Oct - Dec 09 Laestadius: MONTIC/Tidd 1
ManagingInnovationlecturesrelatedprimarilytoabookby
JoeTidd&JohnBessant
chpt45
StaffanLaestadius,prof.
OctDec2009
Chpt4:Developinganinnovationstrategy
rationalistorincrementaliststrategiesforinnovation?(4.1) Thedynamiccapabilitiesoffirms(4.2) Appropriatingthebenefitsfrominnovation(4.3) Technologicaltrajectories(4.4) Developingfirmspecificcompetencies(4.5) Globalizationofinnovation(4.6) Enablingstrategymaking(4.7)
Oct - Dec 09 Laestadius: MONTIC/Tidd 2
Oct - Dec 09 Laestadius: MONTIC/Tidd 3
Therationalisticstrategytradition.
Systemsanalysis,linearprogramming themilitaryinheritage,Clausewitz thelinear,rationalisticmodelofaction appraice determine act
Theclassic:IgorAnsoff
Oct - Dec 09 Laestadius: MONTIC/Tidd 4
..isfarfromunproblematic
Influencesourfocus:isthetargettodefeatanenemyortocreatesatisfiedcustomers?
Civicsocietyhastotallydifferentsticksandcarrots(structuresofincentives)
Theshortcomingsofmilitaryintelligence Thelinear,rationalisticmodellacksinitssimpleforma
cognitivedimension,i.e.learning therationalistapproachtendstounderestimatethe
culturalheritage,i.e.tooverestimatethedegreesoffreedom.
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Famousillustrations
Whentheanalysiscangowrong: ThewarinVietnamigoingwellandwillsucceed(Robert
MacNamara,1963) Cf.theIraquiwar
Whenoverestimatingthestrengthofownresources: Icannotconceiveofanyvitaldisasterhappeningtothisvessel
(CaptainofTitanic,1912)
Whenunderestimatingnewtechnology Ithinkthereisaworldmarketforaboutfivecomputers(T.Watson,
IBM,1948)
Oct - Dec 09 Laestadius: MONTIC/Tidd 6
Therationalisticviewtendstohaveanindustry(branch)focus
Structuralpropertiesofindustries Barriersforentry Productdifferentiation Demandelasticity Inshortthecompetitivesituation,i.e.primarilyexogenous
mechanisms
Oct - Dec 09 Laestadius: MONTIC/Tidd 7
Porterrootedintherationalistschool
Portersfieldofforcesfivestructuralforces Portersstrategymatrixthree(four)strategies FromcompetitiveanalysistoSWOT
Oct - Dec 09 Laestadius: MONTIC/Tidd 8
Thefieldofforces
Newentrants
Rivalryamongexistingfirms
StrengthofbuyersStrengthofsuppliers
Substituteproducts
Oct - Dec 09 Laestadius: MONTIC/Tidd 9
PortersstrategymatrixStrategicadvantage
Uniqueadvantagesforthecustomer
Lowcostposition
Strategictargetgroup
Totalindustry
Selectedsegment
Differentiation
Costleadership
Differentiationfocus Costfocus
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SWOTanalysis(relatedtothePortertradition)
Strengths internal Weaknesses internal Opportunitites external Threats external
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Consequencesofthematrixthinkinginbetweenpositionsareunderestimated
profitability
MarketshareX
Isthereapositioninthemiddle?
Lufthansa Ryanair
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Oct - Dec 09 Laestadius: MONTIC/Tidd 13
CriticalreflectionsonPorter
Underestimatesthethepower/strengthoftechnology(technologicaltrajectories)
Overestimatestheabilityofmanagementtoenforce/implementstrategiesi.e.Tobreakwiththeproductbase,thebaseofcustomers,thetechnologybase,thecompetencebaseetc.
gettingstuckinthemiddlenotnecessarilyaproblem Tofocusedoncompetitionandrivalrywherearecooperative
relationsand(winwin)networks? whereislearning,innovativeness,dynamics?
Oct - Dec 09 Laestadius: MONTIC/Tidd 14
Thealternatives
theincrementalistview:Mintzberg Focusonpatternofbehaviour,revealedstrategy Feedback,smallstepbasedstrategy
theresourcebasedapproach Teece&Pisano,thedynamiccapabilitiesapproach orig.Penrose,TheTheoryoftheGrowthoftheFirm processes,positions,paths
Normallystartsintheuniqueresourcecombinationsofthefirm,i.e.endogenousmechanisms
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TheDynamicCapabilitiesoftheFirm(cf.section4.2)
Afirmcanaccumulatelargeresources/assetsandstilllackusefulcompetences/capabilities
Theabilitytoutilizetheresourcesoftheownfirmandacquire(assimilate)externalonesmaybelabelleddynamiccapabilities
Thefoundationinthisapproachisthatcapabilitites/competenciesnoteasilycanbebought/soldonthemarketbuttoasignificantextenthavetobebuiltoutsidethemarket.
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Thecoreoftheresourcebased/capabilitiesapproach
Asuccessfulfirmischaracterizedbyitscapabilitytocreateheterogenitythroughtransformingexistentoracquiredresources.
Thisheterogenityisnotpossibletoimitateintheshortperspectiveorpossibletoinstantlybuy/sellonthemarket.
Wemaythustalkaboutatemporaryexcessinterest(monopolyorentreprenurialinterestorprofit)
Thedynamiccapabilititesmaybeanalyzedthroughtheconcepts:position,path,process
Whatarethecapabilitiesofthisautomotivefirm?
