ENTR 3012 Exam 2, Cabral LSU (Weeks 7&9) Fall 2022

T or F: Given that collaboration and collegiality are so important in the creative context, it is important to hire for "fit" in the existing culture and avoid "creative abrasion"

False- you want healthy creative abrasion

T or F: Rewards should be delivered according to calendar milestones

False- you want accurate and immediate rewards over the progression of milestones in the project life

T or F: Machine Bureaucracies are not well suited for businesses and industries with a lot of tacit knowledge

True- because tacit knowledge cannot be codified for computers and written down in regulations

T or F: Acquisitions are less reversible than alliances

True- you buy a company in an acquisition but an alliance can be dissolved if needed

T or F: Companies are unique and some structures work better for them than others. Companies should find the structure that works best for them and stick with it

False- structures need to change in order to let the company adapt

T or F: An organic company structure has less centralized decision making than simple structures

True- because simple structure has all the power concentrated at the top

Each week I use crowdsourcing to have the class search for articles that we can utilize as course content. Which of the following is true:

a. I want to limit my control of the process

b. I want to maximize idea generation

c. I want to minimize my commitment to any specific idea

d.All of the above

d.All of the above

Entrepreneurship is best supported by:

a. Well defined job roles/tasks

b. Leveraging internal and external hires

c. Hiring individuals interested in specific career paths

d. Rewarding efficiency

e.All of the above

b. Leveraging internal and external hires

General electric has multiple units- GE Healthcare, GE lighting, GE financial, and GE energy. Executives in these units are provided budgets are objectives but have latitude in terms of how they accomplish the goals and arrange the people and processes within the unit. This would be an example of what type of structure?

a. Simple structure

b. Organic

c. Machine bureaucracy

d. Divisional

e.All are equally appropriate

d. Divisional

Which of these does not involve one company buying (at least part of) another company

a. Corporate venture capital

b. Acquisition

c. Equity alliance

d.None of the above

d.None of the above

Which of these is not an aspect of human management resource systems?

a. Performance appraisals

b. Job planning and design

c. Organizational rejuvenation

d. Recruitment

e.All of the above are part of HRMS

c. Organizational rejuvenation

Uncertainty for the project will lead a company to have structures with:

a. Flexible roles

b. Less control

c. Lower levels of commitment

d.All of the above

d.All of the above

However, as uncertainty is resolved we would expect to adopt structures with:

a. Predetermined roles

b. More control

c. Higher levels of commitment

d.All of the above

d.All of the above

Five HRM categories

Job Planning and Design

Recruitment and Selection

Training and Development

Performance Appraisals

Compensation and Reward

Job planning and design

§ This considered what employees do and the freedom they have to do it

§ Broadly defined jobs but some direction works best

§Emphasize what you do, not how you do it

Recruitment and Selection

§ Considers who is hired and how they are found

§ Leveraging both internal and external candidates

§Seek out candidates that are interested in broad or multiple career paths

Training and Development

§ Considers how important skills are learned and reinforced

§ Emphasize generic skills over specific and ongoing development and investment; make investment at the individual level

§Training on opportunity recognition

Performance Appraisals

§ Considers how employees are guided and how activities improved

§ Balance individual and group outcomes; evaluations occur incrementally at milestones across the project life cycles; it will be subjective

§effectiveness vs efficiency; long term orientation; be as explicit as possible

Compensation and Reward

§ Considers how employees are incentivized to behave a certain way and/or remain with company

§ Want to make sure you're rewarding your desired activity or behaviors

· Talking the talk vs. walking the walk

§ Reward both individual and group outcomes; incremental rewards

Timing of rewards

-At milestones and incrementally over the course of the project

-Immediate and visible

-The entr manager gets the team through the red tape, empowers others and helps them develop new skills

-Key concern is whether and how you're going to identify and improve it

effectiveness vs efficiancy

effectiveness: the speed at which the company's activities convert to business results.

efficiency: how well a company turns resources like time, people and money into activities that serve the business.

non-financial rewards

Promotion, benefits/perks, choose projects, parking spot, take the rest of the day off, plaque presentation...immediate visible low cost

creative abrasion

-When people share similar background, passion, values, and assumptions it easier to communicate and build commitment, but this can lead to group thinking

-You don't want to compromise for the sake of compromising or "watered down" ideas so that everyone is happy

