Demystifying the Link between Innovation and Business Value

We are ready to get started on our next project. On behalf of the entire research team, I would like to thank the i3m partners for deciding to fund this project. We are looking forward to an exciting few months and hope to create actionable knowledge of value.

Here is a brief synopsis of our new effort:

Two universal truths underpin most business operations: (1) unless businesses can demonstrate value to their stakeholders on a constant basis they will lose customers and markets, get overrun by the competition, and eventually become extinct, and (2) to generate business value, an organization must constantly innovate, and do so in an effective and efficient manner. Finding support for these truths is not difficult; consider the following comments by two seasoned executives:

“I know we need to show value…today we are being evaluated in 30 or 60 day intervals. The days of doing one-year projects that pay off two years from now are long gone…my boss wants to know how the money I am spending today is getting us returns next week, next month, or at best, next three months…I need to be able to show the value for this so-called innovation.”
– VP of Research & Development, Information Technology Organization

“Innovation…sure, I think it contributes to the business value…If I did not think so, I would not be here talking to you. But, I would not know how to show you on paper the linkage…I mean we know that it [innovation] does lead to business value, if we did not we would not spend on it…we are rational beings…but every board meeting I struggle to communicate the value of the innovation…The link is so elusive…It is touchy-feely but not concrete.”
– CIO, Financial Services Organization

Such quotes, and several more from our current research project, Leveraging Ideas for Organizational Innovation, help to deduce another truth. Regardless of departmental function (e.g. IT, Sales, Operations, etc), most executives lack good mechanisms for (1) measuring the business value of innovations, and (2) communicating the value of innovation projects. Over 85% of the executives we interviewed requested that research be conducted to identify solutions that can address these two issues. These issues are salient for a number of reasons.

Inability to measure the business value of innovation limits an organization’s ability to build effective innovation programs. Resources spent on innovation may be underutilized or ineffectively utilized. In addition, resources spent on innovation may conflict or compete with other organizational efforts. Moreover, outcomes of innovation efforts may be nothing more than good ideas, which may never get commercialized or diffused, thereby limiting any returns on the original investment.

Not being able to communicate the value of resources spent on innovation makes executives vulnerable. First, the executives will not be able to convince their external stakeholders that current resources directed towards innovation efforts will secure a better position for the organization’s future. Second, and equally important, rallying support from their peer-executives on innovation projects will be very difficult, if not impossible. The linkage on monies spent and bottom-line value, both in terms of operational gains and strategic advantages, will be elusive. Third, being able to communicate to the employees of the organization and set a consistent vision, mission, and agenda for corporate innovation will be difficult. Without clear metrics, an innovation program is not clearly understood, not supported by the executives, and not embraced by the employees. Clearly, without metrics an innovation program is fundamentally flawed.

The goal of this research project will be to uncover mechanisms that can be used to (1) link innovation to business value, and (2) communicate the value of innovation.

Interview in KM Review

An interview with Dr. Kevin C. Desouza on developing metrics around knowledge management and innovation programs will be published in KM Review. This interviews extends work done on our current project and charts our ideas for future research.

Building Innovative Business Partnerships

Our research on building innovative business partnerships will be presented at the International Federation for Information Processing (IFIP) Working Group 8.2 on Information Systems in Organizations – Organization and Society Information Systems (OASIS) 2006 Workshop in Milwaukee, WI on December 10, 2006. Sanjeev Jha and Yukika Awazu will be the lead presenters.

Customer-Driven Innovation

Our research paper, Customer-Driven Innovation, will appear in Research-Technology Management. Research-Technology Management is consistently ranked as a premier management journal in the disciplines of technology management, innovation, and technology policy.

The Final Email to the i4i Team

Hello i4i'ers -

This email is the "official" end of the project. It has been a great pleasure to work with each of you during the last few months. We worked hard, yet had fun! We over-delivered and this is good. Here are our final work products:

1. Baloh, P., Jha, S., Desouza, K.C., Kim, J.Y., Awazu, Y., Dombrowski, C. “Building Partnerships for Innovation,” Technical Report, # I4I-I3M-InnovBusPart-1, Institute for Innovation in Information Management, The Information School, University of Washington, October, 2006, 35 pages.
2. Desouza, K.C., and Dombrowski, C. “Six Case Studies on Organizational Innovation,” Technical Report, # I4I-I3M-InnovCases-1, Institute for Innovation in Information Management, The Information School, University of Washington, October, 2006, 30 pages.
3. Dombrowski, C., Kim, J.Y., Desouza, K.C., Braganza, A., Papagari, S., Baloh, P., and Jha, S. “Elements of Innovative Cultures,” Technical Report, # I4I-I3M-InnovCult-1, Institute for Innovation in Information Management, The Information School, University of Washington, October, 2006, 20 pages.
4. Desouza, K.C., Dombrowski, C., Awazu, Y., Baloh, P., Papagari, S., Kim, J.Y., and Jha, S. “Crafting Organizational Innovation Processes,” Technical Report, #I4I-I3M-InnovProc-1, Institute for Innovation in Information Management, The Information School, University of Washington, August, 2006, 35 pages.
5. Desouza, K.C., Awazu, Y., Jha, S., Dombrowski, C., Papagari, S., Baloh, P., and Kim, J.Y. “Customer-Driven Innovation,” Technical Report, #I4I-I3M-CustInnov-1, Institute for Innovation in Information Management, The Information School, University of Washington, August, 2006, 28 pages.
6. Awazu, Y., Baloh, P., Desouza, K.C., Wecht, C.H., Kim, J.Y., and Jha, S. “Opening up Innovation through Information-Communication Technologies,” Technical Report, #I4I-I3M-InnovICT-1, Institute for Innovation in Information Management, The Information School, University of Washington, July, 2006, 16 pages.

All in all, this project has generated over 160 pages of content. The sponsors of the research are thrilled.

With the end of one project, we have the beginning of a new project. I have put a new proposal under review for funding. Should we get the funding, I will be in touch with each of you to join the next effort. The next effort will look at linking innovation to business value and also communicating the value of business innovation.

Thanks once again for all your hard work, and now let us wait for all the papers to get accepted at journals.

Get some rest now and thanks once again for making this project a success!

Cheers,
Kev

University of Virginia

Here are pictures from my recent trip to the University of Virginia. I spent time working on the new research ideas that have emerged from our ongoing research projects.

Improvise or Perish

Organizations cannot stay at the same level of skills and competencies. They need to ceaselessly learn, create knowledge, and innovate processes, products, and services to stay ahead of competitors. This is true much more now than ever before, with firms competing with local and global players. Hammonds (2003) has profiled the changing structure of global competition through a case study of Wipro Ltd., an Indian IT services firm.

Wipro, till recently, was primarily in the business of “writing software, integrating back-office solutions, designing semiconductors, debugging applications, taking orders, and fielding help calls”, for companies around the world. Since last few years, it has been facing stiff competition from companies in Bangalore, where Wipro is based, and around the globe which can do low-value IT services for a pittance, i.e. compete on cost and provide equally good services. Wipro has no choice but to move up the service chain. It is aspiring to move to the “high-value services such as consulting, integration, and architecture” and poses threat to the business of established IT consultants like Accenture or EDS in the US.

As we see in the above example, global competition restructures the industry. New, mean, and hungry companies are born every day and incumbents cannot maintain their growth and profitability competing on cost alone. Organizations which fail to innovate and improvise, scale up their processes, products, or services go out of business, as newly born companies take over their businesses. Same fate will befall these new organizations if they fail to learn from their predecessors mistakes. Organizational improvisation is the mantra to break out of this loop of birth and death of organizations. One must not be mistaken, this loop was always there, however, the cycle of the loop has shortened due to globalization.

Cunha et. Al. (1999) define organizational improvisation as the “conception of action as it unfolds, drawing on available material, cognitive, affective and social resources”. The authors stress that improvisation is deliberate and result of a action(s), employing the resources available to the firm. Authors definition of resources are as below:

Material resources: General category encompassing outside the individual and the organizational social system. E.g. information systems, financial resources.
Cognitive Resources: Set of mental models held by the individual members in the organization.
Affective Resources: improvisers emotional state
Social Resources: Social structures present among members performing improvisation.

In sum, organizations need to improvise in the wake of increasingly intense competition. They need to employ all resources, especially their employees, business partners, and customers, in their continual quest for organizational improvisation. Remember, organizational improvisation is deliberate and does not happen by chance.

Source:
Cunha, M. P., Cunha, J. V., and Kamoche, K. (1999). Organizational Improvisation: What, When, How, and Why. International Journal of Management Review. September, 1999
Hammonds, K. H. (2003). The New Face of Global Competition. Fast Company, Feb, 67, 90-97.

Elements of Innovative Cultures

We have published our latest working paper – “Elements of Innovative Cultures”

Executive Summary:
Organizational culture is an important determinant of sustained innovativeness and financial performance. Though it is easy to appreciate the important role culture plays in making an innovation successful, it is difficult to change culture. One way of changing culture could be to identify elements of innovative culture and then imbibing the ones relevant to a given organization. In this paper, we have identified, based on past research, eight elements of organizational innovative culture: innovative mission and vision statements, democratic communication, safe spaces, flexibility, collaboration, boundary spanning, incentives, and leadership. We believe assimilating these elements of organizational culture will enable organizations to support and sustain innovative activities.

