Master Thesis at Linköping Institute of Technology,
Linköping University
Department of Computer and Information Science
Front End of Innovation
- A study of how mature companies can improve the
initial stages of innovation
Niclas Anderson
Johan Jarskog
LiTH-IDA-Ex-02/19
2002-02-04
Acknowledgements
We would like to thank Tetra Pak for giving us the opportunity to carry out this thesis, as well
as to help us to increase our understanding of the front end of innovation and the Tetra Pak
corporation. It has been a pleasure to work with all persons at Tetra Pak and we have found
people to be very interested and willing to participate. A special thanks goes to Sven Andrén
who has been our host at Tetra Pak. He has been most patient with all our questions and has
assisted us in every possible way.
We appreciate the constructive criticism we have received from Mathias Carlsson, Håkan
Malm and our tutor Dr. Carl-Johan Petri, who has guided us in the right direction.
We would also like to thank Dr. Sigvald Harryson for introducing us to the topic and for
supporting us through the completion of the thesis. Without his valuable help we would never
have been able to get the support from Tetra Pak, ABB and Dow.
Finally to all of you who have contributed to this thesis with information, knowledge and
support, thank you too.
Johan Jarskog
Niclas Anderson
Malmö, 25 January 2002
1. INTRODUCTION
1
BACKGROUND - INNOVATION
PROBLEM AREA & REFINEMENT
MAIN QUESTIONS
PURPOSE STATEMENT
LIMITATIONS
DISPOSITION
1
2
3
3
4
5
2. IMPORTANCE OF INNOVATION
7
1.1.
1.2.
1.3.
1.4.
1.5.
1.6.
2.1.
2.2.
RADICAL INNOVATION (RI)
THE FUZZY FRONT END OF INNOVATION
3. PROJECT-SPECIFIC ELEMENTS
3.1.
3.2.
3.3.
IDEA GENERATION AND CAPTURING
SCREENING
CONCEPT BUILDING
4. FOUNDATION ELEMENTS
4.1.
4.2.
4.3.
4.4.
CORPORATE VISION
COMMUNICATION NETWORKS
MEASUREMENTS AND INCENTIVES
ORGANISATIONAL CULTURE AND NORMS
5. RESEARCH QUESTION
5.1.
5.2.
5.3.
5.4.
GENERAL OUTLOOK
CORPORATE VISION AND PRODUCT STRATEGY
COMMUNICATION NETWORKS – KNOWLEDGE SHARING
INCENTIVES AND MEASUREMENTS
7
12
18
18
20
23
26
26
30
40
44
50
50
50
51
53
6. METHODOLOGY
56
6.1.
6.2.
6.3.
56
56
62
INTRODUCTION
PERSPECTIVES ON METHODOLOGY
PROCEDURE OF WORK AND RESEARCH DESIGN
7. CASE STUDIES
70
7.1.
7.2.
7.3.
70
86
97
ABB
DOW CHEMICAL
TETRA PAK
8. ANALYSIS
8.1.
8.2.
8.3.
8.4.
8.5.
IDEA GENERATION
IDEA CAPTURING
IDEA SCREENING
IDEA BUILDING
COMPARATIVE ANALYSIS
115
115
119
126
129
136
9. CONCLUSIONS
138
9.1.
9.2.
9.3.
9.4.
9.5.
138
140
142
143
145
IDEA GENERATION
IDEA CAPTURING
SCREENING
BUILDING
CLOSING COMMENTS
10. REFERENCES
146
BOOKS
ARTICLES
INTERNAL REFERENCES
INTERVIEWEES
146
148
150
151
11. APPENDIX
154
11.1.
INTERVIEW PROFESSOR JAN-ERIK REHNDAHL
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Master Thesis at Linköping Institute of Technology
Introduction
1.
Introduction
1.1.
Background - Innovation
As the title indicates, this thesis will focus on the early stages of innovation. This is a rather
un-exploited topic in management literature. Many researchers voice the importance for
companies to address this topic and gain further insight into how to manage and create
necessary conditions for the early stages of innovation. The innovation process is highly
complex and it is therefore very difficult to single out any particular field that is central for
successful innovation. Our host company is Tetra Pak in Lund, Sweden, which we will
introduce briefly in the following section.
1.1.1. Tetra Pak History
Tetra Pak is a leading company in the liquid food processing and packaging industry. Ruben
Rausing established the company in the 1950:s as a small company based on a radical
innovation; how to package milk in paper boxes; greatly reducing cost of distribution
compared to existing systems. Tetra Pak has showed a tremendous growth and today Tetra
Pak is a large multinational company located with sales offices in over 165 countries and net
sale of over 7 300 million €. Tetra Pak's main product is the Tetra Brik, which the company
once was founded upon. The Tetra Brik accounts for nearly 90 % of Tetra Pak’s revenue.
1.1.2. Project Failures at Tetra Pak
Tetra Pak’s rapid growth has lead to many problems regarding the innovation process. Tetra
Pak’s situation is similar to many other large market-leading companies. In the past ten years,
in search of new innovations, they have experienced several large project failures where vast
amounts of money have been spent on projects that have turned out to be dead ends. Ideas
have either been too technological, without market acceptance, or unfeasible, solemnly driven
by customer demand. There are several possible explanations for the failures. The rapid
growth and internationalisation of Tetra Pak has demanded a larger amount of bureaucracy
and organisational hierarchy in order to control and manage the company’s size. This has
separated units and made communication across borders increasingly difficult. The increased
bureaucracy has also dampened the creative entrepreneurial spirit, which the company was
founded upon. Longer internal lead times have made Tetra Pak slower to react to external
market shifts.
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Master Thesis at Linköping Institute of Technology
Introduction
Corporate R&D has tried several different approaches to satisfy the demand. Periods of
excessive networking with high degree of fragmentation have been followed by periods of
isolation and high degree of technology focus. None has been fully successful. As a reaction
to these scattered approaches Tetra Pak has now launched a formalised innovation process
with defined roles, participants and activities. One of the sub processes is called idea
management and concerns the early stages of the innovation process.
Although a formal process is launched and supported with seemingly logical tools and goals
there are large gaps in making the system work. Tetra Pak has encountered problems of
getting people to participate actively. Many complaints have been voiced regarding people
not having enough time or resources to take part in idea management. Therefore, Tetra Pak
has expressed a wish to gain further knowledge about how to make the existing process work
effectively and efficiently.
1.2.
Problem Area & Refinement
1.2.1. Leading Companies
The underlying mechanisms that make it difficult for mature leading companies to pursue
innovations are several. Perceived incentives of pursuing radical innovations become smaller,
more emphasis is put on existing products and customers. Organisational routines become
repetitive due to the nature of large-scale production, which is quite opposite to innovation
projects. Organisational filters serve to maximise the use of existing technology and serve
existing customers. These filters are part of the explanation why the companies are leaders,
however the exact same filters provide a barrier against innovation that might affect the
organisational stability (Chandy & Tellis, 2000). Companies have to address these issues and
not take for granted that they will be able to identify and pursue the right ideas. Instead they
need ways of coming around the complacency prevailing in larger companies.
1.2.2. Company vs. Employees - Altruism or Market System?
What is the underlying problem to these types of systems and processes? The task of
participating in innovation projects is a voluntary task, i.e. no one can force anyone to
generate and submit an idea, and therefore companies have to present strong enough systems
and incentives for employees to participate. This will be explored thoroughly in this study.
When discussing this type of question, the reader might be helped by understanding the
authors’ main assumption regarding (the nature of a firm; indirectly) the relationship between
the company and its employees. There are two schools to choose from. One states that the
company exists for the employees, which means that everyone does as much, and as well, as
they can, not because they are paid to do so, but rather because they are a part of it.
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Master Thesis at Linköping Institute of Technology
Introduction
The other assumption is that the company exists for its’ share holders in order to create
shareholder value. If this perception is chosen the relationship is not built upon mutual
altruism, rather it should be viewed as a market place where participation and knowledge are
traded against currency such as salary, personal fulfilment and recognition (Davenport &
Prusak, 1998). Our basic assumption is the latter, which is reflected in the entire thesis.
1.2.3. System vs. People
Another important issue to consider is if it is possible to regard an innovation process without
considering intelligence levels of individuals. Is it not the best way to create an innovative
organisation to hire the most innovative, intelligent and creative people? One major research
study (O’Reilly & Pfeffer, 2000) identifies an abundance of examples of companies that hire
and retain the most intelligent people but still do not manage to be innovative and stay ahead
of competition. On the other hand companies that focus on making employees share
knowledge and increase learning as well as create systems to capture this knowledge increase
chances of succeeding. Other authors suggest that there is a strong correlation between the
systematic approach of managing the early stages of the front end and the overall
innovativeness of companies’ (Koen et al, 2001; Reinertsen, 1994).
1.3.
Main Questions
In the process of managing the idea management process, one first must identify the different
phases and then the barriers and enablers, in every phase, that exists. This gives us the main
questions for our thesis.
♦ What different phases does the front end process consist of?
♦ How can companies make employees generate a large quantity of quality ideas?
♦ How can companies capture as many of the employees’ ideas as possible?
♦ How can companies increase the chances of selecting ideas with high probability of
becoming a success and kill the ideas with low probability?
♦ How can companies increase the chances of creating a well formulated and feasible idea
concept?
1.4.
Purpose Statement
The main purpose is to identify managerial principles that are used
to improve the early stages of innovation.
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Master Thesis at Linköping Institute of Technology
Introduction
1.5.
Limitations
The main purpose of the limitations is to raise the efficiency of our study. This is done; by
stating what shall be studied and what shall not. There are two types of delimitation, time
delimitation and pertinent delimitation
1.5.1. Time Limitation
Since we had only limited knowledge in the research area, we have spent a substantial amount
of time on reference studies. This has lead to, due to lack of time, a smaller amount of case
studies.
♦ Given our limited pre-knowledge of the area we had to spend a proportionally long time
on getting accustomed to the problems in the front end process.
♦ Our case companies came relatively late in the study, which gave us only limited time to
have the cases reviewed by the interviewees.
1.5.2. Pertinent Limitation
In order to make the thesis feasible we have defined the following aspects as pertinent
limitations.
♦ Personal traits - The thesis will not view personal traits of employees as explanation for
how companies create new ideas. The reason being that this variable is more
psychologically dependent and therefore more difficult for us to study.
♦ Innovations - The thesis will focus on ideas that create new business opportunities for
companies. Incremental improvements within the business or planned product
development are excluded from the study.
♦ Product industry – not service. Since our employer, Tetra Pak, has communicated a wish
that we should conduct the study on similar companies, we will not look at any service
companies.
♦ Market Leaders – We will only study large incumbent leader companies.
♦ Physical environment – We will not look at how the physical environment affects the
innovation process.
♦ Cultural aspects – We will not take any national-cultural consideration or exploitation in
making the analysis and conclusion.
♦ Team building – We will not look at how the composition development teams affects the
innovation process, see Personal traits above.
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Master Thesis at Linköping Institute of Technology
Introduction
1.6.
Disposition
The aim of this section is to make the reader aware of the disposition of the thesis; i.e. to
inform the reader what information will follow and in what order it will be presented. The
ambition is that this section will help the reader to be more informed of his/her position in the
thesis, and therefore making it easier to understand the purpose of each part.
2. Importance of Innovation
Why should companies
pursue innovation?
8,9 Analysis & Conclusions
Recommendations for
improvement of the front end
7. Case Studies
How do ABB, Dow and
Tetra Pak perform
front end of innovation?
Front End of Innovation
Generation
Screening
Building
3. Project Specific Elements
What are the early
stages of innovation?
Incentives
5. Research Questions
How can the front end of
innovation be managed
more effectively?
Culture &
Norms
Vision
Communication
Networks
4. Foundation Elements
Underlying mechanisms
and management tools
Figure 1 Thesis Disposition
Chapter 2, Importance of Innovation, gives the reader an overall understanding of why front
end of innovation is important and how it fits into the overall innovation process.
Chapter 3, Project-Specific Elements, describes the different stages in the front end process
together with the participants, activities, deliverables and highlight difficulties.
Chapter 4, Foundation elements, describes what the underlying drivers and mechanisms of
the barriers from the previous chapter and what tools and principles exist for management to
address the issues.
Chapter 5, Research Questions, diverges the main questions into more relevant questions for
our study. The focus lies on understanding what tools (chapter 4) can be used to make the
project specific elements more effective (chapter 3).
Chapter 6, Methodology, provides the reader with an explanation of how the research was
conducted, as well as our thoughts regarding knowledge and objectivity.
Chapter 7, Case studies, is a presentation of the interviews conducted at Dow Chemicals,
ABB and Tetra Pak. These results are presented to a large degree with absence of opinion
from our part.
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Master Thesis at Linköping Institute of Technology
Introduction
Chapter 8, Analysis, consists of our interpretations of the research’s empirical findings.
These interpretations are made with the help of the information found in the frame of
reference (chapters 2, 3 and 4).
Chapter 9, Conclusions, is a short synopsis of what we feel to be the most important findings
from the entire thesis.
Chapter 10, References, contains all the references used during our work with the thesis.
Chapter 11, Appendix
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Master Thesis at Linköping Institute of Technology
Importance of Innovation
2.
Importance of Innovation
The frame of reference is divided into three chapters. Chapter 2 covers the background to
radical innovation and a description of the front end process. Chapter 3 establishes an
understanding of each phase of the front end process and the barriers. Chapter 4 will purge
the barriers and determine underlying mechanisms of them. Innovation is a broad and
complex term therefore it requires an introduction and common definitions to make the
reading effective.
2.1.
Radical Innovation (RI)
In this section we will give a background to what radical innovation is and provide a common
understanding of the definitions that will be utilised throughout the thesis.
2.1.1. Invention vs. Innovation
In order to create basic understanding of innovation there is a need to understand the
relationship between the term’s invention and innovation. Invention can be viewed as
creativity and the finding of novel ideas, whereas innovation is the successful implementation
of these ideas (Thomas, 2000). An innovation does not necessarily have to stem from an
invention, which is sometimes seen as an imperative to research (Drucker, 1985). An
innovation can appear by combining existing technologies thus creating new applications and
customer value.
“There are plenty of companies with world-class skills in particular areas but poor
records in innovation”
(Harryson, 2000)
Invention can be regarded as exploration of new technology while the process of creating
marketable applications is termed exploitation (Leifer et al, 2000). It is a major challenge for
companies to be able to balance exploration and exploitation. Edison, one of the brightest
persons of the nineteenth century, who despite very successful invention went out of business,
can exemplify a primary risk of focusing too strongly on invention. He lacked the
understanding of how to create marketable applications from his inventions (Drucker, 1985).
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Master Thesis at Linköping Institute of Technology
Importance of Innovation
Companies that wish to gain competitive advantage through innovation are imposed to two
major dilemmas.
♦ The dilemma of technological leadership is that successful pursuit of such tends to focus
on intra-corporate activities, which decreases companies’ sensitivity to the factors that
ought to guide the process.
♦ The organisational dilemma of innovation is that creative invention and rapid innovation
through effective knowledge exploitation pose paradoxical organisational needs in terms
of size and managerial hierarchy.
(Harryson 2000)
Harryson’s dilemmas of innovation stipulate two things that we consider important for our
thesis: (1). We need to understand what how large technological leaders can find new ways to
perform market-driven innovation. (2) We also need to understand how to drive creativity in
large organisations.
What is Radical Innovation?
Authors of innovation literature, define radical innovation slightly differently. However, the
word radical implies that it is something else than incremental or planned innovation. Radical
suggests dramatic changes in product, or service, features (Leifer et al, 2000). It means that
the radical innovation includes totally new, or at least significantly different characteristics,
which create substantially higher degree of customer benefits. Radical innovation can be
defined as an innovation that has one or more of the following characteristics.
♦ An entirely new set of performance features.
♦ Improvements in known performance features of five times or greater.
♦ A significant reduction of cost (> 30%).
(Leifer et al, 2000)
Chandy & Tellis (2000) suggest a different definition, which implies that the core technology
should be different.
“A radical innovation is a new product that incorporates a substantially different
core technology and provides substantially higher customer benefits relative to
previous products in the industry”.
(Chandy & Tellis, 2000)
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Master Thesis at Linköping Institute of Technology
Importance of Innovation
From our perspective we do not consider that the core technology has to be new in order to
create radical innovation. That would rule out the opportunities that lie in crossing different
kinds of existing technologies. Since this thesis will not focus on any technological aspects,
i.e. specific scientific research areas, we are more interested in the actual implications for the
organisation when undertaking radical innovation. In many cases a radical innovation
suggests that the innovation lies outside of companies strategic focus, or at least in the white
spaces between product lines. There is also the scenario of a new innovation that will
cannibalise on existing product ranges. Both of these situations put vast amount of strain on
the development projects and participants of the innovation process, which is a most difficult
task for companies to manage (Day et al, 2001; Stringer, 2000; Leifer et al, 2000). We have
chosen to formulate following definition of radical innovation that will be used in this thesis:
A radical innovation is an innovation based on either existing or new technology put
together in new ways, which provides major benefits to the end user. It can be of
such nature that it lies outside the existing strategic focus and will require vast
amount of knowledge, internal and external, in order to be developed.
2.1.2. Why Should Companies Engage in Radical Innovation?
The fact that speed of technological development is steadily increasing and new innovations
come at a more rapid pace than ever before, creates an environment where only the most
creative and innovative companies succeed. There are many examples of how companies that
have been dominant players of markets, suddenly, by means of ignorance or lack of
perception, start losing large market share due to new technology introduced by other
companies. The term “incumbent’s1 curse” describes how this phenomenon is widely spread
and has a tendency of repeating itself throughout history.
“…incumbents in a particular product generation are so enamoured with their
success or so hampered by their bureaucracy that they fail to introduce the next
generation of radically new products.”
(Chandy & Tellis, 2000)
1 Incumbent refers to the dominant actor of a specific market due to a technological superiority (Chandy & Tellis, 2000)
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Master Thesis at Linköping Institute of Technology
Importance of Innovation
Benefits /
dollars
Market breakthrough
b
c
Radical innovation
Existing Technology (T1)
New Technology (T2)
a
Technological breakthrough
Time
Figure 2 S-curve (Chandy & Tellis, 2000, page 3)
The s-shaped curve Figure 2 of product innovation displays the phenomena. It points out how
existing technology becomes obsolete and how this process always makes very swift changes
in the market patterns. The existing leading incumbent technology (T1) displays a rising curve
that levels out when it reaches maturity. Meanwhile a new technology, T2, is invented (a).
This new technological breakthrough needs time to become a true marketable innovation, but
when that happens it breaks through the dominance of the existing technology with great
force (b). As a reaction to this the owners of the existing technology make great effort not to
loose the dominant role and a so-called market breakthrough occurs (c). This is however a
short-lived phenomena and the majority of customers will switch to the new technology (T2)
and existing technology will start declining and becoming obsolete. The fact that products and
technologies continually fade away and new emerge should be compelling arguments for
companies to seriously address the innovation process and seek not only incremental but also
radical innovation (Chandy & Tellis, 2000).
2.1.3. Systematic Approach – Why Should Companies Use a
Systematic Approach for RI?
Evidently radical innovation is a key for future success, however there is still the question of
how to manage the actual process. Historically, most radical innovation projects have been ad
hoc, meaning that they have been performed randomly without the control of management,
thus adding a lot of extra risk to the innovation process (Stringer, 2000). The initial stages of
innovation are often called the “fuzzy front end of innovation”, which implies high degree of
uncertainty and unmanageability (Koen et al, 2001). Many researchers wish to lessen the
uncertainty by having a more structured approach and formalising the process.
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Master Thesis at Linköping Institute of Technology
Importance of Innovation
Performance level
5
4
3
Front End of Innovation (FEI)
New Product Development (NPD)
2
1
0
High
Medium
Low
Companies' degree of innovativeness
Figure 3 Relationship between performance level of New Product Development (NPD) and Front End of
Innovation (FEI) and overall innovativeness of companies (Koen et al, 2001, page 52)
Studies indicate strong correlation between performance level2 of front end activities and
companies’ overall degree of innovativeness (Koen et al, 2001; Reinertsen, 1994). Figure 3
reveals that the front end of innovation is to a higher degree correlated with overall
innovativeness than the performance level of the latter stage, new product development,
which is the more formalised stage in product development. The results suggest that the
possibilities for improvement are significantly higher in the front end process. The question is
how.
Traditionally small companies have been the main source of radical innovations, which has
been explained by the fact that entrepreneurial people are attracted by the higher degree of
freedom and risk in smaller organisations (Stringer, 2000). Recent studies reveal that large
companies are steadily improving their ability to perform radical innovation (Chandy &
Tellis, 2000). This could be due to the development of systemised approach and creation of
formal processes. Relying too heavily on formal processes may impose a great risk.
Companies that launch large process reengineering programs often realise that there is a large
span between what people think they do and what they actually do (Brown & Duguid, 2000).
2
Measures how well something is carried out, a qualitative measurement.
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Master Thesis at Linköping Institute of Technology
Importance of Innovation
This implies that if too rigid processes are designed there will be less room to foster the
much-needed creativity in the innovation process. The primary task for managers thus
becomes to balance the formal processes with a loose creative environment. Larger companies
have, in comparison to smaller companies more resources to repeatedly conduct innovation
projects, thus collecting experience, gaining knowledge and learning from previous projects
(Leifer et al, 2000). Smaller companies lack in that respect due to the fact that they often
vanish or are purchased by larger corporations, which mean that the experience is lost. (By
drawing upon previous experience and creating knowledge and competence on how to
achieve successful radical innovation larger, companies should be able dramatically increase
the odds of retaining their incumbent leading positions.)
2.2.
The Fuzzy Front End of Innovation
In this section we will review what the front end of innovation consists of in order to create an
introduction of building blocks and make reader the understand how the front end relates to
the overall innovation process.
2.2.1. How the Front End Relates to the Overall Innovation
Process.
The process of product innovation consists of several stages including sub-processes (Figure
4). Most research and development has been made to the latter stages of the innovation
process, which can be called New Product Development (NPD) and Commercialisation (Koen
et al, 2001). These stages consist of planned, structured and well-defined activities. The
purpose of the NPD is to create an application, product or service, based on a concept
delivered from the front end of innovation.
Front End of
Innovation (FEI)
New Product
Development (NPD)
Commercialization
Idea
Idea
Selection
Selection
Concept
Technology
Technology
Development
Development
Idea
Idea
Genesis
Genisis
Engine
Opportunity
Opportunity
Analysis
Analysis
Opportunity
Opportunity
Identification
Identification
The innovation process
Figure 4 The entire innovation process, three stages (adapted from Koen et al, 2001, page 51)
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Master Thesis at Linköping Institute of Technology
Importance of Innovation
Companies are usually very proficient at performing these stages due to the highly developed
systems that already exist. The NPD is triggered by the output delivered from the front end of
innovation. The output consists of a product concept (clear and aligned with customer needs
and with high market potential), a product definition (explicit and stable) and a project plan
(priorities, resources plans and project schedules) (Khurana & Rosenthal, 1997).
2.2.2. A Model of the Front End of Innovation
In order to give a brief introduction to the front end of innovation a model called the New
Concept Development (NCD) will be reviewed. Figure 4 shows the basic elements of the
NCD model, which is based on studies from eight highly innovative companies3 (Koen et al
2001). It is an attempt to create a generic model for the main components of the front end of
innovation. The scope of the model is defined to include all activities ‘before the formal and
well defined NPD begins’. The model consists of seven elements (1-7) (Figure 4).
1. Opportunity Identification
An opportunity is identified when a company recognises any type of technological or business
opportunity. Company’s overall goals, market trends or threat from competitors often drives
this opportunity identification.
2. Opportunity Analysis
In order to understand if the opportunity is worth pursuing, there has to be further analysis.
This is to ensure that there is a business potential and technological feasibility. In this stage
trend analysis of business and technology is a central tool. The use of templates is rather
limited due to the high degree of uncertainty; instead business vision and ideas are contrasted
to give a holistic understanding of the idea.
3. Idea Genesis
In this stage the idea is build up, reshaped and tested in order to create a more developed
description of the idea or product concept. Cross-functional competence is needed to structure
and improve the idea.
4. Idea Selection
Since the amount of ideas is usually substantial, an idea selection has to be conducted. The
company’s task is to pick the ideas that have the largest potential and fit the companies’
overall capacity.
3
Air Products, Akzo Nobel, BOC, DuPont, Exxon, Henkel, Mobil and Uniroyal Chemical
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Master Thesis at Linköping Institute of Technology
Importance of Innovation
5. Concept and Technology Building
The final step before the formal product development process begins, is the concept and
technological building. Markets sizes are studied and technological uncertainties are being
mapped. The purpose is to create a business case that can be evaluated and enable the
company to decide whether a full-scale development project should be undertaken.
6. Engine
The centre of the model consists of the engine. Corporate culture and leadership of the
company fuel the engine.
7. Environmental Factors
Environmental factors are organisational capabilities, business strategy, outside network and
enabling science. These factors largely affect the front end process.
2.2.3. General Characteristics for the Process.
In comparison to the latter stages of the innovation process, which are very chronological, the
front end is rather stochastic and dynamic. The model of the front end of innovation (Figure
4) is shaped as a wheel in order to illustrate the cyclic nature and interdependence between the
stages. There are however some general characteristics associated with the front end.
Uncertainties
The very nature of raw ideas is that they are vague and difficult to structure. This makes it
very difficult to analyse future applications and future business potential. In addition to the
uncertainty of the actual application there are also uncertainties concerning several other
dimensions.
♦ Technical uncertainty
– Can the innovation be realised?
♦ Market uncertainty
– Is there a market, is the market potential large enough
and within reach for the company?
♦ Organisational uncertainty
– Is the organisation flexible enough to support the
development, are there necessary participants available?
♦ Resource uncertainty
– Does the company have the financial resources and
partnerships to realise the innovation?
(Leifer et al, 2000)
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Master Thesis at Linköping Institute of Technology
Importance of Innovation
Stochastic
The timeline of an idea evolution is often scattered partly due to the many uncertainties
involved. The informal project might have difficulties acquiring resources (technological,
financial, or organisational), creating an environment where key participants come and go and
the project moves between business units making it difficult to retain the essence and
momentum of the idea. The general characteristics of the front end make it very difficult to
talk about a process. It is rather a set of interdependent activities (Koen et al, 2001). In this
thesis, however, the word process will be used to stress the importance of integration between
the separate activities.
Speed
Speed and time to market have always been important in product development. The front end
of innovation consumes a lot of time. Typically, it is one third to one half of the total time
available for development. Often it is longer than the NPD process. The front end is a cheep
spot to buy time because the cost of buying time rises exponentially as we progress through
the development cycle (Reinertsen, 1994). Management needs to increase the pace at which
new ideas get approved (Hamel, 2000). It is often more economical improving front end
processing speed than improving its screening efficiency. This conclusion is based upon that
the alternative cost of increased time-to-market and delayed product launch is higher than
allowing a bad project to pass to the next level in the front end process. These arguments
strongly urge companies to focus on speed.
Company-Specific Process
In designing early stages of the development process, companies often deceive themselves in
thinking that they can copy best-practice processes and thus becoming successful. The front
end process is often poorly understood and usually full of opportunities for improvement. An
analysis of the process can shed light on many important decisions regarding the structural
design of the early development process. A key implication of such analysis is that the front
end process structure should differ depending on the underlying economics of the specific
situation. This in turn suggests that there is no universally applicable best practice for
optimising the front end (Reinertsen, 1999). It is very important that the early stages support and are fully integrated with the overall process, since the front end process feeds downstream
processes (Smith et al, 1999). If not, the consequences can be that there is no acceptance for
the process results or that the wrong ideas emerge from the process.
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Importance of Innovation
2.2.4. Building Blocks of the Front End Project Specific and Foundation Elements
Many authors describe the front end as consisting of two separate but interrelated
components, foundation elements and project-specific elements (Khurana & Rosenthal 1997;
Zhang & Doll, 2001). The relationship can schematically be viewed in Figure 5. These two
elements require different skills and levels of effort to perform. In the NCD model, mentioned
above, elements 1-5 can be said to be project specific. By this means that they are unique for
every project and are carried out only when an idea development project is established. The
foundation elements, engine and environment (NCD), support all projects. The difference is
that the foundation elements exist all the time even if there are no ongoing projects. For
example, if a company consistently rewards idea generators, it is part of the foundation
elements that support all projects even if no projects are being pursued at that that time.
Without strong foundation elements projects become highly uncertain and much more
difficult to manage.
Foundation Elements
Culture, Norms
Corporate Vision
Product Strategy
Project Specific Elements
Idea Generation
and Capturing
Preliminary
opportunity
identification
Screening
Go/No-go
decision
Incentives
Concept building
Product and Concept
definition and project
planning
Screening
Go/No-go
decision
New Product
Development
Communication
Networks
Figure 5 Building blocks of front end of innovation (adapted from Khurana & Rosenthal, 1997, page 105)
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Importance of Innovation
Many innovation literature authors stress the importance of foundation elements, however
there is a lack of research on causal relationships between foundation- and projects specific
elements (Koen et al, 2001).
“Approaches to stimulate radical idea generation generally fall into two categories:
motivational tools and organisational mechanisms.”
(Leifer et al, 2000)
Leifer et al (2000) state that the main purpose of foundation elements is to encourage
employees to participate, which can be done by using the corporate vision to provoke and
guide employees or by giving incentives for specific behaviour. Furthermore, they stress the
importance of having communication networks that supports the process, “good ideas need
places to go”.
An equally important but not as frequently mentioned aspect is corporate culture and norms
(Khurana & Rosenthal, 1997; Prather, 2000; Leifer et al 2000). This covers more intrinsic
values of the organisation and we consider it to be an outcome of - and not the main “tool” in
managing the foundation elements. Rather by managing the foundation elements with
incentives, communication networks and corporate vision a specific corporate culture will be
created.
We consider foundation elements to be a “toolbox” that supports the project specific elements
and indirectly product development. The question is how these two elements are related.
Chapter 4, of the thesis, will describe in more detail what the foundation elements are how
they relate to front end of innovation.
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Project-Specific Elements
3.
Project-Specific Elements
In this chapter the three project-specific elements, generation, concept building and
screening, will be described in terms of participants, activities, deliverables and main
barriers.
3.1.
Idea Generation and Capturing
3.1.1. Idea Generation
The main deliverable of the generation process is a large amount of good ideas. By good
means ideas with high business potential that are possible for the company to realise. The
initial step includes generating an idea (Zhang & Doll, 2001; Khurana & Rosenthal, 1997)
and capturing the idea (Leifer et al, 2000). An idea can either be technological or market
oriented, and can be formulated as a solution to a problem or an identification of an
opportunity. Important to note is that ideas are held by individuals, not by teams (Prather,
2000). Ideas are seldom clear and well defined initially, rather they need time too mature and
be tested to become robust, which is done later in the front end process. Idea generation and
capturing can be described, in the words of DuPont’s corporate business development director
(Terry Fadem), as the act of:
“Grabbing lightning everyday”
(Leifer et al 2000)
This is not a simple task. Ideas often occur when different competencies and technologies
merge, which creates dynamic settings and an explorative environment (Leifer et al, 2000;
Stringer, 2000). Ideas can originate either from internal sources, within the company, or
external sources, such as joint ventures, universities or customers etc (Day et al, 2001).
Although companies succeed in connecting these entities, they also have to narrow the scope
of ideas to make the generation more effective. This requires participants to have a sense of
the overall business strategy and market needs (Brody & Eldrich, 1998; Harryson, 2000). One
problem is that world-class researchers are often very narrowly focused on technological
aspects, thus making the identification of business potential very difficult (Harryson, 2000).
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Project-Specific Elements
Employees must believe in the idea and understand the essence of it. Therefore participants
need help formulating attractive ideas. Some companies use advanced information systems to
support the formulation and structuring of the idea, however some authors claim that the most
effective way to formulate ideas is by communication between individuals in order to add
pieces of knowledge to the idea and create new insights (Hamel, 2000). Because of the
difficulty to effectively communicate ideas, especially technological ideas, they risk being
lost, which makes it very important to find effective ways of communicating ideas.
