Leveraging Ideas for Organizational Innovation

Crafting Organizational Innovation Processes: Innovation: Management, Policy & Practice

2009-02-07T06:41:00.001-08:00

We have a new paper accepted for publication. This paper represents the core artifact from the Ideas4Innovation (i4i) research project which was funded by the Institute for Innovation in Information Management (I3M) at the University of Washington

Crafting Organizational Innovation Processes

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 of over 30 US and European companies that have robust innovation processes, this paper breaks down the innovation process into discrete stages: idea generation and mobilization, screening and advocacy, experimentation, commercialization, and 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 success around innovation are discussed for each stage. Successful 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.

Authors: Kevin C. Desouza, Caroline Dombrowski, Yukika Awazu, Peter Baloh, Sridhar Papagari, Sanjeev Jha, Jeffrey Y. Kim

The paper will appear in Innovation: Management, Policy & Practice [The International Journal for Innovation Research, Commercialization, Policy Analysis and Best Practice]

Interviewed for article in Federal Computer Week - Army Retools Knowledge Culture

2008-09-08T06:59:00.000-07:00

I was interviewed for an article in the current issue (Sept 8, 2008) of Federal Computer Week. The article, “Army Retools Knowledge Culture”, by Brian Robinson can be found here [LINK].

See below for my research papers that examine knowledge management programs of defense organizations:

Desouza, K.C., and Vanapalli, G.K. “Securing Knowledge in Organizations: Lessons from the Defense and Intelligence Sectors,” International Journal of Information Management, 25 (1), 2005, 85-98. [LINK]
Lausin, A., Desouza, K.C., and Kraft, G.D. “Knowledge Management in the US Army,” Knowledge and Process Management, 10 (4), 2003, 218-230. [LINK]

New Innovation Paper Published from the i4i Project

2008-09-05T06:40:00.000-07:00

Baloh, P., Jha, S., & Awazu, Y. (2008). Building strategic partnerships for managing innovation outsourcing. Strategic Outsourcing: An International Journal, 1(2), 100-121.

This is a conceptual paper attempting to uncover the mechanisms of organizations managing innovation outsourcing to business partners. In a business environment characterized by the development of deep, niche expertise in a particular domain, business partnerships can provide a source of innovative rejuvenation by outsourcing the innovation to business partners who have complementary skills and expertise. This paper addresses a critical challenge that organizations are currently facing: how do you manage outsourcing of innovation to business partners effectively while maintaining your strategic competitiveness?

In this paper, we conducted multiple exploratory case studies of over 30 innovative European and US companies. It involved 50 semi-structured interviews with senior executives from research and development, product management, information technology, and marketing. We identified three complementary models of managing outsourcing of innovation to business partner: acquisition, strategic alliances, and open source (OS). Based on these, a three-dimensional ‘‘Co-Innovation Space’’ is proposed that can help in analysis and planning of current and future innovation projects.

The practical implications of the study are that partnerships can open the door to multiple knowledge sources. Accessing and integrating information from these sources can greatly enhance knowledge base of organizations and can help fuel sustainable innovation. The models proposed in this study provide a lens to examine existing innovation project portfolios and/or to plan for future innovation programs.

However, although the research is carefully designed, it is an exploratory study and has the limitation of generalizability of the findings. Nevertheless, findings from multiple case studies from diverse organizations shed a light to current innovation and strategic alliance literature. The value of this study is that it is probably among few to study such a large, diversified, and geographically scattered group of organizations. Although exploratory and preliminary, this makes the findings of the study insightful.

Summary provided by Sanjeev Jha

Security and Outsourcing: The Neglected Dimension

2008-08-06T08:53:00.000-07:00

Having witnessed several dozen organizations strategize, plan, operationalize, and even terminate their outsourcing agreements, I continue to be amazed with the lack of care and consideration given to security elements in these efforts (Power, Desouza, and Bonifazi, 2006; Power, Bonifazi, and Desouza, 2004). As one manager remarked:“No one really has the time, patience, or resources, to spend a few days evaluating the security issues associated with an agreement…Most of our time is spent working out details such as the financials, the project management plans, the personnel and public relations dimensions…Unless there are glaring security issues, most outsourcing agreements have the standard boiler plate text on security…you know…the NDAs (Non-Disclosure Agreements), the data and information protection clauses, etc…”The above quote is not unique to a particular manager or organization; one might argue that it is a norm in most outsourcing deals, with the exception of one class of organizations – organizations who have been burnt by security breaches! Only after an organization has witnessed the dire consequences of not adhering to security elements, does it begin to pay due attention to it when considering outsourcing. In Desouza (2007), a whole chapter is dedicated to the issue of securing intellectual assets in the context of strategic alliances. This article will point attention to the need to seriously consider the security dimension in sourcing agreements. Let me begin by sharing two small vignettes that illustrate two different kinds of security breaches (Desouza, 2007):

A large manufacturing firm in the Midwest of the United States outsourced the physical security of its corporate buildings to a security management organization. It was up to this security organization to hire the necessary personnel to monitor the premises. Not known to the manufacturing firm was the fact that the security-outsourcing vendor never ran thorough background checks on its hires. Upon investigation it was found that two of the guards working in night shifts at the manufacturing firm, George and Alan, were stealing high-end office supplies such as printer toner and reams of papers. It was even discovered that George and Alan were using unprotected computers (i.e., computers that were not locked) to surf pornographic websites during their night shifts. The investigation commenced only after a routine IT audit discovered that two computers had traffic to the pornographic websites. Besides the minor expenses involved in replacing stolen office supplies, these actions may have had a more severe cost, such as viruses or spyware that may have been inadvertently downloaded onto office computers.

A boutique strategy consulting company based in downtown New York had about 30 employees and just under a dozen clients. The firm received an offer to participate on a project involving a firm based in Shanghai. No one in the firm had any serious experience in the Chinese market, and hence, they decided to hire a new employee: a recent graduate of a prestigious law school who was interested in international law with a special focus on Asia. The new hire passed the initial background check with flying colors and began her assignment. During the course of the assignment, suspicious behavior started to emerge, including loss of documents and extended phone calls with Chinese counterparts. The organization decided to commission a new check on the employee. During the investigations, which included information on the exchanges with the colleagues in China, it was discovered that the employee was in serious financial trouble and had ailing parents who needed her immediate financial assistance. As a result, she got involved in illegal activities, which included the sale of sensitive information and spying on the organizations’ clients for the benefit of the Chinese business counterparts.

References

Desouza, K.C. Managing Knowledge Security: Strategies for Protecting Your Company’s Intellectual Assets, London, United Kingdom: Kogan Page, 2007.

Power, M.J., Bonifazi, C., & Desouza, K.C. “Ten Outsourcing Traps to Avoid,” Journal of Business Strategy, 25 (2), 2004, 37-42.

Power, M.J., Desouza, K.C, & Bonifazi, C. The Outsourcing Handbook: How to Implement a Successful Outsourcing Process, London, United Kingdom: Kogan Page, 2006.

If interested in reading more, please drop me an email. The above is an excerpt from an article accepted for publication in Strategic Outsourcing: An International Journal…

Organizational Innovation Programs – Upcoming Talks

2008-08-03T23:53:00.000-07:00

I will be giving several talks around South Africa based on the Leveraging Ideas for Organizational Innovation and Demystifying the Link between Innovation and Business Value research projects. Here are a few dates:

August 13th – Graduate School of Business, University of Cape Town
August 26th - Department of Informatics, Faculty of Engineering, Built Environment and Information Technology, University of Pretoria
August 29th – BSG South Africa

Seattle Innovation Symposium – University of Washington – 2008

2008-06-07T08:49:00.000-07:00

I will be chairing a panel discussion on innovation at the 2008 Seattle Innovation Symposium (June 9-11) at the University of Washington. The panel will debate a simple, yet critical, question – Does size matter in respect to sustained innovation? For the panel, I will draw on a completed research project that examined challenges faced by incumbent firms when trying to build sustainable innovation programs. This project was conducted as part of the i4i research program. The final report from this project will be published in Research-Technology Management. Please see below for details:

Braganza, A., Awazu, Y., and Desouza, K.C. “Sustaining Innovation: The Challenge for Incumbents,” Research-Technology Management, Forthcoming.

Abstract
In today’s competitive environment, the ability of an organization to innovate is considered paramount. While most organizations have flashes or spurts of innovation, only a handful of organizations have been able to innovate on a continuous and sustained basis. In this paper, we report on the challenges faced by firms when trying to build sustainable innovation programs. These findings have been deduced from an examination of innovation programs in over 30 organizations based in North America, Europe, and Asia.

A New Work Force Wave: Managing Millennials (See beyond the stereotypes of the ‘Me Generation’ to harness creativity)

2008-06-05T08:21:00.001-07:00

I was recently interviewed for an article on innovation by Colin Simpson of the Bellingham Business Journal. To retrieve the article, please click here [LINK]. As I continue to study innovation practices in high-technology organizations, I continue to be amazed by the innovative capacities of the ‘Me Generation’….

Customer-Driven Innovation

2008-04-22T08:10:00.001-07:00

A research paper from the Leveraging Ideas for Innovation project has been published:

Desouza, K.C., Awazu, Y., Jha, S., Dombrowski, C., Papagari, S. Baloh, P., and Kim, J.Y. “Customer-Driven Innovation,” Research-Technology Management, 51 (3), 2008, 35-44.

The paper can be retrieved from: http://www.ingentaconnect.com/content/iri/rtm/2008/00000051/00000003

Big Think Strategy (Harvard Business School Press, 2007) by Bernd Schmitt

2008-01-06T13:47:00.000-08:00

Big Think Strategy (Harvard Business School Press, 2007) is an interesting and thought-provoking book. As Schmitt notes (pg. 15), “data, spreadsheets, and analytical charts are mostly reactive tools that illuminate the past. They cannot envision strategies directed inherently towards the future. They are good for diagnosing problems, not for creating big ideas and powerful solutions…” I could not agree more. Too often executives are paralyzed by analysis and are risk averse. As a result organizations make incremental changes and adapt to their environments in a reactive manner. Only a handful of organizations have the capabilities, and will power, to truly undertake risky and breakthrough innovations.

Recently, with two colleagues, Yukika Awazu (Bentley College, USA) and Ashley Braganza (Cranfield School of Management, UK), I wrote a paper that examined challenges faced by incumbents in developing sustainable innovation programs. This paper can be accessed via the Institute for Innovation in Information Management (see www.ischool.washington.edu/i3m) and will be forthcoming in Research-Technology Management (see LINK). We open our paper with the following paragraph:
“When facing disruptive innovation, incumbent firms often exhibit incompetence and respond inappropriately. Organizational structures, routines, and systems that are tailored to existing operations prevent incumbent firms from responding to and leading disruptive innovation. As firms grow, they design systems, processes, and structures that are suitable for current operations. In this way, organizations can minimize their costs and increase their operational effectiveness. Hierarchies reduce transaction costs and increase efficiency. However, efficient, rigidities embedded in functional hierarchies and authority structures do not fit with the natural flow of innovation processes. For innovation to occur, ideas need to be represented freely, exchanged, and filtered. Idea generation activities are typically done in informal or open environments. Cross-functional departments or loosely coupled structures are better for mixing people in various knowledge domains. The optimized operational structure may hamper incumbent firms, particularly with respect to disruptive innovation. Operational protocol is often unsuited for the quite different processes of calibrating inventions and turning them into innovation. In this case, incumbent firms tend to invest in daily, minor, incremental innovations that fit their current organizational design…”

Given my interest in the topic of strategic innovation, I was pleased to find a book that proposes a framework for thinking about breakthrough innovations. Schmitt focuses his comments on how should organizations (1) source new ideas, (2) evaluate risky (and breakthrough) ideas, (3) commercialize ideas by developing enabling strategies, (4) execute big-think strategies, (5) lead via big-thinking, and (5) develop sustainable processes for having repeatable success with big-thinking. The book is laden with interesting examples; the writing style is highly conversational; I enjoyed reading the book; Highly recommended!

Complexities of Large-Scale Technology Project Failure

2007-11-01T11:09:00.000-07:00

I have a new paper accepted for publication. The paper, “Complexities of Large-Scale Technology Project Failure: A Forensic Analysis of the Seattle Popular Monorail Authority”, will appear in Public Performance & Management Review (http://mesharpe.com/mall/results1.asp?ACR=PMR).

I co-authored the paper with one of my former graduate students of the Information School (University of Washington), Nina Yuttapongsontorn, and Ashley Braganza (Cranfield School of Management, UK).

Complexities of Large-Scale Technology Project Failure: A Forensic Analysis of the Seattle Popular Monorail Authority

Abstract:“Being stuck in traffic doesn’t have to be a way of life.” This beautiful prologue came from the Elevated Transportation Company (ETC) board’s letter in the ETC Seattle Popular Monorail Plan, one of the largest public works projects ever proposed in the city of Seattle. Three years after this proposal, the Seattle Monorail Project (SMP) was shut down by voters on November 8, 2005. This paper critically analyzes the SMP through the lens of stakeholder theory. This perspective provides valuable insights into the failure of the SMP. We theorize that SMP’s failure might have been avoided had its leadership recognized the many stakeholders that had power over the plan and, more importantly, the dynamic changes in relationships between the stakeholders. Failure might also have been avoided by managing conflicts in stakeholders’ expectations. Specifically, we use stakeholder theory to develop four propositions that are relevant in the context of large-scale technology projects. One, organizations are more likely to succeed when have effective mechanisms for monitoring and evaluating interactions between stakeholders and changes in their positions in relation to their strategic innovation projects. Two, organizations are more likely to succeed when they tradeoff the conflicts in expectations and interests that stakeholders hold. Three, organizations are more likely to implement complex technology projects by understanding stakeholders’ expectations and the interplay between stakeholders. Four, organizations are more likely to achieve their innovative projects when they define stakeholders in terms of their power over their strategic objectives. The paper makes a contribution both to the research and practice of major technological infrastructure projects, strategic innovations, and government technology management.

