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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

1.1. BACKGROUND - INNOVATION 1 1.2. PROBLEM AREA & REFINEMENT 2 1.3. MAIN QUESTIONS 3 1.4. PURPOSE STATEMENT 3 1.5. LIMITATIONS 4 1.6. DISPOSITION 5

2. IMPORTANCE OF INNOVATION 7

2.1. RADICAL INNOVATION (RI) 7 2.2. THE FUZZY FRONT END OF INNOVATION 12

3. PROJECT-SPECIFIC ELEMENTS 18

3.1. IDEA GENERATION AND CAPTURING 18 3.2. SCREENING 20 3.3. CONCEPT BUILDING 23

4. FOUNDATION ELEMENTS 26

4.1. CORPORATE VISION 26 4.2. COMMUNICATION NETWORKS 30 4.3. MEASUREMENTS AND INCENTIVES 40 4.4. ORGANISATIONAL CULTURE AND NORMS 44

5. RESEARCH QUESTION 50

5.1. GENERAL OUTLOOK 50 5.2. CORPORATE VISION AND PRODUCT STRATEGY 50 5.3. COMMUNICATION NETWORKS – KNOWLEDGE SHARING 51 5.4. INCENTIVES AND MEASUREMENTS 53

6. METHODOLOGY 56

6.1. INTRODUCTION 56 6.2. PERSPECTIVES ON METHODOLOGY 56 6.3. PROCEDURE OF WORK AND RESEARCH DESIGN 62

7. CASE STUDIES 70

7.1. ABB 70 7.2. DOW CHEMICAL 86 7.3. TETRA PAK 97

8. ANALYSIS 115

8.1. IDEA GENERATION 115 8.2. IDEA CAPTURING 119 8.3. IDEA SCREENING 126 8.4. IDEA BUILDING 129 8.5. COMPARATIVE ANALYSIS 136

9. CONCLUSIONS 138

9.1. IDEA GENERATION 138 9.2. IDEA CAPTURING 140 9.3. SCREENING 142 9.4. BUILDING 143 9.5. CLOSING COMMENTS 145

10. REFERENCES 146

BOOKS 146 ARTICLES 148 INTERNAL REFERENCES 150 INTERVIEWEES 151

11. APPENDIX 154

11.1. INTERVIEW PROFESSOR JAN-ERIK REHNDAHL 154

Master Thesis at Linköping Institute of Technology

Introduction

1

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.


Introduction

2

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.


Introduction

3

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.


Introduction

4

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.


Introduction

5

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.

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.

Front End of Innovation

Generation Screening Building

VisionIncentives Communication Networks

4. Foundation ElementsUnderlying mechanismsand management tools

3. Project Specific ElementsWhat are the early

stages of innovation?

2. Importance of InnovationWhy should companies

pursue innovation?

5. Research QuestionsHow can the front end ofinnovation be managed

more effectively?

7. Case StudiesHow do ABB, Dow and

Tetra Pak performfront end of innovation?

8,9 Analysis & ConclusionsRecommendations for

improvement of the front end

Culture & Norms


Introduction

6

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


Importance of Innovation

7

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).



8

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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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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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.

Benefits /dollars

Time

New Technology (T2)

Existing Technology (T1)

a

b

Technological breakthrough

Radical innovation c

Market breakthrough



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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.

0

1

2

3

4

5

High Medium Low

Companies' degree of innovativeness

Perf

orm

ance

leve

l

Front End of Innovation (FEI)New Product Development (NPD)



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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.

Figure 4 The entire innovation process, three stages (adapted from Koen et al, 2001, page 51)

Opportunity Identification

Opportunity Identification

OpportunityAnalysis

OpportunityAnalysis

Technology Development

ConceptTechnology

DevelopmentIdea

Genisis

Idea Genesis

Idea Selection

Idea Selection

Engine

Front End of Innovation (FEI)

New ProductDevelopment (NPD) Commercialization

The innovation process



13

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.

3Air Products, Akzo Nobel, BOC, DuPont, Exxon, Henkel, Mobil and Uniroyal Chemical



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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?




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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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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.