“…ultimately technology transfer is less a task to be accomplished than a set of
relationships to be managed”
(Irwin & More, 1998)
To trigger a development project, an idea needs to gain necessary support and organisational
interest. However, little specific research can be found on how to manage these kinds of
relationships in idea generation. The idea generator, who comes up with the idea, has an
important role throughout the process. In order to preserve the essence of the idea the
generator should also be included in latter stages. The idea generator should review if the
actual development is in accordance with the original thought (Petri, 2000). To fill the
generation process with content, employees need to spend time thinking about, working with
and communication ideas. Companies need to address what motivational tools to use to
encourage participation (Hamel, 2000). Some very innovative companies, such as 3M,
demand researchers to spend part of their time on exploratory undirected research. They also
have thorough reward and recognition systems for idea generators. 3M has claimed these
elements are success factors in remaining innovative (Thomas, 2000).
3.1.2. Capturing
After the idea generation the company has to capture the idea, for this to happen, the idea has
to be submitted. Somehow the idea has to enter the system. This is done by an idea submitter.
This person can be the same as the idea generator or someone else who has recognised the
idea. Capturing can be done by using specific foundation elements such as employees acting
as idea gatherers or hunters (Leifer et al, 2000). Another approach is to utilise information
systems to facilitate the capturing process. In spite of the methods used, the main barrier is to
encourage idea generator to submit ideas. A delusion among managers is that employees
continuously generate a large amount of good ideas making it easy to stay innovative because
of the mere volume of ideas. This is however questioned by several authors (Leifer et al,
2000; Hamel, 2001) The authors claim that truly good ideas are a scarce resource, thus raising
incentives to carefully manage the capturing process in order to maximise the chances of
retaining quality ideas. Research suggests that it is very important for individuals to have a
sense of ownership and responsibility of the idea in order to submit ideas (Skogen & Sølrie,
1995).
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3.2.
Screening
The main purpose of initial screening is to determine whether there is enough promise in an
idea to warrant the next step: making a limited commitment of resources to a small team that
will test critical assumptions and further explore the opportunity (Leifer et al, 2000). There
are two main reasons for making screenings and selections in the front end process. They both
have the same purpose - preventing the company from spending their limited resources on the
wrong projects/concepts. The first reason is:
“In most business there are so many product / process ideas that the critical activity
is to choose which idea to pursue in order to achieve the most business value”
(Koen et al, 2001)
The second is:
“ once a project begins there is very little chance that it is ever killed. The result is
that many marginal projects proceed, while the truly meritorious projects are
starved”
(Cooper, 1997)
Depending on the author and at what stage in the front end of innovation, it is undertaken, the
screening/selection has many different names. In this thesis the screening process will be
referred to as:
“A gate where a certain project will be reviewed and where the project will get a go
to continue, gets killed or is send back for further refinement.”
The screening process can consist of one or many gates, but what is synonymous for every
gate is that the further the idea has come, in the overall process, the harder the evaluation
criteria are and the more resources are required. The evaluation is based on a set of rigorous
qualitative and quantitative criteria, including strategic fit and importance, product advantage,
market attractiveness, ability to leverage core competence, technical feasibility, and
risk/return (Cooper, 1997). The criteria used for evaluating radical concepts should differ
from those used for incremental innovations. The high uncertainties associated with radical
innovation makes decision makers nervous and encourage them to insist on even greater
rigour in analysis and a more careful application of traditional evaluation methods and
criteria. Generally these methods are inappropriate or counterproductive. Either they give a
false sense of security, or they lead to premature rejection of promising ideas (Leifer et al,
2000).
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Today go/kill decisions are characterised by serious weaknesses: decisions not made, little
prioritisation, poor information input, no criteria for decisions and inconsistent decisionmaking. Another problem is that most companies do not have a clue about how many
opportunities they can evaluate effectively. They do not know how many people are doing
evaluation, nor how much time they spend on it. Instead they inject new ideas into the process
until the output becomes late and sloppy (Reinertsen, 1994). Benchmarking across U.S.
corporations of the front end process has confirmed that for every 3 000 unwritten ideas, only
about 125 written, well-formed ideas emerge ready for stage-gate development. Of these only
one, on average, leads to a commercial success (Stevens, 1997).
Therefore the driver for front end innovation must be “fast-failure” and “rapid risk reduction”,
i.e., the rapid sifting of many ideas to find those most likely to succeed. This is quit different
from stage-gate commercial development in which the avoidance of failure, during a
multifunctional team-based concurrent development process, is critical (Smith et al, 1999).
It is therefore crucial to design a functional and efficient screening process so that the “right
ideas” are passed on to the next step in the process and that the other ideas, not useful for the
company, are killed before too much resources are spent on them.
3.2.1. Building the Screening Process
As mentioned above, there are no general “best practices” for optimising the front end of
innovation. This in turn suggests that there is no right or wrong, for a specific company, in
designing their screening process. Every criteria and participant should be based on the
underlying environment and economics of every specific situation. The idea screening process
is a step in the larger front end process and like any sub-process it can be optimised.
It is sometimes useful to think of the front end as a precursor to a betting process. At the end
of the process companies’ will put the investment in product development of risk in return for
a chance to make profit. From an economic perspective the purpose of the screening process
is to alter the economic terms of the bets we have placed on product development (Reinertsen,
1999). The expected values of the bets are dependent on the probability of success and failure
respectively. Screening is one major factor by which you can influence this. In trying to
optimise the screening process it is important to identify measures of performance for the
process and then assess how changes in these measures affect profit and success. Three key
measures of performance are:
♦ The expense to screen an opportunity.
♦ The time to screen an opportunity.
♦ The effectiveness of the screening process.
When designing a screening process there are a few aspects to be considered concerning the
key measures of performance.
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Project-Specific Elements
Required Success Rate for New Product Development
Studies indicate a very low success rate for new product development. As mentioned above
only 1 out of 3 000 new product ideas succeed. Many companies maintain that higher success
rates are desirable. Such views display a poor understanding of product development
economics. Pursuing the single best lead maximises the average success rate of one candidate,
but leads to lower expected profit. Although pursuing second best candidates drag down
success rates, multiple candidates increase the chances that one will work. Because the payoff
from success is so high, even a small increase in overall success rate easily pays for the cost
of carrying forward multiple candidates. Therefore companies can raise profits by lowering
average success rates.
Filters
Some companies observe that many new products fail and conclude that adding another filter
will be the answer. An extra filter should only be added when its benefits exceed its costs.
This is of course company specific and can vary depending on resources and probability of
success. Screening often delays the front end process and every project within it. This leads to
that the cost from the delay far exceeds the benefits from the more thorough screening, even if
all the bad ideas are screened away. There are two possible ways to structure a series of
filters. Either to place them sequential or to run the screening processes parallel. For example
companies can assess market feasibility first and then assess technical feasibility. Sequential
screening is rational when screening expenses is high and cost of delay is low (Reinertsen,
1999). In general the filters that are cheapest (in time and expense dollars) and those which
reject the most opportunities, should be sequenced first. A key implication of this is that when
the costs and probabilities of success for filters differ, then the sequence in which we apply
them should also differ. It is only rational to use a fixed sequence if success rates and costs do
not change (Reinertsen, 1999).
Participants
There are many different approaches for the structure of the screening team. Every company
has to find their own composition. The team that selects the ideas has been found to be an
important determinant of success (Smith et al, 1999). The team’s composition should ensure
that members of an evaluation panel are sophisticated with respect too evaluating high-risk,
but potentially breakthrough, opportunities and that they have the credibility and authority to
get the organisation to take appropriate action in response to their decision (Leifer et al,
2000).
Benchmarking studies have proven that a cross-functional senior management team, with
knowledge of company competencies and needs, is a good base for the screening team.
Depending on how late the screening takes place, in the process, the more important it is to
have senior management involvement. This because it is the management who should take the
final decision and the risk that comes with it.
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Project-Specific Elements
3.3.
Concept Building
3.3.1. Opportunity Identification
A newly born idea needs time to mature and ripen in order to become robust. The initial idea
is, as mentioned earlier, often quite vague with no specific target application formulated.
Therefore, the company has to find the application or concept that provides the business-case
with highest possible chances of becoming a success in further development (Reinertsen,
1999).
“The most dangerous trap is choosing a concept or application too early, closure is
a killer.”
(Leifer et al, 2000)
Since there is so much uncertainty in the early stages there is a large amount of work to be
done to create a robust and self-bearing concept. The concept-building phase is the most time
consuming part of the project-specific elements.
The deliverables of the concept-building phase are several, but the overall purpose is to
reduce the uncertainties and vagueness from the idea generation phase and to present a
business case. The case should be possible to evaluate in order to decide if the concept should
move forward to the formal new product development (Zhang & Doll, 2001). Several
innovation literature authors vary in their description of how elaborate business cases should
be. However, all authors recognise similar areas to be pursued.
The main areas are, as mentioned earlier, technical uncertainty, market uncertainty,
organisational uncertainty and resource uncertainty (Leifer et al, 2000). Each of these
uncertainties need to be addressed by evaluating risk, mapping possible solutions and
identifying opportunities. Many companies make the mistake of pursuing the easiest variables
first thus investing large amount of money early on in the concept-building phase. This leads
to several problems. The project becomes a heavy investment even before the company can
evaluate its true potential, which makes it a highly political issue and thus very difficult to
reject (Smith et al, 1999). If the project consumes a lot of time, employees become
emotionally attached to projects and have a hard time evaluating it with the much-needed
critical eyes. To avoid these problems companies should address the “killer variables”, i.e. the
most difficult and essential for further development and commercialisation, as soon as
possible (Smith, 1999). When the main variables have been identified the following step is to
find out how to solve them.
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Project-Specific Elements
3.3.2. Knowledge Diffusion and Scanning
Since the concept-building phase includes many different disciplines, highly specialised
knowledge may be required. A barrier for this is to localise and obtain required resources,
which can be done either by internal or external scanning. Scanning means to map where
required knowledge exists. A reoccurring argument for companies to use external knowledge,
such as universities or science parks research centres, is that the company cannot have all the
knowledge required internally (Harryson, 2000; Stringer, 2000; Jancsurak, 1998). Companies
that effectively use external sources of knowledge stand a much better chance of making rapid
and effective innovation.
“The key to being more innovative turns out to be the company’s ability to absorb
knowledge, not the availability of radically new ideas”
(Stringer, 2000)
The problem is not whether or not to use external knowledge, rather how to manage the
relationship between different organisations. After identifying where knowledge is located,
knowledge sharing and creation has to take place. The collaborations can take many different
shapes depending on what type of organisations that are involved. If universities are involved,
the collaboration could consist of companies funding specific exploratory research and
perhaps tying institutes closer to the company. This can serve many purposes, such as
increasing chances of competent recruitment or exploring new research areas that never
would be possible in-house. Some companies use foundation elements to support this process,
by having specialised functions that continuously scan and integrate external knowledge.
Another knowledge feature is that companies should continuously increase their knowledge
of the building process. They should accumulate knowledge for reuse it in future projects
drawing upon the competitive advantage they have in comparison to smaller firms (Harryson,
2000).
3.3.3. Participants
Participants can include a core team (including project leader), knowledge contributors,
project sponsor and a steering committee (Leifer et al, 2000). Not all roles have to co-exist,
and they seldom do, but most projects have either of these Participants during a building
project. The core team consists of cross-functional experts with knowledge within different
fields. In order for researchers to make the connection between technological solutions and
market needs there is a high demand for multicompetent R&D employees. The general notion
is that researches are increasingly becoming more market oriented and less technological. The
goal is rather to be able to effectively absorb knowledge and combine it instead of creating
everything from scratch. (Harryson, 2000; Trott, 1998). Knowledge contributors are internal
or external individuals that contribute with knowledge that is used for specific problems.
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Project-Specific Elements
These Participants participate only for limited amount of time. Project sponsors provide
necessary support for the project, in terms of funding and political support and with due
resources. Steering committees should continuously review the project to ensure that the
right-track is held and support the project.
3.3.4. Participation
For many employees it is a positive experience to participate in various developing projects.
Colleagues from different business areas and units are put together to create something new
and challenging. They feel selected and important and value that they are offered the
opportunity to do something different. But sometimes problems might arise. When a conceptbuilding project is initiated and internal resources are required, the immediate problem arises
that most employees in R&D, marketing and other key functions are heavily involved in
functional duties and projects. They are not able to participate in cross-functional projects that
may lie outside their job description. Internal status can inhibit employees from switching
departments, which is a problem. A fierce fight for resources is not uncommon, depicted in
the words of a senior IBM executive.
“If a senior executive has not screamed at you lately for grossly exceeding your
authority, you’re probably not doing your job”
(Stringer, 2000)
This quote illustrates what scenarios might arise if the companies do not succeed in providing
strong incentives and structural support for employees to participate in concept building.
Another aspect, which makes it difficult to attract employees to high-risk projects, is that the
likelihood of failure is very large, which is an inherent feature of the entire front end process.
Employees are reluctant to be associated with project failures-they do not want to jeopardise
their careers by any chance.
Thus it is necessary to create strong enough incentives for participation in development
projects (section 4.3 Measurements and Incentives below).
3.3.5. Separation vs. Integration
Companies face the issue of how to treat the concept-building project. The new concept may
be such that it will cannibalise on existing product line, thus creating large tension within the
organisation. The issue to tackle is whether the project should be separated from the mother
organisation or if it should be integrated. There are several different ways to manage this
relationship spanning from total integration via internal incubator to external venturing funds
(Stringer, 2000). Each type of relationship has its pros and cons. If the project is physically
separated to an organisational incubator the project looses the possibility to obtain internal
resources, which is discourage by several authors (Day et al, 2001). But, if separated, the new
venture can develop without the pressure from senior managers that might feel a threat of
cannibalisation. Therefore, it is important that companies maintain knowledge networks
between separated entities and the main organisation.
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Foundation Elements
4.
Foundation Elements
In this chapter we will review what the underlying mechanisms are to the barriers
identified in the process descriptions. The purpose is to understand how foundation
elements relate to the barriers in order to understand what foundation elements that are
most effective in circumventing the barriers.
4.1.
Corporate Vision
This section will cover why and how corporate vision is central to the innovation process.
4.1.1. Strategic Intent
Strategic intent is one of senior management’s primary motivational tools for idea generation.
The organisation can be motivated to engage in idea generation when management actively
encourages the quest for new opportunities. Management can also inhibit or expand the search
for radical ideas through its articulation of strategic intent (Leifer et al, 2000)
SI implies a significant stretch for the organisation and all its’ members. While the traditional
view of strategy focuses on the “fit” between existing resources and emerging opportunities,
SI creates, by design, a substantial “misfit” between resources and aspirations. SI also implies
a particular point of view about long-term market and competitive position that a firm hopes
to build over the coming decade or so. Hamel & Prahalad (1994) have identified three main
areas of interest in looking at a company’s strategic intent - a sense of direction, a sense of
discovery and a sense of destiny.
Sense of Direction
Most companies lack the sense of purpose above and beyond that of short time unit
performance. Lacking direction, few employees feel a compelling sense of responsibility for
competitiveness. Most people will not go that extra mile unless they know where they are
heading.
Bureaucracy blocks initiative and creativity at every turn. Bureaucracy constrains the range of
available tactics, but generally leaves the question of ultimate goals open (Chandy & Tellis,
2000; Roffe, 1999, Hamel & Prahalad, 1994). Delegation and empowerment are not just
buzzwords. Strategic decision-making should be closely linked to competition and customers.
It is dangerous to dismantling bureaucracy without putting in its place a clear and compelling
sense of direction. Empowerment without direction is anarchy.
Individual freedom and delegation often yield unexpected successes. Creativity in the service
of a clearly prescribed strategic intent is preferable. Creativity should be unbridled, but not
uncorralled. SI is more about ends than it is about means. SI must be broad enough to leave
considerable room for experimentation in how to reach the destination. SI broadly constrains
the “where” but not the “how”.
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Foundation Elements
Sense of Discovery
In every person there beats a heart of an explorer. SI should offer employees the enticing
spectacle of a new destination, or at least new routes to well-known destinations
Sense of Destiny
SI must be the goal that commands the respect and allegiance of every employee. The
destination must not only be different, it must also be worthwhile. Too many mission
statements fail entirely to impart any sense of mission. For this reason we prefer goals that are
focused on making a real difference in the lives of the customers. SI is as much about the
creation of meaning for employees as it is about the establishment of a direction. SI aim to
create employee excitement, not just employee satisfaction, so that working at a certain
company is a higher purpose than just the pay-cheque. The appeal to emotion and intellect
must be based on more than the prospect of personal financial gain. It is impossible to create a
financial reward system so finely tuned that the single-minded pursuit of personal gain will
not, in the longer run, dilute firm success. Real SI is when a company can articulate what it is
growing toward - not only that it wants to grow. An illustrative example can be the following
statements
“We want to be the best business in the whole wide world”
“We will become a billion dollar firm be the year 2001”
(Stephen, 1999)
These two visions pose two major limitations in accordance with prior arguments. First, since
it impossible to oppose statements of this kind, no one will oppose them, making it impossible
to distinguish between true and pseudo-buy in. Second such statements fail to make clear
what each employee can do to support the mission. Therefore the content of the vision is most
central issue.
4.1.2. Vision
A company’s vision has both a present and a future component. Vision is not only a foresight
about a future state. It is also necessary to have a vision of one’s present situation. A vision is
firmly connected to an advancement strategy. The strategy should emphasise a company’s
future performance and success. But just as companies must balance advancement and
survival strategies, they need to envision a future based on current conditions and even some
sense of the past. A good vision lays out the basis for future competitive advantages and
performances.
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Foundation Elements
According to von Krogh et al (2000) a vision gives corporate planners a mental map of three
related domains:
♦ The vision should provide a mental map of the world the organisational members live in.
♦ The vision must include a mental map of the world the organisational members ought to
live in.
♦ The vision should specify what knowledge organisational members need to seek and
create.
In practice, a company’s vision may take the form of a mission statement, a set of corporate
values, a document of management philosophy, or a plan that looks more like a strategic
outline. The point is that managers can either articulate a vision and call it this by name, or
they can integrate ideas about knowledge into other corporate statements.
While the definition of a vision and the criteria for a good such are generic, the process of
instilling such a vision can vary substantially from company to company. The one von Krogh
et al (2000) suggest is the best one is called 360° approach. Visionaries represent the full
circle, or 360 degrees, of all knowledge at a company; they include every level in the
organisation when creating a vision, moving horizontal, laterally and all around, in the
company. Good visions need good co-ordination to have a significant impact on the future of
the company. Therefore people from various levels, functions and departments need to get
involved in the vision creation and justification processes. Twelve useful management actions
for this are:
♦ Identify and gather the participants, and organise the process.
♦ Build a common understanding among participants of what a vision is and the seven
criteria for a good one.
♦ Commitment to a direction
♦ Generativity
♦ Specific style
♦ Focus on restructuring the current knowledge system
♦ Focus on restructuring the current task system
♦ External communication of values
♦ Commitment to shaping competitiveness
♦ Write up and use narratives of the future as platforms for the vision process.
♦ Allow ample time for instilling a vision.
♦ Consider the vision process a learning process.
(von Krogh et al, 2000)
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Foundation Elements
Most companies believe that a good strategic vision enables the pursuit of a wide range of
opportunities. In fact, the opposite is true. A good vision should rule out potential
opportunities. If it excludes nothing, then it contains no useful information. Companies with
very broad strategies have enormous problems with their front end of innovation. Strategy
should act as the first filter for product development opportunities. If this filter is defective,
too many opportunities are accepted for review (Reinertsen, 1994). This leads to more
projects in the process, which can cause delays and longer cycle times. Narrowing the
company’s vision can save a lot of time and resources.
The main problem for any vision is that the future is unpredictable. Nevertheless, instilling a
vision is a process that can enable the company’s members to expect the unexpected. It is
better to envision the possible threats and opportunities than to hide from them or look the
other way. It is very important to have in mind that the vision must be flexible enough to
allow new insights that will inevitably flow from new initiatives. Companies should not
neglect interesting developments by clinging to a tightly defined vision.
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4.2.
Communication Networks
Communication networks concern how knowledge can be managed in an organisation to
make it flow freely and interconnect employees.
4.2.1. Knowledge Creation
People need to be able to effectively communicate an idea in order to generate and develop it.
There are several aspects that are prerequisites for effective communication. A wellrecognised model is Nonaka’s model of how to spread, communicate and create new
knowledge. The model is based on two basic types of knowledge, tacit and explicit (Nonaka,
1994). Explicit knowledge is such that can be documented in a formal way. Examples are
mathematical expressions and specifications. Tacit knowledge is held within individuals and
is much more complex to communicate.
Tacit knowledge can be intuition-like knowledge that is based on years of experience and
certain perception of the environment (Nonaka, 1994). The implication of these types of
knowledge for this thesis arises when new knowledge is created.
Tacit Knowledge
To
Explicit Knowledge
Tacit
Knowledge
Socialisation
Externalisation
Internalisation
Combination
From
Explicit
Knowledge
Figure 6 Modes of knowledge conversions (Nonaka, 1994)
According to Nonaka knowledge is created when it is converted from one form to another.
Figure 6 suggests four types of conversion modes. Socialisation is individuals sharing and
creating knew tacit knowledge. To make this mode effective, prerequisites are shared
experiences, common goals and trust. This relates to Zhang and Doll’s research (2001) that
states that the most important enabler of a development project is a shared team vision. This
requires total interconnectivity among group members and strong networks that connects the
project team to external environment. The more shared knowledge and vision the better
chances are for the project teams to adapt to the project requirements. The next conversion
mode is Internalisation. This is what we mostly refer to as common learning, where
individuals study well-described and documented pieces of information and create internal
tacit knowledge by a trial and error process.
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Externalisation refers to tacit knowledge becoming explicit and possible to share with a large
number of people. Combination is simply the process of moving explicit knowledge between
organisational units, by means of phone, fax or other media. Ideas in the early stages are
vague and tacit, born within individuals; therefore the most essential modes for innovation
work are socialisation and externalisation, where tacit knowledge is being converted to both
explicit and tacit.
4.2.2. Communication and Knowledge Strategy
The front end of innovation is obviously a very knowledge intense phase. If companies want
to take control of the process and manage it effectively, there is a need for a certain
knowledge management strategy, or at least an idea of what aspects are important. There are
two main types of knowledge management strategy, codification and personalisation (Hansen
et al, 1999). If a codification strategy is chosen the company focuses on codifying, storing
and making all knowledge explicit in order to be able to efficiently reuse it. On the other
hand, a personalisation strategy means that the company focuses on the individuals as
knowledge repositories and relies on interpersonal networks to spread and create knowledge.
There are a couple of main questions that should be asked when choosing which strategy to
pursue. (1) Does the company offer standardised or customised products? (2) Do people rely
on explicit or tacit knowledge to solve problems? If customised products and tacit knowledge
are the answers, it suggests that a personalisation strategy is to prefer. Depending on which
strategy a company chooses, different managerial aspects need to be addressed. A
personalization strategy calls for good use of incentives, in order to promote employees to
share knowledge (see section 4.3 Measurements and Incentives below).
Incentives can include evaluation criteria such as how much direct help employees have
given colleagues or degree of high-quality, person-to-person dialogue.
4.2.3. Knowledge Sharing
The act of sharing knowledge may seem like a simple task, but companies should be cautious
since it is a highly complex and difficult matter to manage.
“Companies install e-mail or collaborative software and expect knowledge to flow
freely through the electronic pipeline. When this does not happen, they are more
likely to blame the software or inadequate training than to face a fact of life: people
rarely give away valuable possessions (including knowledge) without expecting
something in return.”
(Davenport & Prusak, 1998)
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By recognising that knowledge is an asset just as any other possession companies will come
to important insights about how to encourage people to share knowledge. The sharing of
knowledge can be viewed as a market, made up by buyers, sellers and brokers, who all
require the right incentives to participate in the exchange. A knowledge market, as any other
market, is never perfect. There are many factors that cause imperfection in the market and if
these factors are mapped and understood, management would stand a better chance of
creating the necessary conditions.
For this thesis we have defined the buyers, sellers and brokers of knowledge as:
“The buyer is a person who is looking for insights, judgements and understanding in
order to become more successful at accomplishing designated task. Sellers are the
persons who possess the knowledge and are willing and able to formulate and share
knowledge to others. The broker is the person, or organisational function, that
makes connections between buyers and sellers.”
Leifer et al (2000) suggest that the broker function should be managed by an organisational
unit, an innovation hub, that continually scans and maps internal and external knowledge. The
currency of knowledge sharing consists of three key elements.
♦ Reciprocity. A seller will not be willing to share knowledge unless he or she can not see
the possibility of buying knowledge at a later occasion. This means that there can not be
single directed knowledge flows. All parties have to be involved both as sellers and as
buyers at all times.
♦ Repute. Individuals are increasingly relying on repute within the organisations. A person
who is regarded as a valuable and active knowledge sharer will gain respect, higher salary
and possibilities for further advancement. This has to be synchronised with the companies
overall strategy for knowledge management. If the company actively measures and
rewards knowledge sharing the repute currency will be fulfilled. However if companies
do not recognise the importance of repute people will not be willing to share knowledge to
the same extent.
♦ Altruism. Some sellers are simply very nice people and enjoy sharing knowledge, which
can and should be encouraged by companies, by e.g. creating knowledge communities.
There is, however, a risk of depending too much on altruism since it is hard to actively
manage.
Some companies especially in Japan have designed very well functioning knowledge sharing
systems. They stress the importance of sharing experiences to such degree that employers are
not able to be promoted unless they are recognised to have experienced a success and a failure
(Harryson, 2000)
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The currencies need to be supported by trust, which suggests that knowledge is not used for
personal interest on a seller’s behalf and that the system is equal for all involved. Trust must
be visible and start from the top. Management has to be very clear on how they utilise
knowledge and consistently reward knowledge sharing. When designing a system for
knowledge sharing the trust element must be incorporated. If a need is posted in the needs
bank of the company, the seller has to be sure that he/she will receive due appreciation for the
sold knowledge, especially in a computer based information systems, which are more
impersonal then face-to-face systems.
As in any market place, there are trade barriers in the knowledge market. When people only
collect knowledge, creating large islands of knowledge, and do not share it, is referred to as
hoarding. A similar barrier is the not-invented-here syndrome, which means that people
refuse to buy knowledge that is not invented locally. The not-invented-here barrier also
applies to knowledge not being able to be transferred from different levels in organisation - a
kind of class-barrier. Another trade barrier is the lack of visible marketplaces, which makes it
difficult for people to know where to find knowledge. By using information technology
wisely, people throughout the organisation can be connected to each other and quickly
identify sellers of knowledge.
Marketplaces are needed for buyers and sellers to meet. Companies have introduced forums
and fairs for buyers and sellers to meet and talk with no others goal than sharing knowledge.
In order to be able to enter the knowledge market employees need time to participate.
“Engineers may spend weeks or months solving problems because they can not find
the time to ask if anyone else in the company has dealt with it before. If a company’s
most influential employees are the very ones who are too busy to attend a knowledge
fair or forum, then the knowledge market is not working well.”
(Davenport & Prusak, 1998)
Companies also need to be very clear with their efforts. It is not sufficient to talk about
sharing - companies need to invest and develop systems that support the knowledge markets.
The incentives for employees should be visible and real, suggesting that measurements and
rewards match the desired actions. By giving attention to these aspects the organisation will
have a better chance of realising knowledge sharing participation.
4.2.4. Conversation management
Effective conversation allows for higher creativity and stimulates the sharing of tacit
knowledge. It is quite ironic that while executives and knowledge officers focus on expensive
information-technology systems, quantifiable databases and measurement tools, one of the
best means for sharing knowledge already exists within their companies.
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It cannot be emphasised enough the important part conversations play in the front end process
(von Krogh et al, 2000). Conversations that take place in today’s business community have
two basic purposes. They either confirm the existence and content of knowledge, or they aim
to create new knowledge. The first one is most common in business. It is relatively clear-cut.
It focuses on the present, on facts and on solid reality.
The main purpose, with this form of conversation, is to confirm explicit knowledge. Such
conversations also confirm and reconfirm established expertise, and they allow for effective
problem solving. When creating new knowledge the purpose of the conversation is exchange
and sharing. The purpose is for the participants to establish not only new knowledge but also
a new reality. This since there is no explicit models or solid facts to indicate right or wrong.
The focus is on the future and the conversations are most directly related to the company’s
knowledge vision.
According to von Krogh et al (2000) there are four guiding principles that can be used in
order to manage conversations so that they enable knowledge creation; actively encouraging
participation, establishing conversational etiquette, editing conversations appropriately and
fostering innovative language. They all will be discussed below.
Actively Encouraging Participation
First, management must create awareness for knowledge-creating conversations.
Management should invite to discussion. One way is to have large forums with open
discussion on various company issues. This allows organisational members to give valuable
feedback to management and to make their voice heard. It is important to distinguish between
the core group and different support groups. The core group conversation might require
limited participation perhaps, only experts, but the support group can involve every
organisational member that can contribute to the larger picture.
Second, management can help shape conversation rituals that encourage participation.
Entering a conversation can require a very complicated set of rules and procedures, which
have been developed to provide certain stability for the participants. Companies need to pay
careful attention to these rituals. It is the manager’s responsibility to revise the rituals for
entry to encourage new participation, which is essential for the front end process.
Establishing Conversational Etiquette
Knowledge creation conversations require the right rules and etiquette to make them a
pleasant and memorable experience. “To much” chaos in a group’s relations is not a good
thing. All participants in the group should be connected and be able to share their personal
thoughts when new knowledge is being created. Knowledge creation conversations depend
not only on what is said but also how it is expressed. Paul Grice (1975) has establish several
maxims that can be used in helping almost all knowledge creation conversations:
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♦ Avoid unnecessary ambiguity
♦ Avoid intimidation
♦ Avoid exercising authority
♦ Avoid premature closure
♦ Be brief
♦ Be orderly
♦ Help other participants to be brave
♦ Do not make false statements
Editing Conversations Appropriately
The managerial issue here is making the right incision at the right time. At the beginning too
much editing may close down a conversation; at other points, appropriate editing can keep
things moving. Core competence, vision, strategic intent and purpose of the conversation play
a vital part in how and when mangers should edit the conversation.
Fostering Innovative Language
A company’s language represent one of its’ most important assets (Marlene Fiol, 1991).
Language is a medium for people’s observations about the world, which in turn is required to
create new knowledge. There will be no new prototype, product, or service without a new
concept, expressed in language that conveys its meaning. Therefore, language has to be
extraordinary dynamic when it is supporting the front end process. Participants should not
only speak freely and honest, they should also allow the words they use to be playful, vivid
silly, and not always “correct”. In managerial terms, fostering innovative language during
knowledge creating conversations will help give new meaning to well-known concepts and
terms; it will inspire new terms that incorporates existing meanings, or new terms with
entirely new meanings (von Krogh et al, 2000).
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4.2.5. Choice of Media
Another central aspect for effective communication is the choice of media. In the literature,
media are said to have different degrees of richness (Daft & Lengel, 1984). The degree of
richness is defined by the media’s capability of transferring information in order to reduce
equivocality (ambiguity). Equivocality should not be compared to uncertainty, which is
merely a lack of data and information. Simply asking questions and getting direct answers can
reduce uncertainty. Equivocality refers to a situation where different interpretations of
problems and issues can occur. High degree of equivocally suggests that individuals need to
decide upon what questions to ask and share ideas to create a common ground. When
choosing a media it is important to understand that the choice of media dramatically affects
employees’ possibility to effectively perform tasks. The main thought is to combine a specific
task with a specific choice of media (Figure 7).
Richness of media
High
Face to face
Video
Effective Communication
Telefon
E-mail
Letter
Low
N
i
l
i l
Complexity
Low
High
of task
Figure 7 Effective communication (Lindström, 1996, page 29)
A media’s richness is based on four factors. (1) The possibility for instant feedback between
the communicating parties, (2) the possibility of transferring different types of signals such as
sound, pictures and gestures, (3) possibility of using a natural language, (4) the media’s
possibility of transferring personal emotions. If a certain task has a high degree of complexity,
i.e. that there is high degree of equivocality, then the task solvers require a media with a high
degree of richness in order communicate task-related issues.
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4.2.6. Care in Organisation
Knowledge creation and knowledge sharing are known to put high demands on organisational
relationships. For any given project, knowledge creation has to happen in an open and caring
atmosphere, one in which organisational members take an active interest in applying insights
provided by others. In order to share personal knowledge, individuals must rely on others to
listen and react to their ideas. Constructive and helpful relations enable people to share their
insights and freely discuss their concerns. Good relationships purge a knowledge creation
process of distrust, fear and dissatisfaction, and allow organisational members to feel safe
enough to explore the unknown territories of new markets, new customers, new products and
new manufacturing technologies (von Krogh et al, 2000). Knowledge is created in every
organisation in purpose to be used as competitive advantages against other companies.
