Innovation Renaissance

Defining, Debunking, and Demystifying Creativity

John E. Ettlie

• Publisher: Routledge
• Year: 2019
• ISBN:
  9780429688621
• Edition: 1
• Topic: Negocios y empresa
• Subtopic: Emprendimiento

Innovation is not easy. Understanding the liability of newness but the potential for greatness is the central theme of this work. Innovation Renaissance explores and debunks the myths that have arisen from the proliferation of misleading and often confusing popular press treatments of creativity and innovation. Examples include the notion that successful entrepreneurs are winners because they are innovative—whereas creativity and business start-up acumen are not the same, and are rarely paired—or the idea of disruptive technology, which has now become the buzzword equivalent to radical new technology products or services, despite the fact that new technologies tend to offer simple, limited-capability products or services to satisfy overlooked customer demand. The popularity of open innovation has spawned assumptions, like the idea that crowdsourcing will increase the number of truly new ideas—but in fact the more novel these ideas, the less likely they are to be adopted by incumbent firms because they are less familiar.

Starting by defining innovation and the theories that have arisen surrounding it, Ettlie considers individual creativity and innovativeness, radical innovation, new products, new services, process innovation, and information technology. There is special emphasis on neglected topics such as the dark side of the innovation process—the unintended consequences of new ventures. Finally, the last chapter of the book summarizes a prescriptive model of the innovation process and attempts to answer the question: what causes innovation? Three major constructs are explored: leadership, enhancing capabilities and integration.

This informative and unique text is designed as a resource for postgraduate students, academics, and professionals deeply committed to understanding and working through the innovation process. The book includes an introduction to the subject before moving on to an in-depth study of emerging evidence and topics in the field.

1

INTRODUCTION

In 2010, the McKinsey Global Survey (N = 2,240) results on innovation and commercialization reported the following sobering statistics: “84% of executives say innovation is extremely or very important to their companies’ growth strategy”; however, only 10% of respondents say their corporate venture capital is effective, 13% say their global centers of innovation are effective, and 13% are satisfied with outsourcing R&D and innovation to another organization or geographical location.¹

It appears that little has changed since 2010. In 2013, the PwC survey reported that “three-quarters of CEOs regard innovation as at least equally important to operational effectiveness.”² Further, “93% of executives indicate that organic growth through innovation will drive the greater proportion of their revenue growth.”³

Similarly, the 2016 Deloitte survey⁴ on digital technologies (see Chapters 7 and 8) found similar CEO concerns:

• “87% of respondents believe digital technologies will disrupt their industry to a great or moderate extent, but only 44% agree or strongly agree that their company is adequately preparing.”⁵

• “Companies that are more digitally advanced…place a strong emphasis on innovation and are over twice as likely to be investing in innovation than are early-stage entities—87% versus 38%.”⁶

• “Digitally maturing companies also take a longer-term view of strategy compared to early-stage companies (50% versus 34%).”⁷

• “Digitally maturing companies also place a premium on leadership. More than 70% of respondents from digitally maturing organizations say their leaders have sufficient knowledge and ability to lead the company’s digital strategy versus 22% of early-stage business respondents.”⁸

There is an additional Deloitte survey on boards of directors and radical technology that is quite useful, in particular for both Chapters 3 and 5, but the results are consistent with these other C-level opinions: innovation is challenging and sought after with difficulty.

Digital manufacturing is an evolutionary development merging enterprise resource planning (ERP), design-thinking concepts, product data management, logistics, and even marketing concepts. In other words, it offers complete integration of the value-added chain, more or less controlled by or directed from a major link in this chain, typically a multinational enterprise (MNE) or global manufacturer like Microsoft, Toyota, or Siemens.⁹ Here are some examples of the digital manufacturing challenges continued in Chapter 7.

The headline in the Economist¹⁰ read: “Amp my ride” and the subheading read: “In its biggest deal yet, Samsung bets on connected cars as a driving force” (running headline: Samsung buys Hartman). This was another established and well-known multinational corporation leaping into unaligned diversification, based on current convergent mobility trends. Although Samsung was not the first to “converge,” they are hardly the most “unaligned.” Google, Apple (“Project Titan”), Xiaomi (Chinese smartphone maker), and all of the major automobile and on-demand ride companies like Uber and Lyft are already on the dance floor, with more arrivals at the mobility ball surely to arrive soon.

Samsung paid $8 billion for Hartman, which is a company known for internet audio, information technology, and security systems, located in Stamford, CT. This sector is one of the gateways to autonomous vehicles. Samsung has already invested in Vinli and nuTonomy, both of which make software for connected cars. Samsung supplies lithium-ion batteries for cars through its affiliate Samsung SDI. Samsung’s earlier (late 1990s) entry into automobile OE went under and was ultimately purchased by the French company Renault.

Samsung’s smartphone division recently suffered a major setback due to exploding batteries in its recent Galaxy Note phone offering. This, coupled with the convergence trends in mobility, illustrates two important themes of this book. First, discontinuous change in innovation management, such as the convergence occurring in the personal transportation industry, occurs infrequently and challenges even the best of incumbents, as well as new entrant firms (start-ups and otherwise). Second, radical change takes a long time to stabilize and is extremely challenging.

A recent article in the Harvard Business Review¹¹ argues that the greater the industry investment in R&D, the greater the unfolding uncertainty. An understanding of the amount of uncertainty ahead and one’s ability to manage that uncertainty in different ways is essential to success. For example, the authors show medical equipment has 8.2% R&D/sales and 90.7% revenue volatility, whereas precious metals have a 0.1% R&D ratio and 40.7% revenue volatility. These industry differences are significant.

