15

13

14

Figure A8.5: participants' perceptions of opportunities

The numbers represent the status of the informants. 1 was the CEO, 2-5 were

principal consultants, 6-11 were senior consultants and 12-15 consultants. The

arrows indicate how much each participant believed that s/he had moved in

the preceding 3 months. There was a wide diversity of view that was also

present when the same exercise was conducted with other parameters

including market focus, industry specialisation, functional specialisation,

delivery methodologies, team approaches etc.

Following the strategy development process the same exercise was

conducted at the end. The map that was produced is shown in Figure A8.6

below.

348

Radical Change Needed

Incremental Change Needed

Superior Packaged Products

High Degree of Client Interdependence

7 4/14

1/2/3/5/6/8/9/11/15

10

12 13

Figure A8.6: opportunities following discussion

The result of this, and similar, exercises suggested that the consultants' views

about the future direction for the consultancy had become more closely

aligned through the workshop process. There was a risk that social pressure

tended to accentuate the degree of consensus that had been achieved but a

year later the CEO invited this researcher back and said that the experience of

working as a team for six days "had been a turning point. We now know

where we need to invest and how we can take on those big suckers like

Andersons and give them a run for their money. Because everybody was

there, and in tune with the thinking, there's an understanding. Beth could be

in Saudi and Tom in Maine but they both do it the Alb way and they help

each other. There a lot of investment going on to develop our skills and niche

specialities. That's coherent now. We even spend a day, a full day, going

through the workshop stuff with all the new hires. And I've had the key flip

sheet framed—it's there on my wall".

Alb was a professional type of organisation from the perspective of

Mintzberg's organisational forms. Roles were broadly and comprehensively

349

defined and individuals encouraged to apply their expertise flexibly for each

different (complex) situation.

8.4 Innovation in an diversified organisation(divisionalised form)

Generic Holdings is a corporation with 5 strategic business units (SBUs), one

of which was Svenis Sea and Air, a global shipping service for freight and

general cargo. The other SBUs are in military communications, facilities

management, mining operations and earth-moving equipment sales. It was

not considered that there are extensive synergies between the SBUs, although

inter-SBU trading was encouraged providing goods and services were

brought at the market rate.

Svenis Sea and Air invited this researcher to undertake a similar development

programme to that undertaken with Alb consulting. This was undertaken

with the Managing Director and members of the top team in the SBU—8

people in total. In addition, 11 middle and junior members of staff became

involved in related project work. At the end of the second three day

workshop the following diagram (Figure A8.7) was prepared by the group:

Opportunist Culture in

Prospecting and

Marketing

Disciplined Organisation

Total Quality

Philosophy

Superior Global IT Systems

GLOBAL VISION

Superior Customer Service

100% Quality Systems

Enforced Performance Standards

Benefical Strategic Alliances

Small Business Mentality

Seamless IT Links with Customers

Proven Value-Adding Service

Real Time Goods-in-Transit Tracking

LOCAL ADAPTATIONSuperior

Cost Structures to

Rivals

Exploit Buying Power

Frequent Benchmarking

Figure A8.7: balancing global and local requirements

350

This graphic represents the group's 'new formula for success' as they

described it. They saw their key management challenge to 'handle the tension

between the merits of globalisation and the merits of localisation'. The five

attributes shown in the circles were where they believed that the firm needed

to have proven superiority in the industry. Some of the initiatives required

are also shown on the diagram (the others are confidential).

Following the strategy development workshop the Managing Director and

two senior directors prepared for a half-day session 'with corporate'. They

developed a presentation called 'our formula for success'—based on the work

shown above but elaborated extensively. This researcher was able to observe

the encounter. Corporate representatives were the Group CEO, Group

Finance Director and Group Strategic Planning Director.

At the meeting between corporate and the senior managers from Svenis Sea

and Air the following was noted:

0757 Introductory comments by the Group CEO saying that he was lookingforward to the session and thanking the Svenis Sea and Air team fortheir "hard work".

0801 Svenis Sea and Air MD gives presentation using a video projector. Hedescribes industry, market and competitive forces and then gives 'ourformula for success'. The presentation was heard in silence, except fortwo questions of clarification.