However, in many companies, a legitimate interest in knowledge creation has been reduced to
on overemphasis on information technology or measurement tools.
Beyond sharing of tacit knowledge, as mentioned above, high or low levels of care affect the
knowledge creation process. When productive knowledge creation, the very engine of
innovation in many contemporary organisations, is threatened, the future of the company is in
danger. Most companies reflect the environment that they operate in, both in the way they are
organised and how they innovate. The organisation mirrors itself: it does not reflect the actual
environment but the one it “thinks” it is operating in (Morgan, 1996). Therefore when
companies find themselves exposed to hypercompetitive environments, they mirror some of
this competitiveness internally as well. Systems, strategies, structures and perhaps even the
organisational culture are influenced accordingly. Top management repeatedly conveys the
message that the company is under fire and makes clear that the organisation also needs to be
internally competitive in order to adapt to the change in the environmental conditions (von
Krogh et al, 2000).
The problem with internal competition is a grave one. It can disable one of the most important
enabling factors in the knowledge creation process: care among organisational members. This
in turn can lead individual members to act in an untrustworthy fashion, avoid helping out,
engage in gaming and political behaviour, unduly criticise new and potentially valuable ideas,
and refuse to offer their valuable feedback during the learning process. Even worse, an
internal belief in hypercompetition may lead company strategists in the wrong direction,
undercutting the very advantages that could bring future success. Von Krogh et al (2000)
identifies five dimensions, which are used to better convey what they mean by care in
organisational knowledge creation. Formulating such dimensions can help managers and
others observe the extent to which organisational members show care for one another. These
dimensions, their implications and how to manage each of them is discussed below.
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Mutual Trust
In every encounter with a person, you establish some degree of trust in him or her. Your trust
in a person in some way compensates for the lack of knowledge. You do not know all his or
her motives, preferences, interests, personal background, opinions of you, reactions to your
conversations, backing in the organisation, ability to follow up agreements the two of you
have made, and so forth. You cannot help people to grow and actualise themselves unless you
trust them to use your teaching and recommendation in the best way possible. Trust is also
reciprocal. In order to accept your help, the other person has to believe in your good
intentions. There are at least three ways for creating trust in the organisation create a sense of
mutual dependence, make trustworthy behaviour a part of performance reviews, and increase
individual reliability by formulating a “map” of expectations. A map like this has two
dimensions: expectations for your own activities and performance, and expectations for how
the entire organisation/group as a whole will perform.
Active Empathy
While trust creates the basis for caring, active empathy makes it possible for one person to
understand and assess what another person actually needs. On the most general level, active
empathy is essential for gaining emotional knowledge. Unfortunately, because there can be
many barriers in dealing with emotional issues in an organisation, expressing needs,
especially emotional needs, can be difficult for people. A broad acceptance of the emotional
lives of others is crucial for establishing good working relationships – good relationships, in
turn, lead to effective knowledge creation. There are two ways to reinforce active empathy.
First, managers should emphasise and, if necessary, invest in training and educating
organisational members in listening behaviour. Second, organisational members should learn
to value attempts at active empathy when they experience it. Active empathy has to be
integrated in the companies’ core values and value systems. Trust and empathy has to be put
on the management agenda as a dimension of caring for fellow organisation members.
Repeating, enacting, and explicit encouraging the message of active empathy will positively
enable the work.
Access to Help
Active empathy prepares the ground for a helping behaviour in the organisation. Care in the
company has to be extended to real and tangible help between the members of the
organisation. Expertise should be equated with social responsibility beyond the outcome of
actions. A “caring-expert” is an organisational member who reaches her level of personal
mastery of tacit and explicit knowledge, and understands that she is responsible for sharing
this knowledge. During the course of knowledge creation, participants with different
backgrounds must step into the role of the caring-expert.
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All organisational members must increase their knowledge of this role and become proficient
teachers or tutors as their own skills grow. There are at least four initiatives that can foster
more accessible help in the organisation; training pedagogical skills, training in intervention
techniques, making accessible help an element of performance appraisals, and sharing stories
of helping behaviour.
Lenience in Judgement
For care to be a prevalent feature of organisational relationships, helping behaviour has to be
completed with a lenient attitude among organisational members. Lenience in judgement
means to avoid excessive criticism. Knowledge creation involves a great amount of mental
and linguistic experimentation throughout the front end process. Harsh judgement can prevent
explicit knowledge from being created through externalisation. To help a person grow, one
has to let him or her experiment. One way of doing this is to criticise in a positive way
without abandoning the company core values.
Courage
Care in the organisational relationships is reflected in the courage that its’ members exhibit
toward one another. Courage plays an important role in three different ways. People have to
have courage to allow themselves and fellow organisational members to experiment.
Participants in the front end process must have courage to allow their concepts to be exposed
to intense judgement. Last but not least, it takes courage to give your opinion or feedback as
part of the greater process of helping another organisational member grow. If people are not
brave during the screening process it can result in products or services that are inadequate. As
in the creation of the two first dimensions of care, top management must communicate
lenience and courage values, by example and through oral and written statements. Caring
means that you respect individual differences in observations and viewpoints, and that you
allow individuals to develop their own distinctive skills and ways of operating spontaneously.
In general a mentoring system in the organisation will support all the dimensions of care.
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4.3.
Measurements and Incentives
This section will review what measurements and incentives that exist and how they can be
used to support the overall innovation process.
4.3.1. Measurements
Measurements are a prerequisite to effectively evaluate results. This suggests that in order to
give fair rewards, measurements have to be well functioning. When a task (process, activity,
etc) is performed and the task is to be evaluated, there is a need for measurements.
Measurements allow management to be clear on what basis specific rewards are given. One
risk of giving rewards without clear measurement is that employees loose interest and belief
in the system. Therefore, measurements fill an important role to validate and legitimate
rewards (Tushman & O´Reilly III, 1997). Measurements can be of two types - single or
aggregated. A single measurement concerns only one aspect of the measurement object while
an aggregated measurement consist of several single measurements that are compiled into
one new measurement. An aggregated measurement can consist of measurements from
different objects as well. Measurements provide several benefits, not only the actual
information received from the measurement.
♦ Language. When measurements are used, definitions regarding the measurement need to
be formulated. This provides a common language, which enables people to communicate
about the measurement object.
♦ Knowledge. Measurements often support evaluation of the object especially if the
measure is conducted repeatedly so that trends can be analysed.
♦ Value. If a measurement makes an impact on what decisions are made, they can be said to
have a certain value. However, it is hard to determine monetary value.
♦ Attention. When a specific object is measured organisational, attention is given to that
object. It is a way for management to highlight specific aspects.
(Olve & Westin, 1996)
Visibility
Measurements can be used in different ways depending on what the desired outcome is.
Management can choose to make them visible or use them as control tools. A visible
measurement is made public and spread throughout the organisation. If measurements are
made public they are primarily used for motivation and creating a common vision and
language. Public measurements often work as goals for the employees. When measurements
are concealed they are used to support management’s decision-making.
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Overload
A problem that may arise when management wants to create attention, is when too many
measurements are being used and too little reward is connected to them. In that situation
employees looses interest in the measurements and they become isolated and neglected. The
implication is that managers should carefully choose which measure they wish to make
“public” (Stephen, 1999).
Measurements also incorporate certain risk. When selecting measurements it is important to
take a holistic approach to avoid sub-optimisation of the overall process. All measure should
be in coherence with the bigger picture (Harryson, 2000). Measurements are in this thesis
divided into two different types: (1) Aggregated Process measurements, (2) Performance
measurements.
Aggregated Process measurements
The first group of measurements is process measurements (Table 1). Since the front end
process should be subject to continuous evaluation and improvement, research suggest the
need for process measurements. However, this is not a prioritised area (Reinertsen, 1994). A
literature review provides some process measurements:
Process Measurement
Description
•
Cycle time
Measured time for a certain activity (Reinertsen, 1994).
•
Time
Cost and effectiveness of screening process (Reinertsen, 1999).
•
Number of suggestions
Accepted suggestions or suggestions under investigation (Petri,
2000).
•
•
Importance of radical
Determine
innovation in industry
(Stringer, 2000).
Quality Index Metric
how
important
radical
innovation
is
in
industry
Checklist with a number of (yes or no) aspects central to a
successful development (Smith, 1999).
•
Pipeline Revenue
Projection revenue in pipeline (Smith, 1999).
Projection
•
Dynamic Cycle Time
•
Patent Metrics
Average project lifetime (Smith, 1999).
Number of applications, number of issued patents, number of
disclosures (Smith, 1999).
•
Percentage of revenue
Percentage of revenue derived from sales within past X number of
years (Coyne, 2001).
Table 1 Process Measurement for Front End of Innovation
Companies that have engaged in process measurements and been able to communicate them,
have gained a larger acceptance for the front end process and made participants aware of what
aspects of the process that are most important. This has lead to highly improved processes
(Reinertsen, 1994, Petri, 2000).
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Performance Measurements
Performance measures are defined in this thesis as:
“Measurements that concern individual or team efforts at a single-type level.”
Historically measurements have mostly been on an individual level, although many of the
tasks performed in the front end process are team efforts. This leads to a higher risk of
counterproductive behaviour, since it is difficult to align all individual measurements to
overall team performance (Cacioppe, 1999; Khurana & Rosenthal, 1997; Tushman &
O´Reilly, 1997). Project team members seldom appreciate the importance of cross-functional
teamwork. One reason for this is, as mentioned, the lack of measurements involved. Although
many authors have raised the importance of team measurements, no specific ones have been
identified. However, it is clear that if companies can create team measures they will increase
the efficiency of which teams perform their activities.
Individual measurements can be very effective to increase certain behaviour. Individual
measures are typically concealed and only displayed to each person. Some measurements
connected to knowledge sharing have been identified (Table 2).
Performance Measurement
•
Degree of high quality person-to-person dialogue (Hansen et al, 1999)
•
Extent of direct help given to colleagues (Hansen et al, 1999)
•
Number of suggestion (Smith, 1999)
Table 2 Performance Measurements of Front End of Innovation
Evidently there is not an abundance of measures to find. No theory has been found that
explains how effective these measures are in promoting desired behaviour.
4.3.2. Incentives
Synonym words to incentives are: inducement, enticement, motivation and encouragement.
They all suggest that incentives involve making people motivated and actively participate.
Management can use incentives to spur specific behaviour from employees.
“Rewards are one of the loudest and clearest ways leaders of an organisation can
send a message about what they consider important.”
(Cacioppe, 1999)
Incentives can be many different things, since there are so many factors that motivate people.
Motivators can range from corporate vision to monetary rewards. There is no common
definition of incentives, which makes it rather challenging to structure a literature review.
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To make measurements effective, they often need to be accompanied by some kind of reward.
Rewards can be divided into monetary and non-monetary incentives (Stephen, 1999,
Cacioppe, 1999). It is important to note that different types of rewards promote different types
of behaviour.
Non-Monetary Incentives (Intrinsic)
This is the primary reward tool for the innovation process in large innovative companies
(Gordon, 2000; Roffe, 1999; Leifer et al, 2000). The most reoccurring reward, mentioned in
literature, is recognition. Employees become highly motivated by being recognised in the
company. This can be done by having dual-career systems that allows researchers to get
senior status or by having halls-of-fame for researchers.
One of the central barriers from chapter 3 was the one of people not wanting to participate due
to the high risk and uncertainty of radical innovation projects. People do not want to
jeopardise their careers by being associated with project failures. Some companies have
addressed this issue by ensuring that project members are assured to rotate back into line duty
after projects are finished, despite outcome. This demonstrates to all employees the
importance that the company places on participation in innovation projects. These kinds of
career rewards have proven very effective. Another incentive that the authors described in
section 4.2.3 Knowledge Sharing is used in Japan, employees will not be granted a promotion
unless they are internally recognised for a success and a failure. Reasons for this principle is
to ensure that employees participate and take calculated risks and it also promote
organisational learning since the same mistake is not made twice if it is well spread
(Harryson, 2000).
Companies that want their employees to be creative need to give them the time and
empowerment to explore their pet projects (LeBouef, 1985; Trott, 1998, Brown & Duguid,
2000). High focus on short-term goals lessens the commitment to long-term ideas. Many
larger innovative companies (3M, Shell, Du-Pont, ICI) have for long time granted spare time
for researchers to spend on own projects, which enables employers to commit to truly
innovative projects with high degree of creativity.
In the chapter 3 it became clear that ownership of the idea played an important role when an
idea generator considers submitting an idea. Ownership refers to having your name attached
to the idea. The feeling of ownership is very pervasive and can be so powerful that employees
are more concerned of being able to voice their opinion and feeling involved than actually
understanding the innovation (Skogen & Sølrie, 1995). Employees want to experience the
sensation of being part of the innovation process. If this is not established, people will not be
willing to contribute to the process. Consequently it is very important for companies to
address this issue and truly include generators and make them part of the project.
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Monetary Incentives (Extrinsic)
When it comes to monetary rewards most research suggests that they should be used with
much care (Gregory, 1997; Cacioppe, 1999; Roffe, 1999). Many companies use what they
call standard pay, i.e. fixed amounts ranging from $5000 – $40 000 for outstanding
achievements. Not many companies give employees “a piece of the action”. Nokia has a
incentive system that gives project members same payment, as they would have had in line
duty (Day et al, 2001). The reason for this is twofold. First they want to prevent employees
becoming overly attached to projects and not being able to have the much required
objectivity. Secondly they want the employees to feel a sense of belonging to the whole
company, i.e. what they do for themselves should be good for the entire company.
4.4.
Organisational Culture and Norms
In this section we will explain why and how organisational culture is important for the front
end of innovation. We will also offers some pieces of advice on how to manage company
culture, different methods and their effects on the organisation
4.4.1. Why is Organisation Culture Important
♦ In today’s business, with it is increasing competition, economical problems and tougher
market-conditions managers look for new solution that will increase profitability and
strengthen their organisation. They use methods that are said too be efficient and also
loyalty and success increasing. Such “company culture” is represented in the two books
“In search of excellence” (Peters & Waterman, 1982) and “Corporate Cultures” (Deal &
Kennedy, 1982). These books are often argued to be the trigger for the large interest in
organisation culture that has developed the recent years.
♦ People today want more out of their jobs then just their salary. Many employees have
recognised that they spend most of their awaken time at work and therefor the place of
work has to be a place that fulfils many of their individuals needs. Through the
perspective “organisation as a cultural system“ it is evident what additional functions the
place of work has for the employee.
♦ Managers and employees are beginning to understand that there are a number of processes
within the organisation that they know very little about. Many of these processes can not
be explained by common sense and therefore a “tool” is needed that can assist the
participants in creating understanding and control and also explains how to manage these
“new processes”.
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Through the studying of companies’ organisational culture, researchers hope to find factors
within the organisation that can help describe, explain and predict human behaviour in the
organisation. We will use the following definition for organisational culture:
“the set of common norms, values and perceptions that evolves in an organisation
when members interact with one another and the world around them.”
(Bang, 1999)
4.4.2. Subcultures
When describing the organisational culture, we can look at the organisation as one big culture
or as many different subcultures. The company’s overall culture consists of a mixture of all
the different subcultures within the company. The subcultures can interact in three different
ways:
♦ Support each other
♦ Be contradictory and therefore restrain one another
♦ Be independent and therefore not influence one another
Depending on how the different subcultures interact, conflicts and problems can arise which
can be major barriers for the organisation. Why conflicts and problems arise has much to do
with the group having a need to maintain and strengthen the group-culture, and the threat of
destruction of their own culture. The subcultures give the group members a social identity,
which becomes an important part of the individual’s own identity and self-image (Hogg &
Adams, 1988). One way of dealing with these kinds of conflicts is often to let different groups
work together towards a common goal (Sherif, 1972).
But conflicts are not entirely bad for the company. An organisation cannot grow and develop
if it lacks conflicts. Diversity is a prerequisite for growth. The degree of conflict is dependent
on many different factors. Organisations that are active in a turbulent environment can be
restrained by an overly homogeneous organisation. This through the fact that companies do
not discover other and more functional perceptions around that better answer to the fast
changing conditions in the organisation’s surroundings.
Although conflicts can be good, it is very important to have something that gathers every
individual together in the organisation. Another factor is the organisation’s ability to bear
conflicts. Some organisations are very sensitive to conflicts, while others are much more
tolerant towards them. The composition of people in the organisation also affects the
probability for sub cultural conflicts. If recruitment takes place from different environments,
there is a larger chance of conflict in the organisation.
When designing different types of teams and screening boards it is of the highest importance
to consider the aspects mentioned above. Management has to be able to control the three
different interactions that can develop within the organisation and make them contribute to
the company’s overall goals.
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Foundation Elements
4.4.3. Factors that Affect the Cultural Content
There are three major categories of factors that affect the culture. These categories are:
♦ Environmentally determined factors. These are factors that surround the organisation and
are very hard to influence. For example laws, regulations, local-, national culture, branch
specific apprehension and the effects that customer and other extern parts have on the
organisation.
♦ People. The organisation is created by people with different backgrounds, education,
personal goals, values and roles in the organisation.
♦ Culture development process. An organisation is created through the individuals that are a
part of it and work towards a common goal. The goal contributes with understanding and
unity, which eventually leads to a ground for the development of an organisation culture.
(Bang 1999)
The last two factors are most efficient to focus on in trying to influence the direction of the
culture. People’s attitude can always be changed, for example through reorganisation, changes
in leadership or the introduction of new incentives. The workforce composition can be altered
in order to change the organisation culture. The cultural development process can be
influenced through the change of goals and visions that the organisation works toward. It is
here of great importance to focus on how the organisation functions and the processes within
the organisation. As mentioned above, vision and goals play a major part in motivating and
focusing the organisation towards the company’s goal.
4.4.4. Strong Organisational Culture
To describe cultures in terms of strong and weak, is a very frequently used approach among
cultural scientists (Schein, 1984; Louis, 1984). A strong culture has a great influence on its
members and their actions. There are both advantages and disadvantages of having a strong
organisational culture.
A strong culture can affect the organisation so that it does not consider real alternatives and
prevent important information from reaching the right persons. It is more important to get
along than to find out what the most efficient or right alternative is. Every organisation with a
high degree of institutionalisation and unitary culture has a tendency to be more interested in
maintaining the culture than to produce results (Meyer & Rowan, 1977; Kilmann, 1985). A
culture that has existed for a long time becomes very resistant to change.
According to Kilmann (1984) people in the organisations do what they can to protect the
organisation, being overprotective and building different kinds of barriers around themselves.
To circumvent this, it is important for management to create a safe, supportive and reassuring
environment where it is allowed to make mistakes, to be a Maverick and to contribute with
new ideas/solutions and get them approved.
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Foundation Elements
To have an adaptive culture is more important when you work in environments that tend to
alter quickly and when the organisation is dependent on fast adoption, for survival.
In order to be adaptive, the organisation has to be able to learn from mistakes. An
organisation consists of people – so it is the people that must be willing to change or learn. If
the culture is to become adaptive, it is very important to regard factors that increases
flexibility and learning capacity and institutionalise them into the culture (Moxnes, 1981)
A strong culture helps the company to work toward and realise a common goal, which is
crucial when working with innovation projects. It motivates its members and gives something
to gather around. Strong and tight cultures are characterised by a high level of loyalty and
commitment toward the organisation (Wilkins, 1978). But the company has to be observant so
that the strong culture does not effect the front end process in a negative way. The people
involved have to maintain their objectivity and individuality so that the diversity necessary for
innovation is preserved, in the team and organisation.
4.4.5. Managerial
Principles
to
Effect
the
Organisational
Culture
Schein (1985) claims that managers in general, and founders in particular, have the greatest
influence on the organisational culture. They have most of the power and can change the
vision and strategy and they leave their stamp on the organisation through their perception of
reality.
According to Schein (1985) management have five channels to affect and manage the
organisational culture:
♦ What management calls their attention upon, measure and control in the organisation.
Managers displays what they believe in and what areas they think are important through
systematic measuring, controlling and rewarding. They also make clear for the organisation
that there exist areas that they are not interested in.
♦ Management’s reactions on critical incidents and crises within the organisation.
When an organisation faces a crisis, management’s actions will create norms, values and
work procedures that will be perceived and have an effect on the organisation. A crisis can
often have a large impact on employees in the organisation. During a strong emotional
experience the members tend to adopt more of the organisation culture.
♦ Conscious role model, guidance and training.
Management’s visible behaviour - what they do, how they do it, how do they behave towards
colleagues/employees- mediate assumptions and values to the rest of the organisation.
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Foundation Elements
♦ Criteria for the distribution of incentives and status.
The members of the organisation learn fast what the organisation values and what it punishes
through its formal and informal reward system. Management mediates its priorities, values
and assumptions through the constant connection between reward and punishment of those
who they want to affect.
♦ Criteria for recruitment and selection, promotion, retirement and dismissal.
It is often the managers who recruit or set the standards on those who should be recruited.
They can choose the “right” people who fit in the organisation they have created or want to
create. Who gets promoted, an early retirement or a dismissal also insinuates management’s
values and assumptions.
When the organisation has been “alive” for a while the culture starts to retroact on the
organisation. The culture can be said to create and help preserve its leaders (Schein 1985). In
the process of altering the organisational culture, the managerial principles stated above could
be used as a guide to what management can influence in the pursuit of establishing the right
company culture.
4.4.6. Seven Pieces of Advice for Cultural Affect
Bang (1999) has listed 7 pieces of advice for managers on ways of altering the organisational
culture in a certain direction.
♦ Make clear what kind of culture that exists in your organisation today and what parts that
are functional and dysfunctional respectively
♦ Make clear what kind of culture you want to characterise your organisation and make it a
reality on every level within the organisation.
♦ Choose a couple of values to start concentrate your attention on them.
♦ Make sure that your actions agree with the values, norms and assumptions you want to
promote.
♦ Align action with the desired culture. Remember to be a role model for your employees.
♦ Use conscious and systematic consequences to express wanted and unwanted culture.
♦ Recruit consciously and selectively to support the wanted culture. Replace or change
strong bearers of unwanted culture.
As the authors have mentioned above there, are several important factors to be considered in
the process of creating and influencing a company’s organisational culture. No matter what
direction management wants to go, the seven pieces of advice are equally important for
success. In the process of creating an innovative climate and organisational culture there are
two foremost desired behaviours, which will be introduced below.
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Foundation Elements
Creativity and Implementation
A major research study among managers of 29 highly innovative companies suggests that the
two foremost desired behaviours are creativity and implementation (Tushman & O´Reilly III,
1997). The two differ in both content and driving norms.
Creativity is needed for people to generate new ideas, find opportunities and continuously
develop. Two norms are most important in order to support creativity: (1) Support of risk
taking and change; (2) Tolerance of mistakes.
Implementation means to enact. The organisation has to quickly implement and finalise
intended plans, which calls for two types of norms: (1) Teamwork, (2) Speed and urgency.
Although organisational culture includes many diverse areas we believe that this section has
given us an understanding for the underlying mechanics of the companies and will help in
analysing the collected data. It will also be useful to the case companies in their pursuit of
establishing an innovative climate.
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Research Question
5.
Research Question
In this chapter we will describe the direction of our study in more detail. We will use the
frame of reference presented in chapter 2, 3 and 4 to generate and structure research
questions. The research questions will answer more specifically how the foundation
elements can be managed to create the desired behaviours and activities in the project
specific elements.
5.1.
General Outlook
In generating the research questions it has become clear to us that it is hard to identify
singular relationships between desired behaviours and foundation elements. For example
corporate vision can promote several desired behaviours. In making the research questions we
have chosen to take the starting point in foundation elements, because it has been easier to
develop relevant questions this way. Therefore, the foundation questions will be formulated as
specific as possible but without excluding any desired behaviour. After these questions have
been formulated, we will sort them under each step in the front end process to make the
connection more obvious (Table 3).
5.2.
Corporate Vision and Product Strategy
Strategic intent and company vision are two important tools for senior management in order
to promote idea generation. The organisation can be motivated to engage in idea generation
when management actively encourages the quest for new opportunities.
5.2.1. Purpose
As stated previously, in chapter 4, a company vision should have both a present and a future
component. A vision is firmly connected to an advancement strategy - one that emphasises a
company’s future performance and success. But just as companies must balance advancement
and survival strategies, they need to envision a future based on current conditions and even
some sense of the past. A good vision lays out the basis for future competitive advantages and
performance. To be able to gain further understanding of the company as a whole and
especially the corporate vision the first question becomes:
-
What is the company’s vision?
5.2.2. Content
In the process of creating a company vision one must know what it should consist of. This can
vary a lot between different companies. It is very important to have in mind that the vision
must be flexible enough to allow new insights that will inevitably flow from new initiatives
(Hamel & Prahalad, 1994).
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Research Question
A good vision should rule out some potential opportunities and it should support all decisionmaking. If it excludes nothing, then it contains no useful information. Companies should not
neglect interesting developments by clinging to a tightly defined vision. This gives us the
following questions to be answered:
-
How do companies narrow the scope of ideas?
-
Is it important to capture ideas that lie outside of strategic frame?
-
What are the main issues in making effective screening decisions?
5.2.3. Spreading
Good visions need good co-ordination to have a significant impact on the future of the
company. If every employee within the company is a bearer of the vision, and buys into the
content, the company drastically increases the chances of creating a coherent company. This
is why the spreading and acceptance of the vision is a crucial success factor (Von Krogh et al,
2000). This provides the questions:
-
How can companies spread the vision throughout the company?
5.3.
Communication Networks – Knowledge Sharing
How can organisations effectively manage Communication and Knowledge Creation to
promote the front end of innovation?
5.3.1. Knowledge Strategy
Companies need to have focus on how information and knowledge are stored. Hansen et al
(1999) suggest that when a high degree of tacit knowledge is created, a personalisation
strategy is to prefer. This calls for commitment to individuals as knowledge bearers, which
has to be backed up by due incentives. However, a higher risk is involved when individuals
store knowledge, since they can leave the organisation and take the knowledge with them.
Does the front end of innovation consist of different types of knowledge? Based on Nonaka’s
(1994) different types it could be argued that knowledge regarding ideas is tacit while
knowledge regarding the process is more explicit. Do companies exploit these differences and
does this make it possible for dual strategies, i.e. that some knowledge can be codified while
other knowledge is personalised? The research question that arises is:
-
How is knowledge reused from previous projects to create organisational learning?
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Research Question
5.3.2. Market Places and Conversations
Research clearly points out the importance of reusing knowledge, thus not creating all
knowledge individually. To accommodate knowledge reuse, good knowledge markets need to
exist. Having effective knowledge markets is central when pursuing a high degree of
knowledge sharing. When people need to find knowledge about a specific issue, they can
either spend time solving the issue themselves or they can find someone else, internally or
externally, who possesses the sought knowledge. Davenport and Prusak (1998) stated that
knowledge markets can be regarded as any other market and that this perception will mediate
the knowledge transactions. This suggests that sellers will not give away knowledge or ideas
without due payment. Companies have to address the issue of how to give sufficient
recognition or reward to knowledge contribution. Another aspect of knowledge market is that
individuals are reluctant to accept knowledge from other sources, outside the own group or
business unit. This is a major barrier since the use of external knowledge can significantly
improve the front end (Harryson, 2000). In addition to this, conversations are one of the most
powerful methods of transferring and creating knowledge (Von Krogh et al, 2000). Many
factors affect conversation and consequently it is very interesting to understand if and how
companies manage conversations. This issue can be said to be very prevalent and not specific
for the front end, however none the less important. The main questions that arise are:
-
What are the main idea generation barriers and how do companies promote
employees to generate ideas and to share knowledge?
-
How should external input, e.g. customers and market knowledge, be spread among
employees?
-
What are the most important issues in making employees submit ideas?
-
How is the ownership of the idea handled?
5.3.3. Team Communication
A team needs to be able to acquire and internalise internal and external knowledge.
Technology transfer requires relationships to be effectively managed. Common goals and
shared team vision are also focal points for the team to become effective. In addition, the team
has to gain necessary support from the organisation, making communication with project
champions very important. Are there ways to manage these relationships that are better than
others?
-
What is the necessary composition of building and screening teams?
-
What are the main issues for teams in finding and utilising internal and external
knowledge?
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Research Question
5.3.4. Choice of Media
A prominent feature of the front end is the frequent use of information systems. Much
research praises the high efficiency of information systems and how they enable
communication globally (Hamel, 2000). A conflict here is that the essence of innovation
concerns face-to-face communication. Do companies risk loosing effectiveness on behalf of
efficiency? It is important to match the specific task with the specific type of media. The
implication that may emerge is that the chosen media, when communicating ideas, is not
sufficient due to the lack of richness. Ideas can be lost or not fully understood because their
nature is too tacit. Is this an issue that companies understand and deal with?
-
How are ideas captured?
-
How mature should ideas be when they enter the system?
5.4.
Incentives and measurements
How are incentives used to promote the front end process?
5.4.1. General Measurements
Measurements can be a useful tool when raising understanding among process participants. A
raised level of understanding can guide participants in decision-making and encourage active
participation (Olve & Westin, 1996). The use of process measurements is not overly
recognised, however, some measurements have been identified. The missing part is how the
measurement affects the participants and which measurements are effective and which are
not?
-
What measurements are used to support and enable the front end process?
5.4.2. Risk Taking
Throughout the frame of reference the importance of creativity has been voiced. Employees
need to work with ideas and be willing to take calculated risks in order for new ideas to be
generated. Two important norms that need to be supported in some way are “support risk
taking” and “tolerance towards mistakes” (Tushman & O´Reilly, 1997). The question is what
the barriers are to installing these types of norms and what incentives support them. Risk
taking involves how responsibility is shared and how risk is communicated
-
How is calculated risk taking induced?
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Research Question
5.4.3. Participation and Objectivity
What incentives can effectively and quickly make things happen in an organisation? A major
barrier is that employees are unwilling to participate in projects. This can be due to many
things: employees are too busy, internal status (i.e. employees not viewing working with front
end activities as a rewarding for their careers) or internal tension (cannibalising projects). All
these reasons slow down the process and the company risk loosing competitive advantages.
What incentives are there to avoid these problems and make employees committed? On the
opposite side of the same argument is; project members can become overly attached to
projects and loose objectivity (Smith, 1999). This raises the question on how to balance
between dedication and objectivity. Internal teamwork has to be promoted over individual
interest. One important element that is of such magnitude that it deserves special attention is
how companies motivate people to submit ideas. Without ideas the whole front end process
will be useless. In addition, companies also need to have enough internal freedom for
employees to be able do “structured” skunk-works.
-
What are the major issues in making people participate in the building phase?
-
How can internal tension between building teams and mother organisation be
resolved?
-
How is a balance between high attachment and objectivity guaranteed?
-
How is feedback communicated from screening boards?
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Master Thesis at Linköping Institute of Technology
Research Question
Generation
-
How can companies make employees generate a large flow of quality ideas?
Can companies expect ideas and knowledge to flow freely or do they have to be encouraged?
What are the main idea generation barriers and how do companies promote employees to generate
ideas and to share knowledge?
How should external input, e.g. customers and market knowledge, be spread among employees?
How do companies narrow the scope of ideas?
How is vision formulated, spread to guide employees in idea generation?
Capturing
-
How can companies capture as many of the employees’ ideas as possible?
How are ideas captured?
What implications arise and how are they resolved?
How are ideas stored?
How is the ownership of the idea handled?
What are the most important issues in making employees submit ideas?
Is it important to capture ideas that lie outside of strategic frame?
How mature should ideas be when they enter the system?
Screening
-
How can companies increase the chances of selecting ideas with high probability of becoming a
success and kill the ideas with low probability?
What is the necessary composition of screening boards?
What are the main issues in making effective screening decisions?
Risk, who is responsible, objectivity.
How do companies manage the number of ideas in the pipeline?
What criteria are used to screen ideas?
How are ideas outside strategic frame treated?
How is feedback communicated from screening boards?
Building
-
How can companies increase the chances of creating a well formulated and feasible idea concept?
What is the necessary composition of building teams?
What are the major issues in making people participate in the building phase?
How is cross-functionality promoted?
How is a balance between high attachment and objectivity guaranteed in the building phase?