Kaufmann Foundation collection on Strategic Sourcing: A New Way to Think about Outsourcing

2007-09-06T03:41:00.000-07:00

I was interviewed for the lead article for the Kaufmann Foundation collection on Strategic Sourcing: A New Way to Think about Outsourcing. A summary of the collection: Using a combination of theory, practice, and real-life stories of entrepreneurs like you, this Collection surveys how outsourcing can best serve today’s entrepreneur, president, or CEO. Which functions make the most sense to outsource? How can you use the practice as a strategy? What pitfalls and possibilities do you face when you turn over important business operations to an “outsider”? Entrepreneurs and experts supply answers to these essential questions and others. Smart entrepreneurs now think about the practice as “strategic sourcing”: It can be an invaluable investment that reduces opportunity costs and leverages the primary skills and talents that truly drive the business. Key point: Outsourcing should now be on the inside at entrepreneurial companies, occupying a seat at the growth strategies table.

[LINK]

See the following: Desouza, K.C. “Outsourcing and Opportunity,” [Lead Article] in Strategic Sourcing: A New Way to Think about Outsourcing, Kansas City, MO: Kauffman Foundation, August 28, 2007.

Review of Reinventing Project Management: The Diamond Approach to Successful Growth and Innovation (Harvard Business School Press, 2007)

2007-09-01T18:00:00.000-07:00

Reinventing Project Management proposes a novel approach to managing projects. The diamond approach takes into account the four critical determinants of projects: novelty, technology, complexity, and pace. The authors describe the use of their model through the use of vivid examples and case studies. The book also covers topics such as managing projects for innovation and project alignment with internal and external organizational forces. Overall, I found the book interesting to read. However, I must say that while the book has substantial material presented, not all of it is novel or groundbreaking. Most of the material is repeated from previous works of established authors and is already common knowledge to most project managers. But, for the novice project manager this is a great book…

Reinventing Project Management: The Diamond Approach to Successful Growth and Innovation (Harvard Business School Press, 2007)

2007-08-20T11:18:00.000-07:00

I have started reading, Reinventing Project Management: The Diamond Approach to Successful Growth and Innovation (Harvard Business School Press, 2007) by Aaron J. Shenhar and Dov Dvir. Michelle Morgan (Publicist) at Harvard Business School Press sent me a copy of the book for review and comments. I will send in my thoughts about the book as I make my way through it.

Strategic Outsourcing, an International Journal

2007-08-15T09:21:00.000-07:00

I have just accepted an invitation to join the Editorial Board of Strategic Outsourcing, an International Journal (see http://www.emeraldinsight.com/info/journals/so). Dr. Marco Busi (University of Strathclyde) is the Editor of the journal. It is an honor to be asked to join the Editorial Board. The Editorial Board has several notable researchers such as Professor Bjorn Andersen, Professor Leslie Willcocks, Dr Erran Carmel, Dr Jeanne Ross, and Dr Mary C. Lacity, among others…

Book Review: IT and the East (HBS Press, 2007) by James M. Popkin and Partha Iyer

2007-08-11T19:24:00.000-07:00

The best business book on the competitive stature of India, China, and China-India! A must read for executives who want to stay relevant in today’s global marketplace. India and China are two superpowers in the making. IT and the East (by James M. Popkin and Partha Iyer, HBS Press, 2007) provides a detailed, honest, practical, and futuristic examination of the operating environments of these two nations. In addition, this book describes the potential symbiotic environment that might develop if India and China strengthen their cooperative relationships.

I must repeat, this is a must read!

The book is detailed, with a lot of information, which the average manager is unaware of. For instance, information on the infrastructural challenges in India or the potential of lack of future skilled (qualified) resources in India! The book is practical in that it offers managers a set of activities and interventions that they might (and should) consider. For example, how does one build competencies for market development or research and development in India and China? The authors use their crystal ball and chart out possible scenarios to guide managers as to how these two countries, and the relationships between them, might advance in the next five years.

The book is easy to read, well-structured, and has adequate illustrations which superbly capture the textual details. The book begins by examining China. Chapter 1 paints a sobering picture of the challenges faced by this global superpower. Chapter 2 details the IT infrastructure issues in China. Chapter 3 outlines the courses that China might embark on to 2012. The authors assign probabilities to each of these courses and outline guideposts that can be monitored to gauge outcomes. Chapters 4-6 conduct a similar exposition of India. Chapter 7 argues for the concept of ChinIndia that is seen as the r outcome if the two superpowers expand their collaboration powers. Chapter 8 details why ChinIndia is a real possibility and what are the driving forces behind this. Chapter 9 outlines priorities for organizations who want to be relevant in terms of competing in India or China, or ChinIndia, and even tapping into this growing marketplace for resources.

Overall, An excellent book….

Annual Meeting of the Academy of Management

2007-08-05T20:38:00.001-07:00

I am at the Annual Meeting of the Academy of Management in Philadelphia. I have had a great time so far. Most of the time has been spent meeting with my students, colleagues, and new friends…I will post a complete reaction to the meeting upon my return to Seattle…Tomorrow, I take part in a panel called - Transformation, Change, and Organizational Development: Creating a Global Academic Endeavour (at 10.40 a.m. (EDT)). The panel is chaired by Ashley Braganza of Cranfield University. My fellow panel members are: Steve Leybourne; Plymouth U.; Gerard P. Hodgkinson; U. of Leeds; Gavin M. Schwarz; U. of New South Wales; George P. Huber; U. of Texas, Austin; Terry McNulty; U. of Liverpool; and Ray Hackney; Brunel U.

Book Review: Payback (Harvard Business School Press, 2006) by James P. Andrew and Harold L. Sirkin

2007-08-04T02:56:00.000-07:00

How does one reap the business value out of innovations? This question has puzzled me for the last 24 months. Along with several colleagues, I have been investigating models and mechanisms that firms can use to manage, track, and evaluate the contributions of innovation activities to their business value. Let me say that this no easy feat to accomplish. To date, we have arrived at a mechanism that can be used to measure the business value of innovation (for the interested reader, please contact me for details, or see some of the many talks and presentations that have described our findings, for example - Demystifying the Link between Innovation and Business Value: A Process Framework at the Management Roundtable, July 18, 2007). Given this context, I welcomed the opportunity to read Payback (Harvard Business School Press, 2006) by James P. Andrew and Harold L. Sirkin.

In Payback, the authors, both of whom are senior executives with the Boston Consulting Group, construct the concept of the “cash curve”, as a guide for executives to manage their investments in innovation. The concept is fairly simple, intuitive, and yet helpful. The authors show how to manage critical drivers such as size of investment, speed to market, time to scale, and support costs, so that one can reap the largest payoff out of innovations. The authors describe various measures of business value for innovation beyond cash, such as acquisition of new knowledge, enhancement of brand image, linking to business partners, and energizing employees within the organization.

Overall, I found the book to be very interesting. The most interesting aspect of this book is the discussion on choosing the right innovation model (Chapters 4-6): the integrator, the orchestrator, and the licensor. In these chapters, the authors talk about the various models and how should organizations choose the right model, or a combination of models, to address the various innovation investments they make. The book is good for managers who wan to plan innovation investments. However, this book does not provide a guide whereby to track innovation efforts, the process of innovation (from ideas to prototypes to commercialization) and its effects on the business value of innovation. Put another way, this book will give you a good (or even excellent) understanding of how to manage the investments you make into innovation strategies and efforts. However, once these investments are made, how do you actually manage the innovation process, improve it, and link it to business value is not covered. For those interested in these aspects, I encourage you to review previous posts on this Blog and get involved in our ongoing research efforts.

An excellent read for anyone in the innovation business or even for anyone running a business….

Book Review: The Kids are Alright: How the Gamer Generation is Changing the Workplace, by John C. Beck and Mitchell Wade

2007-08-03T11:42:00.000-07:00

In my modest opinion, a good book should motivate you, encourage you, challenge you, and even call you to explore new boundaries. This is the barometer through which I judge the quality of books. I have just completed reading the book – The Kids are Alright: How the Gamer Generation is Changing the Workplace, by John C. Beck and Mitchell Wade.

This book explores the gaming culture and the behavioral intricacies of game players. The book also discusses how managers should re-think their interactions with the current (and future) workforce that has grown up gaming. Gamers have special skills, aptitudes, views of reality, which if tapped into appropriately, can be used to make them highly productive, engaged, and successful employees, and even high-performing executives. Too often managers, and even academicians, dismiss gamers and have stereotypical views of their behaviors, capabilities, and even outlooks on life and opportunities. This book provides a engaging discussion of why we need to rid ourselves of these prejudices. Through gathering data from gamers, both quantitative (via large-scale surveys) and qualitative (via interviews and observations), the authors set straight the traditional myths about the gaming culture (e.g. they are wasting their time, they are low achievers, etc). Here is a brief outline of the book. The Introduction and Chapter 1, provide an account of how the concept of video games, and the gamer generation (or gaming culture), originated and intensified. Chapter 2 discusses the myths about the gaming culture and why some of us (e.g. parents who think that kids playing video games may lead to demonstrating of virtual behavior, like shooting, in a real-world setting) worry too much about these myths. Chapter 3 addresses the traits of the virtual world and why these provide an alternative reality that is very different from the real world. This alternative reality allows gamers to experience emotions, control behavior, and seek goals that do not have equivalent alternatives in the real world. Chapters 4 – 7, discuss various aspects of the gaming culture, such as their desire to succeed to their preference of emergent leadership and the trial-and-error approach to problem solving. These attributes are discussed with an intention to show managers that these behaviors can be tapped into to drive high-performance in organizations. Chapter 8 brings the book to a close.

So, what did I think of the book? Simply put, it is a good (and even a great) book. This book motivated me to think about the concept of games and how they touch the scholarly disciplines that I am concerned with. Have you heard of the new video game – ICED! ICED allows you to take on the role of foreigners who become illegal in the US and have to deal with immigration nightmares (or challenges!). Players have to use strategies to avoid interrogation and detention (e.g. do not commit crimes that will get you arrested, keeping a low profile, etc). ICED will be available next month via free downloads. Another game, in the same genre, is PeaceMaker, which allows players to take on sides, either as a Palestinian or Israeli, and negotiate for peace. These two games have an educational potential in the areas of public policy, international security, international affairs, and law enforcement. I would have not done a search to discover these games, if not for reading this book.

Overall, an excellent book…a must read for managers who are challenged by the new gamer generation…a definite read for all gamers out there as well, this book will give you insights on how to play up your gaming skills and bring them to the forefront in organizations…to all parents and academicians, reading this book will give you a different perspective on games, gamers, and the gaming culture….

Payback: Reaping the Rewards of Innovation (Harvard Business School Press, 2007)

2007-07-30T11:54:00.000-07:00

I have started reading, Payback: Reaping the Rewards of Innovation (Harvard Business School Press, 2007) by James P. Andrew and Harold L. Sirkin (with John Butman). Michelle Morgan (Publicist) at Harvard Business School Press sent me a copy of the book for review and comments. I will send in my thoughts about the book as I make my way through it.

Elements of innovative cultures, Knowledge and Process Management, Volume 14, Issue 3 , Pages 190 - 202

2007-07-28T17:32:00.000-07:00

An I4I research report has just been published. The paper is titled, "Elements of innovative cultures" and appears in the current issues of Knowledge and Process Management. This paper was an outcome of our I4I research project that examined the best practices of organizations that were successful in building robust innovation programs. Caroline Dombrowski was the project manager for this research paper.

For a copy of the paper, please visit: Knowledge and Process Management (at http://www3.interscience.wiley.com/cgi-bin/jhome/6242)

Dombrowski, C., Kim, J.Y., Desouza, K.C., Braganza, A., Papagari, S., Baloh, P., and Jha, S. “Elements of Innovative Cultures,” Knowledge and Process Management, 14 (3), 2007, 190-202.

Abstract
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 that assimilating these elements of organizational culture will enable organizations to support and sustain innovative activities.

Authors
Caroline Dombrowski (The Information School, University of Washington, USA), Jeffrey Y. Kim (The Information School, University of Washington, USA), Kevin C. Desouza (The Information School, University of Washington, USA), Ashley Braganza (Cranfield School of Management, Cranfield University, UK), Sridhar Papagari (Department of Information and Decision Sciences, University of Illinois at Chicago, USA), Peter Baloh (Faculty of Economics, University of Ljubljana, Slovenia), Sanjeev Jha (Department of Information and Decision Sciences, University of Illinois at Chicago, USA)

IT And the East: How China And India Are Altering the Future of Technology And Innovation

2007-07-28T09:19:00.000-07:00

I have started reading, IT And the East: How China And India Are Altering the Future of Technology And Innovation (Harvard Business School Press, 2007) by James M. Popkin and Partha Iyengar. Michelle Morgan (Publicist) at Harvard Business School Press sent me a copy of the book for review and comments. I will send in my thoughts about the book as I make my way through it.

Global Preponderance : 2007 Bled Strategic Forum: European Union 2020: Enlarging and Integrating

2007-07-13T10:54:00.001-07:00

I have just been invited to serve as a Panelist on the topic of Global Preponderance at the 2007 Bled Strategic Forum: European Union 2020: Enlarging and Integrating. The invitation came from the Minister of Foreign Affairs of the Republic of Slovenia, Dr. Dimitrij Rupel. I have accepted the invitation with pleasure and am excited about the opportunity to contribute my thoughts on this important issue. This is one of the highest honors I have received, and I thank the organizing committee for inviting me. I will be sharing my thoughts on the issue of cultivating global innovation societies, the role of intellectual asset transfer across boundaries, why countries need to consider cooperative innovation systems to work towards greater goals, what are the challenges in establishing these (e.g. immigration, global talents, etc), and what are some of the solutions.

Dignitaries at this event will include: H.E. Mr. Janez Janša, Prime Minister of the Republic of Slovenia, H.E. Mr Nikola Gruevski, Prime Minister of the Republic of Macedonia, Mr Ali Babacan, State Minister for Economy of the Republic of Turkey and Turkey's chief negotiator in accession talks with the EU, Mr Hans van der Loo, Head European Union Liaison, Shell International, Dr Kuniko Inoguchi, Member of the House of Representatives of Japan, among others. The meeting is sponsored by the Slovenian Ministry of Foreign Affairs, Center for European Perspective, Government Communication Office, and the Institute for Strategic Studies.