0932 The Group CEO says "that was interesting but let's kick it to see if itstands up!"

0933 Group CEO, Group Finance Director and Group Strategic PlanningDirector, in turn, ask a series of questions that they noted on theirpads. The Svenis Sea and Air team try to answer, but admit that invarious areas it will be "a question of faith".

1003 Coffee break

1007 Questions and answers continue.

1111 Coffee break

1118 Group CEO says to Group Finance Director and Group StrategicPlanning Director "Well if we don't do what these guys say they wantto do, do we have any better ideas?".

1119 Group Finance Director and Group Strategic Planning Director say thatthey "can sign up to the plan" but the Group Strategic PlanningDirector says that she wants to "run it past a couple of consulting teamsto do a sanity check".

1124 Group CEO asks "what do you need from us?"

351

1125 Svenis Sea and Air MD goes to a white board and says "Great. This isour very provisional development plan. We need some help from theother divisions.". He draws a flow-chart plan and all the directorsgather round the board and work together to develop a revised plan.

1202 Still at the white board the Group CEO says "looks good. Will you getback to me with the key parameters in a measurable form. We canonly do this if we have a suite of criteria and measures that we cantrust. And I'll hold you to these—but you know that" (everyonelaughs).

1204 Break for lunch

The analysis of the record of this conversation suggests that the corporate

officers were seeking to pursue three agendas at the same time. They wanted

to encourage the division to be innovative in ways that would create value.

They wanted to stop unwise innovation and other imprudent acts. They also

wanted a structure of control in place so that the division's activities could be

monitored comprehensively.

On the drive back to the Svenis Sea and Air offices the three directors were

elated. They went over the encounter for more than an hour and the MD said

"I'm going to ring every member of the gang tonight—they'll all be tickled

pink". During the following two weeks meetings were held every day in the

MD's office (not observed) and a detailed programme plan was put to the

corporate trio, who accepted the revised plan, made funding available and

facilitated the development of partnerships with other operating divisions.

Svenis Sea and Air was a diversified type of organisation from the perspective

of Mintzberg's organisational forms. The SBU knew its market and developed

innovation proposals that were negotiated with corporate offices. At group

level a complex series of trade-offs were made.

8.5 Innovation in an innovative organisation(adhocracy)

A 'Cooker Workshop' provided a opportunity to participate in the

construction of a large-group adhocracy. A team was established for one

week to design a new range of cookers and this researcher was invited to

spend 5.5 days working as the facilitator of the event. The company that

sponsored the workshop, DomEase, had identified a generic need to launch a

range of differentiated products that had lower cost to manufacture

352

(primarily through having fewer parts and being easier to manufacture),

could be readily dedicated to different fuels or national markets and would be

go through the NPD cycle 50% faster than rivals.

A group of 24 people were made available for a full week. The selection

criteria were to bring together all of the skills needed to design a new range

of prototype cookers. Included in the group were engineers, cost accountants,

designers, production engineers, home economists, mmarketing specialists

and model makers. One of the industrial designers was a consultant from a

noted specialist design house. In addition to this core team possible

temporary members were put 'on stand-by', including a lighting specialist,

packaging expert, a plumber and electronics expert.

On the Sunday that started the week's work the team met at a motor car

factory and toured the plant. The purpose of this was to demonstrate the

state-of-the-art in automated manufacturing and to have a shared experience

to bond the group. On the Sunday evening the group went to a residential

facility hired for the purpose on a university campus. 15 cookers made by

rival firms had been purchased and the team were divided into

multi-disciplinary teams and asked to strip the cookers down and note their

strengths and weaknesses. This work continued until nearly midnight.

On the Monday morning (at 0830) a team meeting was held and a video

made for the occasion by the MD of DomEase was shown. The MD spoke

about the need for a new range of cookers and set objectives for the group.

This was discussed, elaborated and the team's objectives, and success criteria,

were written on flip charts and posted in work rooms. The remainder of

Monday and Tuesday were spent exploring alternative ways of achieving the

objectives. The lighting specialist, packaging expert, plumber and electronics

expert were called in as consultants to groups. Ideas from the breakdown of

rivals' products were systematically assessed. Groups formed and re-formed

frequently. A 'war-room' was established in which current thinking was

displayed.