This paper will be made available to all sponsors of our research via our website – http://faculty.washington.edu/kdesouza/i4i.htm

Innovation Across Boundaries

On October 10th, 2006, the I3M Research Symposium spent a full day addressing the issues of innovation in business. Symposium participants included people from organizations such as Parsons Brinckerhoff, Washington Mutual, Quellos Group LLC, the Disaster Resource Network, Boeing, NPower Seattle, Casey Family Programs, Nervana, SchemaLogic and Geospiza. University of Washington iSchool and business school faculty members also participated. Dr. Desouza gave a presentation of the innovation process and proposed a model consisting of five stages that capture the innovation process. Those stages were idea generation and mobilization, screening and advocacy, experimentation, commercialization and diffusion/implementation. A panel discussion with business practitioners helped to define innovation, discuss issues of implementing procedures for innovation and revealed several strategies for handling idea screening and incentives for innovation.

The symposium broke into small groups to discuss innovation issues.
Many big questions emerged from this debate, such as: Are process and incremental innovation fundamentally different from creativity and idea generation? Is innovation part of daily practice?

A discussion of the development and instantiation of rigorous Communities of Practice (CoP) at Parsons Brinckerhoff followed. Key themes included the need to reward leaders of communities and the crucial role of injecting business practices into CoPs.

The symposium proper ended with proposals for future research on the topic of innovation in business, presented by University of Washington faculty. A delicious dinner and reception followed.

Shiny New Toys

If you're in search of big ideas and want to see how others have done it, Technology Review has chosen the top innovators under 35 (see http://www.technologyreview.com/tr35/index.aspx). The profiles of each of the nominees reveal that by and large, the winner combined two previously disparate technologies in order to create a single, more dominant one.

The top innovator was Joshua Schachter, who created del.ici.ous, the website that allows individuals to tag their bookmarks and thereby organize them and access them from any computer. But the system also does more than that; the folksonomy of tags that emerged provides a way to organize, understand and link across the entire web.

Other cool innovations range from impossibly devious encryption methods (Apostolos Argyris's work disguising data as white noise) to efficient cookstoves designed to reduce wood burning and keep women in refugee areas close to home, and safety (Christina Galitsky's work).
[summary by: Caroline]

The End is Near

We are in the midst of wrapping up several papers from the research project. These papers will be posted on the following website - LINK. All project sponsors and research participants will have access to these papers. Several of these papers are under review at various management and technology journals. We will be releasing the papers to the general public at a later date. If you have an interest in these papers, please contact Prof. Kevin C. Desouza

Social Networking and KM

When you look at Friendster.com or Myspace.com, almost every member has hundreds of "friends." Those friends form an extended social network that aids in connections, knowledge transfer, knowledge growth and knowledge dissemination. In other words, social networks contribute to, assist in and sometimes hinder knowledge management. To manage knowledge, you have to know what people know. But what people know often depends on who they know, and who they interact with regularly. Since knowledge is often socially constructed, particularly in an organizational context, being able to map out who knows what and whom through Social Network Analysis (SNA) greatly aids in knowledge management and HR decisions (Patton, 2006). Harnessing the tool of social networking in business can allow an organization to identify gaps in communication and then to encourage fruitful collaboration between similar groups (Patton, 2006).
Problems such as loss of expertise (due to employee attrition or HR decisions), duplicative efforts to address similar problems, disconnected and unproductive individuals and decreased motivation to work can be anticipated and preemptively handled through SNA (Patton, 2006). By tracking collaboration and communication between different individuals, teams, units, branches or offices, management can see the actual information flows in an organization, whether or not that matches organizational charts (Patton, 2006). Furthermore, social network analysis can be made fun and interesting, encouraging cross-organizational collaboration. Even better, that collaboration can be tracked, evaluated and shaped in ways beneficial both to the organization as a whole and for individual employee or team-level development and growth (Patton, 2006).

From: Patton, Susannah. "Who knows whom, and who knows what?" CIO, June 15, 2006. Available: http://www.cio.com/archive/061505/km.html


[Summary by: Caroline]

Quoted in Optimize Magazine - The Wisdom Within

Steve Benton (Executive director of IT at UBS Investment Bank) has written a nice article on crafting Wisdom Networks. There are several quotes in the article from me on the importance of knowledge sharing...CLICK HERE FOR THE ARTICLE

Crafting Organizational Innovation Processes

We have just completed a new report from our project - Crafting Organizational Innovation Processes. Here is the abstract of the paper: Innovation is a crucial component of business strategy, but the process of innovation may seem difficult to manage. To plan organizational initiatives around innovation or to bolster innovation requires a firm grasp of the innovation process. Few organizations have transparently defined such a process. Based on the findings of an exploratory study in over 30 US and European companies that successfully foster innovation, this paper breaks the innovation process down into discrete stages: idea generation and mobilization, screening and advocacy, experimentation, commercialization, diffusion and implementation. For each stage, context, outputs and critical ingredients are discussed. There are several common tensions and concerns at each stage, which are enumerated; industry examples are also given. Finally, strategies for and indicators of organizational maturity around innovation are discussed for each stage. Mature organizations will use an outlined innovation process to create a common framework for discussion and initiatives around the innovation process, and to establish metrics and goals for each stage of the innovation process.

The authors of the paper are: Kevin C. Desouza (The Information School, University of Washington), Caroline Dombrowski (The Information School, University of Washington), Yukika Awazu (McCallum Graduate School of Business, Bentley College), Peter Baloh (Faculty of Economics, University of Ljubljana), Sridhar Papagari (Dept. of Information & Decision Sciences, University of Illinois at Chicago), Jeffrey Y. Kim (The Information School, University of Washington), and Sanjeev Jha (Dept. of Information & Decision Sciences, University of Illinois at Chicago).

All sponsors of our research project will receive a copy of the paper on October 11, 2006.

Strategic Sourcing of Innovations: A Strategic Capability

I gave the inaugural talk for the 5th Annual International Smart-Sourcing Conference
Los Angeles, CA. Sept. 21-23, 2006. The abstract of the talk is as follows:
Organizations are engaging in sourcing initiatives at an astounding pace. First, there was the sourcing of mundane and structured work; this was followed by the sourcing of knowledge work such as software development and call centers. Today, we are entering the era of sourcing innovation work. Sourcing of innovation can take many forms and types, and can vary in the level of intensity. For example, some organizations have outsourced their entire research and development functions, while others engage in the sourcing of problems on a need-basis. The challenge facing organizations today is severe – how to create, develop, and manage capabilities for sourcing innovation. Developing capabilities in sourcing of innovation is not the same as using outsourcing for conducting knowledge work or even low-cost manufacturing operations. The nature of innovation projects requires us to pay careful attention to several salient issues, for example the appropriation of rents from innovation. This presentation will describe the changing nature of outsourcing efforts from cost-focused to innovation-driven. A framework to manage the sourcing of innovation will be presented. Lessons learnt and best practices on the sourcing of innovation will also be discussed. Organizations that can leverage sourcing as a strategic weapon for innovation will have a decisive competitive advantage over their peers.

University of Illinois at Urbana Champaign - Being Innovative and Entrepreneurial: Lessons from the Trenches

I had a wonderful time at the University of Illinois at Urbana Champaign. My hosts, Tony Mendez (Director, Academy for Entrepreneurial Leadership) and Laura Hollis (Associate Director, Academy for Entrepreneurial Leadership) took good care of me. I had a rich set of discussions with a number of students, faculty, and guests of the University of Illinois. During dinner, I had a chance to meet a young CEO, Dan Moorehead. Dan heads up Visual 3D.net. In addition, my discussions with students from the Chinese Entrepreneur & Professional Club was stimulating and engaging. I thank all of you for welcoming me to your campus...

The I3M Symposium - October 10, 2006 - Enabling Innovation Across Boundaries

The fall symposium of the Institute for Innovation in Information Management (I3M)will be held on the University of Washington campus on Tuesday, October 10. The theme for the day, “Enabling Innovation Across Boundaries” reflects the members’ interests in discovering the key enablers behind organizations that have documented success in turning creative ideas into products and services contributing to the bottom line.

In order to compete, and even survive, in today’s marketplace, organizations must be capable of innovating. More specifically, organizations should be able to innovate in a highly effective and efficient manner. Failure to innovate can lead to several undesirable consequences from loss of customers to extinction from the marketplace. While these realizations are pervasive among organizations, many have not yet identified how to address the innovation problem.

For the past several months, Dr. Kevin Desouza has been undertaking a research project funded by I3M to investigate this area through field interviews with key executives in organizations recognized as leaders in innovation. These interviews have been analyzed and a model for successful innovation will be presented based on the findings at the symposium. More information on the project and the participants is available on Kevin’s research blog at http://ideas4innovation.blogspot.com/.

To provide more insight into the practices the model is based on, a panel of study participants from a variety of organizations will respond to the presentation, and a structured discussion among all symposium participants will provide ample opportunity to find ways to apply the findings in their own organizations. The day will wind up with a presentation by Mike Williams, CIO of Parsons Brinckerhoff, discussing the business impact of another recent I3M sponsored project (“Beyond Knowledge Exchange: The Case of Practice Area Networks (PANs) at Parsons Brinckerhoff- more information available on the I3M website, and a presentation of candidate projects for the next research round sponsored by I3M.

A complimentary reception will follow the formal sessions, with an optional dinner for those interested in continuing the conversation. The symposium will be invitation only, through one of the partner organizations(Parsons Brinckerhoff, Washington Mutual, Quellos Group LLC, or the Disaster Resource Network) or the University of Washington I3M faculty members.