For details on the conference, please see - http://www.bledstrategicforum.org. The program can be found at: http://www.bledstrategicforum.org/index.php?id=4&lang=en

Voice of America Interview

2007-07-12T21:13:00.000-07:00

I was interviewed by Michael O'Sullivan, the West Coast Bureau Chief of Voice of America on the issue of outsourcing. See - US Lawyer Finds Medical Experts in India, Los Angeles, 12th July 2007, http://www.voanews.com/english/2007-07-12-voa84.cfm. The recording of the interview can be found at: http://www.voanews.com/mediaassets/english/2007_07/Audio/mp3/osullivan_legal_medical_outsourcing.mp3

Book Review: Hidden in Plain Sight: How to Find and Execute Your Company’s Next Big Growth Strategy, by Eric Joachimsthaler (HBS Press, 2007)

2007-07-02T21:34:00.000-07:00

I promised to write a review of the book, so here it goes…This book is a must read for all executives trying to understand why their companies continue to miss the most obvious innovations. Companies, especially incumbent firms, struggle to keep their innovation engines going. I especially found the book to be of interest given my current research on sustainable innovation program. In a research project that I undertook with Ashley Braganza (Cranfield University) and Yukika Awazu (Bentley College), we outlined several reasons why incumbent firms have a hard time sustaining innovation. We also recommended action strategies that these firms could take to be more successful at innovation (see Link).

Joachimsthaler introduces the DIG model for innovation. DIG stands for Demand-First Innovation and Growth. The model is premised on a firm recognizing customer demands, and then structuring demand platforms to meet these needs, followed by devising strategic blue prints to capture the value from these platforms. Joachimsthaler rightly argues that most companies have built up distance between themselves and their customers. Specifically, the average firm does little to understand their customer behavior independent of their products and services. This narrow-minded view of their customers limits the ability of the firm to introduce products and services that become part of the customers’ lifestyles. In today’s marketplace such firms are sure to follow the trajectory towards demise.

I found the DIG model to be interesting for two main reasons. One, it forces firms to place an emphasis on getting to understand their customers intimately. Two, it also forces the firm to structure its processes, policies, rules, etc around capturing customer needs, rather than around aging bureaucratic practices.

Joachimsthaler does an excellent job walking the reader through the DIG model. The book has a number of case studies from State Street to Frito Lays, and GE to BMW. In addition, the book is easy to read and follow. The book begins by discussing the case of Sony and how the iPod revolution caught the company by surprise. The DIG model is introduced next, and successive chapters walk through the various components of the model. The concluding chapter of the book discusses how to embed innovation into the corporate fabric.

I do not want to give away too much about the book (I know as an author that seeing your book sell is important!), so will stop here…Overall, a must read…I surely enjoyed it…

New Frontiers of Knowledge Management: Review in Knowledge Management Research & Practice

2007-06-25T00:18:00.000-07:00

A very positive review of my book has been published in the current issue of Knowledge Management Research & Practice (Palgrave Macmillan, 2005).

____

Book Review
Knowledge Management Research & Practice (2007) 5, 71–72. doi:10.1057/palgrave.kmrp.8500122

New Frontiers of Knowledge Management
Kevin C. Desouza (Ed)
Published by Palgrave Macmillan, Basingstoke (UK), New York (USA), 2005,
ISBN-13: 978-1-4039-4240-1, ISBN-10: 1-4039-4240-4, 275pp
Price £60

Reviewed by, Yanqing Duan of the University of Bedfordshire Business School, U.K.

New Frontiers of Knowledge Management is a contributed volume edited by Kevin C. Desouza. The book contains a collection of 12 chapters, which cover a range of topics focusing on the new frontiers in knowledge management with creative thinking, novel insights and innovative ideas. Any attempt to edit a book on 'the new frontiers' of this multi-disciplinary and widely debated field would be a challenge. Therefore, the editor should be commended on his attempt.

The book starts with an excellent introduction by the editor, which is a must read section for any reader before embarking the rest of the chapters. It defines the term 'new frontier' in knowledge management, sets up the rationale for the book and provides a succinct summary of each author's novelty in his/her contribution to the book. The editor stresses the necessity of sharing options and feelings on the new frontiers and highlights his three motivations in pulling together this unique book, which aims to

'provide an avenue for researchers and practitioners to be adventurous, venture out, and postulate some of their creative thinking.'

'assemble authors who would cross the local space and write on knowledge management in an integrated fashion' and

'seek out some of the new insights and provide an avenue for them to be presented.'

There is no doubt that the editor has achieved the above by providing an opportunity for knowledge management scholars and practitioners to share and exchange their insights and views and be explorative in seeking new ideas and innovative development.

Topics covered in the book include: science and technology knowledge management, knowledge visualization, personalizing knowledge delivery services, knowledge security in organizations, knowledge markets, software artefacts for knowledge management, ubiquitous computing in networked organizations, collaborative enterprises, knowledge flow dynamics, knowledge integration in teams, the role of incentives in knowledge transfer, and innocuous knowledge management.

The book is a mix of debates from social, organizational, technological and economic perspectives, all aiming to offer their thoughts and insights in addressing knowledge management challenges and problems, and attempting to seek new solutions. The strength of the book lies in its diversity, quality, depth and the authors' employment of multi-disciplinary perspectives in their treatments.

For example, from an organizational perspective, Chapter 5 addresses knowledge security in organizations in three focused areas: people, products and processes; and Chapter 10 draws from knowledge flow theory to develop a multi-dimensional model to inform organizational design. From a more technological point of view, Chapter 13 argues the value of innocuous knowledge and explores the management of innocuous knowledge with distributed knowledge networks. The discussion on how market mechanisms can help facilitate knowledge management in Chapter 6 and the role of incentives in knowledge transfer in Chapter 12 offers different aspects of arguments from an economic dimension. Chapter 9 argues the importance of collaborative enterprise from a more humanistic aspect and proposes a generic framework for collaboration, which incorporates the influential factors and the types of capability that needs to be developed.

Most of the authors set forth their arguments on addressing knowledge management problems and challenges from mixed perspectives of social, organizational and technological dimensions. For example, Chapter 2's contributors share their insights on science and technology management emphasizing the conversion of technical textual data to technical knowledge; Chapter 3 emphasizes the importance of making knowledge visible and postulates how this can be achieved; Chapter 4 addresses the challenges in personalizing knowledge delivery services, arguing that knowledge is emergent and needs to evolve based on its particular context; Chapter 7 explores the diversity of software artefacts use in supporting information and knowledge management through the four analytical lenses of interaction, interpretation, connection and collaboration; Chapter 8 argues the potential impact of the ubiquitous information environment (UIE) and proposes a framework for studying the UIE technologies and invites more research in this area; and Chapter 11 explores knowledge integration processes within teams and tests the link between a team's human capital and its knowledge integration competency with case analysis.

For any edited book on new frontiers, the selection of contributors would be critical to its attraction and success. A number of respected scholars and renowned executives in the knowledge management field, especially from America, have contributed to the book. The contributions from both academics and practitioners should be particularly appreciated by readers. However, out of 12 chapters, apart from two from the UK and one from Denmark, the rest of the authors are mainly based in the USA. The heavily American-based contributions may be seen as a weakness in offering a comprehensive reflection of thoughts on future directions worldwide.

In a similar way to most edited books, the collection of chapters represents a mix of depth, length and style. Readers may find that some chapters are better argued and in more depth than others. Others may challenge the novelty, significance or the 'eligibility' as a new frontier in certain topics. It can also be argued that some important or emerging topics may have been left out, such as dealing with culture and trust, dealing with tacit knowledge, transnational knowledge transfer in the global economy, communities of practice, intelligent knowledge systems, etc. However, one of the purposes of the book, as the editor stressed in his opening page, is for 'interested readers to embrace or criticize, to build on or refute, and above all to share' the contributors' views. To this end, the editor's effort can be well justified. As it is not possible to include all new frontiers in one book, the reviewer acknowledges this limitation. The book serves as a call for attention to the continuous effort in seeking new frontiers in this evolving field.

Overall, the editor has done a good job in terms of quality, depth and range of the papers collected. The book makes a unique contribution to the knowledge management literature and is a valuable source of innovative ideas and rich insights on advancing the understanding and achievement in knowledge management. Most of the chapters are well argued and easy to follow, although some of them may be more intellectually demanding for readers to digest. The book would not be recommended as a textbook for students, but is a useful reading for both knowledge management academics and practitioners who would like to further their thoughts on new directions and understand the implications of the new developments. It will also be particularly beneficial to new knowledge management researchers who seek inspiration and thought-provoking debates in their projects and research. I find the book an inspiring, and enjoyable read and hope that KMRP readers will feel the same.

See: http://www.palgrave-journals.com/kmrp/journal/v5/n1/full/8500122a.html

Managing Knowledge Security: Book Cover and Inside Leafs

2007-06-18T13:30:00.000-07:00

The Management Roundtable -- Demystifying the Link between Innovation and Business Value: A Process Framework

2007-06-15T04:10:00.000-07:00

I will be delivering a talk on innovation for The Management Roundtable. This talk will draw on our ongoing work in the area of innovation. The talk will focus on the development of the innovation process, measuring the process, and linking the process to business value metrics.

For details, please see - http://www.roundtable.com/Event_Center/Audiocons/Desouza/Desouza0707.html

Two universal truths underpin most business operations: (1) unless businesses can demonstrate value to their stakeholders on a consistent 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.
Innovation is a crucial component of business strategy, but the process of innovation can be difficult to manage. To plan organizational initiatives or bolster innovation requires a firm grasp of the innovation process. Few organizations have transparently defined such a process.
In this presentation, Kevin will offer a process framework and propose mechanisms to measure the value of innovation. The innovation process will be broken down into the discrete stages of idea generation and mobilization, screening and advocacy, experimentation, commercialization, diffusion and implementation. For each stage, he will provide context, outputs and critical ingredients as well as mechanisms to measure performance. Kevin will finish by linking these measures to business value measures.

Specifically you will learn:

the stages of innovation -- from creating ideas to commercialization -- and diffusing and implementing products and services
how successful organizations conduct activities in each of the stages
how to measure process performance and improve its maturity
how to link the innovation process to business value measures

Dr. Kevin C. Desouza is on the faculty of the Information School at the University of Washington. He is also an Adjunct Assistant Professor in Electrical Engineering at the College of Engineering. He serves as the Director of the Institute for National Security Education and Research, an inter-disciplinary, university-wide initiative. He is also Director and founding faculty member of the Institute for Innovation in Information Management (I3M) and is an affiliate faculty member of the Center for American Politics and Public Policy, both housed at the University of Washington. His immediate past position was as the Director of the Institute for Engaged Business Research, a think-tank of the Engaged Enterprise, a strategy consulting firm with expertise in the areas of knowledge management, crisis management, strategic deployment of information systems, and government and competitive intelligence assignments.

Dr. Desouza has authored Managing Knowledge with Artificial Intelligence (Quorum Books, 2002), co-authored The Outsourcing Handbook (Kogan Page, 2006), Managing Information in Complex Organizations (M.E. Sharpe, 2005) and Engaged Knowledge Management (Palgrave Macmillan, 2005), and edited New Frontiers of Knowledge Management (Palgrave Macmillan, 2005) and Agile Information Systems (Butterworth Heinemann, 2006). His most recent book is Managing Knowledge Security (Kogan Page, 2007). In addition, he has published over 130 articles in prestigious practitioner and academic journals.

Dr. Desouza has advised, briefed, and/or consulted for major international corporations (e.g., Boeing, Microsoft, Accenture, the American Productivity Quality Center, etc.) and government organizations (e.g., the Office of the Director of National Intelligence, the Department of State, the Department of Veterans Affairs, etc.) on strategic management issues ranging from management of information systems, to knowledge management, competitive intelligence, government intelligence operations, and crisis management.

Hidden in Plain Sight: Ideas for Innovation?

2007-06-01T10:02:00.001-07:00

I have begun reading Hidden in Plain Sight: How to Find and Execute Your Company’s Next Big Growth Strategy (Harvard Business School Press, 2007) by Eric Joachimsthaler. Michelle Morgan (Publicist) at Harvard Business School Press sent me a copy of the book for review and comments. I will send in my thoughts about the book as I make my way through it.

IFIP 8.6: Organisational Dynamics of Technology-based Innovation: Diversifying the Research Agenda

2007-05-28T11:23:00.000-07:00

I will heading to England for a few weeks starting on June 9 and returning on June 25.

I will serve as a faculty mentor for the IFIP 8.6 Doctoral Consortium (http://www.ifip86-2007.salford.ac.uk/) to be held in Manchester, UK. Bob Galliers (Bentley College) is the Doctoral Consortium Chair. Bob has done an excellent job in selecting an eclectic group of students who have diverse research interests and aspirations.

In addition, I look forward to meeting up with several of my European Colleagues during the month of June. I plan to spend a few days in Manchester, then head to Oxford, and finally spend a week in London before coming back to Seattle…

Securing Innovation - New Book - Managing Knowledge Security

2007-05-23T14:30:00.001-07:00

How well do you protect your innovations? Most organizations lack good measures to develop protective measures to secure their innovations. As a result, these organizations fail to reap adequate rents from their investments. Before costs, and even normal profits, can be earned an organization may see its innovation being imitated by competitors through reverse engineering. Some organizations even face leaks of information when working on sensitive projects thereby alerting competitors of their strategic motives. How secure is your knowledge (and innovations)?

My new book, Managing Knowledge Security (Kogan Page, 2007), tackles this question from a pragmatic perspective. I have devised, participated in, and even managed, intelligence assignments for several private and public organizations. These assignments involved testing protective measures for securing knowledge, identifying leaks of information, gathering data on competitors, among other activities.