How do building teams avoid picking an application too early?
How should projects be funded?
How can internal tension between building teams and mother organisation be resolved?
What are the main issues for teams in finding and utilising internal and external knowledge?
How is knowledge reused from previous projects to create organisational learning?
Table 3. Foundation element questions sorted under project specific elements
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Methodology
6.
Methodology
This chapter opens with the development and discussion of our approach to Methods. After
that, there is a description of the method of procedure and what theories the performance
of the thesis is based on. Finally possible sources of errors and the credibility of the thesis
are discussed.
6.1.
Introduction
The results from the study are much affected by how the research work has been carried out.
In order to give the reader a chance to form his/her own judgement of the results of the thesis
it is therefore crucial to describe what methodology has been used and how the results have
developed during the work
Methodology is a term that shows how the researcher approaches problems and pursues
answers in the field of science. The purpose of this chapter is to clarify for the reader which
methodology was used for this thesis. It is the ambition of the researchers to provide a
thorough explanation of how the research was conducted, which will help contribute to the
credibility. The explanations that follow will reveal our view towards scientific knowledge
and learning, present the relation between researchers and field of research, as well as give a
practical description of how the study was executed. The chapter is divided into two main
areas - the first dealing with our perspectives on scientific methodology and the second
dealing with classification and execution of the study.
6.2.
Perspectives on Methodology
6.2.1. Paradigms
When a subject of research is presented, the term knowledge is often an accompanied term.
But what is knowledge actually? This is a question that has riddled for thousands of years
(Patel & Tebelius, 1987). There are different ways of defining knowledge, and these
definitions have been modified throughout the course of time. One way of defining
knowledge is to determine how the knowledge will be used; i.e. to determine whom the
knowledge is intend for (Lundahl & Skärvad, 1992). Knowledge may have different endusers, such as oneself, the general public or a specific party, such as an employer.
Furthermore, just as there are different end users, there are different suppliers of knowledge.
In the case of a thesis, the supplier of knowledge is the researcher.
The researcher, according to many, has the primary task of accumulating, sorting, as well as
analysing data to generate knowledge (Lundahl & Skärvad, 1992). The knowledge that the
researcher generates is however not ordinarily considered common knowledge, but is instead
often referred to as scientific knowledge. What is the difference between common and
scientific knowledge?
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Methodology
Depending on the definer, scientific knowledge differs from common knowledge in a few
ways. One way is by looking at how it is obtained (Lundahl & Skärvad, 1992). General
knowledge, for example, can be obtained “scientifically”. However, there are different
schools of thought that define certain criteria for what scientific knowledge is, and how it
should be obtained, These schools of thought have dominated over certain periods and are
better known as paradigms.
A paradigm is a series of beliefs and principles that make up the researchers interpretative
framework. These frameworks give researchers certain perspectives, value judgements,
norms, etc., which guide them through their investigative working process, analyses and
interpretations (Gummesson, 1991). There are several ways of classifying paradigms;
however, two predominant schools; the positivism school and the hermeneutics school
(Lundahl & Skärvad, 1992). These two methods will be discussed in the following section.
6.2.2. Positivism
Positivism has its roots in the traditional natural science school (Gummesson, 1991).
Positivists are generally considered to be empiricists, in that they feel that scientific
knowledge is such that can be verified by means of empirical testing. The requirement for
scientific knowledge to be tested and proven has been one of the main arguments for natural
scientists throughout the years. Scientific knowledge has “traditionally” been derived from
facts; this as opposed to personal opinion. The positivists are hence more interested in
studying and explaining human behaviour than interpreting individuals’ thoughts and
feelings.
Another trait associated with positivists is that the derived knowledge can be repeated through
further experimentation. The research should also be conducted according to the same
methodology. This requirement for repetitive expatriation further supports the notion that the
existing knowledge is “true” knowledge; i.e. that the knowledge regarding phenomena is
objective and should be interpreted the same way by all researchers. To ensure that the
knowledge is objective, distinctions between facts and evaluations must be made (Lundahl &
Skärvad, 1992).
Generally, positivistic research begins with the observation of a phenomenon that appeared to
follow a seemingly consistent pattern. Material is then gathered with the purpose of testing
whether or not the pattern is consistent. The collected data is then analysed and a theory that
explains the phenomena is developed. Predictions are then made, tested and the differences
between the observations and predictions are either identified so as to either verify or falsify
the developed theory. The contribution of scientific knowledge for the positivist is thus to find
better descriptions and explanations of reality, as well as to increase the potential of making
correct phenomenal predictions.
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Methodology
Finally, and along the lines of traditional scientific experiments, the results of positivistic
research should be able to be applied generally, independent of time or place (Lundahl &
Skärvad, 1992).
6.2.3. Hermeneutics
As mentioned earlier, there are several alternatives to positivistic research; these include
hermeneutics, post positivism, critical theory and phenomenology. Hermeneutics, coming
from the humanistic school, is generally presented as the main contestant to positivism. The
reason being that it is primarily more comprehensive than the remainders, but also because it,
along with positivism, has its roots in the western world (Gummesson, 1991). The
hermeneutical research process is a bit less “fact-oriented” than the positivistic approach. As
opposed to the positivism, the hermeneutical researcher strives to gain deeper understanding
of a specific phenomenon. To achieve this, the researcher often has to try and understand
other people and how they define their worlds, their experiences and reactions (Patel &
Tebelius, 1987).
The “deeper understanding” that the researcher strives to achieve implies that a great deal of
interpretation takes place when the researcher analyses collected data. Central to this
interpretation process is the concept of pre-understanding (Gummesson, 1991). A researcher’s
pre-understanding comprises two circles, cognitive and normative (Figure 8). The cognitive
circle contains the knowledge that the researcher possesses before carrying out his/her
investigation. This knowledge may be acquired for instance through education or prior
experience (Gummesson, 1991). The normative circle consists of the researcher’s
prejudgements towards the phenomenon before the actual investigation takes place.
These two circles contain elements that influence the researcher’s investigative process and
make up the basis for the deeper understanding that the researcher is to gain regarding the
phenomenon. During the research, the normative circle will be challenged as the cognitive
circle increases.
Cognitive Circle
Normative Circle
Preunderstanding
Values
Attitudes
Knowledge
Prejudgements
Understanding
Figure 8 Pre-understanding
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Master Thesis at Linköping Institute of Technology
Methodology
The key difference here, as opposed to positivism, is that the researcher’s attitude towards a
phenomenon may be a deciding factor in the outcome of the research. Lundahl & Skärvad
(1992) have likewise noted that one of the difficulties that the hermeneutical researcher faces
is the problem of separating facts from feelings. The reason for this is that the researcher has
the task of interpreting his/her subjects’ data, which implies that a certain degree of
subjectivism may occur, when the researcher attempts to understand those involved in the
investigation process. The notion that the hermeneutical researcher may be subjective, as
opposed to objective positivist, raises the following question: “Should and/or can research be
objective”? This will be discussed in the next section.
6.2.4. Objectivity - a Prerequisite?
As indicated earlier, Chandler (1999) has noted that science has historically been based on
fact opposed to personal opinion. But Chandler (1999) is also quick to point out that there are
many cases in which “facts”, obtained through experiments and observations, have been
doubted. What Chandler is suggesting is that observations can not always be carried out in an
objective manner. Different observers may not necessarily view facts in the same way
because we all perceive things in differently. The reason that differences in perception occur
is because we all experience events differently, and that we have different knowledge and
expectations regarding our observations.
Although scientific research may reduce subjectivity, it will always be present to some
degree. There are eight different errors that can occur during scientific research, which lead to
subjectivity.
1. Inaccurate observation
5. Illogical reasoning
2. Over-generalisation
6. Ego involvement
3. Selective observation
7. Premature closing of inquiry
4. Made-up information
8. Mystification
What should researchers do to address these issues? This question can be answered by stating
that it is imperative for researchers to make the reader aware of where and when subjectivity
has taken place. This reinforces the need for a methodology chapter. It will help the reader to
understand on what basis the research was built upon.
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Methodology
6.2.5. Choosing Methodology
When considering the two opposing perspectives, we have chosen to adopt a hermeneutical
approach for this thesis. There are several reasons for this. First, we feel that digging deep
into the problem is the best way to understand the studied phenomenon. Since we have chosen
a hermeneutical approach we are well aware of the degree of subjectivity that can accompany
the research, and we have therefore tried to be as clear as possible about which assumptions
that are ours and to which that are not. This, we hope, will allow the reader to draw clear lines
between what is facts and what is assumptions and give the reader a chance to form his own
opinions.
A second reason for choosing a hermeneutical approach is that our pre-understanding of the
subject was rather low which made it hard to adopt certain models and theories from the
beginning, since we did not know specifically which areas we would face. Our main preunderstanding was a normative one, based on Davenport and Prusak (1998). A very important
aspect of this study is the assumption that companies do not exist for the employees instead
they exist to create shareholder value. This defines how the interaction between employees;
and companies occur; i.e. that if specific behaviour or knowledge is required the company has
to pay due price for it. This market analogy applies throughout the thesis and defines what
type of questions and theory that we have used.
6.2.6. Deduction and Induction
Deduction and induction are two opposing techniques that a researcher can make use of when
contributing to scientific knowledge. Both the positivist and the hermeneutic researcher may
choose to use either one or a mixture of these two methods. Scientific researchers collect
empirical data and relate to theories, models and/or previous research when conducting
research (Gummesson, 1991). Deductive research is the process in which the researcher
generates a hypothesis regarding the relationship between existing phenomena. The deductive
researcher starts with a theory and then searches for appropriate data. The deductive approach
is often engaged in testing a theory via a relevant data; hence, deductive research is
commonly associated with positivism (Patel & Tebelius, 1987).
Data, on the other hand, that is first collected and then compared to a researcher’s preunderstanding, or theory, is known as inductive research (Gummesson, 1991). The inductive
researcher builds up an understanding of a phenomenon and it is such research that may lead
to the creation of a new theory; hence, inductive research is commonly associated with
hermeneutics (Patel & Tebelius, 1987).
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Both hermeneutical and positivistic researchers’ contribution to knowledge may occur in the
building of theories. The difference is that hermeneutical researchers; even if the researcher
has the ambition of developing general theories, often have their limitations, since their
theories are often more applicable to specific circumstances and are consequently dependent
upon time and place (Patel & Tebelius, 1987). However, there is no need for the
hermeneutical researcher to have the ambition of creating such general theories. Patel &
Tebelius (1987) points out that in reality the researcher quite often does not have a clear
picture of reality or sufficient knowledge of a problem and therefore does not consciously
work in either an inductive or deductive manner from start. Instead, a researcher studies
reality, talks with others and pokes at theories simultaneously in order to build up a base of
knowledge for the research to be carried out.
6.2.7. Inductive Learning
In this study we have primarily gone about learning in an inductive manner. The reason for
this is that our starting point for the research was to gather as much information as possible
about the phenomenon before looking into theories. This we did during an extensive scan of
available literature on the subject. The way that we continued afterwards was along the lines
of the closing discussion in previous the section (Patel & Tebelius). We had a few discussions
with Tetra Pak personnel and identified more specific areas to study, thus we searched for
new, as well as reread some previously studied theories on the subject of front end of
innovation. The more we read and collected data on the front end process, the more we
understood that we needed appropriate theories to grasp the subject. So, in actuality, we
experienced different periods during which our research methods turned from inductive to
deductive, and vice-versa.
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6.3.
Procedure of Work and Research Design
There are several ways in which research studies can be carried out, with different
subcategories accompanying these methods. This research study is primarily a qualitative,
descriptive, case study. Following chapter will explain these terms and why they were chosen.
The chapter closes with a critical evaluation of the chosen research methods.
6.3.1. Qualitative and Quantitative Methodology
Research methodology is often divided into two main categories: qualitative and quantitative
research (Jacobsen & Thorsvik, 1998). It is the belief of certain authors that the method
chosen is dependent upon the types of research questions that are to be answered, the nature
of the information gathered and the discipline of the researcher (Rudestam & Newton, 1992).
For example, qualitative research tend to seek answers to questions such as “how” and “why”,
and gathers data in the form of words and other non-quantifiable material such as feelings,
attitudes and values. Quantitative research on the other hand deals with questions such as
“how many…” and “which of the following…”, which are easily transformed into numbers
(quantifiable data).
Quantitative studies are often associated with positivistic research because of the objectivity
requirement that normally come with quantitative data. Furthermore, whereas qualitative
research goes hand in hand with the researcher developing insights, concepts and attempting
to understand patterns and collect data, quantitative research tends to be deductive (Taylor,
1998).
Qualitative methodology is best suited for the hermeneutic researcher as it allows him/her to
form a holistic view of the research phenomena; to understand the person involved and the
situation studied in its completeness (Rudestam & Newton, 1992). This implies that the
researcher temporarily should become part of and participate in the research environment
(Lundahl & Skärvad, 1992). Our main purpose for the thesis is to find out what factors affect
the efficiency of the front end process and how they can be managed. This is why we are most
interested in qualitative data.
6.3.2. Data Collection- Case Studies
Research, regardless of whether qualitative or quantitative, requires a collection of data. This
data can be derived from a number of different sources. These sources are commonly
classified into primary and secondary sources (Lundahl & Skärvad, 1992). Secondary data is
data that have been collected before the study and/or for another purpose. When mostly
secondary data is used for a study it is referred to as a desktop study.
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We have used several forms of secondary data. This includes newspapers and Internet articles,
Tetra Pak, ABB and Dow Chemicals literature etc. (Annual reports, brochures, etc.), material
from different databases (Ebsco-host and Emerald), literature handbooks, course literature and
other papers containing similar theoretical information. We have used 24 articles and 39
books from which we have collected secondary data. By studying a specific topic from
different angles it has enabled us to verify the information from the many different authors.
All this secondary data has help us to gain a deeper understanding of the presented research
problem. Managerial principles are often very complex.
This is why we have chosen to include a large number of different fields in our literature
study. Since the topic is new there is little specific literature available so we had to look in
different directions.
Primary research data consist of new material gathered by the researchers and constitutes
chapter 7. According to Jacobsen and Thorsvik (1998) there are four different ways in which
to collect primary data: questionnaires, experiments, ethnographical studies and case studies.
We have chosen to carry out our research as case studies, and below follows a brief
explanation.
Questionnaires are forms of a survey technique that attempt to measure, and provide a
representative account of a theoretical phenomenon. Questionnaires may occur in person,
through the mail, as well as over the telephone, and consist of predetermined questions that
are treated statistically
Experiments are used when researchers wish to establish a correlation between several
variables. Experiments are conducted in laboratories or natural environments with the
researcher attempting to manipulate the variable that he or she believes to be the cause of the
phenomenon.
Ethnographical studies, or field studies, are such where the researcher finds him/herself in a
research environment participating among his or her research objects.
Case Studies, the chosen method for this research and which are similar to ethnographical
studies, are often qualitative research studies that involve research in the studied object’s
environment. Case studies can be used to study an individual, a group of individuals or an
organisation, and are therefore often applied in theses covering marketing, strategy and
organisational areas. A case study is flexible in that it can include a combination of
interviews, observations, and other types of collected information. Case studies are also
excellent choices for hermeneutic researchers because they offer an interpretation of
information, as well as they attempt to form holistic views. Case studies usually focus on one
specific study object or a set of objects that are connected with a particular phenomenon
(Rudestam & Newton, 1992).
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There are several reasons for that we have choosing the case study approach for this thesis
(most of them being the questionnaires disadvantages, (Lekwall & Wahlbin, 1993)). One
reason is that case studies have given us the opportunity to work with different types of
information. We have conducted formal/informal interviews and studied secondary
information regarding the case companies. We have also made some observations on the case
companies. Another reason is that we choose mainly to work with qualitative information. A
questionnaire could perhaps have answered some of our questions, but it would have been
hard to quantify some of our questions. Finally, the main reason is that we feel that the case
study approach allowed us to pose many follow-up questions during the interviews.
This was very important because we found that many of the answers we received during
interviews resulted in new, unanticipated questions. It has also allowed us to rephrase
questions that were not understood by interviewees, something that would not have been
possible if we had used a questionnaire.
6.3.3. Research Type
According to Lundahl and Skärvad (1992), case studies, as well as other methods of research,
can be categorised according to the thesis’s purpose. The different alternatives are descriptive,
explanatory, explorative, diagnostic and evaluative. The purpose of case studies is to achieve
detailed descriptions of, to explain and to evaluate the phenomenon in the question.
Descriptive studies aim at describing a phenomenon, e.g. a working environment.
Explanatory studies are used to see if correlation exist between variables and often answer
questions such as “why”. Evaluative studies are widely used to measure the effects of
legislation, an organisational change, work satisfaction, a taken action or a new pedagogical
method.
This thesis is partly descriptive, as a majority of the empirical research focus on describing
the case companies’ idea management processes and “how things are being done”. However,
the thesis is also evaluative because categorising what enablers and barriers that exist requires
judgement on our parts and as we have evaluated the case companies’ current idea
management process.
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6.3.4. Procedure of Work
Below we will describe our procedure of work. The time duration are described in Figure 9
below.
♦ Review relevant literature in the field.
♦ Conduct interviews (within Tetra Pak and in the academic community).
♦ Map Tetra Pak´s Innovation processes (especially their Idea Management process).
♦ Develop research questions
♦ Put together draft-cases on target companies ABB, Dow, best-practice companies
identified during the project.
♦ Pursue in-depth interviews to improve the draft- cases of those target companies that
accept co-operation. Use Tetra-case as a template for what will be studied in target
companies.
♦ Evaluate companies on barriers, enablers, organisational models, processes and tools
identified during the mapping off Tetra Pak, in-depth interviews and the reviewing of
relevant literature.
♦ Review theories and develop theoretical explanations.
♦ Finalise managerial recommendations.
♦ Describe method.
♦ Finalise thesis.
Week
Activity
32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 1 2
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Aug
1 Create benchmarking list, 10 comp.
2 Contact benchmarking companies
3 ABB visits (1. Västerås, 2. Zürich)
4 Analyse ABB
Sept
Oct
Nov
1
Dec
2
5 Dow visit, Zürich
6 Analyse Dow
7 Study TP innovation process
8 Formulate main questions
9 Create frame reference.
10 Method chapter.
11 Analyse TP
12 Making contacts w / interviews
13 Interviewing
14 Synthesize all analysis.
15 Summary
16 Reviewing
17 Presentation for TP
18 Hand in for printing
*
Figure 9. Our procedure of work.
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6.3.5. Interviews and Observations
Case Companies
When picking case companies there were several issues for us to take into account. Tetra Pak,
being our host company, had expressed a desire for companies with long product cycles,
similar to their own situation. We also tried to find mature companies thus avoiding start-ups
and smaller companies because of the differences in development approach. We wanted the
case companies to be highly innovative with well-defined processes and explicit use of
information technology in their development work, similar to Tetra Pak. Since it is rather
difficult to verify that a company is highly innovative (best practice) we received guidance
from our mentor, Sigvald Harrysson, who has worked as a management consultant with
innovation projects for many years. He pointed out Dow and ABB as good examples of
innovative companies with defined innovation processes. We then took the suggested
companies and presented them to our mentors at Tetra Pak who were satisfied. This is a weak
part of the study but since we stress the importance of getting right access to high level
interviewees we feel as if this approach fulfilled our needs.
Interviews
Interviews can be carried out with different degrees of standardisation or structure. Highly
structured interviews often contain set questions in a predetermined order. Such would be
common in questionnaires. Unstructured interviews are characterised by more informal
measures; i.e. there is no predetermined order of questions and questions are asked in a
spontaneous matter, according to needs and feelings. A third alternative that includes both
these methods is semi-structured interview. Semi-structured interviews are characterised by
predetermined questions, but the interviewer has the freedom to ask follow-up questions
(Lundahl & Skärvad, 1992).
Our approach has been to use semi-structured interviews. To complete each case study our
first task has been to establish connection with someone at the company. Our mentor, Sigvald
Harrysson, who has a large personal network, has mediated our initial contacts with the case
companies. This has made it possible for us to get access to key steak holders at each
company. The second task has been to establish common expectations. We did this by
sending a thesis proposal showing the main objectives and components. The next step has
been for us to explain what steak holders we wish to interview and submit the interview
questions. We have expressed a desire to interview key persons within the idea management
process, in addition we have also expressed a wish that the interviewee should be of different
background regarding to age and hierarchical level. In two cases we managed to provide the
questions before the actual interviews.
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However in one case we did not succeed, which we felt was a disadvantage because it took
too long time to explain the focus of the interview increasing the uncertainty.
Each interview has been one hour. We structured the questions in a chronological order, i.e.
from generation to building. This was done to keep the interview as focused as possible and
reduce ambiguity. We also tried to avoid leading the interviewee into giving the answer that
we wanted. We feel that such means allowed us to both ask the questions that needed answers
to plus gave us the advantage to request more qualitative information from the interviewees.
During our interviews we tried to be critical to responses, assertive, friendly and as
knowledgeable as possible about our questions. We tried to interpret as little as possible
during the interviews. We felt that the later interviews were easier to conduct since our
experience and knowledge about the field increased continuously.
To verify that the answers were accurate we frequently tested previous statements on new
interviewees. This gave us an opportunity to triangulate the validity in the answers and made
it easier to identify commonalties. All interviews were recorded, after getting permission from
the interviewee, which allowed us to concentrate on the questions and drive the dialogue
forward.
Case Study Completion and Analysis
After each day of interviews we listened to the recordings and completed the case studies
roughly. To a large extent we used quotes in the early stages and when we returned to “home
office” we compiled the quotes to general statements. If we found several statements that
indicated similar opinions we used this to describe the situation at the case company. When
picking quotes to include the case studies we tried to pick the ones that best fitted all of the
interviewees. After completing the case studies we sent them to our contact person at each
case company and asked them to review the material. After getting all adjustment we
completed the case studies.
The analysis was based on a combination of the three case studies and the frame of reference
where we tried to identify commonalties and differences. By using the frame of reference we
had a better understanding of what may cause the identified issues and problems. It made it
possible for us to come up with explanations and identify managerial principles that improve
the front end.
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Observations
Observations can either be hidden or open, as well as have different degrees of interaction and
standardisation. A hidden observation occurs when the study object is unaware of the fact that
there is an observation taking place. An open observation means that the study object is aware
of the observation and that the study object is found within the study object’s environment.
Intensive interaction is such in which the researcher has a rather large degree of participation.
Non-interaction implies that there is no interaction at all. The degree of standardisation
depends on to what extent the observations are structured. For the purpose of this thesis we
have made a few observations. The observations that we did took place at ABB, Tetra Pak
and Dow, and dealt primarily with environmental factors such as business climate and
organisational climate. To start off with we should mention that we had not actually planned
on making any observations; therefore, we would classify these as being completely
unstructured. Because most of the people observed were not informed, we must say that the
observations were hidden. Finally the degree of interaction differed with the observations.
Some observations were intense and some were non-intensive in the respect that they were
mere perceptions. The observations made clearly contributed to our overall understanding of
the case companies’ climate and the employees’ perception of idea management.
Observations were mostly used at Tetra Pak where we had a chance to roam freely for a long
period of time and perceive the climate. This was most helpful to complete a “true” picture.
6.3.6. Sources of Error, an Evalution of the Research
This section of the thesis contains the different disadvantages associated with the chosen
methods for this thesis, as well as what we did to circumvent these disadvantages. We would
like to point out that because we have a hermeneutic approach to research, and accordingly
feel that we all see and experience the world in different ways, all chosen methods could be
challenged. This implies that this section could essentially be several pages long. Therefore
we have chosen to limit the discussion to arguments that we feel are most fundamental.
The interviews have been rather unstructured much due to the fact that it has been hard to
know beforehand in what area each interview person was knowledgeable. The interviewees
have also been selected by our contact person, at ABB and Dow, thus adding to the
uncertainty of the selection. There is a risk of the interviews being bias and not voicing the
general opinion.
How could we know that Dow and ABB were best practice? This question points out a
weakness in our study. We would have liked to conduct a more thorough study of what
actually is best practice. Due to time-limitation this was however not possible. The strength
with the selected companies was that we got access to high level persons who made it
possible to get a management perspective.
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When interviewing best-practice companies there is always the risk of the respondents being
overly optimistic and not explaining about the difficulties that have been faced. The
interviewees might give answers that reflect their desire and thus avoiding the actual situation.
Since we had the interviews rather late in our study we had build up significant knowledge in
the filed, which made it easier for us to ask control questions and to understand when the
answers were unrealistic.
Regarding the interview questions, there may have been problem associated with
measurement validity. Not formulating interview questions correctly may have resulted in
absence of needed information, which would influence the study’s internal validity. A few
things that we had in our favor were that we carried out our research in the form of case
studies and that we held informal discussions. This meant that we were given the opportunity
to pose follow up questions and increase our chances of obtaining important information.
There is also the possibility that interviewees could have lied, or said something they regret.
Such problems affect the thesis’s external validity, the former of which are difficult to avoid.
The interview candidates did only have limited opportunity to read through their interview
material, and this material may have contained information that certain candidates did not
intend to submit. Therefore, there is a possibility that problems with the study’s external
validity exist.
Since we are relatively new to the subject of front end of innovation we have been aware of
the risk that our theoretical studies might have led us in the wrong direction. To reduce this
risk we have made extensive theoretical studies and used our mentors as much as possible to
continuously verify and modify our track. In the beginning we focused much on the projectspecific elements until we realized that these are highly company specific and it made more
sense to study the foundation elements, which are significant and similar in many companies.
Finally, one thing that should be pointed out is that the researcher has the option of choosing
which empirical information to be included in the thesis. The information that we have
neglected to include, whether this was done intentionally or not, may have been deemed
valuable by other researchers. This line of theory supports the hermeneutic claim that two
different researchers may very well, and probably will come to different conclusions. We can
only state that we did our best to choose information according to what we felt would be most
applicable to the thesis’s research questions and that would be most beneficial for our
employer.
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Case studies
7.
Case studies
7.1.
ABB
The material for this case study was collected at Innovisions, in both Zürich and Västerås,
and ABB Corporate Research in Västerås. The answers to the questions are a mixture of
ABB, ABB Innovisions and ABB Corporate Research experiences and thoughts on the
research area. The process described is the one of ABB Innovisions and since they deal with
the same problem of generating, capturing, screening and building ideas we find it most
relevant for our study.
7.1.1. ABB - the Company
ABB was formed in 1988, when the Swedish Asea AB and the Swiss Brown Boveri (BBC)
merged under the name ABB. Asea’s history dates back to 1883. BBC was founded in 1891.
ABB is a global leader in power and automation technologies enabling utilities and industries
to improve their performance while minimising environmental impacts. ABB has 160,000
employees in more than 100 countries, and has a turnover of 22 billion €.
The ABB Group is headquartered in Zurich, Switzerland. ABB Ltd shares are traded on the
stock exchanges in Zurich, Stockholm, London, Frankfurt and New York. More than half of
ABB's revenues come from European markets, nearly a fourth from Asia and Africa, while
more than a fifth of the revenues comes from North- and South American markets.
ABB Sweden employs 19,000 people working in more than 100 municipalities. In Sweden,
ABB is a leading supplier of products and systems for power transmission, and process and
industrial automation.
Innovisions process and Corporate Research
Beginning of 2001 ABB has set-up a new unit called New Ventures. ABB New Ventures
supports the strategic development of the ABB Group by finding, developing, and investing
in new business opportunities.
“We accelerate commercialisation of promising ABB technologies and ideas,
expand ABB's market reach beyond our traditional customer base, and ally with
external companies willing to make innovative use of ABB know-how. ABB New
Ventures is looking both inside and outside the company for new business
opportunities. When we find them, we have a process in place to evaluate their
potential and quickly grow them into full-fledged businesses that will add value to
ABB.”
(Wolfram Schmidt, Innovisions)
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ABB New Ventures goal is to:
♦ Invest in companies that support our IndustrialIT strategy and promising new technologies
with a strong fit to ABB
♦ Speed up business building and commercialisation of new technologies, products and
services
♦ Foster business innovations and create partnerships
Innovisions is the business innovation facility within ABB New Ventures to accelerate
business ideas.
“We welcome ideas with high innovation level and strategic fit that create new
products, services, markets or business models leading to a significant new business
for ABB. Innovisions encourages you to submit your idea for new businesses into
our supportive and collaborative environment where together we can rapidly
develop and transform the idea into a new successful business. By submitting your
idea you can eventually get access to our extensive business network, our incubation
services and the entire brain power of ABB. Our vision is to provide
“intrapreneures” with a value creating business innovation facility designed to
encourage and accelerate the development of start-up companies, building on a
strong community, profound knowledge, advanced technologies, extensive business
network and the innovation spirit that exists within ABB.”
(Wolfram Schmidt, Innovisions)
ABB Corporate Research is a rather old organisation. The origin was a material lab, where the
first measurements where run 1916. Since then the activities have evolved to a more research
oriented organisation, presently with approximately 800 researchers in labs situated in 8
different countries. The research projects are identified, ordered and financed either by the
BAs (business areas) or by the ABB Corporate Fund. In the latter case the researchers
themselves are often the originators.
The Corporate Research organisation works in close connection with the BAs. By working
with real problems the researchers are supposed to match their deep scientific knowledge with
the future needs of the different businesses.
ABB Innovisions and Corporate Research work closely together to define the right point in
time when a new technology can be commercialised i.e. brought to the market through the
ABB Innovisions tollgate process.
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7.1.2. ABB Innovisions Tollgate Process
Activities
Stages
• Pre Defined
questions
•Building
Business Case
2-4 weeks
Step 1
Business Idea
Step 2
Building
TG 1
• Creating
Business Plan
6-8 weeks
Beyond our scope
Step 3
Business Plan
TG 2
Step 4
Incubation
TG 3
Commercialization
TG 4
Figure 10 ABB Innovisions Stage / Gate Innovation Process, 2001
Stage / Gate Process
Step1: The process of formulating and submitting an idea in a predefined format. This can be
done either on Innovisions web page or by direct contact with the Innovisions team.
Tollgate 1: The idea is presented to the local Innovisions Team at a formal meeting. The team
screens the idea, if necessary, external resources are contacted to obtain required resources
and knowledge to assess the idea.
Step 2: The following building phase is planned to take 2 - 4 weeks. In this stage the assigned
building team investigates the idea further. The building team often consists of the idea
generator and needed competencies. The Innovisions team helps with expertise and presents
the criteria on which the idea will be evaluated at the next gate.
Tollgate 2: The idea is presented to a Local Advisory Board, which consists of some key
ABB employees from ABB’s core businesses, Finance, R&D, IT and Marketing. There is in
each of the seven countries where Innovisions is locally present a Local Advisory Board. If
the idea is accepted it will be passed on to the following step where a thorough business plan
is created.
Step 3: A business plan is created. To complete this, management consultants with experience
from the field, and the Innovisions team support the idea owner. This step should take 6-8
weeks. The business plan should cover issues such as projected sales forecast, cost analysis,
market segmentations, swot analysis and perhaps the most important, to find the right
management team. The management team should consist of 2 to 4 people that are found in an
internal search.
Tollgate 3: After the business plan is written the idea is submitted to the Investment
Committee. There is only one Investment Committee globally and it consists of senior
managers throughout the company. The Investment Committee decides if the idea is ready for
incubation, should loop back or to be stopped.
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Step 4: A company is established with an incubator period of 1-2 years. The management
team is encouraged to quit their prior jobs and work full-time with the company in incubation.
To spur the management team, it is offered a maximum of 10% share of the company in total.
During the incubator period the company is proving the viability of the business model by
launching the product or service in the market, initially with operational prototypes for pilot
customers. Due to the rather small amount of funding there is little room for advanced
research. Step 4 has three funding gates within the incubation period. At each gate the
Investment Committee evaluates the achievement of defined deliverables of the company in
incubation and if progress is too slow they have the possibility to shut down the project. If the
Investment Committee decides to shut the project down, the management team are the first
ones to be offered to buy the project and continue on their own.
Tollgate 4: The last screening team is the New Ventures Board where the final decision
regarding the future is made. This team consists of senior executives from ABB. They decide
whether the firm should be incorporated into an existing ABB division, be grown as a stand
alone business or be diluted to other investors.
The ABB process is linked to a web-based tool that makes it possible for employees to submit
ideas from any location. The main interface with ABB employees is the internal Intranet page.
The web page offers information of what criteria will be studied and how the process works.
ABB intends to collect ideas electronically on the website.