Mapping Innovation

By studying and surveying HP LAbs, Rivas and Gobeli (2005) managed to identify enabling and risk factors for innovation in a large, research-oriented company. Employees reported that the most helpful enablers were: skilled people; people are helpful; management support; checkpoints provide focus; and people working together. These enablers were environmental factors that employees indicated increased their comfort level with and ability to innovate on a consistent basis.

The top five barriers Rivas and Gobeli discovered were not enough resources (such as money, time or access to management); hard to process experiments in the factory; lacking process-capable equipment; undefined market planning; and a project spanning multiple sites.

Rivas and Gobeli then create an easy-to-understand visual model mapping the enablers and barriers to innovation along a spectrum of how well known the innovation's technology is and how well known the market for the innovation is. Those two factors, newness or comfort with technology and market, Rivas and Gobeli define as the "level of innovation."

SOURCE
ACCELERATING INNOVATION AT HEWLETT-PACKARD
Rio Rivas; David H Gobeli
Research Technology Management; Jan/Feb 2005; 48, 1.

[Summary by: Caroline]

Being Innovative and Entrepreneurial: Lessons from the Trenches

I will be giving the following lecture at the Academy for Entrepreneurial Leadership, University of Illinois at Urbana Champaign - "Being Innovative and Entrepreneurial: Lessons from the Trenches". Here is the abstract: Successful entrepreneurs are those who can realize their visions by leveraging their resources and capabilities. Key to successful entrepreneurship is the ability to innovate and leverage ones know-how. Entrepreneurs who are successful in being innovative will be able to identify unique opportunities in the marketplace, position their products and services in unique manners, and will be able to disrupt positions held by incumbent firms. In this presentation, I will outline lessons that I learnt from several entrepreneurial endeavors. These lessons will be framed in the context of knowledge management and the calibration of organizational innovations.
Date: Sep 19, 2006
Time: 5:00 pm
Location: 1404 Siebel Center for Computer Science
Sponsor: Academy
Web: Link

Bounty Hunting for the Sake of Innovation

In an earlier post, i4i discussed Procter and Gamble’s connect and develop policy (see: LINK), where outside scientists and experts join a network to help P&G solve science problems.

Eli Lilly has adopted a similar strategy to tap into experts outside the company by bringing specific problems to virtual arenas (Breen, 2002). Eli Lilly founded InnoCentive, a wholly owned subsidiary, to take on the task of bringing outside researchers’ attention and energy to the drug development process through an incentive system (Breen, 2002). The process is similar to bounty hunting in the Old West: “Wanted” posters are put up describing a scientific problem and a reward, then bounty hunters can compete in an online project room to answer first and best (Breen, 2002).

Confidentiality was the first hurdle InnoCentive tackled, but even scientists who have won large bounties argue that the process puts undue risk upon the scientist, particularly when research must be conducted to get to a particular target or answer (Breen, 2002). The reward is only given to one scientist, so if another does quite a bit of work but comes up with the answer a day too late, they receive nothing.

But many scientists are signing up for InnoCentive: in 2002, “7,000 scientists have registered at InnoCentive, and there are 2,400 project rooms in use, organized around 33 problems” (Breen, 2002). In 2006, more than 95,000 scientists have registered with InnoCentive (Kramer, 2006). Scientists from India, Russia and other places around the globe have signed up with InnoCentive (www.innocentive.com), and companies like Boeing, Proctor & Gamble, Dow Chemical and Nestlé all have paid the membership fee and seek solutions using InnoCentive (Kramer, 2006). Open innovation seems to be working for the organizations, the scientists and the broker.

SOURCES:
Breen, B. (2002) “Lilly’s R&D Prescription.” Fast Company, Issue 57, April.

Kramer, H. (2006) “Brainy Website Takes Advances to Market.” New York Post, July 30. Available: LINK

[Summary by: Caroline]

Lilly Critical Care Europe and Business Customer Communities

Firms, such as Lilly CCE, have created online communities for their customers to interact with each other and share knowledge. Lilly CCE is a European business unit of Eli Lilly & Company and was founded in 1999 to oversee sales, marketing, customer and medical services for specialty products in the critical care setting. It had approximately 150 employees across Europe and an annual revenue of around USD 100 million. However, the majority of the income was generated by just one high-end, high-priced complex product, which had been in the market for several years. This drug was being administered in specialized centers.

Beginning in spring of 2001, Lilly CCE found the market getting increasingly competitive in most European countries. Competitors increased sales representatives and Lilly CCE's existing representatives found it difficult to provide necessary information to physicians and customers. This forced Lilly CCE to launch a project called the “Customer Community Project” to develop capabilities and infrastructure to facilitate development of BCCs. BCCs can be defined as groups of business customers, which are deliberately enabled by a firm and share a long-term need to exchange work related knowledge through online and offline interaction. Business customers form a community to fulfill a specific purpose. Firms deliberately enable BCC formation through technological (e.g. collaboration technology) and organizational (e.g. workshops and events) means. The type of knowledge exchanged within BCCs is always work-related. Self-organizing customer networks can become external BCCs at the point when they are given strategic attention and support by a firm. The purpose of external BCCs is to foster long-term knowledge exchange between its members. Accordingly, during the period 2002-2004, Lilly CCE initiated over 50 BCCs.

Erat et al. (2006) found that the formation process of a BCC can be divided into four major stages: preparation, planning, initiation, and sustenance. In the preparation stage, an organization should lay out the internal processes and structures that can support BCCs. During the planning stage, sales representatives together with the community leader lay the groundwork: identification of common needs, definition of purpose, and preparation of a kick-off event. During the initiation stage, members come together to launch the communities and generate critical momentum. Lastly, during the sustenance stage, the focus is on sustaining the momentum and keeping the BCCs viable. During this stage communities strive to transform shared knowledge into working practices.

The success of BCCs, measured by the number of customer communities, was surprising. More than 50 communities were formed during the first two years. Erat et al. uncovered that BCCs work best for firms with a superior new product and in a market characterized by information asymmetry. It was also found that knowledge sharing in BCCs depends heavily on the influence of the leader of the community, especially if the leader belongs to one of the participating customer organizations. However, it is critical that the sponsoring organization of BCCs (Lilly CCE) take a backseat and allow BCCs to be operated and governed by customers.

SOURCE: Erat, P. Desouza, K.C., Schaefer-Jugel, A., and Kurzawa, M. “Business Customer Communities and Knowledge Sharing: Exploratory Study of Critical Issues.” European Journal of Information Systems, Forthcoming.

Stay at Home!

At the University of California San Francisco's Carol Franc Buck Breast
Care Center, patients don’t need to come in for an appointment. Rather than waste time and energy in transit and wait passively to hear what the doctor has to stay, patients log in and have a toolbar of resources, are examined via webcam when possible and get both more frequent and more engaged treatment. The Center has a thriving online practice. Patients no longer have to fly to experts for diagnosis, making it easier for both patients and doctors to fit doctor consultations into their schedules.

Furthermore, in complicated cases like breast cancer, usually there are many trade-offs necessary during treatment. Patients sometimes let doctors decide, but increasingly are being pulled into the decision-making process. In an online consultation, resources can be personalized to the case at hand and given to the patient prior to meeting with the doctor online, letting patients make informed choices and ask questions based in research. Patients can also consult with multiple experts quickly and with a minimum of scheduling, allowing them to synthesize information from multiple sources.

And that’s not the only opportunity for wireless to enable communication. Texas Instruments has found that product development is smoother and elicits more participation from every member. Instant messaging combined with PowerPoint allows developers to fire off questions as they arise, without needing to remember them, and they can ask them in context. Texas Instruments found that this was particularly true for non-native English speakers, and in an increasingly global company that’s a vital consideration.

E-learning in companies is much debated, but at Accenture it’s a solid part of a blended program, where virtual and in-person learning are combined for best effect. Furthermore, most consultants work almost entirely online, with rare face-to-face meetings.

And Fleet Securities, Inc., a banking firm, has found that combined with the decrease in paperwork through virtual collaboration, they also have far better service to corporate investors. For instance, there are never any delays at the printer’s office because everything is posted online immediately. Revisions can occur quickly and with universal effects.

[Source: Overholt, A. (2002) “Virtually There?” Fast Company, Issue 56, March]

Testing Healthcare

To differentiate itself and better service patients, the Mayo Clinic has started having doctors and nurses act like designers (Salter, 2006). They shadow patients, interview them and develop prototypes to try to put new ideas before them. A dedicated corridor has real patients (who consent to the experiments) being treated by real doctors and real nurses, with experimental prototypes, interviews and questions. The area is called SPARC, or “see, plan, act, refine, communicate” (Salter, 2006).

The notion of changing patient service emerged because they realized that patient care hasn’t changed much since the 1800s—and maybe it’s time. SPARC features transparent walls and cameras that capture doctor-patient interactions, as well as removing some of the mystique and hallowed sanctity of the exam room, all in an effort to better serve patients (Salter, 2006). Personalized guides showing individual risks and risk factors tested very well by the third or fourth iteration, and successes like that help the doctors stay enthusiastic about the innovation process (Salter, 2006). Doctors or managers come up with questions about patient needs, then teams hit the ground running and try to search out how things look, feel and resonate with patients—for instance, the Patient Library was underused, and when they interviewed patients they found out patients didn’t know the computers for them (Salter, 2006). Minor changes in signs helped patients feel confident using the patient library. The teams reconvene in a lounge with a whiteboard after interviewing patients and examining physical spaces, and then they brainstorm.