Figure 5 Building blocks of front end of innovation (adapted from Khurana & Rosenthal, 1997, page 105)

New ProductDevelopment

Incentives

Corporate VisionProduct Strategy

CommunicationNetworks

Culture, Norms

Project Specific Elements

Foundation Elements

Idea Generation and CapturingPreliminary opportunity identification

Concept buildingProduct and Concept definition and project planning

ScreeningGo/No-go decision

ScreeningGo/No-go decision



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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.


Project-Specific Elements

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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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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 decision-making. 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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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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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.”


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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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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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 concept-building 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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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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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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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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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 well-recognised 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.

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.

Socialisation

Externalisation

Combination

Internalisation

Tacit Knowledge Explicit Knowledge

Tacit

Knowledge

Explicit

Knowledge

From

To


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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).

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.

Effective Communication

Richness of media

Complexity

of task

Face to face

Video

Telefon

E-mail

Letter

N i l i l

High

High Low

Low


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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

innovation in industry

Determine how important radical innovation is in industry

(Stringer, 2000).

• Quality Index Metric Checklist with a number of (yes or no) aspects central to a

successful development (Smith, 1999).

• Pipeline Revenue

Projection

Projection revenue in pipeline (Smith, 1999).

• Dynamic Cycle Time Average project lifetime (Smith, 1999).

• Patent Metrics 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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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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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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♦ 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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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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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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A good vision should rule out some potential opportunities and it should support all decision-making. 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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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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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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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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Table 3. Foundation element questions sorted under project specific elements

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?


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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 end-users, 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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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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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.

Figure 8 Pre-understanding

Values

Attitudes

Prejudgements

Knowledge

Cognitive Circle Normative Circle

Preunderstanding

Understanding


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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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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 pre-understanding 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 pre-understanding, 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.

Figure 9. Our procedure of work.

32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 1 21 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

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3 1 24

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Analyse ABB

Study TP innovation process

Formulate main questions

Create frame reference.

Method chapter.

Analyse TP

Presentation for TP

Hand in for printing

Week

Interviewing

Making contacts w / interviews

Synthesize all analysis.

Summary

Reviewing

Contact benchmarking companies

Analyse Dow

ABB visits (1. Västerås, 2. Zürich)

Dow visit, Zürich

Nov Dec

Activity

AugCreate benchmarking list, 10 comp.

JanSept Oct


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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 project-specific 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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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.”


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

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.

Step 1Business Idea

Step 2Building

Step 3Business Plan

Step 4Incubation

Commerciali-zation

• Pre Definedquestions

•BuildingBusiness Case2-4 weeks

• CreatingBusiness Plan6-8 weeks

Beyond our scopeActivities

Stages

TG 1 TG 2 TG 3 TG 4


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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 Perception4

Number of ideas 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

Innovisions

Number of hits on its web page and number of articles about ABB Innovisions in

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

Overtaken by BA

In difference to the measure above quality and usefulness are taken into

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 self-criticism. 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.”



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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.


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.


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.”


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 thought-through 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.”


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”


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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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.”


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”.


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.

Figure 11 Dow DACT Process

Shaping Analysis Validation Development Commerciali-sation

• 20 questionsto fill out

•Search fordiscontinuities

• Identify 4-5critical issues

• Validate thecritical issues Beyond our scope

Activities

Stages


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Number of shapings per

person

Gives incentive to start working but considered too individualistic

Number of ideas in each

stage

Good way to manage the pipeline and assure right amount of ideas in each 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.

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.

New Business Development

Dragon

• Aggressive, extending lines

• Feed Falcon with ideas

Falcon

• Fly high and scan the

environment for opportunities

• Dive fast on opportunities and

strive for fast failure or success

Line Business


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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?


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.


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.


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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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?


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.


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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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?


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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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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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.


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.


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.

Figure 13. Idea Management Process at Tetra Pak.

Time

IdeaGenerationScreening Building/

EnrichmentIdea

EvaluationThe Need

SubmitterMatchmaker

Idea taker


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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 web-based 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).

Figure 14. Idea Management process and tool steps.