-Management of this creative abrasion is an art and is very tough

Creative abrasion is the facilitating of arguments to get ideas

-You need to have a culture that facilitates healthy disagreement

-Encourage friction but keep it civil and professional

-You don't want to have a clear winner, A vs B

creative abrasion: the best ideas usually win:

-Put attention on key assumptions or problems

-Requires on the spot problem solving

-Gets everyone engaged, must choose a side

company structure

-Formal patterns in how people/jobs are grouped and activities of people/functions are linked

-A deliberate decision about structure can be a source of sustained competitive advantage

-How a company organizes people and tasks

-It is not only about who reports to who it is about information (how it is transmitted, shared, and direction) and what people do

Company structure types

Simple Structure

Machine Bureaucracy

Organic

Divisional

Company structure types: Simple Structure

-Informal roles/rules with minimal specialization (everyone does any job)

-Coordination via direct supervision

-Strategy/power concentrated at the "top"

Company structure types: Machine Bureaucracy

-Mechanical and rigid

-Heavy emphasis on rules and specialization

-TMT focuses on workflow processes

Company structure types: Organic

-Limited hierarchy and flexible structure

-Specialists assemble in cross functional teams

-Emphasis on communication on decentralized decision making

Company structure types: Divisional

-Self-contained profit centers

-Variation in structure between centers

-Decision making delegated to the sub-unit

How/why company structure changes overtime

-The correct structure varies depending on the size, age, products, etc

-Implies that the appropriate structure is not static, but rather changes over time

~~External considerations~~

-Hostile environment organic structure

-Predicable environment mechanistic

-Internal consideration

-Want to align structure with the phase related to requirements of the innovation process

How/when does company structure hinders or supports entrepreneurship

-Structure helps people specialize (differentiation), coordinate work (integration), the balancing act is doing both of these at once

-Structural decisions impact the organization's

Speed, adaptability, flexibility, innovation, aggressiveness

How/why company structure can be a source of sustained competitive advantage

if you have the right company structure and using it in a way no one else has thought of yet, you are ahead of your competition

differentiation vs integration

-Differentiation is when people specialize

-Integration is when people coordinate work

When businesses give autonomy and power to each of their divisions and departments, the result is differentiation, in which each section develops its own cultures and methods. When a company brings its separate parts together under one leader or a single mission, the business undergoes integration.

Cycling

the ability to switch back and forth between effective entrepreneurial efforts and efficiency gains through standardization and bureaucracy

3 channels for new product development

Ray of Light Projects

Emerging Potential

Mainstream development

channels for new product development: ray of light projects

-Concerned with formulating concept or value prop

-Exploratory research and intrinsic motivation

-No formal budget -- be clever to acquire resources

-Goal: business concept you present to management they can reject, defer or move into one of the other two categories

channels for new product development: emerging potential

-Projects that have passed some sort of review committee

-Provides small seed capital to engage in formal market search and concept refinement

-Champion assigned (20-30%) of the time

-Goal- formal business plan for directors

channels for new product development: mainstream development

-Products, services, processes have been identified/recognized as priority by top MGMT

-Formal budget and evaluation metrics

-Formal new venture and/or cross functional team assigned

-Goal- major product/service/process launch

3 channels for new product development in action

-Can serve as gate process one can develop into another

-Encourages a portfolio approach (recognizing that there might not be one single fiber, material, or program that meets all requirements or business needs, and that a company's selection might change over time) to innovation

· Different risk, resource, and stage profiles

· ROL and EP approaches provides flexibility and wider engagement

-Establishes ENTR as company wide function

Operational relatedness & Strategic importance

-Operational relatedness: how much does the product or service relate to or rely on what the company is already doing

-Answers: can the company actually do it?

-Strategic Importance: should the company do it

-Will it improve competitiveness

-Result in further differentiation from competitors

-Is project in an area of stated importance

Make sure you understand the intuition behind slide 23 of Week 7 Tues ppt

-You want more control over the development of a project when there's higher strategic importance

-Relatedness has implications for efficiency and effectiveness in managing existing operations and ENT initiatives concurrently

-Implication of framework is that unique aspects of ENT initiative must be considered, can not use one size fits all approach.