Patient needs become the starting point for research, idea generation and prototypes like a single sheet of paper that SPARC urged experimental patients to imagine as a self-check-in station (Salter, 2006). Then, if results are encouraging, the doctors refine the prototype and continually elicit patient feedback. And top management is taking notice—SPARC was named one of the Mayo Clinic’s top priorities last year (Salter, 2006).

[Source: Salter, C. (2006) “A prescription for Innovation.” Fast Company, Issue 104, April. Page 83.]

[Summary by: Caroline]

Knowing when to gamble

Even horse-racing enthusiasts don't count solely on inspiration when making bets. So how can businesses, who must consider the emotional and financial costs for a multitude of stakeholders, afford not to understand and quantify risk?

Innovation requires risk-taking and faith. However, it also requires savvy. Taking risks without evaluating consequences and likelihoods is the mark of immature innovation programs, while more careful, considered business strategies of innovation have various ways of measuring, discussing and analyzing risks and their consequences.

CIO's top 100 innovating companies were interviewed by Christopher Koch, and the result was a blog entry entitled, "Make gloom part of your strategy," (Aug 22, 2006: Available: http://blogs.cio.com/node/420). What Koch is getting at is that somebody's got to be the analyst who warns, cautions and tells horror stories. Being innovative doesn't mean jumping without a net; contingency planning is as important as the innovation process itself (Koch, 2006). Innovation is a hopeful enterprise, but understanding and readying for the possible negative effects can vastly increase overall innovation. That way, if a single innovation project crashes and burns, someone's got a fire extinguisher and can put out the flames before they devour the organization.

Being committed to and excited about innovation must be matched with contingency planning. One potential tool is simply a red, yellow or green tag that correlates to the assessed level of risk for a particular idea, innovation or process (Koch, 2006).

Koch, C. "Make gloom part of your strategy," CIO Aug 12, web exclusive. Available:
http://blogs.cio.com/node/420

[Summary by: Caroline]

IT Innovation: The Nexus of Processes and Technology

For many organizations, technology is a necessary cost that sometimes provides a return on investment in the form of saved time, energy or resources. However, enterprising CIOs are changing that by focusing on how IT can generate revenue as well as decrease costs. Like any other department, IT must contribute not only to operational processes, but also by generating revenue (see Overby, 2006 for more on this ever-pressing need). To do that, idea generation and innovation processes must become entrenched in the IT department. Luckily, as Overby puts it, "IT is the gatekeeper of data across the enterprise and understands business processes intimately," and as technology becomes ever more embedded in business processes, IT is admirably well situated to seize the moment for innovative revenue generation. But as Overby (2006) points out, just like any other department, IT must interact with customers to understand customer needs. The organization mission must infiltrate and motivate IT as much as it does R&D or marketing.

Washington Mutual's organization-wide focus on innovation includes the IT department. In an interview with Deb Horvath, CIO of Washington Mutual, she told us that all executives are evaluated monthly on measures including revenue-generation and innovative ideas for services, processes or products. Using the same process as in the rest of the organization, Washington Mutual focused IT on revenue-generating innovation by setting goals and objectives. As CIO Horvath put it:
"In February I had 13% [of all projects] focused on revenue-generating, now 25% are focused and working actively on revenue-generating programs. IT's one of those things, you can manage what you measure and we decided we could measure focus on revenue-generated opportunities…We stated a goal to increase the percentage of revenue- generating projects..."

Overby, S. (2006) "Money: That's What They Want." CIO, August 15. Available:
http://www.cio.com/archive/081506/money.htm

Two Birds, One stone - Green Innovation

Sometimes, finding the impetus for innovation means asking what can be done to help the world. After all, to create an organization-wide culture of innovation, an unarguably believable and necessary mission statement like, "let's save the world" can come in very handy. Firing employees up about environmental initiatives is exactly what allowed five companies to reduce costs, improve productivity and contributed to being on CIO's (www.cio.com) top 100 list of companies who created value through IT-enabled innovation. Here, two of those companies will be briefly profiled to illustrate how a focus on sustainability can encourage innovation. To read more, see the full article by Levinson (2006), which is linked below.

Goodyear's (www.goodyear.com) experimentation phase with new tire designs has, in the past, meant subjecting tires to the road, over and over, under different conditions, to assess damages. In the past, this meant hours of driving cars around a track to see how tires held up because the math involved in computer modeling this process was notoriously difficult. This slow, expensive, environmentally damaging process has had no alternative--until now. Goodyear has developed a computer modeling system that virtually tests tire designs. The process is faster, cheaper and generally better than the old system. It has reduced the amount of tires tested overall and thus saved many hours of spinning tires that go nowhere. The environmental effect is gigantic because of the reduction in oil, emissions and reduced manufacturing demands. Now Goodyear can do most testing through computer software, which means they get products to market faster, cheaper and with less environmental damage. Engineers can also perform more tests and have developed far more products (see, for instance: LINK). (Levinson, 2006)

JEA, a Florida-based public utility that produces electricity by using natural gas and oil (www.jea.com), put into place an artificial intelligence based on neural nets. The software determines the optimal amount of fuel given current oil and natural gas prices to produce the optimal amount of electricity. It also ensures that emissions stay within government guidelines. Knowledge management greatly assisted this effort, as databases of historical decisions and operating data help to guide the software's decision-making process. The result was decreased operating costs, more consistently staying within emission requirements and dramatic savings in oil and natural gas purchasing. The sheer number of factors involved in the combustion process combined with the need to calculate the highest profit margins when oil and natural gas prices skyrocketed meant that company saved money while being environmentally friendly. The cost was $800,000 and within eight weeks that cost was recovered. Furthermore, the same software will be applied to JEA's water business. (Levinson, 2006)

For full details: Levinson, M. (2006) "Imagination at Work." CIO, Aug 15. Available:
http://www.cio.com/archive/081506/100_innovate.html

The full list of CIO 100 Award Winners can be found here: LINK

How would one know whether an organization is innovative?

Innovations rarely happen by chance, sustained innovation even less so. Drucker (1993) contends that he knows of no “flash of genius” that turned into innovation. Innovativeness requires systematic, disciplined approach. Organizational characteristics of innovative organizations are therefore different and distinguishable from non innovative companies (Subramanian, 1996). They out-compete their rivals by making them irrelevant through new products and new value (Dobni, 2006).

Davila et al. (2006) described a model of innovation with four elements of organizational innovation management: inputs, process, outputs, and outcomes. Inputs management is about finding suitable resources to drive innovation. Four broad categories of inputs are finance (R&D), human resource, physical resource, and ideation (Adams et al., 2006). Processes combine the inputs and transform them. Several factors go into the process of innovation management: strategy, organizational culture and structure, portfolio management, and project management (Adams et al., 2006). Outputs are results of innovation effort. A number of measures have been proposed to operationalize outputs: number of innovations adopted (Wolfe, 1994; Subramanian, 1996), mean time of innovation adoption (Subramanian, 1996), consistency of the time of adoption (Subramanian, 1996). Finally, outcomes describe the value creation, measure how the outputs of innovation management created value for the company.

For the purpose of Blog entry, which is to assess organizations’ innovativeness and not innovativeness management, we choose just the last element of innovation management (outcomes) to propose measures of innovativeness. Our job here is to appraise how well outputs of organizations’ innovativeness created value and not to understand the determinants or the process of attaining innovativeness. In doing so we may know if an organization is innovative or not.

Innovativeness is not a unidimensional construct, and therefore identifying an innovative firm may require assessment on more than one measure (Subramanian, 1996). However, based on past research, at present we propose following two related measures to identify whether an organization is innovative or not.

• What is the percentage of sales coming from products new within the past four years (Coyne, 1997)? This measure of innovativeness is adopted by 3M and in year 1996, 27% of their sales came from products innovated within previous four years (Coyne, 1997).

• Second, is the pattern of revenue increasing or decreasing throughout the range of product innovation orders (Prusa and Schmitz, 1994)? The authors found two major patterns in the PC software industry: (1) a firm’s initial product tended to be the most successful and (2) a declining trend in sales throughout the range of product introduction orders.

An innovative enterprise will have increasing percentage of sales coming from new products and also it will build on its initial success by launching products more successful than the previous ones.

[Posting by: Sanjeev]

Review of Engaged Knowledge Management (2005) by Desouza and Awazu

A review of my book (co-authored) with Yukika Awazu has just been published in the International Journal of Information Management Volume 26, Issue 4 , August 2006, Pages 349-350. The review was conducted by J. Boyd, and can be found at the following SCIENCEDIRECT.

Bureaucracy and Innovation

Over time, small, agile and successful companies grow and become large corporations, where, very often, bureaucracy becomes the organizational form. Thompson (1965) argues that bureaucratic organizational form is appropriate for improving productive efficiency, however, it results in low innovativeness. Thompson suggests changes that can improve innovativeness of organizations with bureaucratic form.

- Increased professionalismIncentive systems should be modified towards 'professional image' rewards (esteem of knowledgeable peers, professional growth). Also, to be able to innovate, employees need considerable, but not complete autonomy and self-direction and a large voice in deciding at what they will work. To stimulate creativity, certain level of problem uncertainty and high level of personal security is needed (otherwise the first possible solution that comes across is many times accepted).

- Untidy organizational structurePractical overlapping of duties / responsibilities and integrative grouping of employees, where various professionals are interdependently engaged upon an integrative tasks with a common goal, will necessitate a good deal of communication and collaborative work, which is exactly what is needed for innovation to appear.

