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).

Typologies of Innovation - Part I

The study of organizational innovation is not new. Actually, one should not be surprised by the fact that some of the best writing on the topic of innovation dates back to the early 1970s, if not earlier. Consider the paper, “Conceptual Issues in the Study of Innovation” by George W. Downs and Lawrence B. Mohr (Administrative Science Quarterly, 21 (4), 1976, 700-714). This paper discusses a rather salient issue – why is the extant literature point us to findings that are instable (i.e. factors found significant in one study are found insignificant in another – empirical discrepancies). The authors note, “Innovation has emerged over the last decade as possibly the most fashionable of social science areas…the study of innovation has not been confined to any single discipline but is being explored in fields as diverse as anthropology and economics. This popularity is not surprising. The investigations by innovation research of salient behavior of individuals, organizations, and polities can have significant social consequences”. Among the many concerns noted by the authors, the one that is of interest of us is the lack of clearly defined or standardized typologies of innovation. As we continue to read articles from the various academic and practitioner journals we continue to see a wide assortment of typologies of innovation. Some authors, use the primary attributes of the innovation to arrive at types (Downs and Mohr, 1976) – cost of the innovation (high or low), communicability (simple innovation or complicated innovation). Others, use secondary characteristics (i.e. the organization in which the innovation is contextualized) to arrive at typologies. So for example, the cost of innovation, high or low, would depend on the type of organization that is considering adopting or developing the innovation. For a large organization, a given cost figure could be low, while for a smaller organization, the same cost figure could be high. Examples of innovation typologies that use the secondary characteristics include: routine or radical, major versus minor, etc.

In this research project, we will have to propose a typology for the study of innovations, hopefully we will propose one that is comprehensive yet cogent….

How do you develop an innovation network?

Innovation networks are hard to define and present in multiple forms (e.g. instantiations of communities of practice, collaborative alliances between organizations, etc) and at multiple levels (individual, group (or team), organization, and inter-organizational). Moreover, the networks can involve a homogenous or heterogonous set of partners and may have different kinds of governance. Since innovation networks are often partnerships without firm hierarchies or well-understood methods of interaction, they often must be created and maintained without relying on familiar structures. However, regardless of the type of innovation network one is building there are a few good practices that one should consider.

The paper “Orchestrating Innovation Networks,” by Dhanaraj, C. and Parkhe A., (Academy of Management Review, 2006, 31 (3), 659-669) offers an interesting view of how to operate and sustain innovation networks. First, they define a "hub" organization as one that is key for reasons of size, reputability, trust, market dominance or other factors. They assert that there is always at least one hub organization, which sets the tone and orchestrates the network without the benefit of formal authority.

The authors examine the issues of innovation networks at the inter-organizational level (i.e. how do multiple organizations engage in a network structure). By examining collaboration among organizations, the authors go well beyond the simple dyadic form of alliances, and also push the readers to think beyond the social networking type studies. In this paper, the authors assume that network members (organizations) actively seek their interests and claim that there are hub firms that take lead roles by orchestrating a series of network activities that contribute to produce innovations. The hub firms use their power and status to effectively and efficiently engage the resources and capabilities of network members.

The hub firm is responsible for three network management activities: knowledge mobility, innovation appropriability, and network stability. Mobilizing knowledge is an important task, since knowledge is the key asset. Knowledge mobilization is the series of activities of acquiring, sharing, and deploying knowledge between the network members. It is important for maximizing innovatory output, since specialized knowledge needs to be unlocked from organizational boundaries and transferred across the network. Next, the hub firms engage in ensuring innovation appropriability(harvesting profits from the innovation). This involves protecting innovation from internal threats such as free-riding and outside threats such as competitors. The final task that successful hub firms engage in is ensuring network stability.

Innovation networks can be seen as loosely coupled networks, where members pursue their own self interest, which due to knowledge and technology domain overlap includes participating in the network. Hence, because of competitive pressures, networks may experience instability that may be caused by betrayal of trust among network members, loss of members - involved parties can stop collaborating with the hub firm or – even worse - engage with competing network. By supporting the three activities outlined above, hub firms can decrease the likelihood of such events. The authors develop a framework for how hub firms can conduct the orchestration process and offer propositions that explain the impact of orchestration on innovation outputs and interactions between network management activities.

One of the many outcomes of this research project will be to hopefully identify how to firms draw connections between the sources of ideas. One mechanism might well be the development of innovation networks at the individual, group, organizational, or even inter-organizational levels. Regardless of the level, the role of the hub (central connector or integrator) will be vital, as the choice of members affects the network membership and structure, on which the future success is dependent.. The three activities of the hub outlined in this paper are quite important…

[Summary Prepared by: Yukika, Caroline, Pete, and Kevin]

Innovation Driven Outsourcing

Cost driven outsourcing is passé. Hagel and Brown (see “What India and China Can Teach Us About Innovation.” , Optimize, 2005) argue that companies with global ambition must focus on innovation driven outsourcing. Authors contend that contrary to the widely held belief about India and China doing low end, routine jobs in IT services or manufacturing respectively, both countries have scaled up their outsourcing expertise, innovating business process and employing creativity in outsourcing core business process.