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Innovation Measurements
In the following section (Table 4) measurements associated with the innovation process are
presented.
Measurement
Number of ideas
Perception4
Number of suggestions submitted to ABB Innovisions. Communicated both internally
(Innovisions) and externally to BA. Goal 2002 is to develop 250 business ideas out
of a bigger number of raw ideas
Acceptance of ABB
Number of hits on its web page and number of articles about ABB Innovisions in
Innovisions
internal magazines. This is Innovisions management way to monitor local buy-in
and to evaluate internal marketing efforts
The time spent / phase
Can be good to identify bottlenecks, but should be used with care due to different
size of projects
Screening efficiency
Number of ideas that are let through at each gate relative the total amount of ideas.
By putting goals on these measurements it makes it easier to make screening
decisions
Sales from new products
Perceived to be the best way of knowing how well the company is at innovation.
Used for communicating the importance of innovation and development
Delivered Results
This measurement concerns how many projects that have been carried out during a
certain period of time. The project can be ordered internally (Corporate Research)
or externally (Business Areas). This measurement is without any consideration to
the quality or usefulness for the BA
Delivered Results
In difference to the measure above quality and usefulness are taken into
Overtaken by BA
consideration. Since the result of the Corporate Research is overtaken and used by
the business areas the researcher gets feedback and appreciation for his/her work.
This has lead to a larger understanding between Corporate Research and BA and
more useful research. This is perceived to be a very useful measurement because it
gives the company an idea of how much of the carried out research actually is being
used
Number of Patents
Number of patents every employee has got approved, by the Patent Authorities. It
says nothing about the quality of the ideas or how useful they really are for the
company. ABB rewards an approved patent with a smaller standard amount of
money
Invention disclosures
Number of invention disclosures turned in to the ABB patent department. This
measurement takes no consideration to the quality of the idea and is therefore not
considered as a good way of measuring the inventive climate inside ABB. A small
standard amount money is paid to every employee that turns in a nontrivial idea
Number of publications
ABB Corporate Research measures # of publications, by individuals or teams, which
have been published in scientific magazines during the past year
Table 4 Measurements associated with innovation at ABB Innovisions and Corporate Research
4
Based on interviews at ABB
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7.1.3. Generation
Main question: How can ABB make employees generate a large flow of quality ideas?
Does ABB Innovisions expect ideas and knowledge to flow freely or do they have to be
encouraged?
Head of Innovisions, Wolfram Schmidt, means that no employee will give away anything for
free. Ideas will not emerge without any incentives. It is known at Innovisions that all different
ABB companies must create an overall understanding for the importance of innovations for
the future of ABB. Companies must find out a way of measuring their employees on how they
contribute to the generation and knowledge sharing process. They believe that employees
must be rewarded to generate ideas and share knowledge.
What are the main idea generation barriers and how does ABB globally encourage
employees to generate ideas and to share knowledge?
Management recognition. After 1994 Harry Frank, the new Corporate Research director in
Sweden, systematically induced a climate that is said to support innovation. He personally
reviews all idea suggestions from Corporate Research and gives feedback to each suggestion.
Researchers find this very stimulating.
Empowerment. ABB show that they give priority and pursue idea generation in two main
ways. By having a seed-funding budget the director of Corporate Research can grant
interesting ideas smaller budgets to explore new research areas.
Visible well defined process. The second characteristic is the installation of ABB Innovisions.
ABB has historically been rather poor at absorbing radical innovations in a systematic
manner. They have relied on strong individual efforts and did not make it clear for the
organisation that radical innovation is a priority area. By installing this new function they
hope to create a faster process that is quicker at reacting to market opportunities than existing
business areas, thus sending a clear message that innovations are pivotal.
Organisational values. Another aspect we encountered during our visits to ABB was the
abundance of organisational anecdotes that hold key values of the organisation, such as
honesty, tolerance towards mistakes and informal direct communication. Without confirming
this, we believe that such stories are important ways of spreading the culture of ABB and
making employees feel comfortable in how to act.
Walk the talk. According to Thomas Edström Innovisions, it is very important to act according
to what is promoted, so that employees can see that the vision is not only empty words.
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Knowledge sharing in ABB globally and ABB Corporate Research
ABB do not have any formal program for recognising knowledge contributors, rather they
claim that it is part of the organisational culture to share information and that communication
channels are flat and open.
Knowledge mix. ABB Corporate Research often invite external people with totally different
types of knowledge to do presentations and mingle. This is said to be very fruitful and help
researchers to be more open-minded and discover new was of thinking. It is said to be
especially important to question your own work and not take everything for granted.
Conversations. A mediator in knowledge sharing is conversations. ABB recognise it to be an
important source for knowledge sharing, but no formalised procedures exist. They try to keep
the tone not overly relaxed, because they believe that it might lead to a low degree of selfcriticism.
Networks. In addition to the recognition of knowledge sharing, employees must also know
were to find knowledge. ABB rely heavily on internal networks. For Corporate Research
these networks are created through the intensive interactions with the Bas during the normal
work on different projects and by the rather high personnel turnover rate in ABB Corporate
Research. The networks make it easy to locate specific knowledge when required.
High image. The Corporate Research have also made a point of creating a high image in
research community, facilitating networks to external partners such as science parks, research
labs and universities. Corporate research is actually said to have a better image externally than
internally.
Slack time. ABB Corporate Research has now and then allowed 20% of the employees’ time
to be spend on non-project related activities. This gives them the opportunity to pursue
interesting new ideas without seeking seed money or “stealing” time from other projects.
They can, in a relaxed fashion, pursue new knowledge and ideas that later on can be presented
and evaluated. Early trials of this kind of freedom has given little result. Employees claimed
that they were too busy with work to take the time off.
How does ABB Innovisions narrow the scope of ideas?
Instead of directing the organisation, Innovisions has chosen a more deductive approach.
After a test period of three months, ABB Innovisions could identify that incoming ideas
mainly focused on four areas. It has now been communicated to the employee that
Innovisions only want ideas within these areas.
“By using what is there we radically reduce innovation time instead of spending
time asking for ideas that are non-existing.”
(Wolfram Schmidt, Innovisions)
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7.1.4. Capturing
Main question: How can ABB capture as many of the employees’ ideas as possible?
How are ideas captured at ABB Innovisions and ABB Corporate Research?
We identified two ways for an idea to enter the process, electronically or face-to-face. In the
future new business ideas are said to enter the system through the IT-tool. Due to the
constraint of the Intranet the system is available for about 2/3 of ABB’s global employees
only.
Visibility. The need for corporate support and marketing of ABB Innovisions, among business
units is large. Since ABB is such a large organisation there is an abundance of information,
which makes it difficult to gain the attention of the employees. ABB Innovisions has tried to
communicate their purpose by using several different channels. They have used Intranet,
posters, direct email and personal visits.
Personal contact. ABB Innovisions’ experience is that direct contact is by far the most
effective medium. In the launch of ABB Innovisions, heavy marketing efforts have been made
to make employees aware of the new channel for creating businesses. The ABB Innovisions
team has been out “selling“ Innovisions to employees and telling them why it is important.
After every meeting they have got a couple of new business ideas from the audience.
Media choice. When considering the choice of media, ABB Innovisions always have a
personal contact with the idea submitter, for two main reasons. The first is that the idea
generator is even more important than the idea itself, which means that a personal contact is
required. The second is that they do not expect the idea to be fully understood only by reading
the electronically posted idea. Instead they take direct communication either by phone or
arrange a personal meeting with the submitter.
Idea Presentation & Recognition. In the Corporate Research organisation sometimes a idea
presentation is used. This means that when someone comes up with an idea, he/she spends a
couple of days to prepare a presentation and then makes a formal presentation for his/her
colleagues who generate feedback and evaluate the idea. So the idea generator conducts an
informal building phase, which gives them the opportunity to pursue an idea. This is
considered to be a very good way of exploring new opportunities and ideas among the staff at
Corporate Research. Another way of giving recognition is by giving the yearly award for best
principle idea. Once a year a department board chooses the best principle idea of the year. The
board selects one of the ideas that have been nominated on the three criteria, newness of idea,
technical maturity and economical impact. The winners receive no further recognition than,
the glory of having created the best principle idea and a big round of applause at the annual
presentation. What drive the employees here are the internal “competition” and the
recognition of his/her fellow colleagues. This reward is considered the interviewees at ABB to
be a very good incentive for innovation.
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External Ideas. In the future, ABB will have a larger need of new business ideas than they
expect to be able to capture internally. This is why they already look at involving partners and
customers in the generation process.
How is the ownership of the idea handled?
Registering. When submitting an idea the submitter accepts to hand over the intellectual
property rights to ABB Innovisions for a limited period. The system registers who turned in
the idea. This protects the generator from getting his idea stolen, since the origin of the idea
always can be tracked back to the person who first entered it into the system.
Group ideas. This has been identified as a problem at Corporate Research, since ideas are
often generated in groups, and it is very hard to determine who “hatched” the initial thought.
Previous experiences, in Corporate Research, have shown that sharing ideas on a global scale
is a problem. A previous system failed because researchers hesitated to write down novel
ideas without knowing exactly who will read it and how the information would be used.
What are the most important issues in making employees submit ideas?
Involvement. All submitter are offered the possibility to participate in the building and being
part of the future business development.
Financial reward. Submitters can get max. 1% ownership of the company in incubation
offered through options, if they simply drop it over the fence. If they join the management
team they can get up to 3%. To get people to participate initially and to contribute with ideas
in an early phase of Innovisions, they have identified that monetary incentives can be used.
The monetary rewards are said to be more important for younger generators and for first time
submitters.
Quick handling. An overall incentive that ABB Innovisions has identified to be very
important for the idea submitter is that the idea is handled quickly and not forgotten.
Otherwise he/she will not submit any more new ideas. By having the Innovisions process as a
quicker alternative to former innovation channels ABB hope to promote innovation.
Redirecting. If, however, an idea is turned down, at an advanced stage ABB Innovisions will
redirect the submitter to external sources that might be interested. This is done to clearly show
that ideas are reviewed and appreciated.
Is it important to capture ideas that lie outside the strategic frame?
ABB has started an internal venture capital unit, called New Ventures, with the purpose of
launching and acquiring new businesses. As a part of this venture capital model ABB has
established ABB Innovisions and introduced a tollgate process with specific activities, inputs,
outputs and roles (Figure 10). This process handles the business development and the purpose
is to maximise the chances of weeding out bad ideas quickly out and to focus on the
promising ones with the goal of getting ca. 10 companies per year in incubation.
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In order to reach this goal they have set the target of incoming business ideas to 250 that are
developed out of 1000 to 20000 raw ideas. The purpose is to transfer the companies after
incubation at market value and not to “give” away new innovations (internally), which has
been the scenario until today. Goals have been set, that the new businesses should be worth
around 10 million $ after incubation. ABB New Ventures will only pursue ideas that are not
core business and they will focus on leveraging existing organisational knowledge (ABB has
today a patent bank containing over 160 000 patents). ABB Innovisions does not intend to
invent the wheel again, as Wolfram Schmidt, head of Innovisions, explains:
“We just need a way to bring the existing ideas to surface, develop them further and
make money out of them.”
(Wolfram Schmidt, Innovisions)
How mature should ideas be when they enter ABB Innovisions?
As mentioned before the ideas that enter ABB Innovisions must enter it in a pre-defined state.
A number of questions, both technological and economical, have to be answered before the
local Innovisions team will screen the idea. This makes the idea more mature and thoughtthrough than if an employee just would post a spontaneous idea and “throw it over the fence”.
7.1.5. Screening
Main Question: How can companies increase the chances of selecting ideas with high
probability of becoming a success and kill the ideas with low probability?
What is the necessary composition of ABB Innovisions’ screening boards?
Competence. High degree of overall company knowledge is required for making the right
decision. The more resources needed for the project the more senior the decision must be.
Therefore ABB Innovisions increases the seniority, in the screening board, at every gate.
Sub-optimisation. The screening board uses expert help in areas where they lack knowledge
in. This happens frequently since the ideas often concern including new areas where most
ABB employees lack experience. The screening boards become more and more global during
the process, this to ensure that no sub optimisation or local favouring will take place.
Learning. In the front-end process the screening boards represent an important repository for
project related information. The members of each ABB Innovisions screening board are not
the same through the process and only the first local board has a full time staff.
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Commitment.
“ABB Innovisions screening members will not have the necessary insight if they do
not spend at least 50 – 75 % of their time on screening.”
(ABB employee)
This statement was voiced in the Corporate Research department and was based on the
assumption that screening is a time consuming process.
What are the main issues in making effective screening decisions at ABB Innovisions
and Corporate Research?
Objectivity. The main difficulties in making screening decisions at ABB Innovisions and
Corporate Research are objectivity and not killing projects. This can be accomplished by
having a screening board that consists of people with a lot of business and project experience.
The screening board must communicate on what ground projects are stopped and at the same
time have lenience in their judgement.
Pipeline management. Neither Innovisions nor Corporate Research did perceive risk as a
barrier in the screening decisions because the top management support and transparency made
it easy to argue for decisions. ABB Innovisions had a very elaborate system to follow how
many building projects existed at the same time and they have good statistics on what
percentage of ideas is screened out at each gate.
What criteria are used to screen ideas in the ABB Innovisions process?
Transparency. In the initial screening there are some predefined criteria that the idea must
fulfil. The criteria are well displayed and open for every one; they have both technological
and economical aspects. This is thought, by ABB Innovisions, to make it easier to see, for the
employees, what demands are put on new ideas and to prevent not thought-through ideas to
enter the system.
“We have to put some pressure on the generator as well, ideas have to be somehow
well thought through.”
(Wolfram Schmidt, Innovisions)
Since the recognised ultimate measurement of the process is true economical output, it is easy
to be too harsh in the beginning of the process and stopping projects that have a long-term
future potential. This goes back to the discussion above about being objective. That is why the
later in the process the screening takes place the harder and more extensive the criteria are.
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How is feedback communicated from ABB Innovisions screening boards?
Quick-nice Feedback. As mentioned above, positive and quick feedback is one of the main
incentives for submitting an idea. Therefore, ABB Innovisions has a number of ways to
communicate feedback. When the submitter submits the idea to the system he/she gets an
automatic reply that the local Innovisions team has received the idea. The idea is often
followed up by a personal phone call from the team.
7.1.6. Building
Main Question: How can ABB increase the chances of creating a well formulated and
feasible idea concept?
What is the necessary composition of ABB Innovisions building teams?
Diversity. When designing a building team it is important to have people with different
backgrounds, education, speciality and age. The ABB Innovisions team will organise the
building team, because it is easier for them to identify the right persons, experts and
resources, both internally and externally. ABB Innovisions has chosen to have different global
competence centres for the different areas of interest. This makes it easier to secure
involvement of the relevant expertise.
Idea Mentor. Every new business idea has a mentor, a senior manager who follows the team’s
progress. At ABB Innovisions, this is said, to help the team because the managers motivate
and support the idea. He/she is often a person who wants to make the idea a reality.
Separation. ABB Innovisions does not require the idea generator to become the entrepreneur.
This is because you need different skills during different stages in the process. Quite seldom
the idea comes from an entrepreneur.
What are the major issues in making people participate in the building stage?
Performance measures. The main barrier as we understood was the conflict between line duty
and innovation projects. All line managers are evaluated and rewarded on performance of
existing local business. On the other hand, ABB Innovisions projects are often on global scale
and do not create any direct benefits to a specific local line organisation. Therefore they are
regarded as mere distraction. Another barrier is that employees are encouraged to follow the
venture outside of ABB line organisation, which can lead to a knowledge drain. These two
factors lead to conflicting goals between line managers and ABB Innovisions projects. To
solve this conflict ABB top management and Innovisions management has taken several
countermeasures.
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Local support. Firstly ABB Innovisions need support and understanding from country
managers and local line managers. Country managers are the ones who solve possible
conflicts. It is a tedious job for the Innovisions teams to convince the line managers, but has
proven to be central for successful implementation. The Innovisions team has created buy-in
by using threat and showing what lack of innovation will do to ABB and pointing out that
ABB must create new business to survive. The next step has been to show the output and
what they can provide to the local business and ABB as a whole.
“You only know that you have buy-in if you see the employees acting accordingly”
(Wolfram Schmidt, Innovisions)
To accommodate local needs, ABB Innovisions was implemented in seven countries by using
local employees with high internal recognition. This is said to be a very important factor to
raise acceptance.
Career risk. Another barrier we identified during our interviews was that employees were
afraid of being associated with project failures. Most new development projects have a high
risk of failure. To communicate risk regarding projects, ABB globally has an open
environment with a high acceptance for mistakes. ABB globally has no formal way of
showing tolerance towards mistakes, rather an underlying understanding that mistakes are
accepted as long as employees are honest towards the company and clearly communicate
risks to all stakeholders. The idea is to create an environment where all employees and
managers take responsibility for projects. The risk should be on company level not individual.
“I would think twice before leaving my position and join a new venture much due to
the high risk of not getting an equally interesting job when I return.”
(ABB employee)
This statement was raised in Corporate Research as an answer to the question “if you would
leave your job to join a new internal new venture”. ABB has not addressed the issue entirely
as of today, but they recognised it to be an important area. In some countries employees are
allowed a contract ensuring them to get a job, if the project failed. During the building phase
the employees do not have to quit their jobs, since they are only lent to ABB Innovisions. It is
only in the incubation phase that the person would have to leave his/her old job. However,
they believe that employees who engage in such projects do not care if they get their jobs
back. They are entrepreneurs and according to a study, done by ABB, they have similar
characteristics all over the world and have the same goal: to venture their idea.
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How is a balance between high attachment and objectivity guaranteed in the building
phase?
Honesty. Early and honest communication ensures that the receivers understand what
difficulties exist and ensures that the right path is followed. Another contributor is to use of
external and independent screening boards with full authority to stop projects. Experience is
an important factor in maintaining objectivity in innovation projects. This because no matter
how “painful” it is to stop one’s project it is more painful to develop something that no one
can use or want to take economical responsibility for.
Separation. To avoid picking easiest way first when completing radical concept building,
ABB suggest the solution to keep projects detached from the mother organisation. It is
important to avoid making too many promises too early, because it puts high pressure on the
project, which can lead to poor decision-making.
Technical aspect first. ABB also try to solve the technical aspects first, since these aspects
often present the greatest challenge and can be the hardest obstacle to overcome. If you can
not solve the technological obstacles you cannot meet the demand from the customer.
Funding. Funding for building projects are taken direct from mother organisation. The line
managers lend the resources needed for building the idea, without getting anything in direct
return. We understood from researchers, at Corporate Research, that they believe that it was
too difficult to get funding from ABB Innovisions, at least in early stages, would be making it
more difficult to attract new ideas.
How can internal tension between ABB Innovisions building teams and mother
organisation be resolved?
Communicate with line manager first. ABB recognise that internal tension can emerge
between business units and research organisation. In avoiding this tension it is important for
idea submitter to communicate with line managers before he/she submits an idea, so called
“putting up the flag”. This should be done for three reasons. First; to enable managers to
arrange a temporary replacement. Second; the managers can act as trust person and perhaps
contribute in making the idea better. Third; the tension could be solved through early
communication with BA to get them involved in the new venture.
Roles. Corporate Research and Innovisions should be like brothers and sisters, Corporate
Research develops technology and Innovisions develops new businesses.
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What are the main issues for teams in finding and utilising internal and external
knowledge at ABB Innovisions and Corporate Research?
Early involvement. In the business areas the resistance against external knowledge is higher
which is said to be due to the gaps between Corporate Research and BA. In order to raise
acceptance of external knowledge at the Business Areas, Corporate Research attempts to
make early involvement an imperative. They want fewer projects without defined customers.
By letting BA contribute with staff, knowledge and resources a higher acceptance for external
knowledge and external ideas can be raised.
External partners. External parties are regarded as an important source of knowledge.
Corporate Research have a long history of joint ventures with both academic and other
research groups, so integration is not perceived to be a problem. ABB Innovisions have strong
support from ABB top management. If they need to find or attract a partner, top management
would give the team full support and even use members of the board to provide help.
Incentives.
“You have to acknowledge…you cannot change people…they are as they are, they
look for what is closest to them and from what they can get the highest reward. Even
though the Innovisions team has a global reward system, every team member wants
to make a local showcase, extremely visible, for their own career, which by
definition means that they do less on global collaboration. So I have to push it, I do
not believe in models that assume that things just happen. You have to push it and
once they see the benefits they will recognise it.”
(Wolfram Schmidt, Innovisions)
ABB is very committed to the opportunity of leveraging internal knowledge on a global scale.
By having the ABB Innovisions process totally transparent and the creation of global
knowledge centres for each target area they try to enable both internal and external knowledge
utilisation.
How is knowledge re-used from previous projects to create organisational learning both
at ABB globally, Corporate Research and Innovisions?
Documentation. Research findings are both documented and held by researchers, while
project related information is seldom documented, which is said to be a major weakness. No
formal process for re-using project specific knowledge is installed. ABB claims that this is
due to the type of industry that they are operating in. However, they expressed a desire for
such systems.
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Knowledge Drain. One difficulty with re-using knowledge from the new business projects is
that the team is encouraged to “fly” with the business, as mentioned above. This in turn can
lead to a knowledge drain from Corporate Research and the mother organisation.
“You cannot keep an employee forever. You do not own him. If we do not recognise
that somebody has the desire to realise his/her idea, then somebody else will and the
company will loose the employee. Innovisions is a way to attract and keep talent”.
(Wolfram Schmidt, Innovisions)
Debriefing. Although documentation is rather low globally, Corporate Research has other
ways of communicating project experience. They hold informal meetings where Business
Areas share experiences, both positive and negative. These are said to be very rewarding and
there has been little difficulty in making people participate.
Turn over. A supporting mechanism to spread research knowledge is that ABB are said to
have a 20% staff turnover from Corporate Research into the organisation every year. People
and teams loop out of the Corporate Research to work with the BA and new projects outside
their “home unit”. This is said to spread research finding, build communication networks and
bridge the knowledge gaps. To enable the high turnover rates and loss of personal from line
organisation, ABB globally puts a lot of effort into creating a high image of the Corporate
Research and the company in general to be able to attract and recruit required competence.
7.1.7. Conclusion from ABB
We consider ABB Innovision to be an efficient way of conducting innovation and pursue new
ventures. It is a well-defined process with clear roles with the potential to drive fast
innovation and rapid failure. The pipeline information management is also a strength that
ABB has been able to manage well. By using measurements they have created a much better
ground for decision making and assuring that a reasonable amount of ideas are let through.
Since the pipeline is already filling up with ideas it seems as if the process is functioning,
however we have not yet seen any delivered results therefore it is difficult to determine
overall effectiveness.
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7.2.
Dow Chemical
We visited two locations, one in Horgen, Switzerland and one in Rheinmünster, Germany. We
conducted interviews with various key employees both in the line organisation and in
Corporate R &D
7.2.1. Dow Chemical – the Company
Dow is a leading science and technology company that provides innovative chemical, plastic
and agricultural products and services to many essential consumer markets. Dow is presently
divided into eight business areas were each business is responsible for one core technology.
With annual sales of $30 billion, Dow serves customers in more than 170 countries and a
wide range of markets that are vital to human progress, including food, transportation, health
and medicine, personal and home care, and building and construction, among others.
Committed to the principles of Sustainable Development, Dow and its approximately 50,000
employees seek to balance economic, environmental and social responsibilities.
7.2.2. DACT Process
Dow has implemented a stage gate innovation process with five phases, which is called
DACT (Develop and Commercialise Technology) Figure 11 below. The global process
consists of both methodology and tools. Each business area can implement the process the
way they like. The DACT process has proven to be a very powerful tool in the development
process.
Activities
• 20 questions
to fill out
• Identify 4-5
critical issues
• Validate the
critical issues
Beyond our scope
•Search for
discontinuities
Stages
Shaping
Analysis
Validation
Development
Commercialisation
Figure 11 Dow DACT Process
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Innovation Measurements
Measurement
Perception5
Number of shapings per
Gives incentive to start working but considered too individualistic
person
Number of ideas in each
Good way to manage the pipeline and assure right amount of ideas in each stage.
stage
Difficulties to track ideas
NVP of each idea
Not well perceived, difficulties of choosing right cost of capital, creating too high
expectations, good if managed correct
Time for each phase
Good way to identify bottlenecks
Resources required
Good way of managing which activities are efficient
Sales from new products
Best measurement to make entire organization focus on innovation
Table 5 Measurements associated with innovation Dow.
7.2.3. Generation
Main question: How can companies make employees generate a large flow of quality ideas?
Does Dow expect ideas and knowledge to flow freely or do they have to be encouraged?
We found a very mixed picture of how idea generation and knowledge sharing was regarded.
The general notion was lacking in participation and need of encouragement. The main
difficulties were that employees were not willing to share ideas and knowledge with other
business areas.
What are the main idea generation barriers and how does Dow encourage employees to
generate ideas and share knowledge?
Stability. This is considered to be a fundamental prerequisite for innovation work. Employees
need to feel safe in their local environment and have a consistency in the research work.
Trust & openness. These words were frequently mentioned. Employees need to feel trust from
management in order to become open. Openness is said to be very important when employees
communicate ideas and increases the ability to create robust ideas.
Empowerment. The authority to act and make individual decisions is perceived to be very
important. The high degree of empowerment has lead to many skunk works. Which are highly
appreciated internally.
Team reward. Another fundamental incentive is that Dow tries to give team-recognition to
avoid an overly individualistic climate. This is a clear driver for people to share knowledge
and ideas.
5
Based on interviews at Dow
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Inspiring vision. To implement the new business development process and increase awareness
of the importance of innovation, Dow has developed a pictorial vision that depicts the line
organisation as a dragon and the NBD as a falcon. This way of displaying the vision is said to
have increased understanding and making it easier to create buy-in from employees. The
relationship between the two can be found in Figure 12.
Line Business
New Business Development
Falcon
Dragon
•
Aggressive, extending lines
•
Feed Falcon with ideas
•
Fly high and scan the
environment for opportunities
•
Dive fast on opportunities and
strive for fast failure or success
Figure 12 Dow's Dragon and Falcon, relationship between line org and NBD, 2001. This is not the official
vision but the authors’ depiction of it.
How should external input, e.g. customer and market knowledge, be spread among
employees?
Market intelligence. Dow uses Business and Technological Intelligence centres with the
purpose of supplying the organisation with external input. Another function with large
amount of external networks is the “Explorer”. An explorer is an organisational role with the
purpose of identifying market discontinuities. They constantly scan the environment and try
to make connections between internal competitive advantages and external trends. The
explorers use many different ways to attract knowledge and have large personal networks,
both within Dow and externally, where they can get access to many different kinds of
information.
Market distance. We found that several researchers considered the distance to customers too
vast. This creates a bottleneck in identifying real customer needs and fast innovation.
Job rotation. Many Dow employees had a very positive attitude towards job rotation as a
method of spreading knowledge and creating networks internally. However, there are no
formal incentives to promote this.
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How does Dow narrow the scope of ideas?
As mentioned above, Dow is an advocate for use of vision. Many employees whom we
interviewed spoke highly of the vision. All business areas have different visions but the ones
we encountered described the relationship to the user, which was much appreciated.
“Putting quality water within your reach“
“Better things for daily life”
(Dow BA visions)
Although not all employees were able to specifically state the vision, most employees found it
to be helpful in pointing out the direction for the company. Recent changes in vision, towards
higher degree of short-term revenue, have made employees question if they are spending their
time on the right things. To further narrow the scope of ideas the NBD process always starts
with a market need before committing to any to of development projects. The explorers had
an important role to fill as a bridge between external needs and internal by having a very
thorough understanding of internal competitiveness.
7.2.4. Capturing
Main question: How can Dow capture as many of the employees’ ideas as possible?
How are ideas captured?
Ideas arise in a rather ad hoc fashion by employees who are committed to their idea and
promote the idea internally by getting support from decision boards and senior management.
They also have electronic systems that have been used to attract ideas but with little success.
“An electronic system can be perceived as too complicated and too slow at
delivering the required feedback”
(Dow employee)
The quote illustrates the notion at Dow that an electronic system is too impersonal and that
feedback comes too slow. Employees have also had experiences of the difficulty in describing
a complex and raw idea on an electronic system.
“It is not a good idea until you have convinced someone else it is a good idea”
(Dow employee)
This relates to maturity and timing of an idea. If the idea is very raw and embryonic
employees conceive it to be impossible to describe and become reluctant to use the electronic
system. In those cases a more successful way of capturing ideas is through hunters. The
hunters are employees who actively search the organisation for ideas.
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Dow employees stated that this has given very good results much thanks to the immediate
feedback and ability to shape the idea as they were speaking. Furthermore, because of the
difficulties to attract internal ideas Dow also uses external partners and customers to generate
ideas, which is done in a rather limited scope.
How is the ownership of the idea handled?
Dow has had experience with employees who steal ideas from others especially from the
electronic idea boards, which has made it difficult to create acceptance. The most recent
attempt to address this issue is to make the idea public after it has received a sponsor.
What are the most important issues in making employees submit ideas?
We encountered two main areas of incentives used to promote submission. The first was
recognition and the second was financial rewards.
Incentives. One issue that arose concerning the submission and sharing process was that it is
very difficult to assess the amount of contribution, colleague to colleague or between business
areas. Dow is in the planning stage of formulating measurements that concerned how good
knowledge contributor within each business area each employee is. The problem with sharing
knowledge within Dow on a global scale had also been discussed, but there were no good
ways of solving the problem.
Recognition. Recognition was mostly appreciated from the technological community.
Employees said that it is very stimulating to have managers and colleagues recognising and
showing interest in ideas. This is done in several ways such as: getting the chance to present
the ideas to the decision boards, get the idea posted on an public idea story boards or by
receiving an award. The appreciation of the latter had decreased since their had been an
inflation of prices and it had lost its significance. Another aspect to recognition is that
employees were motivated by the fact that someone else might start to work with their idea.
Internal visibility. Another financial motivator was career recognition. When we visited Dow
one employee was promoted for having contributed with many good ideas. We got the
impression that the career path was a very strong incentive and that internal visibility was a
prerequisite for career boosts.
Financial rewards. The other incentive that was mentioned was financial rewards in different
forms. We did not find any elaborate financial rewards, but small standard payments could be
given for good ideas. However we did at several occasions understand that direct financial
rewards is something that is highly desired.
“I do not believe in altruism! Cash, cash, cash…show me the numbers”
(Dow employee)
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Is it important to capture ideas that lie outside of strategic frame?
Dow claims that this is central to accelerated growth. By using existing knowledge and
building new innovations on what already is known by Dow they have the opportunity to
make fast and efficient innovation. New Business Development (NBD) is a part of the Dow’s
organisation that focuses on innovation of ideas outside the existing frame. In each business
area there is one NBD unit with a number of projects and ideas being carried out
simultaneously. At polyurethane, a BA, which has a research community of 200 people, about
30 people were involved in NBD projects. Their expectations for only one NBD centre are;
First actual return on investment expected 2003, 10 million dollars return by 2004, 30 million
dollars by 2005 plus 100 million dollars in the pipeline.
7.2.5. Screening
Main Question: How can Dow increase the chances of selecting ideas with high probability of
becoming a success and kill the ideas with low probability?
What is the necessary composition of screening boards?
Holistic. The screening boards should be senior management with a direct connection and
thorough understanding of the innovation portfolio.
Competence. Dow also include external and internal competencies when knowledge is
required and they use the same screening teams all the way through the pipeline.
What are the main issues in making effective screening decisions?
Objectivity. An issue that came up during the interviews was the personal risk aspect was a
problem. Screening boards, especially in the U.S. have a hard time to kill ideas especially
further down the pipeline since it is regarded as a personal failure. This is a serious problem
but is said to be slightly changing.
Pipeline management. Managing the pipeline is also an area that Dow has addressed. This
means that they intend to control the number of ideas and projects in the pipeline. Recently at
an explorer forum they made an effort to identify where the ideas were in the pipeline. The
conclusion, rather unexpected to Dow, was that 75 % of the ideas were in analysis stage and
only 25 % in shaping. They have tried to highlight this problem and raise the awareness of the
importance of having a larger number of ideas in the early stages. Now they try to update all
involved parties about the state of the pipeline.
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What criteria are used to screen ideas?
NPV. (Net Present Value) The first evaluation criteria are market related and try to give an
present economical value to the future idea. They try to screen ideas with increasingly
stringent criteria further down the pipeline.