On Tuesday evening a whole group meeting agreed final design concepts.

Team members had stated that they were willing to stay in the meeting until

agreement was reached, even if it took all night! An agreement was made

353

and documented and the meeting broke up at 1158. By 0800 the next morning

design teams had been formed and were working, using a Computer Aided

Design system, to develop the design. 'Liaison Officers' were appointed by

each group to ensure co-ordination. Periodic whole group meetings were

held. The researcher recalls that he went to bed at 1157 on Wednesday

evening leaving a design group working. When he rejoined the group at 0755

the next morning they were already at work again! On the Thursday evening

another whole group meeting was held to plan the presentation for the next

day to the firm's Board of Directors and the model makers worked all night

to make a mock-up of the finished product.

By lunch time on the Friday a stage had been erected and, behind a curtain

illuminated by stage lighting hired for the purpose, was the freshly-painted

mock-up of the new cooker concept. The firm's directors arrived and received

the presentations. Each of the key specialists delivered a 10 minute

presentation. Directors afterwards spontaneously applauding the work of the

group. The working drawings were signed and dated for protection of

intellectual rights and the team were thanked and asked to depart.

Interestingly, no-one left for more than 20 minutes. The group members

chatted, but there were periods of silence. One member commented, "we've

done a year's work in a week. No, we couldn't have done it in a year. The

energy wouldn't have been there. It's something great".

In preparing for the event the facilitator used Mintzberg's description of the

attributes of an adhocracy as a basis for design of the adhocracy and the

diagram in Figure A8.8 below was used as a conceptual basis for the

development of this temporary organisation. The key design parameters

included active top management participation, access to resources, dedicated

time of all of the experts needed, facilitative management and the use of

problem-solving and decision-making tools. In the event, the wholehearted

and dedicated enthusiasm of participants became an important factor in

diving the organisation forward.

354

Collective Learning

Aligned Objectives

Organising and Re-Organising Frequently

Use of problem-solving and Decision-making Tools

Respect for Expertise

Explicit Liason Devices

An End-Point

Project Management

Facilitative Management Style

Planning and Execution Interwoven

Build On Others' Ideas

Open Hard Working Culture

Top Management Support

Resources Available

Ad Hoc Organisation Design Concept

Critical Mass of Experts

Figure A8.8: adhocracy

In an interview with the Managing Director following the event he made the

following comment: "Unbelievable. People did things I didn't expect and they

didn't expect either. They loved it. We did too. We got the result!".

The Cooker Workshop was an ad-hoc organisation from the perspective of

Mintzberg's organisational forms. It was established for just one weeks and

the expertise of members drove the group forward.

8.6 Innovation in an missionary organisation

Although this form is less fully described by Mintzberg than the five

mentioned above he does give an explanation of the design characteristics of

the missionary organisation. The dominant co-ordinating force is the

standardisation of norms, referred to as 'ideology' (see Mintzberg, 1998 pages

351—352).

Holistic Holidays is a company that offers alternative holidays in Greece and

was established by two people interested in yoga, holistic life-styles and

humanistic psychology. This researcher spent a session of two weeks

observing the running of the Centre and then repeated the observation a

year later when several innovations in product, process and position had

been implemented.

355

This type of holiday attracts only a small proportion of those who travel to

Greece for holidays but there is a relatively high level of repeat attendance

(averaging 43%). Participants are recruited from magazine articles,

advertising, word-of-mouth, attendance by the principals at events and so on.

The cost of the holiday is above average and accommodation could not be

considered luxurious—however, an ample diet of well-prepared vegetarian

food is provided.

The Centre has a structured regime of classes in such topics as yoga, tai chi,

shamanism, the tango and foot massage. These classes are run by visiting

teachers who receive little more than a free holiday in return for their

contribution. Many participants take the classes seriously, including arising at

dawn for chi kung classes.

During the first period of research observation an attempt was made to

understand the organisation from a sociological perspective and the following

conceptual framework was prepared (Figure A8.9).