- Project organization of work, rotation of assignmentsWith project organization, there is a chance to switch organizational structure and leadership style according to a kind of problem needed to be solved. This is line with contingency theory which argues that there is no best organization, leadership or decision-making style as they all depend upon various internal and external factors that company is faced with (c.f. (Fiedler, Chemers & Mahar, 1976; Galbraith, 1973)).

- Free communication, decentralization of powerWith growth of professionalism and project organization of work, decentralization of power and ‘freedom of speech’ will surface. Professionals will move from project to project, decreasing the power of department (and consequently, power of hierarchical superior). Thompson (1965) suggests that dispersion of power and free communication are important, as concentrated power often prevents imaginative solutions of problems.


To sum up, interpersonal communication, multiple group membership and interunit projects result in diversity of knowledge (input, diffusion), extradepartmental ties and interests, devaluation of authority and positional status, and recognized official sharing of power and influence. Such changes will result in stimulated creativity and increased level of integrative collaboration in innovative ‘bureaucratic’ organization of the future.

References
Fiedler, F. E., Chemers, M. M., & Mahar, L. (1976). Improving leadership effectiveness : the leader match concept. New York ; London: Wiley.
Galbraith, J. R. (1973). Designing complex organizations. Reading, Massachusetts, etc.: Addison-Wesley Publishing Co.
Thompson, V. A. (1965). Bureaucracy and Innovation. Administrative Science Quarterly, 10(1), 1-20.

[Summary Posted by: Pete]

More Problems, but Easier Cross-Industry Collaboration: NPower Seattle

Speaking with NPower Seattle's Executive Director, Jamie Green, reinforced much of the research done for this project. With wonderful examples, Jamie highlighted issues of stability versus the need for new ideas. For instance, to maintain a high level of service, people and time must be dedicated solely to that task. However, to attract new clients and keep old clients, NPower Seattle must continually re-invent and be a technology leader. Balancing between maintaining high levels of current service and deciding when to invest in what ventures for innovation remains a challenge for all organizations.

Innovative ideas come from several sources: sometimes clients request new services, philanthropists who donate software, money, technology or time sometimes have ideas or wishes that can be innovative ideas; business partners have stepped forward with suggestions; and the affiliate network sometimes innovates a service or product that NPower Seattle then adopts. Board members and employees also make suggestions and try out new approaches.

However, being a nonprofit also contributes to some of the biggest problems NPower Seattle must face. For innovation, NPower Seattle must balance client needs with existing capabilities and overall mission. The first filter through which innovative ideas pass is whether or not they assist NPower Seattle in meeting their mission of aiding nonprofits through technology. The second is existing capabilities and resources, and some ideas and pilots (like in any business) must be shelved for a later date. Given the large range of nonprofits in Seattle (from multi-million dollar, established ones to newly formed, un-endowed ones, and social services to goods distribution to job placement to legal services), NPower Seattle must consult with each organization and meet them at their current level of technology capacity and technology readiness. Not only that, but NPower Seattle must achieve client satisfaction while charging below-market rates!

However, Jamie identified one of the biggest challenges as just to get people to admit they have an innovative idea. Perhaps employees of nonprofits are just modest, or perhaps it's a worldwide issue, but Jamie finds that often people will talk about issues or solutions they've tried and won't label them as new, innovative or different. Listeners will readily, though, so dialogue and reports of other people's solutions are a key way to access innovative ideas that wouldn't otherwise be brought forward. After all, recognizing innovation has to precede implementing it.

As a nonprofit, NPower Seattle enjoys one main advantage over business: cross-industry collaboration. Jamie told us that people are eager to collaborate and offer advice or expertise to NPower Seattle, giving her a resource base that doesn't exist for most consulting firms due to the competitiveness of the industry. Having a mission for the greater good bypasses that competition and many people are then willing to collaborate.

Agile Information Systems - New Book - Prof. Desouza

My new book, Agile Information Systems, is going to be released shortly. This book presents cutting-edge research and thinking on agile information systems. The concept of agile information systems has gained strength over the last 3 years, coming into the MIS world from manufacturing, where agile manufacturing systems has been an important concept for several years now. The idea of agility is powerful: with competition so fierce today and the speed of business so fast, a company’s ability to move with their customers and support constant changing business needs is more important than ever. Agile information systems: have the ability to add, remove, modify, or extend functionalities with minimal penalties in terms of time, cost, and effort have the ability to process information in a flexible manner have the ability to accommodate and adjust to the changing needs of the end-users. This is the first book to bring together academic experts, researchers, and practitioners to discuss how companies can create and deploy agile information systems. Contributors are well-regarded academics known to be on the cutting-edge of their fields.

I have organized the chapters under three categories: discussion of the concept of agile information systems (i.e. defining agile information management, its attributes, antecedents, consequences, etc.) discussion of information systems within the context of agility (i.e., descriptions of agile information systems and their attributes, how to build agile information systems, etc.) discussion of organizational management issues in the context of agile information systems (i.e., how to prepare the organization for agile information systems, management of agile information systems for improved organizational performance, etc.)

Here are two reviews:

"In today's information intensive global economy, large organizations face a wealth of challenges as they wrestle with resolving the tensions between coordinating globally and responding locally. As a result, a prime consideration of major enterprises is to find an organizational design that enables them to accommodate these joint goals. Not surprisingly, given the volume of information that organizations need to process to synchronize globally and react locally, information systems play a key role in enabling pursuit of this dual goal. The acceleration of the shifting plates of social, economic, political, and competitive forces magnifies the need for effective information systems. Thus, the search for organizational agility is intricately linked to and highly dependent on an enterprises ability to build agile information systems that support nimble managers and employees in adapting to and foreseeing changing circumstances Humans are the critical success factor of agility. No organizational design or information system can overcome rigid, closed thinking. The agile mind is the determining driver. This book is food for nurturing an agile mind. It stimulates thinking about agility and galvanizes the neurons that need to be engaged to build agile organizations and information systems."
--Richard T. Watson, J. Rex Fuqua Distinguished Chair for Internet Strategy, Director, Center for Information System Leadership, Terry College of Business, University of Georgia

"This book makes an explosive break from the past. It takes you from the Old World to the New World; from the clanking Industrial Age of the mid-50s to the New Age and 21st Century; from adaptive response to preemptive initiatives. You know about "just in time" inventory control, yes? This book develops the idea of "agile information organizations" doing just in time strategy and organizing. Agile organizing means just in time: sensing of signals from the environment; data and information processing; mobilization of resources; learning; doing all of this in quick time with minimal cost and effort. This kind of thinking and organizing allows firms to switch from adapting post-hoc to their changing environment to preemptive changes that put them in the driver's seat of industry evolution. It's about getting there first rather than following along behind. Collectively, its 20 chapters uncover drastic changes facing managers: Information is fleeting and emergent. Databases are obsolete. Work has shifted from stable routines to ephemeral global complexity. Basic artifacts of technology are open source and distributed between firm and customers.

Managers and researchers are used to a world of dinosaurs. No more! This book pulls them into a world of socioeconomic viruses and bacteria fast changing, hard to grab hold of, and dangerous if ignored. This change is fundamental, profound, and upon us. Desouza's is the best book on fast moving organizing that I have seen."
-- Bill McKelvey, Professor of Strategic Organizing, Anderson Graduate School of Management, University of California at Los Angeles

Here is a partial list of the distinguished scholars that have authored chapters in the book -
• Robert D. Galliers, Bentley College
• William B. Rouse, Georgia Tech
• William E. Halal, George Washington University
• Anders Martensson, Stockholm School of Economics
• Eric van Heck, Rotterdam School of Management
• Philip Yetton, Australian Graduate School of Management
• John G Mooney, Pepperdine University
• Silvia Gherardi , Università di Trento
• Gabriele Piccoli, Cornell University
• Sue Newell, Bentley College
• Carsten Sorensen, London School of Economics
• Omar El Sawy, University of Southern California
• Mark E. Nissen, Naval Postgraduate School
• Brian Fitzgerald, University of Limerick

For more details, please see - Elsevier

Contingent Workers as Agents of Innovation

Almost all organizations employ contingent workers. These employees are hired to supplement the workforce of the organization. In most cases, these workers have specialized skills that are needed by the organization. In other cases, contingent workers are hired to manage the variable workload that might arise during peak operational times. In the past, most organizations viewed their contingent workers through an operational lens. Seldom were these workers looked upon as sources of innovation. The exception to this was when organizations hired academicians or management consultants for strategic briefing and consulting engagements.

Today, organizations have realized that they must look at contingent workers as sources of innovation (Desouza and Awazu, 2005a, 2005b). Contingent workers bring in fresh ideas, novel thoughts, new processes, and new mental models into the organization. Their creativeness and domain knowledge are almost impossible for organizations to build internally with limited amount of time and resources. Matusik and Hill (1998) studied the impact of contingent works on the competitive advantage via dissemination and creation of various types of knowledge. Nesheim (2003) extended the work of Matusik and Hill (1998). Nesheim (2003) conducted a survey of 26 Norwegian firms in computer services and found that firms operating in dynamic environments are utilizing external work arrangements on purpose for enhancing innovation activities.

Here are some of points that organizations need to consider when utilizing contingent workers.

1. Hire contingent workers to take advantage of their unique knowledge and skill sets. In order to do this, have a sense of where would you like to employ them in the innovation process (e.g. are they going to help in the generation of ideas or may be commercialization aspects?).

