Innovation, R&D and Business functions

Resources

• Resources → All assets, organizational processes, firm attributes controlled by a firm that enable the firm to implement strategies that

• improve its efficiency and effectiveness (Barney, 2001)

  • Physical: Buildings, equipment, tools, weapons, etc.

  • Financial: Cash, budget commitments, etc.

  • Technological: Computers, software, databases, communications systems, etc.

  • Human: Physical, intellectual, emotional, etc.

  • Social: Relationships, networks, trust, norms, reputation, etc.

  • Organizational: Procedures, structures, management know-how, etc.

RBV and Competitive Advantage

• Resource Based View → Resources as key to superior firm performance

• VRIN → For resources to provide sustainable competitive advantage, they should be Valuable, Rare, Inimitable, Non-substitutable

Routines and Capabilities

• Routines

  • Particular ways of behaving, as a result of repetition and reinforcement

  • communicating vision and purpose

  • recognizing others

  • modeling positivity and resilience

  • empowering others

  • What makes an organization different from another in how they carry out the same basic activity How company does it?

• Capabilities

  • The capacity to deploy a combination of resources through collective organizational routines to achieve goals

  • What a company does? (e.g., inspiring leadership; agility and speed; customer focus; etc)

Dynamic Capabilities

• Dynamic Capabilities → A firm’s ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments (Teece et al., 1997, p. 516)

• Dynamic → Shifting character of the environment

• Capabilities →Skills, processes, and routines that allow it to coordinate and deploy resources effectively

• Sensing, Seizing, Reconfiguring

• Examples: Netflix, iphone

Core Competencies

• Resources and capabilities that comprise the strategic advantages of a business (Prahalad & Hamel, 1994) – What the company does best?

• McDonald’s has standardization. It serves nine million pounds of French fries every day, and every one of them has precisely the same taste and texture

• Apple has style. The beauty of its devices gives them an edge over its many competitors

• Coca-Cola has brand power. Its globally recognized brand and secret formula create customer loyalty across generations

Hierarchical Classification

People

• Human capital meets the VRIN criteria?

• It refers to the skills and abilities of individuals or the stock of knowledge within an organization (Cabrera & Cabrera, 2005)

• “Innovation has nothing to do with how many R&D dollars you have… it’s not about money. It’s about the people you have, how you’re led, and how much you get it.”

Why Practices?

Best Practices or Best Fit?

• Universalistic perspective → “Best practices” contribute to performance regardless of the strategic goals of the organization -What practices work best for all firms?

• Contingent perspective → Firms need to adapt their strategies according to the business environment - What practices work best for this firm in this situation?

• How does a practice fall into each category? Examples?

• Imagine you run a fast-growing AI startup and a 200-year-old family-owned brewery. Would you use the same recruitment and performance management practices for both?

3 Phases of Employment Management

• Entry → Manage the entry of new employees, planning, job design

• Performance → Manage employee performance, ensure that performance remains at the desired levels

• Exit → High turnover rates are not favorable

Best Practices

Recruitment and Selection

Recruitment

• Depends on job type, specialization and hierarchy

• Internal and External recruiting

• Internal recruiting is a common practice in promotions

• Company site, referrals, job boards, campus recruiting, etc.

• Inbound/Outbound recruiting

Selection

• Once candidates are found, selection starts

• Interviews (behavioral, stress, competency-based, groups etc.)

• Tests (personality, IQ, skills assessment, etc.)

• Gamification strengthens employer branding

High-Tech Recruiting and Selection

• Tech talent shortage

• Focus on employee referrals

• Skill-based and portfolio hiring

• Investment in employer brand and candidate experience

• Interviewer training

• Performance driven recruiting culture (i.e., KPIs)

• AI & automation in recruitment

Performance Management

• “Continuous process of identifying, measuring, and developing the performance of individuals and teams and aligning performance with the strategic goals of the organization” (Aguinis, 2009b, p. 2)

• Formal and informal process

• Objective and subjective measures

• Multiple evaluation sources (e.g., 360)

• Biases (e.g., Halo/horns effect, recency)

High-Tech PM

• Continuous feedback loops

• Agile performance reviews

• Peer & 360° Feedback Systems

• Innovation and creativity indicators

• Focus on team-level outputs

• KPIs and Metrics (e.g., time to code)

Training and Development

• Investment or cost?