Master in India

Principals as the Guardians of

Values

Visiting Teachers

Selection of Teachers

Design of Holiday Experience

Socialisation of Guests

Encouragement of Community Development

Design of Marketing

Supervision of Staff

Holistic Tradition

Figure A8.9: values driven organisation

In the diagram the circles represent components of the dominant ideology

and the boxes represent activities undertaken to disseminate, reinforce and

356

legitimise the ideology. This diagram shows only the main sources of

ideological transmission and was discussed, at length, with the Centre

Director towards the end of this researcher's first visit.

A year later this researcher returned for a second period of observation. A

number of changes had taken place, including:

6. A wider selection of courses offered

7. Alcohol served with dinner

8. Improved shady areas for informal conversation

9. Less emphasis on acetic life-styles in 'community meetings'

10. Positive acceptance of the less-healthy

11. Encouragement of humour and irreverence (modelled by principals)

12. Acceptance of the 'yoga-buffs' as 'just another sub-group' (yoga-buffs' notgiven superior status in the Centre)

13. Revised advertising emphasising the relevance of the Centre's values toanyone 'living in today's busy world'.

The underlying theme behind these changes/innovations was re-positioning

the Centre towards the mainstream of alternative lifestyles rather than for

yoga buffs. In an interview with the Centre director the process of innovation

was explained to this researcher and conceptualised thus (Figure A8.10):

357

Master in India

Principals as the Guardians of

Values

Other Centres

Non-Yoga Types

New Teachers

Trusted Teachers

Holistic Tradition

CONSERVATIVE FORCES CHANGE FORCES

Yoga Buffs

Sales Office

MUCH CHANGE

Figure A8.10: pulls on values

The principals of the Centre engaged in multiple dialogues with various

individuals and groups whose opinion they wanted to obtain. Some groups

argued for retention of the current yoga-orientated business model whist

others believed that change was needed. Slowly, over months, the identity of

the Centre was redefined in the minds of the principals whose core values

appeared to remain the same but their manifestation (through ideology,

social control and activities) changed in the manner described above.

Holistic Holidays was an missionary organisation from the perspective of

Mintzberg's organisational forms. Its core was the shared ideology described

above. The founders acted as the guardians of ideology but the manner in

which core values were expressed changed over time. Staff were employed

who shared the values of the founders and were willing to be subordinate to

the dominant ideology.

358

8.7 Common features of the six cases

These examples provide illustrations of innovation initiatives undertaken in

different forms of organisation. From an examination of the case notes, 16

largely common features can be suggested. These are:

1. Learning facilitated innovation (i.e. deliberate processes had beeninstituted for the development of concepts and/or skills)—all cases

2. Dialogue was required for development of ideas and proposals—all cases

3. Top management commitment energised the process—all cases

4. Individual innovation initiatives seen as elements within wider innovationagenda—all cases

5. Decision-making and commitment were key—all cases

6. Ad hoc groups set up to facilitate the management of the innovationprocess—all cases except less clear with the small firms (Quintock andHolistic)

7. Strategy, intent and purpose provided an over-arching but evolving set ofconceptual maps within which innovation occurred—all cases

8. A similar process of development of ideas into action can be seen—allcases except less structured in smaller firms

9. The development of a consensus amongst opinion leaders about whatneeded to change and how this could be accomplished was seen asimportant—all cases except Quintock

10. The proposed innovation initiative needed to be seen as 'do-able' before acommitment to undertake it was made—all cases

11. Once an idea becomes a commitment then some of the disciplines ofproject management were adopted—all cases

12. Decision-making required a significant amount of time and thoseconcerned took pains to understand the issues in depth—all cases

13. Perspectives and frameworks (theories in action) needed to change inorder for an innovation initiative to be implemented—all cases

14. Much work was needed to take the germ of an idea and develop it into aproposal—all cases

359

15. Innovation was largely enjoyed by the main actors involved—all cases

16. The quality of people making an input was seen as a significant factor—allcases

There were also differences between the organisational forms. Quintock

Estates was dominated by the personality and entrepreneurial competence of

the founder. Rely Rail institutionalised the innovation process using

techniques from change management. Alb Consultants were highly

participative and involved the whole organisation. Generic Holdings adopted

a results-orientated strategic process. The Cooker Workshop was a pure

adhocracy, remote from other distractions. Holistic Holidays developed new

ways of expressing core values through a revised ideology.