2. Balance between established sources of contingent workers to the newly emerging sources. Too often, organizations restrict themselves to consultants from the brand-name firms, this thinking is dangerous. Newer firms can be as good, if not better, sources for cutting-edge ideas. These firms may not have the track record, but this should not be used as an indicator of the quality of ideas.

3. Contingent workers, in many cases, especially when it comes to high-end knowledge work, serve multiple clients at a given time. The organization must be certain that adequate knowledge protection capabilities are in place to prevent knowledge from leaving the organization and being used elsewhere. Often, preventive measures call for excellent legal contracts and work assignment documents being prepared that demand adherence to tight security policies. As a rule, it may be best that contingent workers not be used in highly sensitive areas. In cases where an organization sees a need for contingent workers in these areas, it may want to think about hiring employees of the required caliber into the mainstream of the organization.

4. Knowledge hostility issues between contingent workers and the traditional workforce of the organization should not be ignored. The internal employees may demonstrate hostility towards the contingent workers due to the fear of job loss and envy of higher pay for the same work. These issues need to be managed, especially when the contingent workers are actually doing work for less. It is interesting to note that, in our experience, workers are less likely to get agitated when contingent workers are paid more than they are, than when they are paid less. The reason is economic threat –– paying external workers less indicates that their salary could be proportionately lowered or they could be out of a job, while paying more indicates that the organization is paying a premium for the external knowledge. Workers feel this works to their advantage –– they have an opportunity to pick up such knowledge and improve their position in the organization.

References
Desouza, K.C., Awazu, Y., and Jasimuddin, S. (2005a) “Utilizing External Sources of Knowledge,” KM Review, 8 (1), 16-19.
Desouza, K.C., and Awazu, Y. (2005b). Engaged Knowledge Management: Engagement with New Realities, Hampshire, United Kingdom: Palgrave Macmillan.
Matusik, S.F. and Hill, C.W.L. (1998). “The Utilization of Contingent Work, Knowledge Creation and Competitive Advantage,” Academy of Management Review, 23 (1), 680–697.
Nesheim, T. (2003). “Using External Work Arrangement in Core Value-creation Areas,” European Management Journal, 21 (4), 528-537.

[Summary Posted by: Yukika and Kevin]

New Team Member – Sridhar Papagari

Sridhar Papagari will also be joining us on this project. Sridhar is completing his doctoral studies at the University of Illinois at Chicago at the Department of Information & Decision Sciences. His research interests are in innovation, e-health strategies, and information systems.

New Team Member - Prof. Jeff Kim

Prof. Jeff Kim will be joining us on this project. Jeff is a fellow faculty member at The Information School, University of Washington.
"Professor Kim’s research focuses on the organizational changes and information technologies in knowledge-intensive firms. His research investigates the ongoing relationship among information technologies, work practices, and organizational structure. He has conducted field studies on the role of technology in the collaboration and knowledge sharing practices of engineers in the semiconductor and aerospace industries. Currently, he is examining the social and technological aspects of information sharing across team and organizational boundaries in the biotechnology industry. Professor Kim earned his BS from Seoul National University and his MS from the University of California, Riverside. He received a PhD in Information and Computer Science from the University of California, Irvine." [Source: http://www.ischool.washington.edu/people]

Opening up Innovation through Information-Communication Technologies

Information Communication Technologies (ICTs) are no longer just for internal use. Rather, in the era of open and distributed innovation ICTs must be leveraged by businesses and organizations to reach, record and review ideas from internal and external sources ranging from vendors, suppliers, customers and employees. Interacting with all stakeholders improves the quality and consistency of ideas. ICTs enable that process at all levels through inclusion and interaction. We have just completed a paper that explores specific ways that ICTs can be used to enable the entire innovation process: from idea generation and development, to experimenting and testing, and finally, to commercialization of ideas.

In particular, ICTs enable management of sources of ideas, documentation of idea histories, distribution and sharing of ideas, market targeting and organic idea development. Successful practitioner examples and specific technologies are discussed in context to outline opportunities and trends in the new era of open, distributed, ICT-enabled innovation. The emerging trend of distributed and open innovation illustrates that customers and users are no longer passively waiting for products. Widely connected, interactive and collaborative practice of innovation will provide a competitive edge to the corporations that carefully select and deploy ICT strategies.

This paper is available at no charge to the sponsors of the study. Please contact Prof. Kevin C. Desouza for a copy of the papers. The citation for the paper is:

Awazu, Y., Baloh, P., Desouza, K.C., Wecht, C.H., Kim, J., and Jha, S. “Opening up Innovation through Information-Communication Technologies,” Working Paper: Institute for Innovation in Information Management, The Information School, University of Washington, July, 2006.

Improvise or perish

Organizations cannot stay at the same level of skills and competencies. They need to ceaselessly learn, create knowledge, and innovate processes, products, and services to stay ahead of competitors. This is true much more now than ever before, with firms competing with local and global players. Hammonds (2003) has profiled the changing structure of global competition through a case study of Wipro Ltd., an Indian IT services firm.

Wipro, till recently, was primarily in the business of “writing software, integrating back-office solutions, designing semiconductors, debugging applications, taking orders, and fielding help calls”, for companies around the world. Since last few years, it has been facing stiff competition from companies in Banglore, where Wipro is based, and around the globe which can do low-value IT services for a pittance, i.e. compete on cost and provide equally good services. Wipro has no choice but to move up the service chain. It is aspiring to move to the “high-value services such as consulting, integration, and architecture” and poses threat to the business of established IT consultants like Accenture or EDS in the US.

As we see in the above example, global competition restructures the industry. New, mean, and hungry companies are born every day and incumbents cannot maintain their growth and profitability competing on cost alone. Organizations which fail to innovate and improvise, scale up their processes, products, or services go out of business, as newly born companies take over their businesses. Same fate will befall these new organizations if they fail to learn from their predecessors mistakes. Organizational improvisation is the mantra to break out of this loop of birth and death of organizations. One must not be mistaken, this loop was always there, however, the cycle of the loop has shortened due to globalization.

Cunha et. Al. (1999) define organizational improvisation as the “conception of action as it unfolds, drawing on available material, cognitive, affective and social resources”. The authors stress that improvisation is deliberate and result of a action(s), employing the resources available to the firm. The definitions of resources are as below:

Material resources: General category encompassing outside the individual and the organizational social system. E.g. information systems, financial resources.
Cognitive Resources: Set of mental models held by the individual members in the organization.
Affective Resources: improvisers emotional state
Social Resources: Social structures present among members performing improvisation.

In sum, organizations need to improvise in the wake of increasingly intense competition. They need to employ all resources, especially their employees, business partners, and customers, in their continual quest for organizational improvisation. Remember, organizational improvisation is deliberate and does not happen by chance.

Sources:
Cunha, M. P., Cunha, J. V., and Kamoche, K. (1999). Organizational Improvisation: What, When, How, and Why. International Journal of Management Review. September, 1999

Hammonds, K. H. (2003). The New Face of Global Competition. Fast Company, Feb, 67, 90-97.

Innovating with rather than for customers

Managing the knowledge an organization receives, shares, and even creates with its customers is salient for sustaining a viable innovation process. Organizations have moved from innovating for customers to innovating with customers (Desouza and Awazu, 2004a, 2004b, 2005). ICTs have played a major role in enabling organizations to better connect with their customers. For example, through the use of data mining algorithms it is possible to study how products and services are being utilized by customers. Latent trends in the marketplace can be uncovered. The use of ICTs has also fostered the development of customer communities. Firms, such as Lilly CCE, have created online communities for their customers to interact with each other in order for them to share knowledge (Erat et al., Forthcoming). In previous research (Desouza and Awazu, 2004a, 2004b, 2005) we identified that organizations need to manage three types of knowledge from customers:

Knowledge about customers: Knowledge about customers mainly consists of the demographic, psychographic, and other indicators that provide the organization with an understanding of who are the customers, what do they like, what is their spending propensity, etc. This knowledge is used to help organizations better target products and services.

Knowledge to support customers: Think customer call centers or virtual help desks! As customers interact with the products and services they might have knowledge needs that need to be addressed, for e.g. how to use a particular feature, why isn’t the product being installed, how to file a complaint, etc. Knowledge use to support customer interactions with the products and services is normally of an operational and procedural nature. Organizations need to leverage each interaction with their customers in order to understand areas for future product developments, service enhancements, etc. In another research study (Jha, Papagari, Desouza, Seo, and Ye, 2006) we examined how handling of customer interactions during the complaint management process can impact one’s intention to repurchase.

Knowledge from the customers: SPSS, among other companies, have begun to host customer workshops, where they bring in the super users of their products and learn from them. Some organizations have product research centers where they monitor subjects as they interact with products and services, so that they can learn from them. It is absolutely essential that an organization tap into knowledge from customers so that they can begin to co-create value with their customers. For example, some software development firms purchase add-ons, scripts, and other artifacts that are created by their customers during the course of using their products. These artifacts are then introduced in future versions of the products and services.

[Summary prepared by: Kevin, Sanjeev, and Yukika]

Coppa del mondo - Campioni Azzuri!!!

Coppa del mondo - Campioni Azzuri!!!...