Orders are being taken on Amazon and other retail websites…Early orders receive a nice discount as well…

The Past 48 Hrs...

2007-05-10T21:44:00.000-07:00

What have I been doing these days…Well, nothing major…Let me give you a run down of my last two days…

I was in Houston for APQC’s 12th Annual Knowledge Management Conference and Training: Knowledge Management and Innovation (www.apqc.org). On the evening of the 9th, I had dinner with Robert (Bob) H. Buckman [Retired Chairman of the Board, Bulab Holdings] and his daughter Katherine Buckman Gibson [Chairman of the Board, Bulab Holdings]. I have known Bob for about 2 years now. The two of us get excited about two topics– knowledge management and organizational innovation. This was my first meeting with Kathy. Kathy is a delightful person. She is guiding Buckman Labs into an exciting future. During dinner, we discussed a number of issues ranging from organizational innovation issues, to information disconnects and organizational fragmentation, cross-cultural issues, and the School of Information of the University of Washington.

[P.S. the Olivette restaurant at the Houstonian is wonderful…if you get a chance, go by and have a meal…delightful!]

After dinner ended, I met up with Roberto Evaristo, a long-time colleague, collaborator, and friend. Roberto is playing an active role in the KM Program Office of 3M. We indulged in a few choice liquids, and spent the time getting caught up on various happenings in our lives.

May 10: I got on a conference call at 6 AM, and barely had chance to check my emails. Then, it was breakfast with Roberto. During breakfast we had a chance to discuss business, and get ready for our talk. After breakfast, we headed to the conference. I got a chance to catch up with several colleagues (there are too many to name but here are a few…Gerry Swift, Darcy Lemons, Carla O’Dell, Marisa Brown, Louis Archuleta, Ann Majchrzak…).

I then attended a talk given by Jimmy Wales, founder, Wikipedia.org, and chairman, Wikia.com. Jimmy talk was engaging, thoughtful, and creative. The talk focused on the development of Wikipedia, its current state, the future plans. I learnt a lot from the talk. One of the things that I will use in my classes is the concept of designing technology by thinking about how one would design a restaurant. Jimmy went on to talk about how students are using Wikipedia for their term papers. To all my student readers: do not use Wikipedia as a reference, just like you would not use Encyclopedia Britannica. Wikipedia should be used to help you gain deeper knowledge about a topic and also to identify primary and secondary sources for further consultation.

The next item on the agenda - Organizational Innovation Processes: The case of 3M, a presentation by Kevin C. Desouza and J Roberto Evaristo. I opened the presentation by setting the stage for the innovation process framework. Roberto then examined each stage of the process and cited practices in place at 3M for conducting activities in each stage. An engaging Q&A session followed (we ran over our allotted time!).

Then, my taxi was waiting, and I headed back to the Airport to fly back to Seattle…

All in all, a fairly calm and uneventful two days…

P.S. I am writing this Blog entry while on my flight back to Seattle…A good way to spend time…currently we are at 30,000 feet and beginning our descent into SEATAC…

Understanding the Complexities of Innovative Technology Project Failure

2007-05-05T13:50:00.000-07:00

Nina Yuttapongsontorn (a graduate student at the Information School, UW) and I have completed a case study paper - Understanding the Complexities of Innovative Technology Project Failure: The Case of the Seattle Popular Monorail Authority.

Abstract

The proposed Seattle Popular Monorail was one of the largest public works projects ever proposed in the city of Seattle. Three years after this proposal, the Seattle Monorail Project was shut down by voters. This paper studies the history of the plan, the challenges the plan’s proponents were confronted with, criticisms and reactions, and reasons for the plan’s failure. It is interesting to note that the City of Seattle has had experience in monorail projects. Seattle’s original monorail was one of the world’s first modern monorails, and it was the first full-scale monorail system in the US. It was built in 1962 for the Seattle Century 21 World’s Fair and cost $3.5 million. The 1.2-mile-long monorail was built in only 10 months. During the six months of the fair, the trains carried more than eight million guests and easily earned back its initial capital construction costs in just five months. Today, the trains carry more than 2.5 million riders each year, and it still operates at a profit after forty years of operation. Yet the City of Seattle could not repeat this success with the Seattle Popular Monorail.

ICTs and Innovation - Paper Accepted for Research-Technology Management

2007-05-01T07:59:00.000-07:00

Our paper, "Opening up Innovation through Information-Communication Technologies," has been accepted for publication in Research-Technology Management. The authors of the paper are: Yukika Awazu, Bentley College, USA; Peter Baloh, University of Ljubljana, SLOVENIA; Kevin C. Desouza, University of Washington, USA; Christoph H. Wecht, BGW Management Advisory Group, SWITZERLAND; Jeffrey Kim, University of Washington, USA; Sanjeev Jha, University of Illinois at Chicago, USA.

Abstract:
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 this process at all levels through inclusion and interaction. This paper 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.

About Research-Technology Management (R-TM)

R-TM is published by the Industrial Research Institute. The Industrial Research Institute (IRI) is the foremost business association of leaders in research and development (R&D) working together to enhance the effectiveness of technological innovation in industry. Founded in 1938 through the National Research Council, IRI comprises senior executives from a diverse range of industries whose Member Companies are investing over $100 billion annually in R&D worldwide. IRI is the leading cross-industry organization providing the R&D community with insights, solutions and best practices in innovation management developed through collaborative knowledge creation.

Research-Technology Management is the award-winning, bi-monthly journal of the Industrial Research Institute, published since 1958. It contains peer-reviewed articles covering the entire spectrum of technological innovation, from research and development through product development to marketing. RTM is a leading source of knowledge and best practices on innovation management for leaders of research, development, and engineering worldwide.

Real Options Approach to Innovation Management - Part I

2007-04-23T09:55:00.000-07:00

Most strategic decisions require significant investments and therefore it is critical that organizations manage these investments carefully for continued growth and survival of firms. Pursuing innovations are strategic decisions too, especially strategic innovations, which are product or process innovations with unproven business models that have potential to change the rules of the existing business. What separate strategic innovations from regular product or process improvements is the degree of expense of a single experiment, the duration of each experiment, and the ambiguity of results. Strategic innovations require huge investments, over a long period of time, and with uncertain financial rewards. The rewards, however, of successful strategic innovations can be manifold: high growth in revenue and profitability, market dominance, and renewed faith of investors and analysts. A few of the celebrated examples of strategic innovations are: online book retailing by Amazon, direct selling by Dell, introduction of mini-mills by Nucor, low cost no-frills airline service by Rynair.

Strategic investment decisions, like strategic innovation, have three important characteristics. First, the investments made are either partially or fully sunk and cannot be recovered, in other words investments are irreversible. Second, returns on these investments are uncertain or the future benefits from investments are uncertain. Third, organizations have some flexibility with respect to the timing of the investment, or timing of different phases of investments. A good example of strategic innovation, showcasing the above three characteristics, can be of pharmaceutical companies entering into alliances with biotechnology companies and universities. Pharmaceutical companies invest into research projects led by biotechnology companies or universities and these investments are irreversible and the outcomes of most of these projects are uncertain. The development phase of these projects run up to a decade before commercialization can begin. Therefore, most of the alliance contracts have provision of payments over a period of time depending upon the successful progress of the project. If the projects do not show promise of product development and commercialization, the contracts have provision of stopping future investments. This flexibility in investment decisions limits exposure to risks while providing opportunity to invest further based on future assessments. These characteristics of strategic investment decisions make them especially relevant to be analyzed through real options approach.

Real option approach to investment decisions can be discovered in various settings and we discuss two of them here to showcase its applicability to wide range of situations. The two examples which employ real options thinking are hiring of professors and the process of awarding grants by National Science Foundation (NSF). There seems to be a real options thinking in the way academia generates knowledge by hiring professors. Most professors come in with a limited contract and then they need to show promise in the development of new ideas and knowledge. If they are successful the contract options are renewed (i.e. most untenured professors start out with a 3 year contract and then it is extended for another 3 years). Upon successful demonstration of innovative capabilities and output – tenure is given. The other interesting example of real option thinking is the process of awarding grants by NSF. NSF gives out grants, for exploratory projects, then they may choose to continue their investment if initial results are found to be acceptable or else stop further investments if the project does not show promise. This restricts wastage of resources to initial funding and provides opportunity to work with applicants incase the projects become worthwhile.

[Posted by: Sanjeev Jha]

Reflections from the I3M Meeting

2007-04-20T08:31:00.001-07:00

I have now had three days to reflect on the I3M symposium. The symposium was exciting and stimulating. I gained a lot from the informal discussions with an eclectic group of executives. There were executives who asked me pointed questions which helped me refine my thinking. Some others asked me to share more detailed accounts of case findings. Yet, others asked if they could help out in future research. What was most interesting is the fact that no two executives asked me the same question. This is probably the first time this has ever happened. Each executive shared questions from their vantage point, and the audience was truly diverse. Here are a few key themes that kept emerging from various discussions:

1. Balancing risks and rewards in innovation – how should organizations manage a portfolio of ideas so as to gain maximum returns. Moreover, how should an organization fund innovative ideas? The possibility of using real-options as a framework was brought up several times.

2. Measuring the innovation process – how do we measure the performance of the innovation process, do we measure the process or the output, do we use qualitative or quantitative methods, do we measure using the unit of analysis of a firm, unit, or group…the answer, we use a combination of metrics and personalize metrics for different problems

3. The difference between large (public) and small (private) firms in terms of their innovation capabilities…are there differences, are there differences in the diversity of ideas they pursue, etc

4. The role of culture in innovation…my thoughts on this was that culture is determined by innovation capacities and not the other way. Too often, we use (organizational) culture too loosely and inappropriately. Yes, having the right culture is important, but creating the culture for innovation is also important.

5. How does legal oversight and regulations impact innovation…A lively discussion on this topic took place…my answer, laws are meant to be broken and they are always a step behind…being innovative helps you be ahead of the laws and find creative, and legal, ways to get your work done…Not the most politically correct response, but my opinion…

Overall, exciting day and I thank all those who attended…it was good fun…Cheers!

More Pictures from I3M Symposium

2007-04-17T12:03:00.001-07:00

I3M Meeting: A Smashing Success…

2007-04-17T07:55:00.000-07:00

We had an exciting day yesterday…By all accounts, the I3M Symposium was a success. The morning started with a keynote presentation by Phil Fawcett of Microsoft Research. This was followed by our research presentation – Demystifying the Link between Business Value and Innovation. This was followed by a panel discussion exploring the various issues surrounding innovation and business value. The evening concluded with presentations on potential research projects, and a wine and o' devours reception. A more detailed note on the symposium will be posted soon…

Peter Baloh at the UW

2007-04-14T20:27:00.001-07:00

My doctoral student, Peter Baloh (http://www.baloh.net/), from the University of Ljubljana (Slovenia) is in Seattle. He is here to attend the I3M (Institute for Innovation in Information Management) Spring Symposium. Peter has been working with me on issues of strategic innovation and knowledge management. Peter was a lead contributor one two i4i papers. The first paper examined the role of ICTs (Information and Communication Technologies) in innovation. The second paper examined strategies used by organizations to innovate with their business partners. In addition, Peter contributed to our papers on customer innovation and communication strategies for innovation.
Peter took a few pictures as I was giving him the tour of the UW.

36 hrs...The Final Countdown

2007-04-14T20:16:00.000-07:00

The I3M meeting is just around the corner…People are flying in, phones have started to ring, the editing and final touches are coming along nicely, and the wine is flowing…Looking forward to seeing all of you on Monday morning…

Cited Again...BusinessInnovationInsider.com

2007-04-13T13:11:00.001-07:00

We have been cited again…See BusinessInnovationInsider.com (http://www.businessinnovationinsider.com/2007/01/understanding_hewlettpackards.php). BusinessInnovationInsider.com has several interesting posts about innovation practices in leading organizations.

Communicating the Business Value of Innovation

2007-04-08T18:19:00.000-07:00

Innovation affects all aspects of a business, from operational procedures to strategic goals. Because of the widespread, often dispersed nature of innovation projects, it can be quite difficult to establish methods of communicating the business value of successful innovation projects. Innovation projects may have delayed costs or benefits, sometimes have unexpected effects on other aspects of the business and can change the culture or use of resources at an organization in ways difficult to measure and difficult to communicate. While working on an innovation project, new knowledge may be discovered that is not immediately usable to the project but which can lead to future efforts and open up new markets. For instance, Pasteur was working on a solution to prevent beer from becoming stale when he discovered the principles underlying fermentation, which led to understanding of microbiology and eventually antibiotics, one of his major contributions to science. Innovation projects can also lead to a culture of energy and high enthusiasm which can stir creativity and increase the likelihood of the firm to hire new talented people -- the most common example of this is the environment at Google.

In addition, strict return on investment (or ROI) measures are notoriously bad at uncovering the true business value (or BV) of innovation. ROI evaluates resources allocated to a project and the return upon those resources, but innovation rarely has easily identifiable returns. Innovation often affects many aspects of a business and can underlie perceptual shifts as well as altering levels of efficiency and sometimes competitive advantages. For these reasons, accurately measuring the resources saved, gained or developed because of innovation projects is nearly impossible. In addition, innovation projects involve a degree of uncertainty and adaptation. Discussions of innovative projects usually revolve around promises, risks and opportunities, not around concrete examples or assurances. For this reason, communication about innovative projects needs to be carefully thought out to encourage innovation while hanging onto a healthy dose of skepticism and evaluation.

We will be presenting our findings from the BVI research project at the I3M symposium on April 16 at the University of Washington. To learn more about how to successfully communicate the business value of innovation, please stay tuned for our research paper and we also look forward to seeing you at our symposium [see http://projects.ischool.washington.edu/i3m/].