Portfolio. As mentioned above Dow also attempt to screen according to the existing pipeline
situation, to avoid a high-risk portfolio in late stages of the pipeline. The screening teams are
responsible for managing the idea portfolio and there are both groups that cover short-term
revenue interests and groups with focus on long-term growth.
How is feedback communicated from the screening boards?
Quick and constructive. We understood that the relationship between teams and screening
boards is very good. The most important features are said to be close communication and be
clear presentation of progress results. The screening process should not take too long time and
feedback that takes more then four weeks is said to be too long. In their new system they are
trying to reach a response time in two weeks. Dow’s experience is that nice and constructive
feedback is essential to keep ideas flowing.
7.2.6. Building
Main Question: How can the building process be managed to maximise the chances of
creating an idea concept with the highest potential?
What is the necessary composition of building teams?
Project Leader. It is considered to be most important to get the right composition in building
teams. The prime member is an ambitious project leader. They have examples of competent
teams not being able to perform due to weak project leaders.
Generator. In the initial stages the idea generator should be involved to make sure that the
essence of the idea is preserved.
Selection. At some parts of Dow they have explored the possibilities of giving employees the
option to choose which projects they want to join. This type of self-selecting process has
given very good results. The underlying notion is that employees tend to be very selective and
only pick the projects most likely to succeed; therefore these will stand a better chance of
succeeding.
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What are the major issues in making people participate in the building stage?
Career risk. This is proven to be a major barrier from two aspects. Firstly employees are
reluctant to join high-risk projects, because they do not perceive that the incentives to join
outweigh the negative aspects of being part of a failing team. It is however claimed that it
could be a jump-start to the career if the project is highly successful.
Cross functionality. Employees from other functions, such as marketing do not consider
joining R&D projects as a good career path. It is considered a side-route, which means that
NBD has a problem with attracting market and other key competencies. Another difficulty is
that not all members are used to work in cross-functional teams. Dow has begun to address
this from the top and down by having the managers from each business area to meet regularly.
This is much appreciated by all participants and it helps to create better mutual understanding
for what everyone does. Unfortunately it is done in a too small scale and will have to be
increased in the future for better co-operation over business area boarders.
Heavy administration. The electronic support tool included a project mapping module was
perceived to be a restraining element. Employees felt that too much time was been spent on
making project plans and updating these, while the true success factors often consist of 4-5
critical issues, which often were missed.
Attraction. Engaging a high image person on the team has made it easier to attract the right
employees. Since there are a lot of team members busy with line duty, a critical factor is to
gain these members’ buy-in in early stages. This is said to make the team members more
motivated and make them feel part of something that is appreciated by the company. We
found that the project kick-off was regarded an excellent tool to bring the team together. A
highly respected project leader stated that it was a pivotal moment of the project and by doing
something special it can make the difference between project success and project failure.
Leadership. The project leader should treat everybody on the team equally, be a trustworthy
person, constantly communicating with involved parties and supplying them with
information. It is likewise important to treat members well during meetings and give them due
respect for their efforts. When heavy job loads are expected they have good experience of
flagging early and asking for confirmation, that the parties can complete the upcoming task.
This has increased the willingness to find alternative solutions.
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How is a balance between high attachment and objectivity guaranteed in the building
phase?
We got very mixed answers on this topic and it is clearly not a synchronised activity at Dow.
Expectations. The most obvious issue we encountered concerned an underlying assumption
of front end activity, is well expressed by a Dow employee.
“People have a hard time to recognise that failure is a part of front end activity”
(Dow employee)
Historically Dow has had a difficult time in expressing and defining expectations of the NBD
projects. Expectations have been raised very high and early in the projects. When calculating
NPV they have tended to be very optimistic and failed to use adequate cost of capital,
especially when entering new markets. However, Dow has begun to be more balanced when
determining the economical value of an idea.
Commitment. Another barrier is that people are not committed enough, they join building
teams, as experts, bur devote very low percentage of their total work time, which is not
enough to make good progress. They can be involved in many different projects at the same
time. The participants perceive themselves as entrepreneurs with no financial involvement,
neither up nor down. This is something Dow has not planned to address.
Accountability. Another reason for the high expectations is the lack of accountability.
“Objectivity will come with accountability”
(Dow employee)
People are not held responsible for large project failures, which in combination with vast
increase in project funding put the project under too high pressure, thus making it impossible
to kill.
Fast failure. The difficulty to kill projects is now addressed from top management by giving
very clear signals that killing projects in early stages is the right thing, if no chance of success
can be identified.
“By highlighting the importance of early declaration of defeat the entire
organisation get a better understanding and appreciation for Dow’s innovation
strategy. “
(Dow employee)
By giving recognition and awards to teams who kill projects early, on the right grounds,
management sends a clear message of how projects should be managed. The most appreciated
way of getting recognition was when it came directly from senior management.
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After project terminations the head of the business area sends out emails to the entire division
stating that Dow is very thankful for the members’ excellent participation and explaining
what the reasons for killing the project were. In addition all managers are encouraged to
spread this statement to all employees.
Stage-gate. The DACT process itself was also said to secure objectivity, by using the stage
gate approach, clear roles and clear deliverables, which increases the chances of fair
judgement.
How can internal tension between building teams and mother organisation be resolved?
There have been difficulties in making connections between NBD and the regular research
activities, mainly because there have been no incentives to contribute knowledge between the
two. The most important role of the project leader was said to be that of the internal motivator
and the external protector. The project leader should find necessary support from within the
organisation and be very honest and constantly communicating progress results. Sometimes
the NBD projects were separated from the mother organisation to hub sites, with good results.
The project leader should understand that he is not the idea generator, rather just a person
with an understanding of the overall picture and with a skill to make it happen.
What are the main issues for teams in finding and utilising internal and external
knowledge?
Networks. Personal networks are by far the most used channel for obtaining knowledge both
internally and externally. Since many of the projects concern entering markets Dow does not
have any knowledge about they need to have fast learning, which is primarily done in
partnership with other companies. This was considered a natural part of conducting
development. When collaborating with partners, Dow claims that it is most important, at an
early stage, to define relationship to avoid unnecessary conflicts and to enable smooth
collaboration.
Scanning. There also seemed to be a high degree of understanding of the importance of
knowledge scanning, or as stated by an interviewee:
“A day in the library can save a year in the lab”
(Dow employee)
When employees search for external knowledge they often begin to interview industry
observers, not participants. Dow is connected to knowledge markets were experts are hired by
the hour to give quick insights into new markets.
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Not-invented-here barrier. Dow has had problems with the not-invented-here syndrome. At
many occasions when the idea generator has been involved in building ideas there has been
difficulties in getting researchers to accept other employees ideas. Researchers often want to
solve problems using personal solutions. A Dow project leader suggested two ways around
this.
“Communication and truly understanding the problem is central. Then create new
sets of activities that fit the project, fit the timeline and fit everything else, with a
win-win compromise. Exclude idea generators in later stage, when the technology is
defined the idea generator can be taken out”.
(Dow Project leader)
Hand-over. Another way to secure objectivity at Dow is to hand over the project, which is
sometimes very difficult due to the difficulties of keeping projects insights and momentum.
We understood that this was done sometimes because of the different competencies needed
later down the process.
How is knowledge re-used from previous projects to create organisational learning?
Ad hoc. The technical oriented part of the organisation is very good at reusing knowledge but
the market-oriented part often neglects this. We could not identify any function that supported
the re-use of experiences and insights, and it seemed as if the learning sometimes was
“forgotten” deliberately to avoid embarrassment or a bad internal reputation.
“When I’m looking at a market segment it could well be that somebody else has
looked into this before me. It is a shortcoming but we are thinking of ways of how to
resolve the problem”.
(Dow employee)
We got the impression that the use of post-mortems, i.e. spending a day at the end of a project
for documentation, was highly appreciated but seldom used due to lack of time. By neglecting
this Dow risk to lose valuable experience, something that was acknowledged by almost all
interviewees.
7.2.7. Conclusions from Dow
Dow has experienced failures with electronic submission systems and are clearly more
interested in the personal submission channels. They have a relatively high degree of external
partnering which enables them to create fast innovation and avoid excessive internal
development. They are also very good at supporting project failures, which has enabled them
to make fast failure a part of the innovation climate. One barrier we identified is the lack of
personal incentives. Employees wish to get more extrinsic incentives.
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7.3.
Tetra Pak
Tetra Pak R&D in Lund have worked as our host company during the thesis. Interviews have
been conducted in various Tetra Pak companies, giving us a better understanding of the Idea
Management process.
7.3.1. Tetra Pak - the Company
Tetra Pak was established in 1952 by Ruben Rausing and is today one of the leading
companies in liquid food processing and packaging. The company is privately owned and is at
the present owned by the third generation of the Rausing family. It is a multinational company
present in 165 across five continents and has over 18 000 employees. Net sale was amounted
to over 7.3 billion €. Tetra Pak is a single source supplier meaning that can offer a complete
solution to the customer, from the processing of liquid food through packing of the product to
the service on the machines.
7.3.2. Idea Management Process at Tetra Pak
Idea management is the most recent formal contribution to Tetra Pak’s innovation process and
one implementation has been performed with mixed results. The long-term goal is to make
the system available to all of Tetra Pak 18 000 employees. Although one pilot implementation
has been conducted Tetra Pak believes that they need further insight into how to make the
maximal use of idea management.
Tetra Pak has identified three main building blocks of idea management: Process, Tools and
Culture. In order to make idea management work effectively and efficiently Tetra Pak
believes that the three components need to be balanced.
The process (Figure 13) consists of five steps that are all interrelated but can be
chronologically ordered. The first step is the need or opportunity recognition. This is not an
actual step rather a trigger for the process. Needs and opportunities can either be undiscovered
needs, well-defined needs or mere problems. The more defined the need can be, the more
focused the idea generation is claimed to be.
The Need
Idea
Screening
Generation
Building/
Enrichment
Submitter
Matchmaker
Idea taker
Idea
Evaluation
Time
Figure 13. Idea Management Process at Tetra Pak.
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The second step, idea generation is very straightforward but none the less difficult. One or
several employees need to come up with an idea for Tetra Pak and register the idea in the
system. The ideas can be spontaneous generated or planned. Tetra Pak believe that a large
amount of ideas increase the chances of generating good ideas. After that an employee
generates and submits an idea, a matchmaker performs an initial screening. The matchmaker
is located on a company level. This is foremost a mechanical step were he reviews the idea
and passes the idea on to the best suited idea taker, who will be responsible for the next steps,
screening and building / enrichment. This is according to Tetra Pak, the most important step
due to the fact that the ideas need time to mature before an application for further
development is picked. Many projects have failed because wrong applications of the ideas
have been chosen. The building phase is conducted within Tetra Pak by idea takers, who are
located on a department level throughout the organisation in order to accommodate any type
of idea. The idea taker is responsible for staffing a team and enriching the idea and finally
handing it over to the final step, final evaluation. In this step the idea is evaluated and a
decision is made whether the idea concept should be developed any further or if it should be
terminated.
The Administrative Tool
In order to support the generation and management of ideas Tetra Pak has created a webbased tool. On Tetra Pak’s global Intranet the idea management process is intended to play a
central role in serving the Innovation process with a larger amount of new and better ideas.
Other important contributions that the tool provides are: identifies the receiver of the idea,
promotes identified company needs, provides efficient and visible handling of ideas, supports
the entire idea management process and organises the Idea bank. As described in the idea
management process the idea passes five steps before it can be considered of as a formal
development project (Figure 14).
TG A
The Need
Idea
Generation
TG B
Screening
Building/
Enrichment
TG C
Idea
Evaluation
Figure 14. Idea Management process and tool steps.
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The five stages are all represented in the web-based solution that Tetra Pak has created for its
idea management process. After each stage there is a tollgate, which assures that the idea
concept meets certain specifications in order to be allowed to the next level. These tollgates
are in Tetra Pak’s system defined as A, B and C.
The web-based tool is presented below in Figure 15.
An idea can enter the tool in two different ways either by submitting a spontaneous idea; “I
have an Idea”, or by suggesting a possible solutions to a need.
Figure 15. The Idea Management tool.
Possible solutions to problems can be found in the “Ideas bank” as well. New ideas are
submitted to matchmakers, as described above, and he/she represents tollgate A and makes
the first screening of the idea. The tool supports screening and evaluation with the right
templates and makes suggestions on relevant matters. The matchmaker serves as the link
between the submitter and the idea taker who is responsible for the enrichment/building of the
idea. During each stage in the idea management tool, different templates and compulsory
steps are available for the persons who work with the idea.
Tollgate B is where the idea taker allows the idea to move on to next level, which is a second
evaluation and refinement. This is made by a cross-functional team, which has the
responsibility to reject or accept the idea as an idea ready to go to the project stage.
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Innovation Measurements
Tetra Pak considers using measurements for effectively managing their idea management
process. In Table 6 below some of the measurements will be presented.
Measurement
Perception6
Number of ideas
Number of ideas entering the system.
Number of needs
Number of needs presented in the system.
Time spend in each stage
Time each idea spends in different stages.
Ideas location in pipeline
Number of ideas in every different stage.
Number of users
Number of visitor on web site.
Amount training
“Innovation” training spend on each employee.
Time spend on idea work
Time spent on “innovation work”.
Table 6 A draft of Tetra Pak’s future measurements.
7.3.3. Generation
Main question: How can companies make employees generate a large flow of quality ideas?
Does Tetra Pak expect ideas and knowledge to flow freely or do they have to be
encouraged?
Our impression from studying Tetra Pak is that they have a somewhat idealistic attitude
towards the generation process. Tetra Pak put high trust in the employees that they will
generate ideas without incentives. Statements such as: “Never wrong to say anything or to
come with ideas”, are frequently spread throughout the company. Or as one interviewee said
“Ideas…they just come, the question is whether I will submit the idea or not”
(Tetra Pak manager)
So the question at Tetra Pak is not whether ideas are generated or not, rather the one of how to
capture them.
What are the main idea generation barriers and how does Tetra Pak promote employees
to generate ideas and share knowledge?
Leadership. Several barriers were identified at Tetra Pak. Many employees in the R&D
mentioned the lack of overall guidance, visible strong leadership and trust as very
discouraging. A couple of employees even went so far as to say that the company is
“emotionally empty”, much due to inconsistent leadership, during the last decade.
6
Based on interviews at Tetra Pak
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At the same time, after spending several months at the corporate R&D unit, we found driving
individuals who talked and lived innovation. But most obvious was the gap between written
statements and the spoken word.
“Instead of walking the talk, they need to walk and talk”
(Tetra Pak employee)
This quote illustrates the strong urge for consistent leadership that matches the vision and the
need of communicating the vision. Since Tetra Pak has encountered many management
changes, employees feel that it is hard to adapt and understand what the current priorities are.
Process orientation. Some employees were critical about the high belief in process orientation
of innovation.
“Look at ABB, Astra Zenica and Atlas Copco, when they brought their innovations forward then had
no formal processes.”
(Tetra Pak employee)
Instead the doubters wanted a looser structure with higher degree of freedom. This issue was
recognised by management and plans on implementing 10 % “free” time were being
formulated.
Visibility. Tetra Pak is not very good at displaying ongoing projects and communicating these,
which makes it hard to see what is going in the research department. Voices were raised to
promote a more visible research portfolio to encourage new ideas to flow freely.
A problem in the past has been poor recognition of good technological innovation. Inventors
and developers have in the past not received any rewards or recognition, outside the R&D
community, for a job well done. The credits have always been given to people in market and
sales departments for selling the new product. They have been voiced in the organisation as
the real heroes.
“They (Market department) would not have anything to sell if it was not for us, but
they get all the credit for our work”
(R&D employee)
The technological side was said to need some real and visible heroes for others to relate to.
The most recent attempt discussed is to give an award to best innovator at the yearly top
management meeting in Switzerland.
Cross-functionality. Another overall barrier is that market companies have little incentives to
develop and adapt to new packages. Since existing packages are so good, market companies
are reluctant to participate in the generation process and seldom make direct contact to the
R&D department.
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Tetra Pak want to put volume targets on percentage of sales from newly developed product
but have failed due to the difficulties of defining what is new, due most to that most
innovations are incremental. To address the growth and innovation issue Tetra Pak has
launched a program which is called 5005, which means that Tetra Pak’s goal is to grow by
50% within by 2005. This recognised by the employees but does not seem to have received
their full attention.
By having many brainstorming sessions and identifying key brainstormers Tetra Pak wishes
to increase effectiveness in their generation process.
How should external input, e.g. customers and market knowledge, be spread among
employees?
This area is said to be one of the most fundamental aspects of idea generation.
“The time when we just came up with good ideas is long gone, now we need
thorough understanding of market trends, design trends, environmental trends etc.”
(Tetra Pak employee)
Employees need to understand what is happening in the world to increase effectiveness in the
idea generation. As in many other companies Tetra Pak was considered to be overly
introverted, have large gaps between functional entities and have a too slow internal and
external communication. There are no real incentives or communication channels for market
companies to share customer knowledge and experience.
To solve this communication gap Tetra Pak has installed a function called CCUPD in the
R&D unit, which is supposed to act as a link between customers, the entire value chain and
researchers. In addition, Tetra Pak have both Business and Technology Intelligence centres
with the purpose of collecting external data.
Job rotation. Job rotation was a desired activity but not encouraged at the moment. Today the
receiving organisation had a relatively low tolerance and no real willingness to pay due
salaries. The job rotation should be mutual, between R&D, production and marketing.
Managers stated that the only way to implement it is to force it. Suggestions were either by
putting it on the line managers score-card or by making it part of the career path.
Consumer understanding. The other way was to promote researchers to spend time at
customers, which was a project previously undertaken. All employees at R&D documented
how many customers they visited during specific time periods. This project was terminated
due too little interest in reporting.
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How does Tetra Pak narrow the scope of ideas?
One of the major difficulties for Tetra Pak employees was the lack of overall company
direction and guidance. Several employees blamed the non-inspiring vision, which presently
is:
“To become and remain the world’s leading liquid food processing and packaging
company”
Instead employees wished for a more empathic and living vision with more symbolic and
inspiring meaning. Employees reflected to historical values from Tetra Pak’s founder, who
built the company on values such as reducing poverty and minimising food losses.
Unfortunately, these guidelines seemed to have decreased. The present vision was said to be
too constraining in creative work and make it difficult to pursue real innovative work.
“If we want to become world leaders we need to work with the undiscovered and not
copy what already is done. Today we only work within areas that are well known.”
(Tetra Pak employee)
Another reason for the concern regarding the vision is that Tetra Pak is a value driven
company and many employees have joined the company just because of that. Today many of
the values have lower priorities and in the words of a Tetra Pak employee.
“When a company has reached the point that you have to hang the corporate values
on a door they are dead for sure…”
(Tetra Pak employee)
The R&D director was aware of the problems and tried to communicate the vision and
guidelines during meetings but apparently the message came out rather hollow. This has much
to do with walking the talk and the bad employee perception of the vision.
Tetra Pak are however trying to control the innovation process in many ways. They have a
Strategic Global Marketing (SGM) that tries to find new prioritised areas into which Tetra
Pak should venture. Their overall innovation process does also include a strategy and
planning tool that manages the project portfolio. Another way of displaying overall needs,
which is not yet used, is the possibility of presenting focus areas on the idea submission webpage. The needs would be communicated from top management. Our impression after a large
amount of interviews is that employees are somewhat uncertain of the overall direction today.
We also identified that management was not aware of this uncertainty, thus creating a
vacuum.
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7.3.4. Capturing
Main question: How can Tetra Pak capture as many of the employees’ ideas as possible?
How are ideas captured?
The formal way of submitting ideas to Tetra Pak is through the new web-based idea
management tool. The target for the idea management tool is that 80 – 90 % 7of all ideas
should come through it. But there are alternative ways of submitting ideas. Experienced
employees claim that they rather go directly to their manager, head of R&D or to the idea
management process owner. Not until the idea is welcomed and considered valuable they
would consider submitting it into the system.
At the moment the tool is available for two of Tetra Pak’s many companies only and the
global implementation has no scheduled date. It is said that every company can chose when to
implement the tool, but there seems to be a large interest and belief in the tool at management
level world-wide. There are vague future plans of making the tool available for both
customers and partners.
How is the ownership of the idea handled?
When an idea is submitted to the system the owner is registered and protected from getting his
/her idea stolen. Tetra Pak does not consider the stealing of ideas between units or between
individuals to be a major barrier and have not taken any measures to address this. At Tetra
Pak there is a patent board that works with patent applications only and the new idea
management tool supports a direct communication with it. The submitter chooses if the idea
should be submitted both to the matchmaker and to the patent board. Employees appreciated
the opportunity to tag the idea so that the organisation would know from whom the idea came.
Some employees on the other hand did not want to publish ideas because of the same reason.
The risk of publishing an idea that was regarded naïve or unqualified made some employees
feel that this would restrain them from submitting ideas to the system.
What are the most important issues in making employees submit ideas?
Although the system exists the flow of ideas has radically decreased in recent moths.
Suggested explanations from Tetra Pak are; organisational uncertainty due to recent
reorganisation, lack of self-confidence to approach head of R&D and language difficulties.
Feedback. Many employees wish to have quicker and better feedback on their ideas. The
experience today from the idea management tool is that feedback is too slow and somewhat
impersonal.
7
BG Nilsson, Director, Corporate Technology, Tetra Pak Sweden
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Recognition. Idea submitters would appreciate a higher degree of recognition for their efforts.
Suggested forms were, having senior management taking more active interest in innovation
and perhaps visiting innovative employees. Employees also appreciated when they were
asked for their competence and felt that the system could help them conveying what they
know. Many complaints were raised because of the marketing side getting all the praise in the
organisation.
“There are no technological heroes at Tetra Pak.”
(Tetra Pak employee)
As this paper is being finalised Tetra Pak has installed a global award for the innovator of the
year and they are also considering recognising innovator of the month at Tetra Pak R&D.
Other reward examples were event tickets or dinner with manager. Employees stated that
Tetra Pak should be able to recognise team in a higher degree and award them as a group, this
is said to be important in making knowledge flow more freely in the organisation. Everyone
in a group should be able to get credit for submitted ideas.
Monetary rewards. Many employees also mentioned monetary compensation as an important
motivator, which until today does not exist. They suggested possible solutions as to monitor
future income, if the idea becomes a success. But money is also regarded as a clear way of
getting a grade on the idea.
Visible channels. The available channels to submit ideas are to unclear, and some employees
were afraid that the electronic system was regarded to be the only way of communicating
ideas. Instead all channels should be visualised.
Trust. One identified barrier was that the submitter wants to trust the idea taker otherwise
he/she feels a higher degree of risk submitting the idea. Employees want someone who
appreciates and can realise their idea to receive it.
Creativity. The negative aspect is that some employees feel that the tool strangles the
creativity. They feel that the personal contact and interaction between idea-generator and idea
taker cease to exist, when you implement an electronic tool. However, the intention of the
system is the opposite. Since each employee is able to identify, who the person that will
perform the screening is, the system will increase transparency and make communication
more effective. We believe that the difference in perceptions has to do with the amount of
education regarding the system that has been carried out.
Active work. Employees consider the fact that someone actively starts to work with ideas as
an important motivator to submit ideas.
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Measurement. Is it possible to demand 3 ideas per year? Many employees found that this
would be an effective way to make people submit ideas, at least initially. Or as one Tetra Pak
employee expressed his feelings:
“Demand three ideas per year?… Is not that why we are here?”
However, employees recognise that Tetra Pak also need to measure quality as well and not
only numbers.
Local knowledge. Another concern that we identified was:
“Is it possible to solve local problems on a global level. You can not solve India’s
milk problem by sitting and thinking in Sweden.”
(Tetra Pak employee)
Employees were sceptical to the chances of coming up with relevant solutions to problems
that are created in an environment very different to the one you live in?
Clear value. There has to be an obvious value in sharing ideas, it could be the chance to get
access to other ideas or the possibility to work with your idea. We heard many opinions about,
how important it is to show what value the system gives to the user - something that today is
rather uncertain. The plans are to make extensive education on the tool.
Knowledge gap. Another problem area is the knowledge about the new idea management
system. Users claimed to have little knowledge regarding how the process works and what
type of ideas that can be submitted.
Over belief. Some employees also talk about the risk of having an overly high belief in the
electronic systems and forgetting that idea management is not a software package, rather a
way to approach idea process in the front end of innovation. Participants need to understand
that it is not the only way of communicating ideas and that all channels should be used. Due
to the high degree of uncertainty that employees feel today, both regarding the system and the
company as a whole has resulted in many ideas lying on ice in drawers waiting for the right
time to be posted. Managers however do not seem to have the same perception of the
difficulties and they believe that the system is rather straightforward.
How are ideas stored?
The system has an idea bank that stores all ideas. The idea-generators names and all
information about the idea are available on the Intranet. This is done to show that all ideas are
valuable and to make it possible to search old ideas. Since many ideas have a long durability,
it is simply a question of timing. Some employees wanted to have a better search engine that
would allow them to make more detailed searches, i.e. for ideas from specific markets.
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Is it important to capture ideas that lie outside of strategic frame?
Many Tetra Pak employees expressed the desire to pursue idea outside the present strategic
frame.
No obvious stretch. There is today no real good or obvious place to go with stretch ideas.
These opinions came from all levels within the organisation. Many employees were afraid
that it would become difficult to reach growth goals and retain market lead if Tetra Pak did
not leverage the existing knowledge.
“We have to be leading by innovation not by copying.”
(Tetra Pak employee)
Short-term focus. There is too much short-term focus. Managers are evaluated and rewarded
on a too short time frame, which makes them hesitate to undertake any long-term
development projects. This has made the organisation avoid such ideas. In order to solve this
problem it was suggested that managers could get recognition for something that happened at
a unit long time after they had left.
To make these kind of ideas a reality it was suggested that some 3-5 % of the time should be
spend on exploratory development.
How mature should ideas be when they enter the system?
There are no demands on maturity, on the contrary all ideas are encouraged and the idea
management director Sven Andrén recognised:
Many small pieces of ideas can form one good idea collectively.
(Sven Andrén, Idea Management
process owner)
7.3.5. Screening
Main Question: How can Tetra Pak increase the chances of selecting ideas with high
probability of becoming a success and kill the ideas with low probability?
What is the necessary composition of screening boards?
Competence dependent. Screening boards should be able to see both business and
technological possibilities. The requirements for members should be based on competence not
on hierarchical level. Tetra Pak does not consider the screening decisions to be associated
with any risk. External parties were also considered to be part of the screening boards,
however it was noticed that although many companies have extensive consumer testing it
does by no means guarantee success.
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What are the main issues in making effective screening decisions?
Continuity and transparency. Employees expressed a wish to understand on what grounds
ideas have been killed. Often screening decisions are taken after the actual outcome is known.
This post decision is possible due to the unclear procedure of idea process.
Early kill. An employee in the R&D department highlighted a more general aspect of
screening:
“The worst and by far biggest screener is one self. “
(Tetra Pak employee)
His experience is that the generator screens many good ideas, long before he/she even
consider sharing it with anyone. This is a major barrier because new knowledge is often
created when fragments of knowledge or ideas are put together.
Muddled pipeline. As mentioned earlier Tetra Pak has a problem with ideas that lie in the grey
area of the strategic focus. This also applies to ideas that have an 8-10 year perspective where
Tetra Pak lacks the right questions to ask. Ideas that concern shorter time frame, within 3
years are easier to address. The best way of tracking ideas is if they are entered into the idea
management system. Today it is done in a rather ad hoc approach, which makes it difficult to
know what different projects are running and where they are in the process.
What criteria are used to screen ideas?
Metrics with care. Metrics is used with care and Tetra Pak wishes to avoid being overly
dependent on such criteria. The idea management tool consists of templates and metrics that
can be used by whom ever wishes. Each unit is allowed to have their own subsets of criteria.
How are ideas outside strategic frame treated?
Unclear paths. Presently there is no clear haven for such ideas although many employees
expressed their interest in an organisational unit that has the competence, market knowledge
and business understanding. Today this is handled by the SGM. The main problem with this is
that there is little understanding of how they operate and how to approach them.
How is feedback communicated from screening boards?
Transparency. Historically it has been quite difficult for employees to understand why ideas
have been killed due to unclear feedback, which has made employees unwilling to submit
ideas and also made it difficult to “let ideas go”. The new idea management system has the
purpose of making communication easier and more transparent. All ideas are supposed to be
evaluated on clear basis and there should be less uncertainty of why ideas are killed.
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7.3.6. Building
Main Question: How can the building process be managed to maximise the chances of
creating an idea concept with the highest potential?
What is the necessary composition of building teams?
The generator is per default included in the building phase, but it is up to the generator if
he/she wants to participate. It is understood to be important that the generator can be along to
preserve the essence of the idea.
What are the major issues in making people participate in the building stage?
Our overall impression is that Tetra Pak R&D employees are very willing to participate in
building projects. Many of the employees have been with the company for a very long time
thanks to the good possibilities of pursuing small building-like projects. However, we
managed to identify some barriers and enablers.
Cross-functionality. Since we have mostly met Tetra Pak employees from R&D, it is
somewhat difficult to estimate the willingness among other units to participate. At several
times during our interviews researchers expressed the difficulty of obtaining support from
market companies, which implies that there are some problems with attraction. As of today
there is no good way of promoting cross-functionality. A way of making people participate is
that the system hands over the ideas to someone who has a personal interest in and benefits
from a successful building.
Measurements. In addition Tetra Pak was planning on measuring how much time each idea
taker spend on the building ideas. At this moment it was not decided upon but, seemed to be a
measurement that had gained some organisational interest.
How is a balance between high attachment and objectivity guaranteed in the building
phase?
Risk prone. The historic entrepreneurial legacy is still very influential at Tetra Pak. We heard
many stories such as:
“Money is the only thing we have a plenty of.”
(Tetra Pak employee)
Values like this make it very difficult to ever terminate projects although there is no obvious
market for the application. Still today many people are very willing to take high risks with
Tetra Pak resources. Management is trying to raise personal responsibility in order to reduce
the uncalculated risks and to make employees more aware of the real costs. In recent years a
change has occurred and higher awareness of market importance has been induced. We
identified two similar problems at Tetra Pak (Figure 16).
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Technical Pursuit
Product Pursuit
Possible solutions
Previous approach, early focus on a few number of
solutions and applications. Creating risk that best
solution might be in the shaded area .
Goal, to strive for keeping the solution space as
wider
Previous approach, difficult to accept anything but
the best making development too long
Goal, to strive to make the solution space narrower
Figure 16 Schematic development pipelines at Tetra Pak
In a Technological development perspective Tetra Pak has had a tendency of picking
technologies and applications too early, greatly decreasing the chances of identifying other
possible opportunities with possible higher outcome. The other case is the product and
packaging development, where we have come across many employees who express frustration
over the amount of time spent on development, trying to invent the perfect package, instead of
choosing a “good enough” and move on.
“Search for the best is the worst excuse for the good enough”
(Tetra Pak employee)
Suggested solutions are several:
Learning. First a wish for better project post-mortems was expressed. Increased learning from
previous projects would make it easier to understand why projects fail and give employees a
better decision-making frame. This is a big problem at Tetra Pak, since very little time is
spent on documenting learning. It is identified as a managerial problem but there is at the
moment no formal solution to the problem.
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Management understanding. Some statements from management level such as:
“We are here to succeed, better to reward success than failure”
(Tetra Pak manager)
This reflects our perception that management underestimates the problems associated with
support. Employees wish for a clear and outspoken support from leaders that failure is part of
research and development. We heard several employees saying that there is a gap between
what is being said and what is being done.
Communication & openness. A higher degree of communication and openness between
groups, individuals and towards management would make it more difficult for projects to
pursue unsuccessful paths and making it easier for employees to understand why projects are
terminated. In the past Tetra Pak have lost a lot of good employees, and their knowledge, after
project terminations. This has happen due to bad communication why projects were killed and
lack of empowerment from management.
Career stability. This issue relates to the one above. We understood that employees would
feel safer and make the killing decisions easier if they were certain that their careers was not
negatively affected because of a bad project.
Minimising scope. Making clear definitions early and not expanding the project too much.
This will make it easier to evaluate if building is going along the right track. It is said to be
important to set targets and goals early in building projects to create a mutual understanding
and focus.