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..andofthese?
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SSAB&AvestaOuokumpu
Appropriatingthebenefitsfrominnovation(4.3)
Xeroxafamouscaseoflowappropriabilitycompetence Factorsenablingappropriability:
Secrecy Accumulatedtacitknowledge Leadtimeandaftersalesservice Thelearningcurve Complementaryassets Productcomplexity Standards Pioneeringradicalproducts Strengthofpatentprotection(IPR)
Oct - Dec 09 Laestadius: MONTIC/Tidd 19
Technologicaltrajectories(4.4)
TheScylla&Karybdisdilemma:interpretingthecharacteroftechnologytoogeneralortoospecific=>wecanjoinanytrajectoryorweareoutsideallofthem
ThePavitttypology: Supplierdominatedfirms Scaleintensivefirms Sciencebasedfirms Informationintensivefirms Specializedsupplierfirms
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Oct - Dec 09 Laestadius: MONTIC/Tidd 21
Majortechnologicaltrajectories(4.4contd.)
Questionstoask: Wheredothecompanystechnologiescomefrom? Howdotheycontributetocompetitiveadvantage? Whatarethemajortasksofinnovationstrategy? Wherearethelikelyopportunitiesandthreats,andhowcanthey
bedealtwith?
08-09-05 EPIM/Staffan Laestadius 22
Hallstapapermachine(Mets)underconstruction
Supplierdominatedfirms
Scaleintensive
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Sciencebased
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Informationintensive
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Specializedsupplierfirms
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Thelogicbehindinnovationstrategies
TheinnovationlogicaccordingtoCTO:s Patentdrivendiscovery Costbasedcompetition Systemsintegration Systemsengineeringandconsulting Platformorchestration Customizedmassproduction Innovationsupportandservices
Oct - Dec 09 Laestadius: MONTIC/Tidd 27
Developingfirmspecificcompetencies(4.5)
Hamel&Prahaladoncompetencies Corecompetencies Associatedorganizationalcompetencies focus
Assessmentofthecorecompetenceapproach Strength:placesthecumulativedevelopmentoffirmspecific
technologicalcompetenceinfocusofcorporatestrategy
Problemwithtechnologybaseddifferentiation&multitechnologyfirms
Corerigidities Developingandsustainingcompetencies/capabilities
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Aspectsofthecorecompetenceapproach
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Globalizationofinnovation(4.6)
Mostinnovationactivitiesstillinoldindustrialcountries
GloballocationofR&Dunitsisonething
Globalizedinnovationprocesssomethingelse
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CorporatevsDivisionallocationofR&D
WhatistheroleoftheR&D/innovation/designunit? Corporateintelligencecontributetoabsorptivecapacity? Createcapabilities/competencies? Produceradicalinnovations? Contributetoincrementalinnovations? Focusonproducts,onprocesses? Other?
Amultidimensionproblem: Physicallocationtodifferentcorporatelevels/divisions Fundingresponsibility Decentralizationcentralization
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HowtofinanceR&D? Quantitativemethodsforevaluatingresourceallocationin
R&Darenotsousedasyoucouldimagine,althoughtheyarethere: NPV Probability/uncertainty Projectmanagementmethods(earnedvalue)
WhatistheproductfromtheR&Dunit?(learning,competence,positioning)
TwolegstrategyinR&D?: TheRleg(scanning,competencebuilding) TheDleg(product/processdevelopment)
Oct - Dec 09 Laestadius: MONTIC/Tidd 33
GlobalvslocalR&D
HithertomostmultinationalfirmshavelocalizedtheirR&Dunitstotheirhomecountrieswhy??
ThereisnowatendencytoglobalizealsoR&Dwhy? AnalyzingR&Dstrategies:
MarketorientedR&D Process/technology/competenceorientedR&D
GlobalnetworksinR&D? Huawei&ZTEhaveR&DunitsinKistaandGothenburgwhat
aretheydoingthere?
Oct - Dec 09 Laestadius: MONTIC/Tidd 34
Globalnetwork? Globalhubsystem
Theproblemofglobalknowledgeformation
Enablingstrategymaking(4.7)
Whatcanwedo(realistically?) analysis Whatarewegoingtodo choice Isthiswhatweintended/want? monitoring Routinestohelpstrategicanalysis Portfoliomnagementapproaches
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Oct - Dec 09 Laestadius: MONTIC/Tidd 36
Part3:Search
Sourcesofinnovation(chpt5) Wheredoinnovationscome
from?(5.1)
Knowledgepush(5.2) Needpull(5.3) Whoseneeds?(5.4) Towardsmasscustomization
(5.5)
Usersasinnovators(5.6) Extremeusers(5.7) Watchingothers(5.8) Recomb.Innov.(5.9)
Regulation(5.10) Forecasting(5.11) Accidents(5.12) Aframeworkforlookingat
innov.sources(5.13)
Howtosearch(5.14) Exloitat./explor.(5.15) Absorptivecapacity(5.16) Toolstoenablesearch(5.17 Dimensionsofinnovation
search(5.18)
Amapofinnovationsearchspace(5.19)
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Oct - Dec 09 Laestadius: MONTIC/Tidd 38
Christensen:themessageinonepictureCa
pacity
Year
New(disruptive)technology
Lowenddemand
Highenddemand