• On-boarding, promotional, continuous

• Knowledge, skills, attitudes – upskilling vs reskilling

• On the job

  • coaching

  • mentoring

  • job rotation

  • employee relations

  • internship

• Off the job

  • case studies

  • simulations

  • role playing

  • lectures-seminars

  • business games

High-Tech Training

• Hard/soft skills training – ‘writing a code is not enough’

• Focus on speed, flexibility and collaboration

• Microlearning

• Self-paced

• Emphasis on managers

• Metrics (e.g., user rate, dropout rate)

Compensation and Rewards

Financial

• Monetary and non-monetary rewards

• Employee stock options plan - equity

• Benefits

Non-monetary

• Recognition

• Social rewards

• Non-monetary benefits

• E-compensation systems decrease costs, errors, and time (Dulebohn & Marler, 2005)

• Employee self-service systems (ESS)

AI Applications in HRM

• AI applications

  • HR/workforce analytics

  • HR decision making

  • Recruiting

  • Objective appraisal

  • Data-driven pay

• AI-powered sourcing and screening

• Chatbots answer candidate queries, schedule interviews

• AI recommends personalized training modules for each employee

• Auto-generating job descriptions based on organizational templates

• Automating payroll calculations

• Internal AI job boards auto-matching employees to vacancies

• AI tracks productivity metrics and provides dashboards

• Predictive models flag employees at risk of leaving

• Collective intelligence
  AI-HI working together

• AI employment and skills

  • Realization skills

  • Utilization skills

  • Maintenance skills

• Barriers to adoption

  • Ethical constraints

  • Privacy concerns

  • Data quality, etc

• Augmentation vs Automation

Innovation Systems

• System → A set of interrelated components working together for a common purpose

• Innovation systems → Structured networks where interdependent actors collaborate to create and apply knowledge

• Components/ actors: Firms, universities, public agencies

• Collaboration: Links between components, feedback

• Institutions: Rules which regulate the interactions

• E.g: Through LEGO Ideas, fans submit designs, and winning ones become real products LEGO + fans + toy designers + licensing partners (e.g., Disney, Star Wars) form an innovation system

Types of Innovation Systems

• National → A network of institutions, actors, and relationships within a country that together create, diffuse, and apply new knowledge and technology

• Regional → The same idea, but at the level of a region instead of a whole country - the local network of firms, universities, and government working together to innovate

• Global → Innovation increasingly happens through networks that cross national borders

Open Innovation

• A means to value co-creation (Chesbrough, 2003)

• It is a business management model for innovation that promotes collaboration with people and organizations outside the company

• Organization doesn’t just rely on its own internal knowledge, but also uses multiple external sources to drive innovation

Open vs Closed Innovation

Why Open Innovation?

• Reduce costs of R&D and market entry

• Reduce risk by sharing it with partners

• Reduce time to develop and launch products

• Promote shared learning & collaboration

• Access external talent and ideas

• Enter new markets faster

• Spark new business models

• Increase in sales

• Brand awareness

Open Innovation Challenges

Inside-out and Outside-in

• Outside-in → The normal focus of open innovation process, where a focal company brings in third parties to support an innovation process

• Inside-out → Where a focal company decides to let go of some of its innovation projects and allow outside companies or individuals to exploit this in-house work

Strategic Alliances

Cooperative agreement between two or more organizations that remain independent while working collaboratively to achieve mutual goals

Strategic Alliance and Venture

Crowdsourcing

• Individual, organization, or company solicits contributions from a large, diverse, and often online group through an open call

• The crowd

  • Participants who contribute to completing the crowdsourced task

• The crowdsourced task

  • The activity assigned to the crowd by the crowdsourcer

• The crowdsourcer

  • The individual or organization initiating the crowdsourcing effort

• The crowdsourcing platform

  • The intermediary between the crowdsourcer and the crowd

• User innovation and Co-creation

Licensing

• A company allows others to use its intellectual property (IP), brand, technology, or design in exchange for fees or royalties

• Why companies use licensing:

  • Earn revenue from existing IP

  • Expand brand reach without high costs

  • Enter new markets quickly through local partners

Outsourcing

• An agreement in which one company hires another company to be responsible for a planned or existing activity that is or could be done internally, and sometimes involves transferring employees and assets from one firm to another

• Why companies outsource:

  • Reduce costs

  • Access specialized skills

  • Focus on core business

  • Increase speed and flexibility

Resource Based View of the firm?