Building projects are funded by line organisation. The resources come from the department
where the building takes place. Since they are the benefiting from the idea they will have to
provide the resources necessary or kill the idea. If a true innovation is outside focus Tetra Pak
need to have skunk works, but at present, there is no real place to go with such ideas.
How can internal tension between building teams and mother organisation be resolved?
Separation. In a couple of cases small building teams have been sent out side of the Tetra Pak
premises to do exploratory work. This has only been done during the creative phase.
Experience has been mostly positive. The building teams have been able to operate more
freely and pursue ideas that would be more difficult in-house. Two main difficulties arose in
making employees participate. Firstly, employees were reluctant to participate due to practical
reasons such as travelling distance. The second was internal prestige. The building team was
perceived to get higher attention than in-house projects, making knowledge sharing more
difficult.
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What are the main issues for teams in finding and utilising internal and external
knowledge?
Introverted. Tetra Pak are better at exploiting internal resources than external; sometimes
there is a tendency towards internal glorification, which prevent employees from going
externally for help. A result is that development lead times increase and that a lot of resources
are spent on developing already existing technology. Some projects have nonetheless
successfully managed to obtain external knowledge. It has by no means come easily, instead
project leaders have, in early stages, emphasised the importance of external involvement and
creating mottoes such as: “Steal with pride”.
“Openness and co-operation does not come naturally, we have to train employees to
communicate and show the obvious benefits of external and open communication. If
we can obtain external knowledge our team learning will dramatically increase. (..)
Our project team became much more efficient at all aspects by adapting a more
open building approach.”
(Tetra Pak project leader)
The introvert focus is also reflected between different building projects. It is said to be a high
degree of prestige and difficult to grasp what projects are running at the moment. This makes
it difficult to share experience and finding alternative solutions. The idea management tool
has one purpose of making the identification of internal knowledge easier, by simply posting
that need development teams can receive answers from anywhere within the organisation and
hopefully obtaining required knowledge much quicker.
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How is knowledge re-used from previous projects to create organisational learning?
As mentioned above, this is said to be a major barrier at Tetra Pak, which has consequences
for the entire R&D organisation. The same project can be conducted many times without
drawing any learning from previous buildings. We have schematically depicted the
reoccurring pattern in Figure 17.
Accumulated
Knowledge
Time
1.
Forgetting. Projects fail to build on
existing knowledge forcing teams to
start from scratch again.
Project time line Project end
Figure 17 Learning situation at Tetra Pak R&D, 2001
We met many employees at all organisational levels, who expressed their frustration over lost
learning and the difficulties to reuse existing knowledge.
“All too many times we make the same mistakes over and over again, instead of
allowing us to start at a higher level than before.”
(Tetra Pak employee)
Post mortem. After failed projects the core project teams have at many occasions left Tetra
Pak thus making it very difficult to debrief their insights. Many employees claim that the
problems stem from the individualistic attitude and the pride that is nourished within R&D,
mentioned above.
Lack of Forums. Employees wish for better knowledge sharing forums. Suggestions such as
idea story rooms or frequent meetings were called for. Presently there exists a so-called
“challenge session”, which means that teams invite people with previous experience from
specific project related areas. These were much appreciated but the difficulty is to locate who
has the required knowledge.
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7.3.7. Conclusions from Tetra Pak
Tetra Pak has well functioning innovation process. However the lack of a guiding and
inspiring vision has made employees somewhat frustrated over the present situation. It makes
it difficult for employees to prioritise where they should focus their efforts. We consider the
electronic system to have a large potential however it should also be acknowledged that
employees wish for more incentives to submit ideas and a wish for more personal connection
is voiced.
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8.
Analysis
In this chapter we will analyse what the main issues are regarding the front end of
innovation. We will identify managerial principles, based on the foundation elements and
the case studies that will make the front end of innovation even more effective.
Although the case companies have different processes, outputs and fill them with unique
content, they all consist of the same basic elements: idea generation, capturing, screening and
building. This is why we are able to draw conclusions from the companies and identify
patterns. We somewhat contradict Reinertsen (1999) who claims that there is no universally
applicable best practice for optimising the front end process. We believe that this might be
true when designing project-specific elements but not when forming the foundation elements.
The important thing when developing a company-specific front end process is that the early
stages are fully integrated with the overall process, since the front end feeds downstream
processes. If companies encourage innovation from top management they have to somehow
“walk the talk”. By this we mean management must create incentives, culture & norms,
communication networks and corporate vision that truly support the message of innovation.
8.1.
Idea Generation
Main Questions: How can companies make employees generate a large flow of quality ideas?
In the process of making employees generate a large amount of “quality ideas” we have
identified two main areas of concern. Employees need “Right and Relevant Knowledge” to be
able to generate quality ideas and an “Organisational Climate” that encourages idea
generation.
8.1.1. Right and Relevant Knowledge
To be able to generate ideas of interest for the company, employees must understand and have
extensive knowledge about the business. This knowledge includes understanding of
customers, consumer, market trends, competitors, competitive advantage etc. If companies are
not able to access the right information they risk being out-rivalled by other companies more
adaptive to market shifts and business reality. The knowledge can be collected and distributed
in many different ways.
Business and Technology Intelligence centres are internal functions for collecting and
distributing business related knowledge. Our case companies used this approach for
knowledge collection. It can be very efficient since these employees are experts on finding
and gathering information and knowledge. It is their job to continuously scan areas of interest.
An issue we identified was that employees do not know how they can use the different centres
of knowledge and what kind of information they can supply to them. Another issue we
identified was the aspect of the media noise or information overload.
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There is so much information available on Intranets etc. that it becomes difficult for nonexperts to access the needed information. We believe that having formal presentations by
knowledge experts can resolve the difficulty of obtaining relevant information. Companies
must acknowledge that knowledge transfer involves personal interaction (Nonaka, 1994). By
doing so companies will enable employees to actively keep track of competition and business
trends.
Personal networks are another way of supplying relevant information. If companies put
people with different specialities together the total amount of overall company knowledge in
the local setting will increase. We regarded this as a sort of “miniature enterprise”. Chances
of generating ideas better aligned to the entire company’s competencies will increase. Crossfunctionality can be created through job-rotation. At ABB we found that job-rotation was
considered to be a good way of getting employees from different departments to share
knowledge and create networks. Although they had no formal program that promoted jobrotation, employees from Corporate R&D frequently looped out, to join BA, on different cofounded projects. Based on all case studies we suggest that in creating conditions for job
rotation managers must be evaluated on how many employees they “send away” and how
many they “receive” from other units. Without these measurements it will not become reality
because the benefits are not obvious in a short-term perspective. Since there is a risk of
knowledge drain if many employees leave R&D they need to focus on creating a high image
so that they easily can attract new employees. Furthermore, all case companies had a number
of employees with much larger networks than others. We believe that if companies would be
able to identify these individuals and make them visible as “communication hubs”, the rest of
the organisation would get a very good “networking tool” and access larger parts of the
organisation.
Overall guidance. Another tool in management pursuit of guiding employees is the vision.
Management can state and communicate the message of innovation or knowledge sharing. It
is important that the vision is inspiring and give employees guidance in their daily work and
shows where the company wants to go in the future. An important aspect concerning the
vision is that management must, as mentioned above, walk the talk of the vision. Meaning that
management must practice what they preach. Vision can be used to narrow the scope of the
employees’ ideas. By stating the main areas of interest or goals for the company, management
provides employees with a sense of direction of what kind of ideas are wanted. Dow used the
vision in a much-appreciated way. The use of images made it easier for employees to relate to
the message. Dow also included end-users in the vision and described the relationship to the
users.
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ABB Innovisions narrowed the scope of ideas by a deductive method. They observed what
type of ideas that were submitted and based their four areas of interest on what was actually
there. Tetra Pak intends to state on the idea submission page which types of ideas that they
require. No matter what method is chosen we consider need presentation to be an excellent
way of communicating where the company’s resources should be focused. Both ABB Global
and Dow have created internal venturing units, Innovisions and NBD, with the purpose of
leverage existing knowledge and entering new markets. This has proven to be very fruitful
and the pipelines are filled with new business concepts based on existing technology. We
consider this to be a very effective way of optimising the use of scarce resources.
Diverse Knowledge Mix. At ABB R&D they had frequent guest speakers and visitors from
different competence areas. This was said to be very effective in creating new ways of
approaching old issues. Leifer et al’s (2000) argument that ideas are often generated when
different competencies merge, support the use of a high degree of external influences
8.1.2. Organisational Climate – Encouraging Idea Generation
To enable idea generation, companies need to establish a climate that supports this. We have
identified principles that promote an innovative climate.
Management’s attention to the importance of innovation. Management enables generation of
ideas by continuously stressing the importance of innovation for the company’s future. This
can be done in various ways. First management has to talk about it as much as possible, using
all available channels. ABB has created ABB Innovisions, a haven for new business ideas,
given a clear message that growth is important for ABB’s future. Dow has created the NBD
units where new growth ideas are welcomed. Tetra Pak has created the Innovations network
and Idea management, enabling employees to submit their ideas on various subjects and
allowing them to assists colleagues with solutions to problems. We believe that all case
companies send a clear signal to their employees that innovation is important and that every
employee is welcome with ideas and suggestions.
Knowledge sharing is prerequisite for idea generation (Nonaka, 1994). Employees must
interact with some knowledge to enable them to generate ideas or identify needs. That is why
the sharing of knowledge between employees is of highest importance. Knowledge sharing
can, as mentioned above, either take place in formal or informal ways. To enable idea
generation, time must be granted for employees to participate in the knowledge sharing and
the front end process (Davenport & Prusak, 1998). We have not been able to identify any case
company that has addressed this issue. Furthermore, when employees share knowledge and
ideas they need to feel a high degree of trust (von Krogh et al, 2000). They also need to know
that the exchange is mutual and that the receiver will give constructive and “nice” feedback or
knowledge in return. If management wishes to address this issue more actively there are
measurements to be used (Table 7).
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Dow was the only case planning on implementing these types of measurements. A good way
of increasing knowledge sharing is to give team rewards since knowledge creation mostly is a
team effort. This was solved at Dow by giving team awards for knowledge sharing, which
worked as a clear driver for people to share ideas and knowledge.
Conversations between employees is another important way of confirming the existence and
content of knowledge, or to create new knowledge. None of our case companies had
identified managing conversations as an enabler for generating ideas. According to von Krogh
et al (2000) there are four guiding principles that can be used in order to manage
conversations: actively encouraging participation, establishing conversational etiquette,
editing conversations appropriately and fostering innovative language. The principles will
help companies and managers to share and create new knowledge, which will enable better
idea generation.
Slack time, is a good way of giving employees the opportunity to pursue interesting ideas and
to seek new knowledge. ABB allowed their Corporate Research staff 20% slack time to
pursue ideas but this has proven to give little result due to the fact that the company did not
live up to their intention. Employees argued that there was little “real” time for ideas. The
normal workload was too high to pursue new own ideas. This is only one example among
many others where management in the case companies do not “walk the talk”.
Organisational Stability. Lack of organisational stability and continuity has proven to
negatively affect idea generation. Tetra Pak provides a good example, were stability during
the past year has been very low, leading to a very low amount of new ideas. If people are
afraid to lose their jobs, they will not occupy their minds with creative thoughts, knowledge
sharing and idea generation. Therefore if companies wish to create a climate that supports
innovation they must increase organisational stability.
Empowerment. Management needs to empower their employees. By letting them take own
responsibilities they promote an open and creative climate. There must be room for trial and
error when you work with ideas in the front end of innovation.
Measurement
•
Dialogue Quality
Purpose
Qualitative measure of dialogue ability. Will help employees to
adjust their manners and identify educational needs.
•
Knowledge Contribution
Qualitative measure of how good knowledge contributor each
person is. Will increase knowledge spreading.
•
Number of “send and
received” employees
This measurement will force managers to actively work with job
rotation.
Table 7. Measurements for increasing knowledge sharing.
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8.2.
Idea Capturing
Main Question: How can companies create the best conditions to capture as many ideas as
possible? - All case companies use a voluntary system i.e. employee can chose to submit an
idea or not and companies can only capture the idea when an employee submits it by free
will. If companies want employees to submit ideas, it is our opinion that they have to create
the “Right Climate”, use appropriate “Incentives and Measurements” and finally choose
appropriate “Media Channels”.
8.2.1. Right Climate
In the creation of a favourable climate we have identified a couple of issues important for
companies to take under consideration (see section 8.1.2 Organisational Climate –
Encouraging Idea Generation).
Trust. As trust and openness were important factor for employees to generate ideas it is also
recognised here as important. Employees need to trust the person to whom they submit their
idea. We think of the idea as a child and the submitter as a parent. No one will leave their
child in a stranger’s care. It must be someone whom they know and trust. It is the same with
ideas; the submitter wants the best for his/her idea, otherwise he/she will not submit it. Idea
takers need to be trusted persons, so that the submitter knows that they will do their best in
taking care of the idea. There are at least three ways for creating trust in the organisation:
create a sense of mutual dependence, make trustworthy behaviour a part of performance
reviews, and increase individual reliability by formulating a “map” of expectations. A map
like this has two dimensions: expectations for your own activities and performance, and
expectations for how the entire organisation/group as a whole will perform.
Management attention. For employees to submit ideas it must be a management priority area.
Management must take every opportunity to communicate the importance of employee
participation and idea submission. The vision can also be used, as mentioned above, to state
the message of how important innovation and ideas are for the future.
8.2.2. Incentives and Measurements
Submission incentives can be divided into two different types, intrinsic and extrinsic. The
intrinsic rewards are non-monetary and more on a psychological level while extrinsic rewards
are monetary rewards in some form. We believe that there are three important aspects of
rewards that must be considered before we can present any incentives or how they affect the
front end. First, it is very important to reward the right persons. Ideas are seldom generated
individually, they are created when employees interact and share knowledge. This is why idea
ownership is very important.
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Management should reward all employees that have participated to the idea. Awarding teams
was something that Dow had recognised both in idea generation and the latter building phase.
The second aspect is measurements. We believe that companies can not reward anything if
they do not measure it. If they would give random rewards, the rewards would be ineffective
(Tushman & O´Reilly III, 1997). No clear message of what is important would be
communicated or in what direction the company wants to follow. Measurements that can be
made public or put on the employees’ scorecards, to promote idea submission, are presented
in Table 8.
Measurement
•
Number of ideas
Purpose
Total number of ideas motivates employees to submit ideas, set
high targets and give due rewards. Could be used on individual
level by setting targets and forcing employees to submit.
•
Patent
Should be counted and rewarded, serves as high prestige for
researchers and hold a external value for the company.
•
Sales from new products
Holistic measurement to make the entire organisation focus on
innovation, set high targets.
•
Importance of radical
innovation
•
Best principle idea of the
year
•
Best innovator of the year
Determines how important innovation is in industry – motivates
employee (Stringer, 2000)
Increasing the reputation among researchers and serves as a
stimulating competition.
Increasing the reputation among researchers and the entire
company.
Table 8. Measurements used to promote idea submission
The third important aspect on measurements is how well do employees understand and buy
the message of what management promotes. In Table 9 below the identified managerial
measurements will be presented. In order to manage the front end, and especially idea
capturing, management must keep track of employee “buy-in “. This can be regarded as
measures of “effectiveness of innovation implementation”.
Buy in Measurement
•
Number of users
Purpose
Measure number of users on the Idea Management tool. Gives an
indication on the attention it has received.
•
Amount of training
How many hours of training has been spent on front end issues.
•
Publicity
How many articles have been published about front end, and how
many presentations have been held. If employees want to have
presentations they are also interested.
•
Sales from new products
Measures the overall effectiveness of foundation and project
specific elements.
Table 9 Managerial measurements of employee “buy-in”.
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Intrinsic Rewards
As mentioned above intrinsic rewards are non-monetary and used for fulfilling psychological
needs. From our case studies and the frame of reference we have identified these rewards as
more important for enabling people to participate in the front end. Surprisingly in the world
we live in, money is not considered the number one trigger for submission. The identified
incentives and implications will be describes below.
Feedback and Quick Handling have proven to be the most important enablers in the whole
front end process. If idea feedback is not given quickly (employees at case companies
expressed a time limit of 2 weeks) the idea submitter might loose interest and feel that nobody
cares about the idea. We have identified quick handling and feedback to be a weak link at all
the case companies. Either feedback is to slow, impersonal or not communicated in the right
way. Dow has experienced an idea management tool failure due to lack of responsibility for
the ideas that entered the system. All submitters received an auto-generated email, but after
that nothing happened. Employees need to feel that their idea makes a difference and that
someone handles the idea. The aspect of how ideas can be captured and the implications will
be discussed in section 8.2.3 Right Choice of Media.
Recognition and Internal Visibility. These two intrinsic rewards go hand in hand with
managerial attention discussed above. Management needs to recognise and give idea
submitters and creative employees attention in the organisation. At all of the case companies
this was recognised as a good way of spreading the message that innovations are important
for the companies’. Diplomas and special inventor rewards can be used to increase the status
of researchers and idea submitters internally. This was in some form used, or in the progress
of being introduced, at all case companies. An identified issue was that companies must not
“over-reward” employees, creating inflation in rewards. It must remain something special for
just a few employees. This problem Dow experienced with employees getting rewards for
almost anything. Another way of displaying internal recognition was identified at ABB, the
best principle idea of the year. This was an internal competition were researchers competed
for the glory of generating the best ideas. This was very well appreciated reward among
employees and send out a clear message that management cares about ideas.
Offer Personal Involvement. Another trigger for submitting an idea is the chance of working
with the idea. This was considered to be good motivator. Management must here once again
“walk the talk” by giving necessary slack time for employees to pursue ideas.
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Extrinsic Rewards
Extrinsic rewards are some form of monetary rewards. At the case companies they were
identified as early enablers for making employees participate. Meaning that first time
submitters can be triggered by a small monetary reward, while more senior employees are
more triggered by the intrinsic rewards. The discussion about the monetary reward goes all
the way back to why employees work. Are they there for their own or for the company sake?
Some employees at the case companies argued that:
“If the company makes a lot of money on my idea, why should not I have a piece of
the action.”
(Tetra Pak Employee)
The different extrinsic rewards identified and how they affect the process will be discussed
below.
Career Advancement. A trigger for submitting ideas is the appreciation from management,
which they display through career advancement for the creative person. This reward has both
an intrinsic and an extrinsic part. The intrinsic part is the recognition and the extrinsic part is
that he/she will get more responsibility and a higher salary. This reward should be used
especially on junior employees, because they often have a larger desire for advancement in
the organisation. The reward sends out a clear message to the entire organisation that creative
people with good ideas will be rewarded.
Cash for submitting an idea is another extrinsic reward. Junior employees at all case
companies expressed desire for small monetary rewards when submitting ideas. This was also
considered a good way to attract first time submitters, by senior researchers at ABB. It is
important to give them a clear and quick reward, stating that ideas are important and that the
company appreciates their contribution.
Share of company’s value for idea/business. This is more of a quality reward, which will be
given late in the process, when companies have a real value of the new idea/business. We
found that this reward triggers both senior and junior employees. The fact that they could get
a bonus, if their idea really becomes a reality and is worth a lot of money, is a clear trigger for
submitting ideas.
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8.2.3. Right Choice of Media Channel
The choice of how the idea should be communicating is of central importance. Different
media act as barriers or enablers in the creative phase of generating and submitting ideas.
Below we will discuss the different ways we identified for capturing ideas and what effect
they might have. These discussion will be summarised in Table 10 where we perform a
personal evaluation of each media. We have chosen to separate the different ways in
electronic and personal channels for idea submission. Electronic systems are web-based tools
that allow employees to submit ideas from any location. All case companies use or had used
web-based systems, without any real success. Personal systems can be employees that act as
idea hunters and actively roam the organisation and search for ideas. We encountered idea
hunters at ABB Innovisions and Dow, which were said to be very effective.
Electronic Idea Submission Channel
Knowledge Gap. There is a gap between management’s understanding of how the system is
perceived and what our interviews with Tetra Pak employees reflect. Since we have spent
most of our thesis at Tetra Pak we have the largest insight in this organisation but we believe
that the problem exists in other organisations as well. Employees expressed a clear
uncertainty of which ideas that management wanted them to submit. This problem can be
avoided by stating the purpose of the idea management and use vision to guide employees in
what the company considers important. The knowledge of how to use the tools was also
limited, leaving employees with the chose of either not submitting the idea or to ask a fellow
employee how to use the system. This problem can be resolved by educating employees in
using the system.
Uncreative System. Some senior employees, at Tetra Pak, experienced the new idea
management tool as uncreative. They argued that the system was unable to communicate the
entire idea and therefore they refused to use it, which goes along the lines of the media
richness theory (Daft & Lengel, 1984). We believe that is important for companies to
communicate that the electronic system is only one alternative when submitting ideas. We
suggest that companies make all channels visible. This way companies increase chances of
capturing as many ideas as possible.
Pre-defined questions can also strangle creativity because the generator might not have all the
knowledge needed to fill in the submitting form, especially not if the idea is very embryonic.
Pre-defined questions should therefore be used with care and companies should offer
assistance for idea generators in areas where they might not have any pre-knowledge. Once
again it is important to make the support visible so that all employees can get fast access to
help.
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Idea ownership. The web-based tools, used by our case companies, protect idea submitters by
tagging the idea with the submitters’ names. However, after Dow’s first failed implementation
of an electronic idea management system they identified that employees were reluctant to post
ideas because the risk of other employees, from other areas, “stealing” ideas. For the next
system-launch, management at Dow is planning to enable ideas to be hidden until they gain
support. We believe that this is a good way to control the ownership issue.
Idea storage. Tetra Pak’s Idea Management tool supports the storage of ideas. This gives
employees the opportunity to review all ideas and save them for the future. Since most ideas
are long lasting, companies can save good ideas for later if the timing is wrong. Employees
can also see all ideas that have been submitted and identify solution to their problems. We
consider this to be a good way of displaying that ideas are appreciated.
Need presentation. Tetra Pak’s Idea Management tool gives the company the opportunity to
post special areas of interest as well as individual needs. This way, when the system becomes
available world-wide, employees all over the world can contribute to different problems.
System Reach. By using a web-based tool companies can reach the entire organisation and
leverage knowledge on a global scale. We feel that this can be somewhat difficult due to the
local context in which problems arise but the opportunity is inspiring. The tool can also be
turned to external partners, but partners must be chosen with care so that the systems will not
overheat with useless external ideas.
Personal Idea Submission Channel
Idea hunters are persons that work fulltime with the search, both internally and externally, for
new ideas. The idea hunters have good knowledge of the company, the businesses and
competitive advantages. The idea hunters also have a large personal network that supplies
him/her with knowledge and ideas. By using such a system Dow has created a good way of
making connections between different parts of the organisation and providing a large amount
of ideas.
Speaking partner. If you submit your idea to a person you often get instant feedback and the
person can work as a speaking partner allowing you to shape your idea. This was one of the
major benefits, according to employees at the case companies.
Visibility. A person is more visible than an anonymous system. Both ABB and Dow had good
experience of persons serving as idea hunters. If companies chose to use web-based tool for
collection of ideas, they must promote it on a regular basis, reward employees to make them
participate or force them by using various measurements.
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Comparison between Electronic and Personal Submission
Issue
Description
R
Feedback
Speed of
3
feedback
Reach
Trust
Ownership
Uncertainty
Storage
Number of
Electronic
R
Hunter/ Personal
If the process works well it can
5
Immediate feedback, no system
be fairly fast
5
The entire organisation can be
can compete
2
reached and easy to include
consuming to visit and speak to
can be reached
external parties
many people
Perceived trust
Tagging the idea
Perceived
3
4
3
Ideas can not be hidden, the
4
can be submitted to a trusted
about the idea
person
Immediate tagging, but since it
3
More difficult since a personal
will be displayed to other parts it
meeting often will create extra
risks being “stolen”
input to the idea
Seemingly easy to define what is
5
Person to person communication
uncertainty of
requested but presently lack in
is the best way of reducing
what is required
employee understanding
uncertainty
Reuse of idea
5
Ideas maturity
3
when entering
Ideas can be stored for infinite
1
Often predefined criteria
Employee
Very difficult to store ideas in a
clear way
5
dampening creativity
Embryo can be puzzled together
and form totally new ideas as
system
Visibility
Depending on the person, idea
whole organisation will find out
time
Creativity
Limited since it is time
employees that
they are speaking
2
attraction
5
The electronic information
4
Difficult to get time to meet with
overload makes it difficult
employees, a lot of competition
promote yet another system
for time
Managing
Possibility to
process
monitor and
All steps can be measured and
monitored making it a valuable
manage process
tool
1
Most difficult to get holistic view
of the process
Table 10 Evaluation8 (Ranking) of Electronic vs. Personal submission channels (R - 5:max, 1:min)
One learning from the case studies was that even if there are formal ways of submitting ideas
there will always be ideas that emerge from other uncontrollable channels. Experiences show
that, so far, no company have reached the necessary levels of trust, feedback, visibility and
creativity that fully enables the usage of an electronical system. For really creative and
targeted idea generation, personal generation and capturing still gives the far best results. We
believe that companies should allow employees to submit ideas in whatever way they please
as long as new ideas keep coming in. The personal channels are very effective to reduce
uncertainty and make it easier to put pieces of information together. The major advantage of
the electronic system is that it allows management to control the entire situation and the
ability to reach out to a vast number of employees. The electronic system will make
submission more transparent and easier to manage. Therefore, we recommend that both
electronic and personal system should be used and co-ordinated. All ideas that are captured by
idea hunters should be registered in the electronic tool.
8
The Ranking “R” is a subjective and has the purpose of highlighting differences. Should not be viewed as
absolute measures.
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8.3.
Idea Screening
Main Question: How should screening be conducted so that companies can select the ideas
with the best chance of becoming a success and kill the losers? - We start by analysing what
“Competence and Information” that screening members require. This is followed by
“Screening Principles” that we believe will guide decision-making.
8.3.1. Required Competence and Information
Lack of information imposes a major problem for screening teams. The lack of information
results in decisions being made on an ad hoc basis, leading to a muddled pipeline. Screening
members need to have a holistic understanding of the overall vision, as mentioned in section
8.1.1 Right and Relevant Knowledge. This gives employees a much better frame of reference
regarding all innovation-related decisions. Another key issue is employee understanding of
screening criteria. The criteria need to be well displayed and communicated so that everybody
involved in front end activities have a clear understanding of what they are. This avoids
confusion and can save a lot of time for screening members. It might also save some
employee disappointment, because they know in advance what demands are put on their
ideas. As mentioned above it is important not to strangle creativity with pre-defined
questions, but communicating screening criteria can help employees shape their idea.
Pipeline Information
As was seen in the Dow case, approximately 75 % of the ideas were in the later stages of the
process, a fact which totally opposes the underlying pipeline statistics. Reinertsen’s (1994)
finding was that 3000 unwritten ideas lead to 125 written, and well-formed ideas, and only
one leads to commercial success. This means that a larger amount of ideas should be found in
the early stages. We feel that this underlying fact is recognised but not well followed, with the
exclusions of ABB Innovisions. Since ABB Innovisions is a rather well structured process,
they have managed to spread this fact, thus giving screening teams better grounds for making
their screening decisions. To increase relevant pipeline information and transparency, the
following measurements have proven to be effective Table 11.
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Measurement
•
Purpose
Number of ideas in each Focuses the screening boards and the entire organisation on what
stage of the pipeline
is practically possible to pursue. We believe that if this measure is
made visible it will increase awareness of the idea situation and
motivate submission. It makes it easier to explain for submitters
why their idea can not be pursued.
•
Time
consumption
for Helps to identify bottlenecks. Organisations can either adjust the
each stage of the pipeline
•
Screening
efficiency
flow with respect to the bottleneck or adjust the bottleneck.
at Ensures that gates have the right flow of ideas and it will give
each gate
screening boards more input to their decisions. It will also help to
identify gates that are overly open or closed.
•
Quality of idea
Screen technological ideas according to novelty of the idea,
economical impact and elegance. This has proven to be a high
motivating factor at ABB Corporate Research. Submitters are
interested in a value judgement on their idea.
•
NPV of pipeline in each This should be conducted very carefully with high cost of capital in
stage
new markets. This would help screening boards to understand the
present situation and enable managers to evaluate risk profile.
Table 11 Pipeline measurements for Screening decisions
If information, of any kind, is to be available, companies have to encourage employees to
report and document projects or else the measurements will be hollow. To assure the
necessary information supply we strongly promote the use of information systems to manage
the front end process. However we still promote the use of all available channels to capture
ideas.
Competence Required
All case companies claimed that they would use external and internal knowledge to fill
eventual knowledge gaps. With exception of ABB Innovisions, we did not see any concrete
examples of this. Since we strongly believe that very limited knowledge can be found on
individual level, we are advocates for a higher degree of knowledge borrowing in the
screening phase. Force the use of one external screening member, at least in later stages. This
will promote the use of external knowledge in general. Screening criteria can be used to guide
the screening members, but is used with much caution by all companies. A too high trust in
screening criteria can create a false sense of safety.
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8.3.2. Screening Principles
Our overall impression is that screening can with success be a systemised activity that will
benefit from having clear principles and guidelines. Our impression is that the principles we
have derived are applicable for all screening boards within larger companies.
Continuity & Transparency. At Tetra Pak we found the lack of screening continuity to be a
major barrier because employees have become wary of the significant difference in
judgements over time. Management has to demonstrate a clearer direction of what kind of
ideas that are promoted and act accordingly for longer periods of time. This relates to both
empirical data (Dow case) and theories (Rehndahl 2001, von Krogh et al 2000) that stress the
importance of trust and stability as a prerequisite for innovation.
Objectivity and Idea Transfer. We believe that objectivity when screening ideas refers to
several aspects. Screening members have to be able to disregard who submitted the idea.
There is a risk of only letting managers’ ideas through in order to stay at good terms with
them. Screening members should not be biased towards any particular part of the
organisation. The experience from ABB was that screening members could favour certain
parts of the organisation thus making resource allocation very inefficient. Davenport and
Prusak (1998) state that the not invented here syndrome is a major barrier in making
knowledge accepted. Our suggestion to resolve this is to enable swift transfer of ideas. Tetra
Pak has addressed this by making it very easy to communicate ideas between units. Tetra Pak
has a matchmaker that reviews all ideas and passes it on to other units, which we believe, is a
very good way of promoting objectivity. If it is very easy to spread ideas, screening members
will be less reluctant to transfer ideas to other units.
Feedback. Feedback in general seems to be a central motivator for the submitters and should
therefore be handled with equal amount of attention from the screening side. Feedback should
be quick, no more than 2 weeks. Feedback should be nice and constructive, that means not to
kill ideas harshly rather encourage new directions and clearly explain the reasons for killing
an idea. This follows the theories developed by von Krogh et al (2000) that harsh judgement
can prevent explicit knowledge from being created from tacit. Since externalisation (tacit →
explicit knowledge) involves a great deal of experimentation and uncertainty, it is central that
the submitter does not risk his/her personal pride by submitting ideas.
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Learning. To make screening effective different screening teams should be able to easily
obtain information regarding ideas from previous gates. The best way to enable this is to let at
least one screening member follow the idea to next screening board. This will make it easier
for each consecutive screening board to quickly understand what the issues are.
“Re-Screening” – Raising accountability. By addressing all these aspects we believe that the
chances of letting the winners through and killing the losers will increase. What we feel as a
fundamental element is to raise accountability of the screening boards, which could be done
by evaluating screening boards on the measurements mentioned above (Table 11). Our
suggestion is for companies to install a group that evaluates and supports the screening
boards: “Re-screeners”. The re-screening board should be aware of the difficulties that
screening boards are faced with and assess performance critically.
8.4.
Idea Building
Main Question: How can the building process be managed to maximise the chances of
creating an idea concept with the highest potential? - We use four areas to cover this stage in
the front end. These are “Composition” that describes how a building team should be built.
“Participation” covers how employees can be promoted to participate. “Idea Lifetime”
covers issues regarding how ideas stay alive for the right amount of time and finally
“Utilisation of Knowledge” which analyse how buildings should manage knowledge in the
most effective way. This is the most difficult and most under-managed part of the front end
process. Even if companies would get a lot of ideas it is in this phase that they really can
make something out of them.