Managers of innovation projects can learn a lot from the game of football. For one, managers can only prepare and train their employees to be innovative; however they cannot lead the innovation program. Once the whistle blows, it is up to the players on the field to decide how to be innovative! The leadership for innovation falls on the shoulder of every player and in certain respects on the team captain. Second, as witnessed by the championship game, you can only plan for so much. The emergent complexities on the field need to be addressed as they occur. Hence, it is always more important to instill sound principles and values, rather than to train for every possible situation that might occur. Fourth, agility and stamina are critical ingredients in building a sound innovation program. Finally, victories are sweet, especially when they come at the most opportune time.

But most of all, managers who want to be innovative need to embrace hobbies so that they can distract themselves from the daily work and embrace new sources of creativity…For me, it is the game of Football (or Futbol)…Cheers!

Foreign Knowledge

New knowledge opportunities (and following that growth and innovativeness) exist when combining knowledge across domains. This recombination view of existing physical and conceptual resources dates back to the work of Schumpeter (1934). Thus, organizations are encouraged to tap into foreign and different technological knowledge in order to create breakthrough innovation. However, absorptive capacity of a company (Cohen & Levinthal, 1990) limits the assimilation of distant knowledge.

An interesting study by Phene, Fladmoe-Lindquist & Marsh (2006) looked at how geographical or/and technological distance affects chances of breakthrough innovations. Knowledge takes on specific national characteristics due to various institutional factors, culture, technological development, demand and supply conditions, scientific, technological and regulatory environments. Knowledge outside existing technological boundaries may help firms overcome the competency traps (Levinthal & March, 1993) and lead to breakthrough innovation.

Findings, even though based on US biotechnology industry, offer interesting words of advice to managers on crafting a strategy that selects external knowledge inputs based on their geographic and technological context:

1) Technologically distant knowledge has a significant impact on breakthrough innovation only when coming from the same national context; however, the effect is curvilinear, therefore choice of external technologies should be made selectively and cautiously.

2) Breakthrough innovation is likely to occur when technologically proximate knowledge is used in international (geographically distant) context.

3) Tapping into technologically and geographically distant knowledge simultaneously is unlikely to yield breakthrough innovation results, as due to distances on both dimensions, difficulties are likely to appear in its acquisition and especially absorption.

4) Absorptive capacity limitation is significantly reduced in case of multinational corporations (MCNs) that have national subsidiaries embedded in local environments; tapping into both technologically and geographically distant knowledge is for MCNs thus less difficult (as “international” knowledge is almost “national”).

SOURCES:
Cohen, W. M., & Levinthal, D. A. (1990). Absorptive Capacity: A New Perspective On Learning And Innovation. Administrative Science Quarterly, 35(1), 128-153.

Levinthal, D. A., & March, J. G. (1993). The myopia of learning. Strategic management journal, 14(Winter), 95-112.

Phene, A., Fladmoe-Lindquist, K., & Marsh, L. (2006). Breakthrough Innovations in the US Biotechnology Industry: The Effects of Technological Space and Geographic Origin. Strategic Management Journal, 27(4), 369-388.

Schumpeter, J. A. (1934). The theory of economic development : an inquiry into profits, capital, credit, interest, and the business cycle. Cambridge, Mass.: Harvard U.P.

[Summary Prepared by: Pete]

Why knowledge management projects get abandoned and why shouldn’t they?

Today, creation and utilization of knowledge drive business performance. No other asset is perceived to be as valuable, imperfectly imitable, rare among competitors, with no strategically equivalent substitutes as organizational knowledge (Kogut & Zander, 1992; Nonaka & Takeuchi, 1995; von Krogh & Roos, 1995). Studies have shown that successful creation and utilization of new knowledge improve decision making, accelerate learning, improve innovation assimilation, increase productivity and minimize reinvention and duplication (see e.g. Wing & Chua, 2005). However, organizations differ in their innovation absorptive capacity: improved skills and abilities of acquiring facts, learning, imbibing knowledge, understanding, exploiting existing knowledge and creating new knowledge. The greater the innovation absorptive capacity the faster and more successful can be the innovation assimilation in a firm.

With increased global competition, companies need to innovate continuously by introducing new products, processes, or new ways of working. Their agility in doing that depend a lot on how successfully they implement knowledge management (KM) practices. According to the 2005 and 2006 Global Most Admired Knowledge Enterprises (MAKE) reports (Teleos, 2005; Teleos, 2006), benefits of KM have been substantial. Companies dedicated to growth through innovation and managing enterprise knowledge created intellectual capital and shareholder value twice as fast as their competitors - for the ten-year period 1995-2005, the total return to shareholders for the NYSE/NASDAQ-traded 2006 Global MAKE Winners was 24.2% - over twice the average of the Fortune 500 company median. Profits as a percentage of revenues (Return on Revenues) for the publicly traded 2005 Global MAKE Winners was 10.8%, compared to the Global Fortune 500 company median of 4.3%. Being valued at US $293.6 billion, the 2005 Global MAKE winners also rank high in brand value with 13 out of the top 100.

Consequently, organizations (firms and governments) invest heavily in KM initiatives with hope to improve existing knowledge utilization and new knowledge creation (INPUT, 2006; Wing & Chua, 2005). However all too often, many KM projects get abandoned as companies do not know how to go about them or do not deliver what had been promised (Chua & Lam, 2005; Davenport & Glaser, 2002; Desouza & Awazu, 2005; Stewart, 2002; Wing & Chua, 2005). It is important, therefore, to understand the causes of KM projects abandonment to improve management of risks associated with KM projects.

Wing & Chua (2005) explored root causes for KM projects abandonment and came up with three main categories of causes: poor project implementation, organizational mismatch and content deficiencies. The “poor project implementation” category comprised underestimated complexity of KM projects, shortfall of expertise, and lack of project support. These factors led to excessive technology costs and project delays. The “Organizational mismatch” occurred when KM project were not well-aligned to existing organizational structures and roles. This category comprised techno bias (relying on IT only), weak business case (without significant benefits), lack of clear KM requirements, lack of KM measurement, technology mismatch, conflict with stakeholders and lack of user involvement. Finally, issues related with the third category, content deficiency, pertains to the core of KM projects: creation, transfer, and access of knowledge. Here, lack of technological scalability, poor tools usability or reliability, knowledge camouflage (when knowledge is difficult to get to or is non-digestible), knowledge hoarding, and out-of date knowledge, lead to content deficiencies. These issues span across areas of technology (e.g. poor knowledge access), process (e.g. out of date knowledge) and culture (e.g. hoarding) and are “unique” when comparing KM projects to generic projects.

Organizations need to be aware of the above issues and manage the risks accordingly. Common practices include: having a formal KM requirements document “ticked” by the users, iteratively designing a process, and/or build prototypes of KMSs, document and get to know knowledge needs in the firm in the given context. As actual implementation of the knowledge management can be seen as diffusion and implementation of process innovation, the above findings can be complemented with the findings from (Sherif & Menon, 2004). First, senior managers may develop administrative guidelines, allocate resources, define the scope of change, appoint the change agent who fosters the adoption of the innovation throughout the organization, and develop education and training programmes. Second, middle and project managers may need to develop the methods for implementing new processes, creating scales for progress measurement. Third, the operational staffs may need to be able to create new knowledge and exploit existing knowledge. Future research may attempt to build a comprehensive model of KM implementation failures linking other areas of concern, e.g. innovation absorptive capacity (Sherif & Menon, 2004).

SOURCES:
Chua, A., & Lam, W. (2005). Why KM projects fail: A multi-case analysis. Journal of Knowledge Management, 9(3), 6-17.

Davenport, T., & Glaser, J. (2002). Just-in-Time Delivery Comes to Knowledge Management. Harvard Business Review, 80(7), 5-9.

Desouza, K. C., & Awazu, Y. (2005). Engaged knowledge management : engagement with new realities. Basingstoke: Palgrave Macmillan.

INPUT. (2006). INPUT Predicts Federal Knowledge Management Spending Will Reach $1.3 Billion by FY10. Retrieved 07.07.2006, from LINK. Last updated 27.06.2006.

Kogut, B., & Zander, U. (1992). Knowledge of the firm, combinative capabilities, and the replication of technology. Organization Science: A Journal of the Institute of Management Sciences, 3(3), 383-397.

Nonaka, I., & Takeuchi, H. (1995). The knowledge-creating company : how Japanese companies create the dynamics of innovation. New York ; Oxford: Oxford University Press.

Sherif, K., & Menon, N. M. (2004). Managing Technology and Administration Innovations: Four Case Studies on Software Reuse. Journal of the Association for Information Systems, 5(7), 247-281.

Stewart, T. A. (2002). The Case Against Knowledge Management. Business 2.0, 3(1), 80.

Teleos. (2005). 2005 Global Most Admired Knowledge Enterprises (MAKE) Report. Executive Summary. Retrieved 09.11.2005, from LINK. Last updated 08.11.2005.

Teleos. (2006). 2006 Global Most Admired Knowledge Enterprises (MAKE) Report. Executive Summary. Retrieved 07.07.2006, from LINK. Last updated 27.06.2006.

von Krogh, G., & Roos, J. (1995). A perspective on knowledge, competence and strategy. Personnel Review, 24(3), 56.

Wing, L., & Chua, A. (2005). Knowledge Management Project Abandonment: An Exploratory Examination of Root Causes. Communications of AIS, 2005(16), 723-743.

[Summary Prepared by: Pete and Sanjeev]

Injecting knowledge management practices in the innovation process

To face new work challenges efficiently and effectively in evermore competitive environment, employees need
- to have access to information needed for performing their jobs
- to be able and motivated to use existing knowledge residing in coworkers, organizational routines etc.,
- to be able and motivated to create new knowledge,
- to store and share that knowledge throughout the organization where it is needed.