Resources

• All assets, capabilities, organizational processes, firm attributes, information, knowledge, etc. controlled by a firm that enable the firm to conceive of and implement strategies that improve its efficiency and effectiveness’ (Barney 1991: 101)

• Three types: Physical, Human and Organizational

Competitive Advantage

• When a firm is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors’ (Barney 1991: 102).

• Resources should Valuable, Rare, Inimitable, Non-substitutable

What is a network?

• A set of actors connected by ties

• Actors/Nodes

  • Individuals

  • Teams, organizations, etc.

• Ties/Links

  • Knowledge, trust, team, sit by, dislike, etc.

  • Alliance, customer, investment, et

Uncovering networks in an organization

• formal

• informal

• Individuals within a firm

The strength of weak ties

It is the people with whom we are the least connected who offer us the most opportunities.

R&D and innovation funnel

Open innovation ←→ closed

R&D Intensity

• Refers to the ratio of R&D expenditure relative to total revenues , directly influences the volume and quality of ideas entering the funnel.

• Driven by industry-specific factors.

• Higher intensity = more allocated resources.

• Risks of R&D Investment

  • Overinvestment drains resources needlessly.

  • Underinvestment limits innovation outputs.

  • Misallocation delays innovation cycles.

R&D short term long term

Common Causes of R&D Delays

Intra-organizational

• poor project management practices

• insufficient human resources

• weak planning and scheduling processes

Extra-organisational

• market and regulatory conditions

• supply chain and contractor issues

• economic factors

Intellectual Property (IP) and innovation

• IP grants legal rights to protect innovations.

• Includes patents, trademarks, copyrights, trade secrets.

• Secures innovations and supports firm strategy.

• Creates barriers against competitor entry.

Project and portfolio management principles applied to innovation

Project Management

• Identifying requirements

• Establishing clear and achievable objectives

• Balance triple constraint of scope (what will be achieved), time (how long it will take) and cost (how much it will cost)

• Adapting to expectations of stakeholders (later addition)

Types of Projects

• Complicated → Many different activities need to be completed but
  in general know in advance what needs to be done and how long it
  will take

• Complex → Not even clear what activities need to be done (unknowables), how long each will take, and what implications are
  following completion of a particular activity

Types of Uncertainty

• Technical → How to develop the science for a particular project?

• Market → How will the market respond?

• Resource → Time, people, money needed for the project?

• Organizational → Out-sourcing some parts; co-locating a team?

Project Liminality, Liminal Space

• Temporality → People are team members for a limited time period only

• Ambiguity → Liminal space is a risky place with opportunities to
  create something truly novel

• Freedom → People are free from structural and institutional
  constraints and obligations

• Community → You share the experience with your team members
  only. It can create a divide with those ‘on the outside’

What is a reason why projects may be effective ways to organize innovation processes?

Projects enable organizations to be more flexible and have consistent communication.

Projects Not Always The Answer

• Outcome of projects not always easily accepted by those who have
  not been involved in a particular project

• Project management seems especially difficult in contexts of
  complexity in science, technology or regulatory environment

• Project management methodologies still have a symbolic role (to
  legitimize and indicate progress)

Agile method

• While traditional project planning (sometimes described as waterfall method) may be difficult in complex and even complicated projects.

• New methods have been developed to try and take account of the uncertainty – agile methods.

• Many different variants (e.g., Scrum, Kanban) of agile but all share same idea.

Definition of Business Intelligence (BI)

BI refers to the processes, technologies and tools used to transform raw data into meaningful insights. It plays a crucial role in decision-making by offering a real-time, comprehensive view of business operations. BI systems aggregate data from diverse sources, such as internal databases, customer interactions and external market data, to uncover patterns and trends.

Business intelligence in innovation management

• What motivates people (see movie on Brightspace)

• What is motivation?
  Motivation (from Latin movere = to move) is a major
  determinant of our behavior;
  Motives may be innate (drives) or acquired (learned)
  = dispositions vs. situational factors

• gold collar workers

• What Motivates people?

  • Autonomy

  • Mastery

  • Purpose

Leadership

• Leadership is defined as the process by which an individual influences others in ways that help attain group or organizational goals

• What makes leadership an elusive concept?

  1. Leadership is primarily in the eye of the beholder.

  2. It is easier to believe in leadership than to proof it.

  3. There is no denying the fact that we have a tendency to
     overestimate the importance of leaders.

  4. Unfortunately, there are not many good examples of
     leadership in practice

Gold collar workers

Highly trained professionals, specialized engineers are assets that are not only hard to obtain and difficult to keep but also hard to manage in today’s distributed international work environments