Infosys cites Ideas4Innovation work

2007-04-02T16:37:00.000-07:00

Infosys Technologies (the Technology and Outsourcing Giant) maintains a series of blogs. These blogs talk about various issues related to IT, outsourcing, and innovation. One of their blogs, Managing Offshore IT (http://infosysblogs.com/managing-offshore-it) cited our work on Outsourcing Innovation. The post More Companies Outsourcing Innovation: But what does it mean to you? (http://infosysblogs.com/managing-offshore-it/2007/04/more_companies_outsourcing_inn.html#more), discusses the changing nature of outsourcing innovation. We are working on a project called Managing Risks for Rewards: The Case of Outsourcing Innovation (we call it IRO). Stay tuned for more details…

APQC Best Practice Partners: Successfully Embedding Innovation

2007-04-02T16:08:00.000-07:00

Executives from CSC Corporation...	Executives from Ethicon Endo-Surgery (a Johnson & Johnson Company)...
Executive from Boston Scientific...	Executives from Air Products and Chemicals, Inc...

Research Featured in Sloan Management Review

2007-03-31T08:59:00.000-07:00

The core paper of our first research project, Leveraging Ideas for Organizational Innovation, is featured in the current issue of Sloan Management Review.

Mariello, A. “The Five Stages of Successful Innovation,” Sloan Management Review, 48 (3), 2007, 8-9.

See http://sloanreview.mit.edu/smr/issue/2007/spring/06/

APQC Knowledge Transfer Session: Successfully Embedding Innovation

2007-03-30T18:34:00.000-07:00

I just returned back to Seattle from Houston!!! While in Houston, I spent two days with an eclectic group of senior executives discussing the ins and outs of building innovation programs. A diverse group of organizations was present at the meetings – Accenture, BD, Boeing, Deloitte & Touche USA LLP, Fisher-Price Inc., Northrop Grumman Corporation, Occidental Petroleum Corporation, Praxair Inc., Aramco Services Company, Siemens AG, U.S. Army, Army Research Laboratory, U.S. Army, ARDEC, U.S. Army, TARDEC, U.S. Department of State, U.S. Government Accountability Office, U.S. Navy, Carrier Team One, IBM, Air Products and Chemicals Inc., Boston Scientific, Computer Sciences Corporation, Ethicon Endo-Surgery, and Hewlett-Packard.

I had the distinct pleasure of giving the opening and closing talks during the two days. My opening talk focused on strategic actions and issues that organizations need to consider while building sustainable innovation programs. To close the meeting, I addressed how managers should turn ideas into action for business value.

Modifications and Innovations to Technology Artifacts

2007-03-28T02:00:00.001-07:00

Along with Yukika Awazu and Arkalgud Ramaprasad, I have a new paper that was just published:

Desouza, K.C., Awazu, Y., and Ramaprasad, A. “Modifications and Innovations to Technology Artifacts,” Technovation, 27 (4), 2007, 204-220.

Abstract:
What happens to a technology artifact after it is adopted? It has to evolve within its particular context to be effective; otherwise, it will become part of the detritus of change, like the many genes without a discernible function in a living organism. In this paper, we report on a study of post-adoptive behavior that examined how users modified and innovated with technology artifacts. We uncovered three types of modifications made to technology artifacts: personalization, customization, and inventions. Personalization attempts are modifications involving changes to technology parameters to meet the specificities of the user; customization attempts adapt the technology parameters to meet the specificities of the user’s environment; and inventions are exaptations conducted to the technology artifact. This paper presents a grounded theoretic analysis of the post-adoptive behavior based on in-depth interviews with 20 software engineers in one multi-national organization. We identify a life-cycle model that connects the various types of modifications conducted to technology artifacts. The life-cycle model elaborates on how individual and organizational dynamics are linked to the diffusion of innovations. While our research is exploratory, it contributes to a deeper understanding of post-adoptive behavior and the dynamic relationship between user innovations and organizational innovations.

Measuring Innovation: From Process to Stages to Capabilities to Measures to Business Value

2007-03-27T18:52:00.000-07:00

Measuring innovation requires an organization to have a well-articulated innovation process. Without a process, measurement is impossible. During our research, we arrived at the following stages of innovation: (1) generation and mobilization, (2) advocacy and screening, (3) experimentation, (4) commercialization, and (5) diffusion and implementation. For each of these phases, we identified underlying capabilities that an organization must execute: (1) sources management, (2) analytics management, (3) interpretation management, and (4) action management. These capabilities are comprised of a series of activities. For instance, in sources management, (a) Identifying Sources, (b) Evaluating Source Characteristics, (c) Organizing Sources, (d) Retrieving Ideas from Sources, (e) Updating the Collection of Sources, and (f) Protecting Sources.

Once we are able to make the process of innovation explicit, we can develop measures for the process. We start by measuring the activities, then build composites for measuring capabilities, which in turn will help us measure each stage, and then the overall innovation process.

Using these measures, we can link innovation to business value measures, from process to output, and value measures.

More details will be forthcoming as we begin to release our working papers.

Measure and Measure: Making Innovation Explicit and Valued

2007-03-27T18:40:00.000-07:00

In the 18th century, the renowned physicist Lord Kelvin remarked, “To measure is to know” and “When you can measure what you are speaking about, and can express it in numbers, you know something about it; but when you cannot measure it, when you cannot express it in numbers, then your knowledge is of a meager and unsatisfactory kind”. Although he was not speaking about the field of knowledge and innovation management when he made these statements, there may be no better field for which these statements hold true, and his words may easily be applied to that which is missing from the extant literature on knowledge management.

There is a conspicuous absence of models to evaluate such efforts. A major concern for scholars and practitioners is how to measure the status of knowledge and innovation management in an organization –– i.e., its strengths and weaknesses Managers today have to rely on anecdotal descriptions to justify investments. Without a meaningful framework for describing its trajectory, knowledge, and innovation, management is viewed by many as a mere fad.

During the I3M meeting in April, I will be presenting our model for measuring the innovation process and linking it to business value...

Contradictions in Innovation: The Critical Role of Librarians

2007-03-24T08:00:00.000-07:00

I will be giving a talk to the Pacific Northwest Chapter of the Special Libraries Association. The talk is titled, “Contradictions in Innovation: The Critical Role of Librarians”.

In order to innovate, organizations must find ways to manage their knowledge. Knowledge need to be created, utilized, shared, duplicated, and commercialized. However, the very same knowledge must also be protected and secured. Herein lies the contradiction: to share or not to share. How do we build organizational mechanisms where knowledge can be shared, while being secured! More importantly, how do we retain the high-energy and enthusiastic culture required for innovation, while still being respectful of the needs for security and compartmentalization? I will draw on examples from government intelligence operations, innovation programs in large organizations, and even my own entrepreneurial experiences to draw some tentative conclusions.

Knowledge Transfer Session at the APQC

2007-03-21T17:11:00.000-07:00

I will be presenting some of our findings at the APQC(American Productivity Quality Center) Knowledge Transfer Session meeting next week in Houston, Texas. APQC is a strategic partner on our research efforts. All sponsors of the APQC research project will receive copies of our research papers. I have enjoyed engaging with APQC as a Subject Matter Expert on their study – Successfully Embedding Innovation: Strategies and Tactics.

Flyer for the I3M April Symposium

2007-03-20T21:14:00.000-07:00

I3M Spring 2007 Symposium: Demystifying the Link between Business Value and Innovation

2007-03-18T17:31:00.000-07:00

Mark your calendars...

I3M Spring 2007 Symposium: Demystifying the Link between Business Value and Innovation

Location
Waterfront Activities Center
Monday, April 16, 2007

Agenda

Sustaining Innovation: The Challenge for Incumbents

2007-03-13T21:00:00.000-07:00

We have another paper ready for submission to a journal – “Sustaining Innovation: The Challenge for Incumbents”. The authors of the paper are Ashley Braganza (Cranfield University, UK), Yukika Awazu (Bentley College), and Kevin Desouza (University of Washington)

Abstract:

In today’s competitive environment, the ability of an organization to innovate is considered paramount. While most organizations have flashes or spurts of innovation, only a handful of organizations have been able to innovate on a continuous and sustained basis. In this paper, we report on the challenges faced by firms when trying to build sustainable innovation programs. These findings have been deduced from an examination of innovation programs in over 30 organizations based in the North America, Europe, and Asia.

In the paper we analyze issues such as the inhibitors of innovation (e.g. pursuit of stability, risk avoidance, bounded by experience, lack of requisite variety, etc). In addition, we outline several interventions, including the portfolio approach to allocating resources for innovation, training managers to be innovators, communicating the value of innovation, among others.

CSC Corporation

2007-03-12T19:58:00.001-07:00

On February 28, 2007, I visited the Computer Sciences Corporation (CSC) (http://www.csc.com/) at Falls Church branch. Founded in 1958, CSC has been a pioneer of IT service organization. CSC is a large global organization that has approximately 77,000 employees in 80 countries worldwide. CSC is a large company that has a decentralized structure. Although almost 50 years has passed since CSC was founded, CSC is still one of the innovative companies. The purpose of my visit is to find out their secrets about how they preserve innovative culture such a long time. The following three points are those I thought interesting.
Point 1: CSC has a unique virtual central unit called The Office of Innovation. The role of Office of Innovation is to identify and finance ideas generated by business units (or individuals in those units) and help those ideas to be implemented. They host several awards such as Technical Excellence Awards, etc.

Point 2: CSC preserves its innovative culture. CSC employees know that CSC was founded as a pioneer of IT services. As the name "Computer Science" Corporation indicates (in 1950's, the term "Computer Science" was not much popular) that CSC is always seeking innovative solutions.

Point 3: CSC utilizes various types of ICTs for various purposes. For example, they still utilize Lotus Notes, since Notes are accessible by all employees in CSC. At the same time, they conduct trial and error of new ICTs such as Wikis.

For large organizations, it is difficult to embed innovation. Lessons learned from CSC's practice are 1) keep flexible organizational forms that combine both traditional forms and network forms, 2) establish or keep innovative culture, and 3) utilize ICTs as possible as you can.

[Posted by: Yukika Awazu]

Building Partnerships for Innovation

2007-03-06T16:25:00.000-08:00

We have a new paper ready for submission - Building Partnerships for Innovation

Executive Summary:

In a business environment characterized by the development of deep, niche expertise in a particular domain, business partnerships can provide a source of innovative rejuvenation. This paper aims to uncover how organizations engage in innovation with business partners through exploratory multiple case study of over 30 innovative European and US companies. Data collection involved 50 semi-structured interviews with senior representatives from R&D, product management, information technology, and marketing. The interview data were complemented by desk research: analysis of corporate reports and validated in follow-up sessions. Three complementary models of business partner innovation emerged: acquisition, strategic alliances, and open source. These can be used in a portfolio manner by organizations with sustainable innovation programs. Organizations make strategic, project-based choices. Based on the three models, we propose a three-dimensional “Co-Innovation Space”, in order to analyze existing innovation project portfolios and/or to plan what kind of innovation approach a company may take within the near future.

Table 1 from the Paper:

Outsourcing and Chicago

2007-02-20T14:24:00.000-08:00

Chicago is my kind of town! I spent the last few days in the Windy City. While my primary reason for the visit was to continue to gather data for our ongoing research project, BVI (Demystifying the Link between Innovation and Business Value), I did have time to do other interesting things (e.g., eat some good food and catch up with old friends).

On a business related matter, I gave a talk to the students at DePaul University (www.depaul.edu) as part of an executive panel on outsourcing (http://facweb.cs.depaul.edu/yele/CIO-annual-events/2007winter/program.asp). Professor Olayele Adelakun (http://facweb.cs.depaul.edu/yele/) invited me to address his students and guests. I thank him for doing this.

I had the distinct pleasure of giving the opening talk for the panel; the topic I chose to speak about was the future of outsourcing, titled, "Strategic Sourcing: Sourcing of Innovation." For the talk, I drew on material from our forthcoming research project, IRO (Managing Risks for Rewards: The Case of Outsourcing Innovation), and our current project, BVI, along with findings from our past project, I4I (Leveraging Ideas for Organizational Innovation). An excerpt from my talk:

Outsourcing programs are becoming more complex. One aspect of the complexity comes from the kind of work that is being outsourced. Once, companies only outsourced simple, defined, and structured work. Organizations are now venturing into the outsourcing of innovation, and some are even ready to outsource pieces of their core capabilities. Organizations that are prepared to manage these relationships in a strategic manner will survive and thrive in the marketplace.

Some geniuses think they are beyond outsourcing, or even protected from it -- as I recently heard from one executive, "we will never see ourselves outsourcing our [IT] work...we just do not do that." Such thinking is not only dimwitted but immature and shortsighted. Most banks have outsourced large portions of the IT functions; similarly, supply chain functions and HR functions are being outsourced.

Think about this: most defense sectors of nations have begun to outsource the jobs of the military to private contractors. Once, these jobs were sacred and never to be outsourced.

My talk was followed by a presentation from Richard R. Howe (Vice President, Science Applications International Corporation (SAIC)). Richard drew upon his experience in managing outsourcing deals from the perspective of a vendor and provided a lively discussion of the issues that companies face when aligning outsourcing programs. A presentation by John McCord of the Global IT Consulting Group from the PA Consulting Group was next. John discussed results from a recent PA Consulting survey on the state of outsourcing. What caught my attention was the perceptions from the points of view of clients and vendors as to why they engage in outsourcing programs. Seldom do clients and vendors meet eye to eye or agree on what are the drivers of their relationships.

After the three talks, and a small break, we answered questions from the audiences for about 90 minutes. I must say that the audience kept us honest and asked some very interesting and difficult questions. Issues were raised surrounding the management of SLAs (Service Level Agreements), the protection of IP around outsourcing, the political and economic implications of outsourcing, and the management of risks and opportunities around outsourcing efforts. As the evening closed, there was a book signing event: I had the opportunity to sign copies of my book (The Outsourcing Handbook, Kogan Page, 2006). The day ended with Olayele and me, enjoying a few pints at a pub and enjoying the traditional food of Chicago: ribs and steak!

Managing Risks for Rewards: The Case of Outsourcing Innovation - New Proposal Submited

2007-02-16T19:01:00.000-08:00

Organizations face a daunting challenge in managing the risks associated with the outsourcing of innovation. Most organizations have realized that they cannot reach business goals by conducting all activities internally. Cooperating with business partners and leveraging the know-how found in an organization's midst is a salient determinant of competitive successes. Many organizations struggle to increase the intensity and success of partnerships.