8.8 Consistency check

Research on Mintzberg's six configurational forms enabled common

attributes of companies (whatever their configuration) to be, tentatively,

identified. In order to provide a consistency check this list was compared with

the 18 components of the G2 reference model. The results are summarised in

the table below:

Table A8.2: common features and the G2 model

Common features of innovations in firms Relevant components

1 Learning facilitated innovation IVa

2 Dialogue required for development of ideas and proposals Ib, IVb and IVa

3 Top management commitment energised the process Ia, VIc

4 Innovation initiatives seen as a gestalt within a wider innovation agenda Ib

5 Decision-making and commitment were key VIb

6 Ad hoc groups set up to facilitate the management of the innovation process Va

7 Strategy, intent and purpose provided an over-arching conceptual mapwithin which innovation occurred

Ib and VIa

8 A process of development of ideas into action IIc

9 The development of a consensus amongst opinion leaders about whatneeded to change and how this could be accomplished was seen asimportant

IIIc

10 The proposed innovation initiative needed to be seen as 'do-able' before acommitment to undertake it was made

VIa and VIb

11 Once an idea becomes a commitment then disciplines of projectmanagement are adopted

IIc

360

Common features of innovations in firms Relevant components

12 Decision-making required a significant amount of time and those concernedtook pains to understand the issues in depth

VIb

13 Perspectives and frameworks needed to change in order for an innovationinitiative to be implemented

Ic

14 Much work was often needed to take the germ of an idea and develop it intoa proposal

Vc

15 Innovation was largely enjoyed by the main actors involved IIIc

16 The quality of people making an input was seen as a significant factor IIa

All of the factors identified could be matched against at least one component

in the reference model. This finding supported the view that the reference

model was identifying significant components and elements of innovation

capability.

361

Abbreviations and technical termsABC Activity Based Costing

AL Action Learning

B2B Business to business commerce via the internet

BBC Basic Business Concept

BPR Business Process Re-engineering

Business Link A UK Government-supported consultancy service

CAPEX Capital Expenditure

CBI Confederation of British Industry

CI Continuous Improvement

DCF Discounted Cash Flow

DfEE Department for Education and Employment

DI Diffusion of Innovation

DTI Department of Trade and Industry

e-tailing Retailing via the world wide web

EBP Education Business Partnership

EQM European Quality Model

ESRC Engineering and Science Research Council

FO Foreign Office

Gestalt Gestalt Psychology—a holistic and humanistic approach to therapy

GTR Global Team Room

GF General Foods

ICdb Innovation Capability database

IIP Investors in People

InT Innovation Theory

IPR Intellectual Property Rights

IPT International Project Team

IR Industrial Relations

ISO 9000 International Standards Organisation: standard on quality management

IT Information Technology

JIT Just in Time

Kaizen Continuous Improvement (Japanese Term)

KSF Key Success Factor

LEAs Local Education Authorities

MIS Management Information System

MbO Management by Objectives

NATS Norms, assets, skills and technologies

NORWESCO North West Co-operation (Ireland)

NUD•IST Non-Numerical Unstructured Data Indexing, Searching and Theorizing (a qualitativeresearch tool)

362

NP–PD New Product/Process Development

NPD New Product Development

OD Organisation Development

OI Organisational Innovativeness

PC Process Consultation

PEST Political, Economic, Social and Technological (Analysis)

PIMS Profit Impact of Marketing Strategies (a large multi-national database)

PT Process Theory

PwP Partnerships with People

QFD Quality Function Deployment

SATs Skills, Assets and Technologies

SBU Strategic Business Unit

SMEs Small and Medium Sized Enterprises

SMED Single Minute Exchange of Dies

SWOT Strengths, Weaknesses Opportunities and Threats (Analysis)

SPSS Statistical Programme for the Social Sciences

T-Group Training Group (Sensitivity Group)

TORI Trust, openness, realisation and interdependence

TBC Time-Based Competition

TQM Total Quality Management

TPM Total Productive Maintenance

voc Voice of the Customer

WEI Work Environment Inventory

WI Workplace Innovation—upwards flow of innovation

www World Wide Web

363

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