8.4.1. Composition
Composition of building teams was repeatedly mentioned as an important factor for success at
all case companies. We have not included any team building theories in our frame of
reference so we can only summarise and comment the findings from the case studies. A
diverse project team was said to be very important at all companies to enable questioning and
a sort of triangulation of competencies. In our view, a very interesting approach was presented
at Dow, where team members were allowed to individually choose in which building projects
they wanted to participate. This self-screening process increased the odds of well functioning
groups and thus increasing chances of overall success. It was said that employees only picked
the ideas that were most likely to succeed, which resulted in a “pre-screening” by people, who
knew the business best. Each building team should also have an idea mentor, a person with
senior standing that supports the building process. The idea mentor should preferably have a
personal interest in the success of the building, which would facilitate the acquisition of
required resources for the building team.
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Treatment of idea generators. The idea generator is treated similarly at both ABB Innovisions
and Dow. They strive to include the generator until the concept has been build to ensure that
the essence of the idea has been preserved. This follows the lines of Nonaka’s (1994) theory
of knowledge conversion, where he stresses the importance of personal contact for
externalisation. Two solutions seem to apply. Firstly, exclude the generator right after the
concept is defined. Secondly, allow the generator to be along the entire way, but be aware and
deal with the conflicts that can arise between generator and rest of project team. The
experience from Dow suggests that the conflict can be resolved by adapting a scope that fits
all parties.
8.4.2. Participation – What Motivates People?
We identified several barriers in making employees participate in the building phase. Since
building projects often are extra curriculum activities, projects are discouraged from line
management. Line management is always concerned with existing business and are evaluated
on local unit performance. This means that if ideas from other parts of the organisation enter
there will be difficulty, for the new project, in attracting support and funding for these kinds
of activities - conflicting goals arise. Management needs to make the necessary resources
available for building, feasibility tests of concepts and market analysis. What is the use of
getting new ideas if there is no money to try them?
Line managers also risk losing competence if the builders leave the unit to pursue the ideas in
other places. In addition there seems to be very small possibilities to measure the achieved
contribution. Another barrier is the career risk. This is said to be a problem at Dow and ABB
Corporate Research. Employees feel reluctant to join radical building projects due to the
uncertainty of the outcome. It is also difficult to attract cross-functional employees because
this type of R&D activity is regarded to be a career sidetrack.
To make employees be willing to participate we have compiled the following list of activities:
Top-down/bottom-up. The most fundamental aspect is to capture the attention of management
at all levels, which will not come by itself. ABB Innovisions have made vast persuasion
efforts, starting at top management in each country and working downwards, making great
efforts to meet as many managers as possible. The intention should be to create local buy-in at
as many levels as possible. All innovation processes are carried out in a local context initially
and therefore they need to be managed locally. The persuasion can be done both rhetorically
or by including measurements (such as time spent on idea building) on the personal
scorecards on all levels, and making it part of the yearly evaluation. The local buy-in also
concerns flagging early when a building project is coming up. Before accepting any building
work employees should clear it with their line manager and explore the possibilities of getting
time off.
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Team leadership. It was identified at Dow and Tetra Pak that team leadership was central to
gain participation. The team should in early stages gather around the idea and define common
perspectives. According to Zhang and Doll’s research (2001) a common team vision is most
central for navigating a building project. The project kick-off was said to be an underestimated
activity to create a sense of community and importance. Leaders should also defend the
building from outside influences and continuously motivate members. It is most important to
show employees trust and respect their efforts and not take anything for granted. This
includes such simple efforts as flagging early before heavy workloads were handed over.
Attraction. To be able to increase attraction it can be wise to use high-image persons on
certain teams to gain legitimacy and organisational support. Other ways are to make the
building projects visible, by presentations or idea storyboards, so that employees easily can
take part of what is going on and express their interest. If nobody knows what is going on it
will be very difficult to attract any quality members. For enabling this phase there is a strong
need of dedicated people, who are willing to make rapid progress on concept building.
Incentives. To make employees willing to join building projects the company has to give due
incentives (Table 12). In many R&D organisations it is not regarded as a problem since that is
the purpose of their existence, but when they need to attract knowledge from other key
functions there is a need to give higher rewards. As mentioned earlier it is regarded a sidetrack to join such projects.
Incentive
•
Piece of the action
Purpose
ABB Innovisions have showed that this is not the prime motivator,
rather that fixed amounts for deliverables within the project scope
are more appreciated.
•
Career ladder
Make it a part of the overall career to participate in building
projects. Management should say that the chances of promotion,
in any part of the organisation, dramatically increases if they have
conducted R&D based on front end building projects.
•
Visibility
The chance to gain internal visibility is a prime motivator for
employees and therefore they should be allowed to present their
findings as frequently as possible.
Table 12 Incentives for joining idea buildings, 2001
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8.4.3. Idea Life Time – Killing Ideas at the “Right” Time
An issue that we early on identified according to Smith et al (1999) is the difficulty for
companies to kill projects. The reasons are several but our main conception is that it relates to
the fact that:
“People have a hard time to recognise that failure is a part of front end activity”
(Dow employee)
We perceive that companies have difficulties to outlive this, although all our case companies
were aware of it. This creates a climate were employees do their outmost to ensure project
success and become overly risk prone. Indirectly, since so many projects fail, it becomes hard
to attract people since they believe that failure is not good for their career. We have
formulated several principles that will make employees more objective but still willing to
participate in idea buildings.
Support project failures. A pivotal issue is that management has to recognise project failures
and give recognition to those people who kill projects early if they can not identify any
possibility of success. For example Dow has introduced a system where management sends
out a message to all employees, after each project failure and thanks all participants for a job
well done and clearly presents the reasons for the project failures. By ‘rewarding the early
declaration of defeat’ Dow has created a much better understanding for the underlying
principles of front end activity. If employees do not feel this support and recognition
employees will, as long as possible, try to avoid failure and therefore the company will risk
losing a lot of money on hopeless ideas. Our perception is that sometimes the goal of projects
should be revised. Instead of having only idea buildings with focus on developing
applications, some building projects should have the purpose of learning. This would make it
easier for project members to kill at early stages and still feel that success has been reached.
Create Common and Realistic Expectations. Sometimes building projects get too much focus
and funding too early, which creates high pressure to succeed. Instead management and team
members should be more open and realistic with their expectations and early on define what
the expected outcome is. The idea buildings that have focused on minimising scope have also
increased chances of reaching success. Honesty is a word that should be valued high all
through the organisation. ABB Innovision’s solution to keep projects hidden until they have
reached certain stage is not a solution we believe in. What we have seen at both Dow and
Tetra Pak is that a high degree of internal prestige can arise and make knowledge sharing
difficult. Instead we believe in open presentation of results all along the way, although
separating projects physically is a good solution when ideas are conflicting with existing
products in accordance with findings from Tetra Pak.
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Accountability. All companies claimed that this is central for keeping the right mind set. Each
employee should personally be responsible for the decisions that they have made. We believe
that this is a really good thought but it becomes difficult to promote real accountability if the
underlying notion is that: ‘we are only here to succeed’. To increase accountability one
solution could be to hand over building projects (Dow case), which forces employees to
clearly defend their decisions. The actual stage gate process is also much appreciated because
it makes it a lot more natural to become accountable for the decisions. Although some
negative voices have been mentioned regarded a stage gate process we believe the outcome
exceeds the negative aspects by far.
8.4.4. Utilisation of Knowledge
Our understanding of this area has increased during the process of completing the thesis.
Initially we did not regard it as very important but in later stages it has become very clear that
it is central for fast innovation. The main risk for companies which do not address this issue is
that they have to spend a lot of time pursuing knowledge that already exists, either inside the
organisation or externally, or as the following quote suggests:
“A day in the library can save a year in the lab”
(Dow employee)
Accumulated
Knowledge
Learnings
2
1
Time
1.
Forgetting. Not reusing experience.
2.
Learning. Learning from previous
experience, accumulating knowledge.
Project time line Project end
Figure 18 Learning Curve, 2001
Figure 18 sheds light on this issue. At each project end there is the choice of letting the
accumulated knowledge disperse (1) or making it available for other members in the
organisation (2). Too often the first path is chosen, unwillingly many times.
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The learning (Figure 18) that can be drawn will allow each building project to climb higher
on the accumulated knowledge ladder, thus reducing knowledge waste. The benefits seem
obvious and we are convinced that companies have to address this issue. We believe that there
are several barriers for this but the main barrier comes from an inherent feature in most large
organisations, namely the notion that market leading companies are untouchable or ‘we are
the best’ (Chandler & Tellis, 2000). Below we suggest some knowledge principles to follow
to maximise the possibilities of becoming a learning organisation.
R&D Mission. We believe that R&D organisations should spread the message, that innovation
is an activity that should be based on learning from other people. This has to be followed by a
number of enacting principles.
“Steal and Exchange Knowledge with Pride”. All employees should have these kinds of
mottoes in their minds and it is management’s task at all levels to make this happen, because
it will not come naturally. Partnerships should be used to incorporate external and internal
knowledge and make the organisation more adaptive towards external signals.
Visualisation. Employees have difficulties to know what projects are ongoing. At Dow there
exist highly visible idea storyboards that display idea buildings and highlights question marks,
dead ends, and potential directions. A storyboard is a physical board were the team describes
the development as attractively as possible. All ideas should be presented at frequent meetings
to enable the human interaction.
Forums and Channels. Employees need to know where to go to share knowledge (Davenport
& Prusak, 1998) This can be internal idea-rooms, frequent presentations, challenge sessions
(Tetra Pak) or human knowledge carriers, who spread research findings among employees.
Our research indicates that electronic tools are not rich enough to catch employees’ attention
regarding ideas. This makes us believe that relying too much on an electronic system, as an
idea communication tool, is a wrong approach. If tools are to be used they need to be very
easy to navigate and give a clear value. The electronic tools main purpose should be to
increase transparency of the pipeline and help to communicate the first contact with dispersed
islands of knowledge. Another aspect to channels is the need for personal networks, which we
discussed in section 8.1.1 Right and Relevant Knowledge.
Documentation and Post Mortems. One major difficulty of creating learning is that teams do
not document their findings. It is not part of the project and therefore not prioritised. The
different electronic support systems for front end management are often regarded to be too
“heavy” and too cumbersome. At Dow they have decreased focus on the tool and increased
focus on what the main deliverables are. This has improved both quality and speed. However
we see a risk that documentation will suffer and make it difficult to overview findings. We
suggest that teams should be forced to spend at least one day with project documentation and
debriefing all project-members on their experiences.
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Analysis
The insights should be documented in different meta-levels to make them more accessible to
other employees. Another difficulty is that after project terminations, members often leave or
are reorganised, thus making it very difficult to capture their insights. This relates to the
discussion regarding revised project goals (8.4.3).
Training. Our last principle is to train employees in what systems, for knowledge sharing, that
exist and what the benefits are. Our suggestion is to make a stepwise implementation with
small projects that can be used as success cases and then build on a larger scale.
We believe that the task of organisational learning is of such magnitude that companies could
benefit from installing a learning group that can support employees with all different aspects
of learning. ABB Innovisions team help all building groups with knowledge related aspects
such as creating external partnerships, finding right knowledge etc. If employees want to
build knowledge communities or other forums the suggested learning group could support
this. Finally in Table 13 we present measurements that we believe are relevant for improving
the building phase.
Measurement
•
Time spend on building
Purpose
Evaluate employee on the amount of time spend on idea building
will raise the importance of this activity.
•
Number of buildings
Career related measurement to promote the joining of building
projects.
•
Quality Index Metrics
Quick checklist of quality of building projects. On aggregate level it
has proven to increase quality of buildings. (Smith, 1999)
•
Cycle Time
Measures the building-time. At an aggregate level it has increased
awareness of importance of speed in innovation. (Smith, 1999)
•
External Connection
Measure amount of external networks that each person has. This
to focus on external knowledge.
Table 13 Measurements for Building Phase
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Analysis
8.5.
Comparative Analysis
In the following section (Table 14) we have performed a cross-analysis between the cases.
This is a rough overview of what performance level we consider the cases to have. The
grading can not be traced quantitatively; rather it is based on our intuitive value judgement.
Generation
Area
ABB
Tetra Pak
3(5) Good use of
2(5) Low use of
Relevant
presentation, high degree
vision facilitates
vision, low external
Knowledge
of job-rotation, diverse
decision making
knowledge input and
knowledge mix but less of
although perceived gap low job-rotation
guiding vision
to market knowledge
Organisational
3(5) High degree of
4(5) Team awards for
3(5) Low
Climate
management attention
knowledge sharing
organisational
Right
and 4(5) Very clear need
Dow
stability, high
Capturing
management attention
3(5) High degree of
3(5) Rather low
4(5) High degree of
management attention
degree of trust
trust
Incentives and
4(5) High degree of
3(5) Low degree of
2(5) Rather low
Measurements
extrinsic incentives and the
extrinsic awards but
employees express
Right Climate
option to pursue the project good use of intrinsic
wish for a higher
personally
degree of both
extrinsic and intrinsic
Media Channel
5(5) Utilising both personal 3(5) Using idea
2(5) Focusing too
and electronic channel
hunters with success,
highly on electronic
less fortunate with
channel which
electronic systems
employees perceive to
Building
Screening
be overly complicated
Required
5(5) Very good use of
2(5) Low knowledge
4(5) Possibility to gain
Competence &
pipeline information
of pipeline situation
large degree of
Information
facilitates all decisions and
and external
pipeline information,
forcing to use external
knowledge
low use of external
knowledge
knowledge
Screening
4(5) Difficulties with
3(5) Personal
3(5) Low continuity
Principles
objectivity, good
feedback
and feedback, high
Composition
documentation of decision
degree of trust and
raises accountability
objectivity
3(5) Include a mentor
5(5) Self selection
3(5) Including
which enables resource
principle creates
generator is a natural
acquisition
conditions for
part of the process
successful team
Participation
3(5) Uncertainty about
4(5) Put high image
4(5) High degree of
job-security, however
persons on team, ,
involvement and
compensated with high
team leadership focus
enthusiasm although
monetary rewards
and visible of projects
lack of measurements
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Building
Analysis
Idea Life Time
2(5) Project are hidden
5(5) High support of
2(5) High pressure
until late stages which
project failures, stress
and lot of focus on
makes it more difficult to
importance of early
success makes it
get knowledge exchange
failure
difficult to kill projects
early
Utilisation
of 4(5) Innovision and R&D
4(5) Many forums for
2(5) Frequent
Knowledge
are highly perceptive
knowledge sharing,
presentations, low
towards external
high degree of visible
post mortems and
environment and actively
projects
spreading of learning
Generation: 7
Generation: 7
Generation: 5
Capturing: 12
Capturing: 9
Capturing: 8
Screening: 9
Screening: 5
Screening: 7
Building: 12
Building: 18
Building: 11
Total: 38
Total: 39
Total: 31
pursue partnerships
SUM Max 55
Table 14Cross case comparative analysis of Case studies
All companies display high capabilities in different areas. Dow receives very high grading in
the building stage much due to their active work with idea visualisation. Tetra Pak has
received slightly lower overall grading than the others, which is due to the fact that they
haven’t allocated as much resources to the administration of idea management as the others.
Both Dow and ABB have more employees involved in the actual structuring and support of
ideas. All though this is a staff duty we believe it is worth while to increase resources to this
area because the alternative cost of not capturing the next “big” innovation far exceeds the
cost of increasing front end budget.
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Conclusions
9.
Conclusions
In this chapter we will present the identified managerial principles that we consider will
improve the front end of innovation. The conclusions are directly based on the analysis. To
increase the understanding of the principles we recommend the reader to have the analysis
chapter in close reach.
9.1.
Idea generation
9.1.1. Relevant Knowledge Input – “Miniature Enterprise”
A major difficulty for market leading companies is that they become so large and hampered
by bureaucracy that the holistic understanding is lost. Employees fail to get relevant input
regarding external aspects (customers, end-users, and competition) and internal issues
(competitive advantage, supply chain knowledge). Casual effects become very difficult to
assess, leading to ideas without internal or external bearing. To come around this problem
there are several ways of making relevant knowledge available to employees:
♦ Business and Technology Intelligence: Create units with the responsibility of collecting
and spreading internal and external knowledge. Companies should realise that this activity
requires high degree of personal communication.
♦ Communication Networks: Stress the importance of personal networks and “force” jobrotation actively and visualise employees with large networks.
♦ Overall Guidance: By making good use of the vision, the company can create
understanding of the direction where the company strives and make it easier for
employees to make innovation related decisions. Need areas should be presented to
further guide employees.
♦ Diverse Knowledge Mix: Guest speakers, visitors, external experts and customers can
spread knowledge, new ideas and new ways of approaching old issues.
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Conclusions
9.1.2. Generation Climate
Essential enablers for the early stages of innovation are to establish an organisational climate
that supports sharing and creation of knowledge. Companies often fail to recognise the
difficulties associated with this activity. A pivotal aspect is that knowledge will not be given
away without anything in return. It should be regarded as any other asset. Knowledge sharing
clearly displays market-like features. We have identified several principles that will support a
high degree of knowledge sharing and idea generation.
♦ Management attention: Management must be very clear that they perceive knowledge
sharing as central for organisational success.
♦ Knowledge sharing: Measure and reward people who are good at sharing knowledge and
make it a prioritised activity in the organisation by frequently stressing the importance.
♦ Organisational stability: Organisational stability is fundamental for sharing of ideas and
knowledge. Lack of stability creates immediate decrease of sharing of ideas.
♦ Slack time: Employees must have the time to generate ideas and share knowledge.
♦ Conversation: Conversations between employees is an important way of confirming the
existence and content of knowledge, or to create new knowledge. Management must
recognise this and learn how they can better manage their organisation’s conversations.
♦ Team rewards: Knowledge sharing and idea generation is a team effort and should be
recognised as such.
♦ Empowerment: By letting employees take own responsibilities, management promote an
open and creative climate, which is important for idea generation.
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Conclusions
9.2.
Idea Capturing
A large part of this study has covered how to make people participate and actually submit
ideas. If companies want employees to submit ideas, it is our opinion that they have to create
the “Right Climate”, use appropriate “Incentives and Measurements” and finally choose
appropriate “Media Channels”.
9.2.1. Capturing Climate
We have identified two main areas of concern for creating a good capturing climate.
♦ Trust: Employees need to feel trust for the person to whom they submit their idea. Idea
takers need to be trusted persons, so that the submitter knows that they will do their best in
taking care of the idea.
♦ Management attention: For employees to submit ideas it must be a management-priority
area. Management must take every opportunity to communicate the importance of
employee participation and idea submission.
9.2.2. Incentives and Measurements
As mentioned earlier, we feel that the only way companies can expect to successfully capture
ideas is to offer some kind of reward in return. The incentives can be divided into two
different types, intrinsic and extrinsic. The intrinsic rewards are non-monetary and more on a
psychological level while extrinsic rewards are monetary rewards in some form.
Ideas are seldom generated individually. They are created when employees interact and share
knowledge. This is why idea ownership is very important. Management should reward all
employees that have participated to the idea.
We believe that companies can not reward anything if they do not measure it. Measurements
can be made public or put on employees’ scorecards, to promote idea submission.
♦ Intrinsic rewards: We have identified that intrinsic rewards are overall more important
for enabling people to participate in the front end.
♦ Extrinsic rewards: We identified extrinsic rewards as early enablers for making
employees participate. Meaning that first time submitters can be triggered by a small
monetary reward, while more senior employees are more triggered by the intrinsic
rewards.
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Conclusions
9.2.3. Right Choice of Media
In choosing the media for communicating ideas the companies must take some aspects under
consideration. We have chosen to present two different types of systems to communicate
ideas. Electronic systems are web-based tools that allow employees to submit ideas from any
location. Personal systems can be employees that act as idea hunters and actively roam the
organisation and search for ideas.
The personal channels are very effective to reduce uncertainty and make it easier to put pieces
of information together. The major advantage of the electronic system is that it allows
management to control the entire situation and the ability to reach out to a vast number of
employees. The electronic system will make submission more transparent and easier to
manage. Experiences shows that, so far, no company have reached the necessary levels of
trust, feedback, visibility and creativity that fully enables the usage of an electronically
system. Therefore we recommend that both electronic and personal system should be used
and co-ordinated. All ideas that are captured by idea hunters should be registered in the
electronic tool.
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Conclusions
9.3.
Screening
Screening decisions are often performed on an ad hoc basis, which results in difficulty of
controlling where ideas are in the pipeline. Companies risk of having a large number of ideas
in late stages of the pipeline, when it should be the other way around, i.e. a large number of
ideas in the early stages reducing along the pipeline. Screening members are also the direct
interface with idea submitter making it very important to have understanding for what
submitters are wishing.
9.3.1. Required Competence and Information
♦ Pipeline information: There are several measurements that can be used to overview the
pipeline and identify bottlenecks, quality of ideas etc. To provide the information we
recommend that companies use information systems to manage their pipeline.
♦ Competence required: Screening members should have holistic understanding to be able
to evaluate the potential of the idea and they should be willing include judgement from
other people to enable relevant competence.
9.3.2. Screening Principles
♦ Continuity and Transparency: Idea submitters need continuity and transparency for
them to understand what kinds of ideas are needed and how decision are made.
♦ Objectivity and Idea Transfer: Screening members should not be bias towards
particular parts of the organisation. To enable efficient resource allocation companies
should make it very easy to transfer ideas between units.
♦ Feedback: A main trigger for submitters is quick, nice and constructive feedback.
Feedback should take no more than two weeks and no harsh judgement should be given,
instead encourage other directions.
♦ Learning Allow screening members to follow the idea through the pipeline to allow
knowledge transfer to latter screening boards.
♦ Accountability: To make the screening members aware of the importance of all issues we
believe that all screening boards should be evaluated critically in all their decisions by a
independent group “Re-screeners”
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Conclusions
9.4.
Building
Idea building involves many aspects. This is the most difficult and most under-managed part
of the front end process. Even if companies would get a lot of ideas it is in this phase that they
can really make something out of them. A major issue regarding participation in the front end
activities is that idea work is regarded to be extra curriculum activity for many parts of
organisations. This leads to conflicts between line managers and front end activity. Line
managers are today mostly evaluated on performance of existing business and will not
encourage any type of work that they do not perceive to improve local conditions. Therefore
funding is a major aspect in enabling building projects. Management needs to make the
necessary resources available for building new ideas. If management wants employees to
submit ideas they have to have money to fund the projects, otherwise there is no use of asking
for ideas.
Another aspect we have identified as pivotal is the use of knowledge and organisational
learning. Learning refers to the organisational members’ ability to use existing internal and
external knowledge. A common pattern is that companies do not manage to capture and
spread the experience and accumulated knowledge. Therefore much time is lost on pursuing
paths already explored. There is a also a strong need of dedicated people who are willing to
make rapid progress on concept building.
9.4.1. Composition
♦ Idea mentor: Idea buildings should have an mentor or support person within the
organisation and with higher rank. This will make it easier for building projects to gain
organisational resources required.
♦ Idea generators: Keep the idea generator along for the creative phase of the idea building
to preserve the essence and momentum of the idea.
9.4.2. Participation
♦ Top-down bottom up: Make managers from top to bottom understand the importance of
innovation and that employees are allowed to spend time on front end activity. Problems
should be solved at local level since building projects are carried out in local context.
♦ Incentives & Measurements: Include measurements to evaluate how much time is spent
on idea building or publishing other aggregate measurements, with high targets, to
motivate employees to participate. Make participation in idea building project part of
career ladder and give internal visibility to employees who perform the task well.
♦ Team Leadership: Creation of a common team vision in the early stages will motivate
the team and make it more adaptive to the building requirements.
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Conclusions
♦ Attraction: Include high image persons on teams to gain organisational support and
indicating the importance of building. Employees also need to know what projects are
going on. Therefore the use of idea storyboards and frequent idea presentations are
effective ways of making people interested. Employees also need see success cases to se
what building can do for them and the company.
9.4.3. Idea Life Time
♦ Support project failures: Recognise that failure is a part of front end activity and
recognise and reward the early declaration of defeat. This will kill many projects before
too much resources are spent. Clearly identify what the reasons for killing project and
communicating them.
♦ Revise and minimise scope: Revise goals so that some building projects serve the simple
purpose of learning. Buildings should also have small scopes that are feasible.
♦ Create common and realistic expectations: Management should clearly state that
honesty is rewarded regarded project outcome. Do not give too much funding too early to
keep expectations at reasonable level and ensuring that members remain objective.
♦ Accountability: If employees are accountable for their action it will increase the chances
of realistic approach towards the ideas.
9.4.4. Utilisation of Knowledge and Learning
♦ R&D Mission: R&D mission should include a statement regarding organisational
learning, making it a priority of R&D activity. Instead of inventing reinventing the wheel,
use what is there and climb the ladder of accumulated knowledge.
♦ Steal with pride: Install norms that encourage employees to incorporate external
knowledge, avoiding to spend excessive time in the lab doing what has already been done
elsewhere.
♦ Forums and Channels: Make buildings projects visible to the organisation, either by
having idea presentations, idea storyboards or challenge sessions. This will enable
employee to understand issues and contribute with input.
♦ Documentation and Post mortem: Spend one day of building on documenting learning
and making them available for the organisation.
♦ Training: Employees should be educated on how to spread knowledge and contributing
to the learning process, It will not come naturally.
♦ Learning group: To make the utilisation and learning effective we believe that a learning
unit should be founded that supports all employees in creating external networks and
spreading building related information.
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Conclusions
9.5.
Closing Comments
In this section we will give some reflections on our progress of work and suggest future areas
of research.
9.5.1. Alternative Procedures in Conducting the Thesis
Since the case studies came relatively late in the completion it was difficulty for us to do any
large changes in the literature study. However we had received rather unlimited instructions
from Tetra Pak, which made us, spend a lot of time to narrow the research area. It would have
been interesting to put more energy into assessing what best practice really is and to conduct
more case studies. Unfortunately, a fact of life, time is a scares resource. However we feel as
if we used it as efficiently as possible.
9.5.2. Future Research
We believe that the area front end of innovations requires significantly more research. There
are several areas that could be of interest.
♦ We have discovered that very little research is done to connect what kind of incentives
that enables idea capturing.
♦ It would be interesting to investigate if creativity can blossom in a highly process oriented
environment.
♦ How much resource should be spent on internal/external idea capturing?
♦ Is there a shortage of good ideas in a company or is the problem only to access them?
♦ Based on our study, a quantitative study could be performed, studying which managerial
principle that is most attractive to them.
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Interviewees
ABB
Björk, Patrik, ABB Innovisions, Sweden, Västerås
Management Consultant, 23/10-01
Edström, Tomas, ABB Innovisions, Sweden, Västerås
Technology Coordination, 23/10-01
Isberg, Peter, ABB Corporate Research, Sweden, Västerås
Project Leader, 23/10-01
Nyqvist, Jan, ABB Corporate Research, Sweden, Västerås
Project Leader, 23/10-01
Schmidt, Wolfram, ABB Innovisions, Switzerland, Zürich
Manager, 21/11-01
Dow
Badini, Gabriele, Dow Germany, Germany, Rheinmünster
Technical Leader, 20/11-01
Carnevale, Pepe, Dow Europe, Switzerland, Zürich
Global Market Manager, 19/11-01
Huisman, Willem, Dow Europe, Switzerland, Zürich
Project Leader, 19/11-01
Trottier, Emile, Dow Germany, Germany, Rheinmünster
R&D, 20/11-01
Waddington, Simon, Dow Europe, Switzerland, Zürich
New Business Development Leader, 19/11-01
Wrigley, Stephen, Dow Germany, Germany, Rheinmünster
Project Leader, 20/11-01
Davidson, John, Dow Europe, Switzerland, Zürich
Idea Hunter/ Project Leader, 19/11-01
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Tetra Pak
Andersson, Bengt, Tetra Pak R&D, Sweden, Lund
Department manager, CCUPD, 22/11-01
Andrén, Sven, Tetra Pak R&D, Sweden, Lund
Idea Management process owner, various occasions during autumn 2001
Atkins, Mark, Tetra Pak R&D, Sweden, Lund
Director R&D, various occasions during autumn 2001
Forsberg, Jan, Tetra Pak, Sweden, Lund
Patent Information Specialist, 22/11-01
Fröberg, Christer Tetra Pak R&D, Sweden, Lund
former Idea Management process owner, 16/11-01
Harrysson, Göran, Tetra Pak, Sweden, Lund
CTO, various occasions during autumn 2001
Håkansson, Bengt, Tetra Pak R&D, Sweden, Lund
Machine Designer, 23/11-01
Nelke, Margareta, Tetra Pak R&D, Sweden, Lund
Department manager, Business Intelligence, 22/11-01
Nilsson, BG, Tetra Pak, Sweden, Lund
Director, Corporate Technology, various occasions during autumn 2001
Olsson, Gabriel Tetra Pak R&D, Sweden, Lund
Project Manager, various occasions during autumn 2001
Persson, Åke Tetra Pak R&D, Sweden, Lund
Developing Engineer, 23/11-01
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Master Thesis at Linköping Institute of Technology
References
Viberg, Rolf, Thomas Tetra Pak, Sweden, Lund
A man with a lot of thoughts, 22/11-01
Waldner, Thomas Tetra Pak R&D, Sweden, Lund
Designer, various occasions during autumn 2001
Others
Harryson, Sigvald, Booz Allen and Hamilton, Switzerland. Zürich
Consultant and our mentor, various occasions during autumn 2001
Rehndahl, Jan-Erik, Lund Institute of Technology, Lund University, Sweden, Lund
Professor and member of IMIT, 16/11-01
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Master Thesis at Linköping Institute of Technology
Appendix
11. Appendix
11.1. Interview Professor Jan-Erik Rehndahl
In addition to our case studies, we did an interview with Prof. Jan- Eric Rehndahl, who is
active at Lund University and IMIT. His answers are based on several research studies
regarding how R&D departments should be managed.
Innovation Enablers
According to Prof. Rehndahl 70 % of all enablers for innovation are based on leadership. It is
the managers’ responsibility to create an environment that supports innovation. The most
important factors that the manager must strive to create for his/her employees are
accountability, freedom, security and a good working atmosphere. The idea generation is not
a problem itself. If management can create the necessary environment then ideas will be
generated.
By using different levels of innovation (1,2,3) companies can make a clear message what
resources should be allocated to the different kind of projects. Depending on level different
types of leadership, incentives and organisation are required. The levels can be arranged in
accordance to how radical a specific idea is.
Vision can be used to communicate an innovative message in the company. R&D must
understand the direction and to feel part of it otherwise it is useless
The best incentive for a manager to give his/her employees is to show interest and
commitment and give recognition for jobs well done. Prof. Rehndahl claims that these
incentives are more effective then a company’s vision. It could be top management talking
about new inventions at a annual meeting or them letting a researcher present his/her project.
The manager has to follow up and give support. Innovations are not possible to administrate.
They rather require commitment. The leaders and managers in the R&D organisation need to
be strong and stand up for the projects in the department. In many companies there are no
recognition for good technical personnel. This must change. All personnel should be equally
rewarded if they do a good job. This helps to build a united company, instead of envy and
lack of co-operation between departments.
It is central not to put too much stress on the researchers. They prosper in stable and peaceful
environments. Researchers have to be able to operate on longer terms and not being evaluated
on business base. Researchers do not respond well to short-time business goals. There are
other ways to evaluate researchers.
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Appendix
A good way of choosing measurements, according to Prof. Rehndahl, is to allow your
employees to participate in decision-making. Choosing how they should be measured is a
good way of rooting the process into employees’ minds. It is better to have just a few
measurements and focus on them well instead of a wide range that nobody cares about.
Criteria for measuring new ideas could be novelty, value and elegance. The novelty is
newness of the idea; value is future economical value; elegance is just what is says. Bottom
line is, you get what you measure.
If the organisation is too rigid, then send the innovation projects outside. Otherwise keep them
in-house. If the organisation rewards and focuses on incremental innovations, there will be no
radical innovations.
To be able to ensure objectivity it is important to give the idea support, not the person.
Companies need to have a sharing and open climate. Managers and employees should talk
freely about project failures so that no one else will repeat the same mistake again.
For the researchers to develop the right things it is important to have a good link with the
market. It should direct communication between research and customer, via the marketing
department. The message might be disrupted when it passes through too many different
channels. The marketing department interprets what they think is right and then the researcher
interprets it again.
Ideas are created when people interact with each other. It is therefore very important to have
meetings with other departments to create bridges, networks, both formal and informal. This
will make cross-functionality and spreading of knowledge easier in future situations.
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