When organizations outsourced only manufacturing, business partners simply assembled raw materials. Business partnerships then moved to simple knowledge work, as was the case when the outsourcing of software development and IS maintenance efforts became popular in the mid-1980s. Today, leading organizations rely on their business partners for innovation and process goals. The outsourcing of innovation involves engaging with business partners in ways that are significantly binding and have strategic implications.

In all the above cases, we notice several interesting things – (1) in innovation-based outsourcing programs both parties are engaged in developing novel products and services, (2) the chances of the two parties successfully meeting their objectives is very low as the project space is undefined and new, with a greater chance of failure, (3) these alliances are premised on the fact that both parties will gain, and if they gain will share the rents and royalties, and (4) the knowledge sharing and intellectual property issues within (and around) these alliances is emerging and sometimes indeterminate.

This research project aims to examine the issues surrounding the management of innovation outsourcing programs. In particular, we seek answers to the following questions:

1. How do organizations make decisions to engage in the outsourcing of innovation? To this end, we will seek to evaluate the various methods that are used by organizations to identify critical areas, capabilities, and spaces for outsourcing. Research into the goals and objectives of outsourcing for innovation can inform executives about potentials for alignment of goals and objectives with outsourcing partners.

2. How do organizations choose business partners for the outsourcing of innovation? This type of partnership is different from finding a business partner for traditional outsourcing efforts, e.g. the sourcing of manufacturing or well-defined knowledge work. Outsourcing of innovation requires finding business partners who have specialized knowledge in a given arena, and business partners who can work in concert with an organization to come up with new products and services.
Being able to manage risks becomes critical here. A traditional, established organization might seem to be less risky, but the value of such an engagement may not be high. Larger firms may be predisposed towards economies of scale, and may not be interested in tailoring efforts to meet the specifics of the organization. On the other hand, an upcoming firm might be riskier, but the rewards might be higher.

3. How do organizations manage issues surrounding the governance of innovation? Issues here include the development of robust knowledge sharing programs that capture all of the information needed to implement and refine innovations that emerge from outside the organization. Furthermore, what are the procedures in place to secure intellectual property during these outsourcing transactions? Finally, what are the models used to share rewards, costs and incentives with business partners?

4. How do organizations manage their portfolio of relationships? Most organizations have multiple relationships and the management of these can be quite tricky. How do organizations develop models to manage these relationships? Some organizations have created an Office of Alliance Management (e.g. Eli Lilly), while others decentralize the management of relationships to functional groups.

5. How do organizations manage the risks associated with outsourcing of innovation? While the outsourcing of innovation has many benefits, it has an equal amount of risks. For instance, what happens if an organization realizes that the business partner has not lived up to expectations? How are issues surrounding new product development managed? What about the case where a business partner acts with guile and compromises the organization’s intellectual assets?

6. What are the critical success factors and drivers behind successful management of outsourcing programs? Are any of the five issues discussed above crucial to all outsourcing for innovation programs? What differences exist in successful outsourcing for innovation, and can we explain those differences based on the data? The ability to scale innovation projects and to sustain long-term business advantages through this kind of innovation requires an understanding of management processes for outsourcing for innovation.

Measuring Gaps: Innovation

2007-02-06T20:37:00.000-08:00

Innovation can increase revenue growth for a company, and according to Mullen's article, calculating the gains and gaps in innovation can give a company a better idea of where they fall with respect to the competition. Understanding if an organization has an "innovation gap" can illustrate new areas for revenue growth. Part of this process involves democratic participation and brainstorming by employees through content management systems. Innovation can decrease operating costs, lead to new products, improve workplace atmosphere and generally affect all elements of a business and its success.

Mullen's article discusses four components to consider when evaluating for innovation gaps: revenue growth, revenue protection, cost containment and disruptive change. Evaluating these elements can greatly assist organizations in making strategic choices.

For other ways of calculating the monetary value of innovation, see the "smart metrics" listed by Baseline: http://www.baselinemag.com/article2/0,1397,818932,00.asp. They include formulas such as "employee suggestion payoff" which is measured as such:

[($ saved or created by employee suggestions/# of employees)/$ costs of IT to support employee-suggestion system]

These kinds of metrics can help to quantify the seemingly impossible, the effects of both far-reaching and short-term, incremental and radical innovation.

See: Mullen, E. "Calculator: The Money Your Innovation Isn't Making," Baseline, Available here: http://www.baselinemag.com/article2/0,1397,743154,00.asp

[Summary by: Chen Ye]

Measuring Innovation

2007-02-05T08:36:00.000-08:00

The previous blog entry discussed Boston Scientific and their emphasis on innovation in the domain of medical equipment. Boston Scientific also has a strong program in place to measure and understand innovation and opportunities for innovation. Scott Engle (Director of Emerging Technologies and New Market Development) gave the next presentation. Scott focused his remarks on the methods and metrics used by the organization to identify areas for innovation. His critical point was that the organization needs to be one with its customers. Boston Scientific uses an extensive set of methods to gather ideas and insights from customers, and then uses these to identify areas for new product development. The organization has developed a Customer Perception Matrix to identify and map out customer needs and available products, based on features and drivers. Using this map, the organization can engage in directed innovation.

Another critical points that Scott made was the need to know when an organization has missed opportunities and it is not worth spending the resources to innovate, as a competitor has already secured an advantage.

Richard Traxler (Senior Manager, Technology Planning) gave a highly energetic presentation on the process used by Boston Scientific to conduct evaluations on core versus novel innovation projects. I must say the program that Richard has put in place is by far one of the best that I have seen. Novel projects are put through different review processes than core ones (most organizations still do not do this at all…). In addition, the ways used to start-or-stop these projects, and origination of these projects is also managed differently.

The strong understanding of the innovation process and ways to measure that process were fascinating. Thank you to all at Boston Scientific for sharing your knowledge!

Boston Scientific: The Context

2007-02-04T08:35:00.000-08:00

The purpose of my visit to Boston Scientific (Maple Grove, MN) was to learn about the innovation programs that Boston Scientific has in place. On a brisk morning (if memory serves me right, the temperature was a balmy 1˚ F) I attended a nice breakfast reception, followed by an energetic talk by Randy Schiestl (VP, Product & Technology Innovations). Randy gave an overview of Boston Scientific and highlighted the accolades that the organization had won for its innovation programs (2005 Shingo Prize for Excellence in Manufacturing; 2005 Industry Week’s Best Plant; 2006, UBS Investment Research ranked the company number one in Technology Strength in a study of the intellectual property patents). Currently, Boston Scientific has about 28,000 employees spread out in 22 countries, with the headquarters being in Natick, MA. The company has four main divisions: Cardiovascular (which includes Interventional Cardiology, Peripheral Interventions, Vascular Surgery, etc), Endosurgery (Endoscopy, Oncology, and Urology), Neurormodulation, and Guidant. Boston Scientific is an $8 billion dollar company today, growing from $2 million in 1979.

Chris Pelerini (Manager, Technology Development Process) discussed the various communication programs, incentives, and organizational support mechanisms in place to foster innovation; Boston Scientific has an extensive review process in place to mobilize innovative projects. These include reviews by various technical boards, a technology executive committee. Susan Trahan (Director, Portfolio Planning) wrapped up the day by highlighting success factors, critical barriers to innovation, and the next steps in the organization’s innovation programs. Overall, I enjoyed my visit to the Maple Grove area, and learnt a lot from the visit to Boston Scientific. Thanks to all who helped organize the visit!

The Need for Innovation
Randy discussed how the US faces epidemics of obesity and diabetes, and why the need for new less invasive techniques of treating these were necessary. The calling to make less intensive medical devices is a noble one. Employees of Boston Scientific are bound together by their interest in working out problems, coming out with new discoveries, and pushing the frontiers of less invasive medical technologies.

One of the major growth strategies of the organization has been the pursuit of acquiring innovative organizations. This reveals a critical nugget of insight – unlike most organizations, Boston Scientific does not try to immediately merge their acquisitions into their manifold existing operations. Upon acquisition, they allow the acquired entity to run on its own, and then slowly begin a phased integration process. They thus discover and understand the peculiarities of the new organization from an operational point of view. Integration, right off the bat, without adequate time for assimilation and cross-fertilization of ideas is not appropriate. Boston Scientific learnt this lesson through past failures. Most recently, the organization acquired Guidant Corporation, and hopefully they will be able to turn this acquisition into a strategic capability.

New Team Member - Krishnaja Gutta

2007-02-02T14:48:00.001-08:00

I am Krishnaja Gutta- Current MSIM student , ISchool, UW.

I am very excited about joining this group and am sure it will be great experience working with varied expertise.Looking forward for the project to get started.

As a new member on board, here's a brief introduction about myself:
I have a masters in Physics and a minors Business Administration prior to UW. Strategy and Portfolio Rationalization in Agile Organizations have been some my major interests since college. Having been in the midst of the "Outsourcing" boom in India, I had an opportunity to witness the various attributes of the practice up close. To this project I would like to bring some of the experience and insights I had gained over the years and research further into the "Outsourcer" (USA) side of the equation and study the where, how and when of global equilibrium of these outsourcing trends and would like to see how the industry can face the risks that when it starts playing around with aspects like innovation.

Stages of Maturity - Innovation in Organizations

2007-01-29T13:42:00.000-08:00

Consider the following comment, from Jaime Green, NPower Seattle Director:
“NPower was founded here in Seattle, and the first 3-4 years, our innovation was around that startup energy, where you're inventing everything, including things that other businesses know how to do. The kind of time that you dedicate to innovation, build before you codify. But now we're moving into a stabilizing life cycle, what things we want to maintain stability around, but how to balance that with maintaining stability. Where do you prioritize, staying flexible, and how do you dynamically manage that flexibility? Get your bills out on time, the way that you deal with customers, so it's a dual challenge.”

Organizations can be tracked on an evolutionary path in terms of their innovative behavior. During the early days, the organization will likely be quite small and will be focused on getting the operations started. During this time, the focus of the organization will be to try and leverage the collective know-how of the personnel and transform these into products and services of interest. Early on, the amount of innovative behavior in the firm will be high. The entire focus of the organization will be to disrupt incumbents in the industry to carve out a niche for themselves. Moreover, the need to make an impact in the industry will be the overriding concern and will be the driving force behind the creative spirits. It is common to see organizations in this mode of operations go after almost any option or opportunity so as to showcase the skills possessed by the organizational members.

Over time, the organizations that move out of this early phase of rapid response and organizational shape-shifting have identified their core competencies and have carved out a niche in one or at most two products or services. The next phase that the organization will enter will be one of thriving on being flexible. Here, the focus will be to reuse the knowledge and experiences captured in products and services and reaping the benefits of reselling these to multiple parties. Moreover, the organization will be able to stretch the range of their operations and in doing so extend the scope and scale of the efforts, most notably the efforts in distributing products and services. So, for example, if the organization was first serving only ten clients, the focus of this stage will be to scale up to serve thirty or forty clients. It is important to note that here the focus is not so much on product innovation, but on process innovation, i.e. scaling the business processes to extend the reach of the firm. This line of thinking will be apt for only a short period. The reason is that soon there will be new firms in the marketplace, who will be trying to overthrow the firm, in the same way that the firm entered the market.

Hence, the organization will move to the third phase – adaptation. Here, the firm will focus on trying to imitate the work of the newer firms and respond to them. The focus here is not so much on scaling the product or service delivery efforts as was the case in the previous stage, but to quickly add components to the current offerings so as to keep them from obsolescence and prevent the loss of market share and clientele. During this time, the organization will realize that they need to go back to their bread and butter, the things that got them into the business in the first place – product innovation. So, efforts in the area of product innovation will start to be commissioned again, albeit in a reactive manner, based on competitors and market research.

Organizations that make it through this stage will enter the stage of exaptation. Expatation is a term borrowed from biology – it means the ability to use your existing features for novel functions. In business, that means using existing assets to create or apply to new markets, products or services that you did not know existed before. Organizations similarly will be able to innovate using their existing resources in novel ways – they will develop breakthrough innovations, most often in the context of new products or revised business models here. The challenge for the organization here will be balance between its current size and the difficulties in innovating with the large size. This is why the concept of exaptation is fitting here. The organization probably cannot shrink back down to a small size or reverse the clock. Hence, it is important for the organization to use its current structure and yet seek ways to innovate. The final stage in the model is where the organization displays agility in terms of its innovative capabilities. This will occur if the organization can sustain its capacity to innovate on a continuous basis.

There are risks is moving through the phases noted above. Most organizations get trapped in the stage of flexibility. The reason for this is that the organization has just expended a great deal of energy getting through the stage of operability and now would like to take a breather and reap the benefits of the original inventions created during the initial stage. Moreover, a comfort factor sets in as the organization realizes that it has carved out a niche, and now they do not have to consistently innovate to continue the business. Instead, they just have to scale up to redistribute the invention to as wide of a scale as possible. Failing to address that task seriously and with respect for the innovative capacities that the organization was built upon leads to stagnation at the flexibility stage. The other risk is that when organizations get trapped in the adaptability stage. Organizations may just try to imitate and continuously try to keep up with their competitors rather than work to redefine the competition. Most organizations are fearful of conducting exaptation as there is a great risk that they might fail and lose everything they have created.

New York…New York…IBM-NYU Global Sourcing Workshop…

2007-01-27T07:56:00.000-08:00

I just attended the IBM-NYU Global Sourcing Workshop (http://w4.stern.nyu.edu/ceder/events.cfm?doc_id=6687) at the Stern School of Business. I would like to thank Natalia Levina (Assistant Professor, NYU) for inviting me. Natalia, and her team, organized a high-impact day with an eclectic array of speakers. All details, from the logistics of getting to NY, to lodging, food, and even the closing dinner, were handled with the utmost care.