The authors identify three primary misconceptions about innovation for the above belief. First, business executives in general perceive innovation to be a new product or service that can be marketed. While, this undoubtedly is true, executives fail to understand the importance of innovating business processes. For example, say Dell finding an efficient way of cutting delivery time. Modest improvement in business processes may have a huge impact on the bottom line if these activities have to be done often.

Second, business executives are biased towards breakthrough or disruptive innovations and have low regard for rapid and incremental innovations. The reasons could be their misplaced belief of disruptive innovations to be inimitable and immensely profitable. While this may appear to be true, the authors reason that rapid and incremental innovations are difficult to copy and also bring sustained profitability. In support of their argument, the authors cite the example of Dell and Toyata, who fearlessly talk about their business processes, unworried about competitors catching up with their ceaseless incremental innovations.

Third, most of the executives have a very narrow, firm centric approach towards innovation, focusing on employees to be the only source of innovation. However, this perception is slowly changing with companies findings ways to collaborate with customers, business partners, and also people in general to generate ideas or solve business problems.

In light of the above, expansive meaning of innovation, the authors state that India and China have done immensely well in mastering distributed innovation by practicing rapid and incremental innovations. While China have mastered the art of open production, India is said to have honed their skills at open distribution. At the heart of open production and distribution is the splitting of business processes into independent modules, where performance or output is clearly specified and work on each module can be done independent of any other. Participants in this global process network are free to innovate their processes, so long as they meet the end specifications or performance. For example, say manufacturing process of a product has 10 modules. Business partners responsible for each module are free to experiment with their business processes so long as the output specifications are met.

This captures the essence of authors’ definition of innovation being not only disruptive product and services, but also about betterment in business processes. Further, business process innovations can be rapid and incremental, difficult to imitate too. Lastly, innovations does not have to organization centric, business partners should be co-opted in the innovation processes. The authors cite examples of Western companies waking up to this broader definition of innovation. Nike and Cisco are revamping their operations, deploying global process network to speed their innovation process through collaboration.

[Summary Prepared by: Sanjeev]

The Magic of Symbols

If you want to change culture, you need not only new archetypes for business, but the kind of gossip that will spread infectiously. Stories that emphasize the core of your business (whether that be scientists, social change or light bulbs) and yet emphasize that change and new ideas fit within the profit margins are keys to making organizations change. Who tells your stories how changes rate and type of change.
Research backs up this idea of the importance of stories. Communities of practice won't develop unless a "harmony of values" between business and employee interests is reached ("Transforming an Old Economy through Strategic Communities," Mitsuru Kodama, Long Range Planning, 2002 (35)) and one of the keys to internal collaboration seems to be making sure emerging networks are linked to "burning issues" in the company ("Building Knowledge-Creating Value Networks," Bettina Buchel & Steffen Raub, European Management Journal, 2002 (20, 6)). Context is vital to motivation. Company environment and company processes for innovation need to espouse the same values, and environment and process are clearly different things ("Innovation Alchemy," Michael Schrage, CIO, 2005). Change doesn't just happen; advocacy and consistent proseltyzing is how change is absorbed into corporate culture--which is one role of a CKO ("Implementing Knowledge Management: Three Strategies for Effective CKOs," Steffen Raub & Daniel von Wittich, European Management Journal, 2004).

Many articles about how to encourage innovation harp on values. But how do you manage values? How do you not just talk about objectives, but turn values into something employees internalize into tacit culture that changes interactions and processes throughout the business? Higgins and McAllaster (2002) suggest that stories and tangible cultural artifacts are the ways to effect cultural organizational change through easily-understood, significant symbols.

Story-telling isn't the first step towards organizational change. Higgins and McAllaster emphasize that first a strategic plan, objectives, resources and hiring need to be aligned with new organizational goals. But to diffuse that change through an organization into the daily activities of business, stories and cultural artifacts do the trick. Changing culture sounds (and is) daunting and nearly impossible to approach systematically. But Higgins and McAllaster know that cultural artifacts such as the layout of a building, the names of teams and myths told around the office reflect organizational culture. Since that's the existing strata of organizational artifacts, to effect change first a business must figure out what kinds of stories their employees tell around the water cooler.

Example: 3M and Post-Its. The employee who invented Post-It notes, Fry, developed the sticky notes to use in his church hymnal. Market research showed no interest in this product, but Fry gave them to secretaries until they were hooked by the new possibilities and eventually it was developed into a new product line.
Higgins and McAllaster break this story into the values supported by 3M: perseverance, openness to ideas, advocate for your own ideas, success is rewarded & stories promote corporate values (2002, p. 78).

Example: Yokogawa Electric Corporation & the Bullet Train. When a new corporate strategy was needed for the electric corporation, the CEO used the metaphor of the new, high speed bullet trains to emphasize that a quantum leap in strategy requires new technology, new modes of thinking and new ways of laying the groundwork. Just as a bullet train needs a different kind of engine than a traditional train, straight, wide tracks and a new design, corporate strategy change requires that the groundwork, engine and design of the company change together.
Higgins and McAllaster emphasize that Yokogawa succeeds with this metaphor because a new "richness" is added, that "transcends the words themselves."

For more details, stay tuned to our reports from the research project...

SOURCE: "Want Innovation? Then Use Cultural Artifacts that support it." (2002) James Higgins & Craig McAllaster. Organizational Dynamics 31(1), p. 74-84.

[Summary Prepared by: Caroline]