This type of recurring discontinuous change involves both new products and new process innovations, including new information technology changes. Each one of these elements requires a different set of technology orchestration skills and is based on different economic and strategic theories that are recurring with perpetual themes and paradigms. This is the Innovation Renaissance: the understanding of lasting and accumulated knowledge in the innovation field. This book is devoted to sharing these enduring lessons of technological change and debunking and exposing the shortfall of most popular treatments of this sea change. The obfuscation that has resulted in the popular press to try to make “easy to understand” sense of current trends has, for the most part, done more harm than good.

The faster things change, the more mistakes are made in the popular press in trying to understand these recurring themes. In the first Industrial Revolution, a very similar convergence occurred in the making of the textile industry in England. Simple machines to convert cotton cloth eventually were combined and integrated into more complex, but more efficient factory systems, requiring fewer “hands.” No one person, firm, or enterprise had the complete answer, and the solution often morphed to meet the context. The Industrial Revolution in America was powered by water, not steam. Herein lays the plausible explanation of why simple treatments of sea change end up being confusing. Understanding technological change is not the purview of one discipline of engineering, or even one field of science. Sociology has as much to contribute to our understanding of technological trajectories as physics. It is ultimately not the technology itself but the understanding and implementation of technology in society that matter most. Clayton Christensen has often correctly said that when an industry like health care is disrupted, everyone is better off.¹² Medical research and treatment can concentrate on the most difficult health issues like cancer. Emerging fields of science and medicine can concentrate on delivering large-scale health care to many, many more needy patients. Disruptive technology is probably among the most misused terms applied in the popular press, all the way up to and including annual reports today. The singular important purpose of this book is to debunk these simplified pronouncements that contribute to the confusion and replace platitudes with enduring, theory-based empirical research that has been applied over and over for the betterment of everyone.

Where have we been? Where are we going?

It would be difficult to argue that what has persisted in any field of inquiry is independent of the state-of-the-art comparisons. Therefore, it is necessary to review assessments of the technology and innovation management-applied research field as well as practitioner reports of challenges. A selection of both are included here with one caveat: it is very difficult to predict where a field is going based on what informed opinion suggests is the state-of-the-art and to chronicle the past contributions in any domain related to the innovation process.

Nonetheless, boldly we go forward. Perhaps the most recent review of the management of technology field, as of this writing, is the special issue of Production and Operations Management.¹³ In spite of the comprehensive coverage of topics in this special issue, the editors rightfully admit that a field as eclectic as technology management “…focuses on the entire gamut of issues that arise as firms transform newly developed scientific or technological knowledge into new products, services, and business models to impact the marketplace.”¹⁴ Therefore, it would not be possible to cover the entire field but rather a sampling based, in part, on editors’ solicitations and choices of topics by contributors. The range of topics and experience of authors is impressive in this special issue. Creativity, ideation, organizational learning, value chains, information technology, co-production, digital goods, and new product development are all featured prominently. For the most part, the articles all beg to be read, depending upon your own particular interests in the field. Further, the issue has a noble objective: to focus attention on “multidisciplinary knowledge on management of technology.” The consequences of not taking this view are many. One documented case in Ettlie and Sanders¹⁵ is the absence of manufacturing scope considerations in flexible innovation theory development.

The articles generally do a good job of reviewing where we have been but fall short, for the reason stated earlier, on where we are going, which is what lead researchers are grappling with right now. Good journals only publish new ideas, which are yet to be determined. So-called “gaps” in knowledge rarely produce breakthroughs in knowledge. This is easy to evaluate by just examining the theory section of this book or any book on the subject.

Focus first on the limitations of the special issue as they relate to the present volume. Ken Kahn¹⁶ has published a concise introduction to the subject whereby innovation is really one of three things: outcome, process, and mind-set. Nearly all the contributions that appear in journals and the trade press focus on strong appropriation conditions,¹⁷ where knowledge is protected or potentially protectable by secure intellectual property acquisition, like patents, and the focus is almost exclusively on outcomes. The current volume is targeting the interface between product and operations management and management of technology, but most operations and information technology are adopted from outside the firm. Without deep understanding of weak appropriation conditions, and with only one article focused on the implementation of information technology,¹⁸ the result is a very large piece of the intellectual pie being absent from this special issue. This exact topic (managing production and operations under conditions of weak appropriation) is featured in Chapters 7 and 8. Managing under weak appropriation conditions is quite different from managing under strong appropriation conditions. The paradox of standardization and innovation taken up by several of the special issue authors should have been rigorously addressed by contributions in this regard.

The special issue addresses many interfaces but conspicuous by its absence is the marketing discipline and function of the firm. Errors of omission could have been avoided if this path had been taken. A prime example is the fine contribution by Loch¹⁹ on creativity and risk taking. Loch devotes much of his contribution to behavioral issues in the stage-gate process and project management, but only one reference to Robert Cooper is cited and no references to the marketing literature appear. His review of the stage-gate process and its shortcomings relative to the novelty of the techno...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Preface
• 1 Introduction
• 2 Defining, debunking, and demystifying innovation
• 3 Radical innovation
• 4 Theories of innovation
• 5 New products
• 6 New services
• 7 Process innovation
• 8 Information technology
• 9 Creativity and innovation
• 10 The dark side of the innovation process
• 11 Innovation renaissance
• 12 Innovation by design
• Index