The day began with talk by Dianne Bellantoni-Sammon, Director of Global Diversity, at IBM. Dianne discussed IBM’s resourcing program, and also the various disruptive issues that need to be managed in sourcing relationships. During the Q&A session, she was asked to comment on the skills needed by business students to be successful in today’s marketplace. Not surprisingly, she cited the need to have students who can communicate effectively, argue their positions, pull the business case together, and manage relationships.

Next there were talks by prominent scholars on various themes of outsourcing research. Cynthia Beath and Rudy Hirscheim began by discussing the State of Affairs. Cynthia’s presented her analysis of the literature on outsourcing. Rudy provided a personal reflection on current happenings in outsourcing. This was followed by several sessions of talks: Working across Boundaries: Challenges and Solutions (speakers: Erran Carmel, Alberto Espinosa, Jens Dibbern, and Natalia Levina), Accounts from Offshore Providers (Anand Gopal, Kate Kaiser, and Ravi Aron), and IT Outsourcing Performance (Jeanne Ross, and Vijay Gurbaxani).

During lunch, I participated in a roundtable discussion on knowledge sharing and innovation issues in outsourcing. Members of the roundtable included: Natalia, Sirkka Jarvenpaa, Joe Rottman, Alberto Espinosa, and Manuel Arriaga. We wrestled with the idea of developing new theories for work, questioning the notion of organizational boundaries, and even the concept of culture.

The day ended with a nice wine reception, followed by dinner at Zoë. During dinner, I had entertaining discussions with Alberto and Cynthia…

Overall, an excellent event, and once again, a big thank you to Natalia…

Air Products, Part 3: Air Products, cont., How to use Metrics

2007-01-23T22:43:00.000-08:00

The successful innovative environment at Air Products depends upon metrics and evaluations, and for the research project Demystifying the Link Between Innovation and Business Value, several key lessons were learned.

First, metrics are easier to devise for incremental innovation programs where one is working in a structured and well-defined space. Metrics to gauge radical innovation efforts are not easy to devise. New ideas need time and space to be developed so that applications can be fully understood. Moreover, the environments where such ideas might be deployed are also less understood than the traditional domains in which the company is operating in.

Second, metrics for innovation are normally calculated at the process level (e.g. efficiency values) or the output level (e.g. customer satisfaction, customer retention, etc).

Third, when allocating resources for innovation, most often organizations only hold managers’ responsible for spending their budgets. Instead, managers must be held accountable both for spending and returns and there must be systems in place to shape innovative ideas into useful business plans and projects.

Overall, Air Products is a model of an innovative culture created in an established industry. Their business process innovations have been dramatic and sweeping, and have created an organization with firm procedures and metrics around incremental innovation that contributes to their market success.

For more information, contact Kevin Desouza for the final report!

Air Products, Part 2: Air Products cont., Alerts and Conversations

2007-01-22T18:45:00.000-08:00

In addition to having structures and people in place for encouraging internal innovation, Air Products also scans the environment to inform employees about developments in the industry, in markets and throughout the world. Kerri Freidl highlighted the process by which external ideas are brought into the organization. Air Products has an excellent system that uses many of the principles and goals of information science and business research. Automated tools (e.g., data retrieval systems, text mining, etc) scan several external databases (from the structured such as patent filings, to the unstructured such as blogs) for ideas and innovations. Managers have profiles and personalized alerts about key developments are sent to them individually. On average, 1000 sources are searched and over 4000 alerts are sent out per year.

Managers can then choose alerts that that are of interest, and commission background reports – backgrounders. About 50-100 backgrounders are created each year. The Technology Partnerships Group generates backgrounders by digging deeper on alerts of interest to provide a more comprehensive picture of the idea. If the idea is still appealing, the Technology Partnerships Group can generate a more detailed report – analyses. Twenty to twenty-five analyses are created each year, and these are used to facilitate structured discussion around ideas and decision making.

All these structures to encourage thoughtfulness and innovation also require opportunities for discussion, debate and cross-fertilization of ideas. Pushpinder Puri discussed the various mechanisms by which ideas get shared at Air Products. For example, a mentoring system helps incoming employees get acquainted with the innovation process. The various technical groups hold weekly symposiums and discussions where ideas are shared. In addition, there are several internal, organization-wide, conferences where ideas are put through a peer review process and chosen for discussion and presentation.

Air Products has a slogan: "Tell me more – the heart of a meaningful conversation." The organization shows this slogan demonstrates day-to-day activities.

Air Products, Part 1: Creating Accountability for Thinking Ahead

2007-01-21T06:42:00.001-08:00

I recently visited Air Products and Chemical Inc., in beautiful Allentown, Pennsylvania. Air Products is a gases and specialty company with about $8.8 Billion in revenues. 50% of the sales occur outside the U.S. The company is organized into its four main domains – electronics and performance materials, TGEE (Transportation Energy, Hydrocarbon Recovery, and Power Generation), Homecare, and Merchant Gases. For more details see www.airproducts.com. Much of what we know today of how to extract, compress, and distribute gases has existed at some level since 1900. As noted by Jon Irven, some might argue that the only thing that changed in the delivery of gases was the color of the cylinder. Air Products has successfully and amazingly met the challenge of innovating in this highly mature, commoditized, and stagnant market. I walked away from the meeting with one major point – if Air Products can innovate, anyone can.

Consistent innovation requires leadership, and Air Products has met this challenge by forming a specific group of responsible individuals. Jeff Kramer heads up the Corporate Development Office (CDO) whose role is to (1) ensure that the company has a healthy business portfolio, (2) that the portfolio meets and exceeds investor’s profitability and growth expectations, (3) the company is well positioned to generate solid, and sustainable, returns for the foreseeable future, and (4) to critically examine performance based on internal and external comparisons.

The CDO group does not get involved in the day-to-day running of the various business units (e.g. Homecare or TGEE). Instead, the group looks to the future. The group studies new ideas that have high risks and high payoff, while of course trying balance the portfolio of opportunities. The CDO works with the Growth Board (a senior leadership team involving the COO, CFO, CTO, and VP of Corporate Development) to screen, fund, incubate, and develop future business opportunities. One of the major functions of the CDO is to engage the Senior Leaders of the organization with ideas that might be risky or radical – as was noted several times during the day, if you want senior executives to bet on risky concepts it is best to get them in the loop ahead of time.

Communicating IT Effectiveness, Part 2

2007-01-17T01:48:00.000-08:00

This blog recently discussed IT investments for innovation and gave a framework for communicating and discussing those investments (from Poniatowski & Wischer, 2006). Clearly, the next question becomes what metrics exist to evaluate and communicate about IT investments? In an interesting article, Chabrow (2006) outlined twelve techniques for measuring IT effectiveness. We discuss them briefly in the following paragraphs, with the names and the real-life examples taken from Chabrow's (2006) article.

1) Missed Opportunities: American Power Conversion (APC) focuses on continuous customer service. They have designed and implemented an alert system that informs employees of failures in customer service. Furthermore, they measure success by decreases in missed opportunities to provide services, creating an ever-higher bar for excellent customer interactions.

2) Client Impact: Paul Heller, CIO of Vanguard Group, the mutual fund company, has created a metric consisting of a 3x3 grid to measure the intersection of client impact and operational impact. Each is ranked as low, medium or high impact, but the overall company benefit (or lack thereof) can be easily and consistently visualized. IT funding is allocated and tracked for low, medium and high client impact.

3) Self-Help: Pacific Blue Cross in Vancouver, British Columbia, categorizes IT expenditures as either innovation or support projects. Sometimes, those two intersect, as in the domain of self-help for filing claims. Their new e-claims system has been considered successful because dentists who use it are increasing and manual claims are decreasing, reducing operational overhead.

4) Staff Mix: Effectiveness of an IT project can also be assessed in terms of knowledge gained and hours spent, which can be characterized by the proportion of in-house and outsourced staffs. Though outsourced projects may be cheaper, with territory specific projects, knowledge of local needs, challenges, and obstacles are critical to long and short term project success. One company, EMC, strives for a 40% outsourced, 60% in-house staff to maximize knowledge and minimize costs.

5) Tied To Profit: Steve Phillips, CEO of Avnet, benchmarks IT spending against gross profit instead of revenue or expenses. IT spending is evaluated by if it increases revenue or decreases cost.

6) Perception Counts: A group at MIT's Sloan School of Management has developed a methodology for assessing gaps between an organization's IT security measures and employees' perception of security. Organizations then have a checklist for areas for operational, security improvement, particularly with regards to current practices.

7) Development Speed: Incorporating best practices during software development can help with the ever-important development speed of IT projects. University of Pittsburgh Medical Center has adopted Capability Maturity Model Integration and went from performing best practices 30% of time to currently seeing them 90% of the time.

8) Dropouts: This measures success of a new Web feature. Vanguard Group, the mutual fund company, conducts 80% of customer interactions online. Vanguard tracks the number of people who use a feature and when and where they stop using it--or if it is highly popular.

9) Sales Engine: IT centers must understand and engage customers to increase revenue. At Global Crossing, CIO Dan Wagner encourages IT people to attend customer meetings to understand business issues firsthand and hopefully deliver possible solutions to increase revenue. Knowing the customer changes development processes and can inspire new kinds of IT projects.

10) Innovation: IT projects can focus on creating new capabilities. While CIO Wagner at Global Crossing speaks of "strategic software development," CIO Randy Mott at Hewlett-Packard talks about IT "innovation." Innovative IT capability has to be actively pursued. Global Crossing insists that IT employees keep track of the hours spenton new projects, so as to assess time spent on new capabilities per IT project.

11) No Train, No Gain: CIO Wagner at Global Crossing emphasizes employee training. Each employee's training is tracked and the linkage to business requirements or objectives is essential. In other words, training for IT groups is actively pursued to create new business opportunities and growth.

12) The Ultimate Test: Vanguard Group, the mutual fund company, regularly surveys employees with two key questions: Will I recommend my area to a co-worker, and will I recommend my boss to a co-worker? Engagement with the job is thus assessed, and job switching is encouraged across business functionalities. Employee satisfaction takes on new meaning and can direct job placements.

References:
Chabrow, E. (2006) Techniques For Measuring IT's Effectiveness, Information Week, October 23, available at http://www.informationweek.com/story/showArticle.jhtml?articleID=193401033

24/7 Innovation = Hype?

2007-01-16T13:46:00.001-08:00

Reading marketing and technological innovation literature, it is easy to get the impression that businesses today cannot survive without completely satisfying customers’ needs by continuously innovating processes and technology that new product features and new products are based upon. Market share can only be guarded from competitors’ probes by offering innovative products, reasons traditional literature. Yet, is never-ending innovation really the key to the ultimate success?
It seems that truly successful businesses know better. Having interviewed senior executives of some of the most innovative Slovenian companies, I was struck by two of the answers. On the question of rate of innovation and measuring the innovation process success, the Executive Director of Development in a manufacturing company argued:

“Sure, we do set goals, we do measure and we do assess the rate of innovation. But this is only for incremental innovation, small ideas that improve daily working practices and result in minor product changes. We are situated in a mature industry with narrow profit margins and products with approximately 5 to 10 years of shelf-life…. So our development goals are not oriented towards rapid renewal of product lines and our activities are not labeled with aching urge to replace existing products. Rather, we are harvesting our crops from well-designed products throughout the life-cycle…We are nevertheless working hard on figuring out the future trends and steadily and prudently updating our product portfolio – when the time is right and with the features and products that are aligned with customers’ needs and which promise the best margins.”

On a similar question of innovation efforts, rate of innovation and innovation measures, Director of Products and Solutions of a telecommunications company responded: “As we are smaller than our competitors, we can only engage i.e. 1.000 man-years per development of a product for which our bigger multinational competitors will engage 5.000 man-years. In terms of product characteristics and features, I admit that due to lack of resources we don’t offer everything our competition does. However, we are nevertheless experiencing better results on the market. Why? We are more focused on nurturing only the truly value-added innovations. Besides, we don’t deal with so many complexity issues in the development, production, sales and after sales stages."

These responses echo Gottfredson and Aspinall’s article in Harvard Business Review on the Innovation versus Complexity topic (2005). They suggest that companies can identify the point at which product innovation maximizes both profits and revenues and argue that for most firms, number of product and service offerings that would optimize profits and revenues is considerably lower than the number they offer today. Continual launches of new products and line extensions add complexity throughout a company's operations, and as the costs of managing that complexity multiply, margins shrink. Organizations that fail to check proliferating product lines and overly-customized services lose efficiency and confuse their customers.
Instead, organizations must figure out their zero-complexity baseline and justify additional offerings one by one: “What would your company look like if it made and sold only a single product or service? Answering that question is important for two reasons. First, virtually every complexity reduction exercise we have seen that does not do this has failed to break through organizational resistance.... [Second, only] by stripping away all the products, options, and configurations do managers get a clear sense of the extent of the complexity and its costs,” (Gottfredson & Aspinall, 2005).

For example, custom truck builder Navistar found that most consumers would opt for a generic model if Navistar could deliver it cheaply, quickly, and reliably. It introduced a modular design and realized a 25% assembly savings. The few customers who still wanted customized configurations went to Navistar’s competitors, who picked up the complexity and costs of providing that customization. Burger King saw that several products were complex and costly to handle as some of the ingredients required special manufacturing (bake, freeze), distribution and handling in outlets. They replaced those products with – from the customer perspective – similar ones, for which all of the ingredients could go through the usual supply chain, inventory management would be simpler (not requiring costly frozen storage). Sales did not drop; the complexity and the costs were driven down.
After thinking about this, “24/7 innovation” seems like hype, or maybe even dogma. It appears that the best advice is to make competition irrelevant by redesigning buyer value to expand existing markets and create entirely new ones (as suggested in influential (Kim & Mauborgne, 1997) article), rather than seeking the Holy Grail of eternal products and upgrades.

References
Gottfredson, M., & Aspinall, K. (2005). Innovation versus complexity: what is too much of a good thing? Harvard Business Review, 83(11), 62-71.
Kim, W. C., & Mauborgne, R. (1997). Value Innovation: The Strategic Logic of High Growth. Harvard Business Review, 75(1), 103-112.