PARC

-Xerox Palo Alto Research Center established in 1970

-Goal is to help Xerox become the "architecture of information"

-Why this location? Away from political influence of current businesses -- This becomes an interesting nuance to keep in mind as story unfolds

-Remarkably successful; became the foundation of many modern technologies

-Unfortunately, XeroX did not capture most of the value that was created

-Xerox offspring exceed the value of the parent company hundreds of times

-Ideas went where? Incorporated into XeroX, spun out into own companies while XeroX maintained some ownership, people left and started their own companies (spawning) or ideas were leveraged by other companies (spillover)

-Blame it on the closed innovation paradigm

Difference between R&D

-Research is the basic science to finding what is something new and not knowing what it could be used for at first

-Development is the ability to transform it into something profitable

-Often not aligned

Closed Innovation Paradigm: how it works

-Every step from idea generation to getting that final product into a customer's hands is done within the organization

-On the one hand this high level of integration and control can stifle competition and firms get really good at doing "their thing"

Closed Innovation Paradigm: key tradeoffs

-little competition monopoly power

-they must do everything

^^^

-its not clear what can jolt them from trajectories

-existing business vs new business

deconstruction

-Startups "deconstructed" Xerox's vertical integration and found best use for individual components and steps

Erosion factors of Closed Innovation paradigm

-Employee skills and mobility

Public policy creates more capable "input"

GI bill and push to educate nation; "brain gain" pro immigration

Workforce becomes more mobile and expensive

Job hopping to better pay; can bring entire teams; "hire" experience

-Venture Capital

Provides cash to startups in exchange for ownership positions

Aligns risk and reward through strong incitive

Provide $ needed to recruit key talent to the startup

-Idea can no longer "sit on the shelf" because there are viable exit options

-Influx of talent and financing meaning capable supply chain members and complements emerge

-Specialization and efficiencies quicker route to market than go it alone approach

Market and technical uncertainty

-Market uncertainty: what is the best market application of the technology

-Technological uncertainty: how do we get a technology to work for a given market

"relatively" easily to be resolved; feedback from experiments and customers

-When innovating, we face challenges related to both technological uncertainty and market uncertainty

-How can existing customers or employees answer questions about an unrelated or unknown market?

Market share: How/which customers can help you resolve

-Customers were able to help you identify and ask your customers how it should/could work; resolve technical uncertainties

Benefits to Open Innovation (three categories)

pipeline benefits

process benefits

economic benefits

Benefits to Open Innovation: Pipeline Benefits

-New idea infusion- not how complements our discussion about HRM and structures

-Relationship building

-Portfolio approach to innovation

Benefits to Open Innovation: Process Benefits

-Introduces healthy friction between research and development function

-Can no longer sit on ideas: exit routs exist

-Forces development to think outside the box and be ok with cannibalization or else the opportunity to leave

Benefits to Open Innovation: Economic Benefits

-Combining forces

-Cheaper: why reinvent (likely inferior) wheel...can learn from others

-Parties can specialize in their unique strengths; find opportunites outside collab

Inside out vs Outside in pathways

-Inside out: an approach to marketing and business that focuses primarily on the capabilities and strengths within the organization, such as effective protocols, efficient processes and a talented workforce

-Outside in: instead guided by the belief that customer value creation is the key to success

-Valuable ideas come from and go to the market from inside or outside the organization

-External ideas/paths to market are equally legitimate and important as internal ones and must adopt structures and capabilities that can leverage these external pathways and knowledge

-Traditional path inside to market no extras

-Inside out inside big corps to startups

-Outside in startups to inside big corps

-From other established corps into another

Role of Internal R&D in Open Innovation

-Still responsible for idea discovery, evaluation, and exploitation

-Identify and understand a variety of tech outside

-Envision how to integrate promising opportunities into new systems and architectures...develop the "missing pieces"

-Internal R & D also holds an important role in testing, evaluating and determining the most appropriate ways bring diverse technology together (architecture)

Architecture

-Understanding how the whole system works together and what each part "can do" requires lots of data points both from internal and external sources

-Determining architecture helps alleviate interdependency pain points

Balancing: "acceptable" camera vs battery life

Substituting: 3G Wi-Fi to save battery

Complementing: wireless charging capabilities

Role of IP in Open Innovation

-Legally intellectual property protection (IPP) gives the owner exclusive use discoveries

-In open innovation, it is a currency for sharing/exploiting discoveries across firm boundaries

-As a result, IP management becomes a strategic function, not one relegated exclusively to the legal department