Chapter 12: Managing Innovation & Fostering Corporate Entrepreneurship

What is the definition of managing innovation?

involves the transformation of organizational processes, creation of new and commercially viable products and services

It requires new knowledge:

-New technology

-Experiment results

-Creative ideas

-Competitor info

What are the types of innovation?

-Product innovation

-Process innovation

-Radical innovation

-Incremental innovation

-Sustaining innovations

-Disruptive innovations

What is product innovation?

creates new product designs

applies technology to develop new products for end-users

commonly occurring during the early stages of an industry's life cycle

Associated with a differentiation strategy

What is process innovation?

improves the efficiency of organizational processes

enhances materials utilization, shortens cycle time, and increases quality

typically seen in later stages of an industry's lifecycle

Associated with overall cost leadership strategies

What characterizes radical innovation?

involves major departures from existing practices

often due to technological changes

can be highly disruptive

transforming or revolutionizing entire industries

What is incremental innovation?

involves making small improvements in products and processes

can enhance existing practices

can create evolutionary applications of earlier innovations; provide new capabilities

What are sustaining innovations?

extend sales in existing markets

enable new products or services to be sold at higher margins (i.e., internet)

May be incremental (small changes or improvements) radical innovations (big/ bold new ideas)

What are disruptive innovations?

overturn markets with new approaches to meeting customer needs

are typically technologically simpler and less sophisticated

appeal to less demanding customers

Take time to take effect

What is the difference between incremental and preemptive launches?

An incremental launch is safer, uses fewer resources, and tests the market but risks credibility and invites competition; a large launch costs more but can block competitors

How is the pace of incremental and radical innovation managed differently?

Incremental takes 6 months to 2 years, with set goals and deadlines

Radical takes 10+ years, with open experiments and mistakes. Time pacing helps control the process

What is corporate entrepreneurship?

means starting new ventures and renewing strategy from within (intrapreneuring)

It depends on Supportive culture + leadership

Good systems + structures

Team use

Product/service + tech level focus

Clear innovation goals

What are focused approaches to corporate entrepreneurship?

Create an autonomous venturing team

Free team members from existing norms to encourage creativity

Isolate group from mainstream operations

Use new venture groups

Create business incubators (offer resources like space, mentoring, and funding)

New venture groups

Semi-autonomous units with an informal structure

Innovate and experiment

Coordinate with other corporate divisions

Identify potential venture partners

Gather resources and launch the venture

Business incubators (hatch new businesses)

Operate independently

Provide funding, physical space, business services, monitoring, networking

What are dispersed approaches to corporate entrepreneurship?

Spread entrepreneurship throughout the firm

Change is a core capability

Stakeholders bring new opportunities

3 key aspects:

Entrepreneurial culture focused on change

Resources for entrepreneurial activities

Product champions to support projects from start to finish

Entrepreneurial culture exists when?

Search for opportunities is throughout the organization

Every activity is seen as a competitive advantage

Top leaders support programs and bottom-up ideas

Encourages:

Innovation,

Risk-taking,

Search for new opportunities

What role do product champions play in corporate entrepreneurship?

Bring ideas forward

Identify market opportunities

Find resources for the venture

Promote the concept to upper management

2 critical project stages:

Project definition - justifying the opportunity

Project impetus - supporting development

What are exit champions?

help avoid costly defeats by:

-Question project viability

-Gather data to reduce uncertainty

-Build a case for ending projects

-Reassert decision-making criteria

-Risk status by opposing popular projects

-Save company finances and reputation

What is entrepreneurial orientation?

-Strategy for identifying and launching new ventures

-Focus on entrepreneurship

-Reflected in processes and culture

-Influences decision-making across the firm

An entrepreneurial orientation includes the dimensions of?

-Autonomy

-Innovativeness

-Proactiveness

-Competitive aggressiveness

-Risk taking

What does autonomy in entrepreneurial orientation mean?

refers to the willingness to act independently to pursue entrepreneurial opportunities

-Independent work groups for new ideas

-Structures that foster creativity and flexibility

Problems:

-Duplication of effort

-Wasting resources

How does innovativeness manifest in a firm?

refers to the efforts to find new opportunities and solutions

Promoted by:

-Fostering creativity and experimentation

-Investing in reach & development

-Encouraging and rewarding innovation

Problems:

-Waste of resources if no results

-Investment may not pay off

What is proactiveness in the context of entrepreneurial orientation?

refers to the efforts to seize new opportunities

-Identify future customer needs

-Act before competitors

Problems:

-First movers may fail

-Customers may resist change

What does competitive aggressiveness entail?

refers to the efforts to outperform rivals

-Enter markets with lower prices

-Copy successful business models

Problems:

-Can hurt reputation

-May be too aggressive toward competition

What does risk-taking mean in entrepreneurial orientation?

refers to the willingness to act boldly without knowing outcomes

-Know firm's risk appetite (business, financial, personal)

-Thoroughly evaluate new opportunities

Problems:

-Poor research

-Failure to reduce uncertainty