[Summary by: Peter Baloh]

Communicating the value of IT

2007-01-15T15:44:00.000-08:00

The old IT metrics like IT investment as a percentage of total firm revenue and total-cost-of-ownership are passé. IT operational excellence is not just cost efficiency (Poniatowski and Wichser, 2006). Business excellence requires focusing on deriving value out of IT initiatives. IT budgets reveal costs, but benefits can be distributed across the organization. Emphasis on single-mindedly cutting IT costs will be ruinous and stymie any efforts at creatively using IT to support business processes. The authors identify three important questions firms should address to achieve excellence at harnessing IT:

1. How can IT function determine what really matters to the company?
2. What is the most effective way to align IT activities and investments with the overall business strategy?
3. How can CIOs track and manage not just IT operating efficiency, but also IT effectiveness?

The authors emphasize that organizations need to create a portfolio of IT investments that are aligned with their business objectives. They classify IT investments into four broad categories of innovation, growth, productivity, and maintenance. Organizations have to be clear about the strategic objectives of each of these four IT investment categories. Innovative IT investments are strategic, unproven, and risky, but can radically change the business environment and bring startling profits. Examples of celebrated innovative IT investments are first implementation of package tracking, the first online auction site, and the introduction of ATMs. The second category of growth IT investments are also strategic but less risky. These initiatives boost firm revenue and bring efficiency in business operations. Examples of this category of IT investments are customer self-service, Web-stores, and in-store kiosks that increase revenue and business size. The last two categories of productivity and maintenance IT initiatives are operational in nature and aim at improving business productivity and operational excellence. Examples of productivity IT investments are POS and properly implemented ERP systems that help in margin and asset utilization improvement. Maintenance IT investments include systems like accounting, control, and payroll that can help in preventing margin erosion and asset deterioration.

Therefore, business technology executives have to become more creative in employing metrics that measure and benchmark benefits from IT that are aligned with company objectives and enhance firm value and competitive advantage. Chabrow (2006) in an interesting article outlined twelve techniques for measuring effectiveness for IT. We discuss them briefly in the following paragraphs.

1) Missed Opportunities: American Power Conversion (APC) is in the business of selling uninterruptible power supplies and understandably, believes in uninterruptible customer satisfaction. APC company has a culture of continuous engagement with customers and has developed an alert system which notifies appropriate employees in case of failure in customer service. This company values IS that helps engage with customers and hence stresses its success measure in terms of minimization of the number of missed opportunities in providing services. Value of IT has to be measured in its effectiveness in creation of new businesses with existing and new customers.

2) Client Impact: Paul Heller, CIO of Vanguard Group, the mutual fund company, believes that each IT project has to be mapped into one of the nine boxes of a 3 by 3 grid, with three levels of client impact on one dimension and three levels of operational impact on the other dimension. The impact levels are categorized as low, medium, and high impact. The value of each IT project has to be assessed in terms of its impact on clients and operations. Also, overall IT spending has to be tracked in terms the proportion spent on high, medium, or low client impact.

3) Self-Help: Pacific Blue Cross in Vancouver, British Columbia, categorizes IT spent in terms of innovative projects versus support function projects. Innovative projects that enhance business value are encouraged. For example, e-claims system is proving to be a success as increasing number of dentists are using it to file claims. Pacific Blue Cross is aligning IT with business processes to enable dentists to file claims electronically, self-help, rather than handling manually.

Therefore, business technology executives have to become more creative in employing metrics that measure and benchmark benefits from IT that are aligned with company objectives and enhance firm value and competitive advantage.

Reference:

Poniatowski, S. and Wichser, J. D. (2006) A Better Metric For IT Efficiency, Optimize, May 1, available at http://www.informationweek.com/story/showArticle.jhtml?articleID=187200790

[Summary by Sanjeev Jha]

How standardization affects innovation?

2007-01-14T16:42:00.000-08:00

Benner and Tushman (2003) explore how process management techniques affect technological innovation and adaptaition. Total Quality Management, ISO standardization, BPR, Six Sigma, and other management concepts are based around process based view of an organization, and they help to map and improve organizational processes. They fuel continous innovation that results in improved efficiency, cost reductions, improved customer satistfaction and higher profits. However, long term success is not only based on (efficient) exploitaiton of existing resources.

Yes, companies do get better and better while integrating and building upon existing capabilities, however, core capabilities can become competency traps (Leonard-Barton, 1992; Levinthal & March, 1993). A firm's ability to compete in a long run also depends on simultaneously developing fundamentally new capabilities (Teece, Pisano & Shuen, 1997). In other words, while incremental innovations develop existing technology and serve existing customers, exploration into new knowledge or departure from existing skills leads to radical innovation serving emergent customers or markets (March, 1991).

New products for new customer designed around new technology are often organizationally disruptive and require significant departures from existing activities. On the other hand, (Benner & Tushman, 2003) argue, process management leads to stabilization and rationalization of organizatioanl activities while establishing a focus on easily available efficiency and customer satisfaction measures. This triggers bias towards certainty and favors exploitative at the expense of exploratory innovation. Namely, as an organization learns and increases its efficiency through repetition of a set of activities, its subsequent innovation is increasingly incremental (Levinthal & March, 1993). Moreover, organization is focused on understanding and satisfying existing customers, thus, innovation is channeled into areas that benefit existing customers. Non-standard, exploratory activities outside the existing technological trajectory are unwanted (Levinthal & March, 1993). Process management techniques stabilize organizational routines, making cross-community linkages more difficult (Benner & Tushman, 2003), which is however in contradiction with Nonaka & Takeuchi's (1995) suggestion of a need for such organizational design that connects redundant and overlapping knowledge bases in order to increase organizational innovation. Also, compared to easy-to-measure efficiency improvements, dilficult-to-quantify exploratory activities are less attractive (Levinthal & March, 1993).

Benner & Tushman (2003) warn agains explicit focus on incremental innovation which is achieved by process management orientation which results in innovation that is closesly related to existing technological or market competencies. Organizations that must meet current customer requirements and new customer demands must deal simultaneously with the inconsistent demands of exploitation and exploration. Authors suggest that appropriate answer is an ambidextrous organization which allows for both exploratory and exploitative activities to be spurred by loose and tight organizational arrangements. Benner & Tushman (2003) suggest that within processes, the tasks, culture, individuals, and organizational arrangements are consistent, but across subunits tasks and cultures are inconsistent and loosely coupled. Tight exploitation units in technologically stable settings, will benefit by reducing variability and maximizing efficiency and control by introducing process management techniques. On the other hand, n turbulent environments, for new customer segments and for radical innovation, process management activities are less conducive to organizational effectiveness. Exploratory units will succeed by experimentation, which is encouraged by introducing variety and loose control.

Benner, M. J., & Tushman, M. L. (2003). Exploitation, Exploration, And Process Management: The Productivity Dilemma Revisited. Academy of Management Review, 28(2), 238-256.
Leonard-Barton, D. (1992). Core Capabilities and Core Rigidities: A Paradox in Managing New Product Development. Strategic Management Journal, 13, 111-125.
Levinthal, D. A., & March, J. G. (1993). The myopia of learning. Strategic management journal, 14(Winter), 95-112.
March, J. G. (1991). Exploration and Exploitation in Organizational Learning. Organization Science, 2(1), 71-87.
Nonaka, I., & Takeuchi, H. (1995). The knowledge-creating company : how Japanese companies create the dynamics of innovation. New York ; Oxford: Oxford University Press.
Teece, D. J., Pisano, G., & Shuen, A. (1997). Dynamic capabilities and strategic management. Strategic Management Journal, 18(7), 509-533.

[Summary Posted by: Peter Baloh]

HP, Part 2: Specific Practices that focus on employees

2007-01-12T11:02:00.000-08:00

HP has a number of ways to encourage employee innovation. For example, they had a business plan competition open to all employees of the company. Teams of employees propose ideas and develop plans for new business development. In addition, for the more technical staff, HP has TechCon. TechCon is analogous to a research conference. Employees within HP submit their papers, which are refereed and judged. The best papers are selected for presentation, and some are chosen for poster sessions. TechCon receives over 1000 papers, from internal HP employees. About 550 employees are selected to attend this event and the discussions here foster future innovative efforts.

On the communication front, HP has taken concrete steps to communicate the value and process of innovation to its employees. HP hosted a Power-UP event (think road-show!) for innovation. Through this event, HP was able to showcase its cutting-edge work on innovative ideas and projects across the enterprise. As you can imagine, this is no easy feat, given all of the costs associated with moving innovations (e.g. physical artifacts) from one location to another. In addition, HP does make it clear to every employee that coming up with innovative ideas is hard work. The chances of an employee actually developing a new business practice are slim (really, really, slim!); some refer to this as the "Valley of Death". This is not done to discourage employees, but to make them aware of the effort and care needed to move these ideas ahead.

As one executive remarked, when he joined HP Labs, he heard the saying, "ideas are cheap". Sure, ideas are cheap (a dime a dozen), but there are only few ideas that stand a chance to make it to market. As John Meyer, Director, Digital Printing & Imaging Lab, stated, "my job is to provide an environment where innovation is fostered...I do not want to interfere with my engineers and the technical staff...I need to give them the tools and support needed to help them succeed". This thinking is quite revolutionary. Most managers want to be the ones making decisions on innovation. Many managers, and believe me I have seen a fair share of these, will want to be the "judges" of innovative ideas, even if they lack the technical competencies to judge these ideas. HP has understood that this approach does not work and does not interfere with the brilliant minds of their employees. The role of the manager is to make sure that the outputs generated by the brilliant minds can be commercialized.

Of high interest to me was the metrics that HP uses to gauge the performance of its innovation programs. Surprisingly, HP is not big on metrics. As one presenter remarked, "HP has been a very informal and nurturing environment that more often than not resists too much centralized control". Metrics are loosely defined in many cases when it comes to innovation. In terms of HP Labs, the best metric used is the track record (the history) of the Labs in coming up with innovative ideas. For more operational (also known as incremental) innovations, HP does have formal processes to gauge the quality of the ideas, calculate outcomes such as return on investments (ROIs), etc.

I can go on and on about writing about my learning from this visit. For example, the transformation ambassadors are people who helped HP close down work in some areas of its enterprise and open up new areas is interesting. Also,the notion of, "invest where we can make a difference and partner for the rest," was also intriguing given the current surge in business process outsourcing efforts. The NBC (New Business Creation) Center and its role in fostering open discussion and thoughts is another area where HP's company-wide innovation can be seen.

For more details, wait for the final research project report, or email me.

Hewlett-Packard, Part 1: A Holistic Innovation Culture

2007-01-11T11:49:00.000-08:00

On Jan 10th, I (Kevin Desouza) visited HP Labs (see http://www.hpl.hp.com/) in Palo Alto, California. The purpose of the visit was to listen to HP executives about their innovation processes. The meeting was hosted in the Executive Conference Room, which is adjacent to the original offices of the founders of HP, W.R. Hewlett and D. Packard. Amazingly, the HP folks have preserved the original offices and the original conference room. Being able to see these amazing old offices is worth the trip. During the visit, I learnt about the many processes that HP has put in place to foster innovation across their enterprise.

The single most important enabler of innovation at HP is their history and culture of innovation. From the days of Hewlett and Packard, HP is a company that recognized the value of innovation throughout the organization. HP focuses on all aspects of innovation: product and service innovation; innovation in business models; cultural and organizational innovation. Throughout the meetings, I kept hearing the phrase - "managing the innovation portfolio." Using a portfolio approach, HP is able to balance out its investment in innovation efforts across the enterprise, and also across various types of projects (core, emerging, and new). The portfolio approach is a top-down management approach and gauges the efforts of senior managers and executives, and their respective units.

HP is a highly collaborative company. Collaboration is the way work gets done in HP. Like much of HP's current culture and behaviors, this attitude goes back to the days of its founders. Employees can seek for help and input on ideas across the enterprise, and more importantly they can reward people who help them. Managers have eAwards that they can give to other units who help them. An employee, with authorization from a Manager, can also provide these eAwards to other employees.

HP also has fairly mature stage-gate processes to screen ideas and innovations. Ideas are screened at multiple levels, and across the enterprise. For example, at HP Labs ideas are put through project reviews. During these reviews, the manager presents his/her view on the idea, and then almost all members of the technical team chime in and share their views as well. These meetings are open to all who are interested, and normally draw in folks who are working in allied areas. Comments and feedback shared at these meetings are used to improve ideas and develop more robust research projects.

Demystifying the Link between Innovation and Business Value

2006-11-07T18:27:00.000-08:00

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

2006-11-06T18:02:00.000-08:00

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

2006-11-06T18:01:00.000-08:00

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

2006-11-06T17:58:00.000-08:00

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

2006-10-28T17:08:00.000-07:00

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

2006-10-23T20:58:00.000-07:00

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

2006-10-18T10:50:00.000-07:00

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

2006-10-18T09:56:00.000-07:00

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

2006-10-17T22:40:00.000-07:00

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

2006-10-09T08:53:00.000-07:00

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

2006-10-07T16:48:00.000-07:00

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

2006-10-04T21:52:00.000-07:00

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

2006-10-03T16:06:00.000-07:00

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

2006-10-03T09:19:00.000-07:00

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

2006-09-27T05:18:00.000-07:00

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

2006-09-20T11:32:00.000-07:00

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

2006-09-19T08:44:00.000-07:00

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

2006-09-18T16:57:00.000-07:00

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

2006-09-17T12:47:00.000-07:00

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

2006-09-13T07:50:00.000-07:00

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

2006-09-12T07:51:00.000-07:00

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!

2006-09-12T07:47:00.000-07:00

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

2006-09-11T19:48:00.000-07:00

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

2006-09-10T21:00:00.000-07:00

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

2006-09-06T05:47:00.000-07:00

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

2006-09-05T17:38:00.000-07:00

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?

2006-09-04T09:54:00.000-07:00

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

2006-08-30T16:23:00.000-07:00

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.