Driven by the realization that people and organizational know-how represents a strategic asset that can be leveraged for competitive advantage, the practice of knowledge management has become pervasive and ubiquitous across business environments. With the purpose of improving the organization’s efficiency and effectiveness through better decisions, organizations have started to consciously plan, organize, actuate and control activities that instigate utilization of existing knowledge and new knowledge creation which is needed in current and future decision making activities.

However, even though there is abundance of management interventions that are being introduced as knowledge management initiatives (i.e. measuring intellectual capital, building intranets, fostering collaboration in communities of practice, leading training programs, installing groupware…), many KM projects get abandoned as they do not deliver what has been promised (Chua & Lam, 2005; Davenport & Glaser, 2002; Stewart, 2002; Wing & Chua, 2005, Desouza and Awazu, 2005).

A growing realization is that companies reporting successful KM practices are the ones that inject knowledge management practices directly into business processes (Davenport & Glaser, 2002; Seeley, 2002; Desouza and Awazu, 2005). Namely, employees need to interact with organizational knowledge during their work assignments. The tasks conducted by a member of the R&D lab of your organization will differ from the work being conducted by a production engineer or the marketing analyst, or even the secretary. Following that, how and which existing knowledge is (could be) utilized and how new knowledge is (could be) created, depends on the work-context.

Smith & McKeen (2004) examined how different organizations have injected knowledge practices in business processes and, combining field research with previous literature findings, suggested a framework for doing that.

Consider a case of a company who brought knowledge management practices to its sales process. The firm redesigned the information system used by the sales managers and account representatives to accommodate their knowledge needs: account reps had been interested in trends and sales data for a particular customer and sales managers wanted to have composite information at hand. The system also dynamically linked people that were connected with particular customers, so they were able to socially construct new knowledge in person (Smith & McKeen, 2004).

Smith and McKeen (2004) suggest that injecting KM practices in business practice involves the following steps:
1) Focus on core business processes
2) Start with process redesign: IT/IS and KM specialists need both to understand capabilities and possibilities of “the other” side and understand how business process itself
3) Add KM to the process: organize and package codified and reusable knowledge, formalize common practices (i.e. of knowledge sharing), identify links to tacit knowledge.
4) Perform contextual analysis where knowledge from the process is looked at from a higher level or organization: where can that knowledge (or new knowledge, based on existing) also be used or repurposed?
5) Maintain and improve KM practices constantly.

How do these finding affect the context of our project?
Innovation itself is a process, too. In each of the innovation stages, generation, advocacy and screening, experimentation, diffusion and implementation, there is abundance of opportunities – or rather, needs - for injecting knowledge management practices. To foster innovation process successfully, companies need not only to be aware of the process’ stages and critical issues within those stages, but also consciously think of, develop and implement appropriate KM interventions. Only then will existing knowledge be able to get utilized and new knowledge will be able to get created, leading to more efficient and effective realization of each of the innovation stages.

SOURCES:
Chua, A., & Lam, W. (2005). Why KM projects fail: A multi-case analysis. Journal of Knowledge Management, 9(3), 6-17.

Davenport, T., & Glaser, J. (2002). Just-in-Time Delivery Comes to Knowledge Management. Harvard Business Review, 80(7), 5-9.

Seeley, C. (2002). Igniting Knowledge in your Business Processes. KM Review, 5(4), 12-15.

Desouza, K.C. & Awazu, Y. (2005). Engaged Knowledge Management: Engagement with New Realities, Hampshire, United Kingdom: Palgrave Macmillan.

Smith, H. A., & McKeen, J. D. (2004). Developments in Practice XII: Knowledge-enabling Business Processes. Communications of AIS, 2004(13), 25-38.

Stewart, T. A. (2002). The Case Against Knowledge Management. Business 2.0, 3(1), 80.

Wing, L., & Chua, A. (2005). Knowledge Management Project Abandonment: An Exploratory Examination of Root Causes. Communications of AIS, 2005(16), 723-743.

[Summary Prepared by: Pete]

Stages of Innovation Diffusion

Innovation can mean a new product or service, or a change in organization or process, and it is necessarily connected with usefulness, either for external or internal parties. For example, innovation can be a new product/service that satisfies customers’ needs better. Innovation, as Damanpour (1987) suggests, can also be an idea that gets implemented and it preserves or improves organizational performance. However, both new products and new ways of working need to be adopted by customers, business partners, or employees.

In the area of new products, several diffusion models have been proposed that explain how, why and when customers choose to adopt an innovation. Everett Rogers (Rogers, 1962) recognized that there were 5 distinct groups of adopters, from innovators and early adopters through early and late majority to laggards. Combining these findings with understanding the product life cycle, marketers are able to develop appropriate marketing mix strategies (price, promotion, product, placement, process…) which help in accelerating innovation diffusion.

Innovating in firms is accompanied by a need to change. In order to adopt a new process, firm has to successfully utilize technological and process capabilities. This “assimilation” of process innovation (Armstrong & Sambamurthy, 1999) presents an organizational change and is thus natural subject to inertia. As noted by Sherif & Menon (2004), accelerating and succeeding in innovation assimilation in firms, requires actors at different organizational levels to implement strategy, process and culture changes. As innovation moves through assimilation stages of initiation, adoption, adaptation, acceptance, routinization and infusion (Cooper & Zmud, 1990), all organizational actors (senior managers, middle / project managers, operational staff) are involved in the change process.

It is however organization’s and their innovation absorptive capacity which defines organization’s readiness for learning (Cohen & Levinthal, 1990; Zahra & George, 2002), meaning in the innovation assimilation case, how long will it take and if it will be successful or not (Sherif & Menon, 2004).

In the initiation and adoption phases, acquisition of facts and learning skills are is especially relevant. In adoption and adaptation phases, imbibing knowledge and skill of understanding is important. Using knowledge is crucial in adaptation, acceptance and routinization phases. Lastly, exploitation of knowledge and new knowledge creation relate to the routinization and infusion phases of innovation assimilation (Sherif & Menon, 2004; Zahra & George, 2002).

For improving innovation absorptive capacity, Sherif & Menon (2004) argue that all organizational actors must be engaged, though, it is crucial that appropriate interventions are taken in each of the innovation assimilation stages.

Senior managers need to provide strategy change: develop administrative guidelines, allocate resources, define the scope of change, appoint the change agent who fosters the adoption of the innovation through the organization, and develop education and training programmes, if innovation is to move quickly through assimilation stages. Senior managers need to focus on the acquisition dimension of absorptive capacity (i.e learning in terms of environmental scanning). Middle and project managers are the ones that need to enact in process change: develop the methods for implementing new processes, creating scales for progress measurement. They are the ones that understand, convert and internalize innovation. Operational staff needs to be able to exploit existing and create new knowledge. For innovation to be routinized and infused in every day working practices, a culture change must occur. New attitude and behavioural stances are to be adopted, employees must be ready to change (Leonard-Barton & Deschamps, 1988).

To summarize, changes in strategy, process and culture must accompany innovation assimilation. Actors on various organizational levels are responsible for making these changes happen, resulting in faster and in more successful innovation assimilation in a firm.

SOURCES:

Armstrong, C. P., & Sambamurthy, V. (1999). Information technology assimilation in firms: The influence of senior leadership and IT infrastructures. Information Systems Research, 10(4), 304-327.

Cohen, W. M., & Levinthal, D. A. (1990). Absorptive Capacity: A New Perspective On Learning And Innovation. Administrative Science Quarterly, 35(1), 128-153.

Cooper, R. B., & Zmud, R. W. (1990). Information Technology Implementation Research: A Technological Diffusion Approach. Management Science, 36(2), 123-140.

Damanpour, F. (1987). The Adoption Of Technological, Administrative, And Ancillary Innovations: Impact of Organizational Factors. Journal of Management, 13(4), 675-688.

Leonard-Barton, D., & Deschamps, I. (1988). Managerial Influence in the Implementation of New Technology. Management Science, 34(10), 1252-1266.

Rogers, E. M. (1962). Diffusion of innovations. New York: Free Press of Glencoe ; London : Macmillan.

Sherif, K., & Menon, N. M. (2004). Managing Technology and Administration Innovations: Four Case Studies on Software Reuse. Journal of the Association for Information Systems, 5(7), 247-281.

Slevin, D. (1971). The Innovation Boundary: A Specific Model and Some Empirical Results. Administrative Science Quarterly, 16, 515-531.

Zahra, S. A., & George, G. (2002). Absorptive Capacity: A Review, Reconceptualization, and Extension. Academy Of Management Review, 27(2), 185-203.

[Summary Prepared by: Pete]

Definition of Innovation

What is meant by the term innovation? According to Slevin, D. (“The Innovation Boundary: A Specific Model and Some Empirical Results,” Administrative Science Quarterly, 16, 1971, 515-531) – “innovation is defined as occurring whenever an individual tries something new, for example, chooses a strategy that he has not used before. This definition may appear to be too general, but the implementation of any major innovation in an organization can be accomplished only by large numbers of individuals trying things they have not tried before” (pg. 515). Innovations as noted by Damanpour and Evan (pg. 393) can be considered to be “responses to environmental changes or means of brining about change in an organization” (Damanpour, F., and Evan, W.M. “Organizational Innovation and Performance: The Problem of “Organizational Lag”, Administrative Science Quarterly, 29 (3), 1984, 392-409).