IdeaGeneration Screening Building/

EnrichmentIdea

Evaluation

TG A TG B TG C

The Need


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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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Tetra Pak considers using measurements for effectively managing their idea management process. In Table 6 below some of the measurements will be presented.


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.”


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.”


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.”


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…”


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 web-page. 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?


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.


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.


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.”


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.”


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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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.”


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?


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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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. “


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.


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?


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.


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.


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.”


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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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”


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.

Previous approach, early focus on a few number ofsolutions and applications. Creating risk that bestsolution might be in the shaded area .

Goal, to strive for keeping the solution space aswider

Possible solutions

Technical Pursuit Product Pursuit

Previous approach, difficult to accept anything butthe best making development too long

Goal, to strive to make the solution space narrower


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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.


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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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.

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.”


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.

Accumulated Knowledge

Time

1. Forgetting. Projects fail to build on existing knowledge forcing teams to start from scratch again.

Project endProject time line


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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 non-experts 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. Cross-functionality 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 job-rotation, employees from Corporate R&D frequently looped out, to join BA, on different co-founded 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 Purpose

• Dialogue Quality 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 Purpose

• Number of ideas 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

Determines how important innovation is in industry – motivates

employee (Stringer, 2000)

• Best principle idea of the

year

Increasing the reputation among researchers and serves as a

stimulating competition.

• Best innovator of the year 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 Purpose

• Number of users 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 Electronic R Hunter/ Personal

Feedback Speed of

feedback

3 If the process works well it can

be fairly fast

5 Immediate feedback, no system

can compete

Reach Number of

employees that

can be reached

5 The entire organisation can be

reached and easy to include

external parties

2 Limited since it is time

consuming to visit and speak to

many people

Trust Perceived trust 3 Ideas can not be hidden, the

whole organisation will find out

about the idea

4 Depending on the person, idea

can be submitted to a trusted

person

Ownership Tagging the idea 4 Immediate tagging, but since it

will be displayed to other parts it

risks being “stolen”

3 More difficult since a personal

meeting often will create extra

input to the idea

Uncertainty Perceived

uncertainty of

what is required

3 Seemingly easy to define what is

requested but presently lack in

employee understanding

5 Person to person communication

is the best way of reducing

uncertainty

Storage Reuse of idea 5 Ideas can be stored for infinite

time

1 Very difficult to store ideas in a

clear way

Creativity Ideas maturity

when entering

system

3 Often predefined criteria

dampening creativity

5 Embryo can be puzzled together

and form totally new ideas as

they are speaking

Visibility Employee

attraction

2 The electronic information

overload makes it difficult

promote yet another system

4 Difficult to get time to meet with

employees, a lot of competition

for time

Managing

process

Possibility to

monitor and

manage process

5 All steps can be measured and

monitored making it a valuable

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

stage of the pipeline

Focuses the screening boards and the entire organisation on what

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

each stage of the pipeline

Helps to identify bottlenecks. Organisations can either adjust the

flow with respect to the bottleneck or adjust the bottleneck.

• Screening efficiency at

each gate

Ensures that gates have the right flow of ideas and it will give

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

stage

This should be conducted very carefully with high cost of capital in

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 side-track to join such projects.

Incentive Purpose

• Piece of the action 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)

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.

Learnings

Accumulated Knowledge

Time

1

2

1. Forgetting. Not reusing experience.

2. Learning. Learning from previous experience, accumulating knowledge.

Project endProject time line


Analysis

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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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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 Purpose

• Time spend on building 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


Analysis

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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.

Area ABB Dow Tetra Pak

Right and

Relevant

Knowledge

4(5) Very clear need

presentation, high degree

of job-rotation, diverse

knowledge mix but less of

guiding vision

3(5) Good use of

vision facilitates

decision making

although perceived gap

to market knowledge

2(5) Low use of

vision, low external

knowledge input and

low job-rotation

Gen

era

tio

n

Organisational

Climate

3(5) High degree of

management attention

4(5) Team awards for

knowledge sharing

3(5) Low

organisational

stability, high


Right Climate 3(5) High degree of


3(5) Rather low

degree of trust

4(5) High degree of

trust

Incentives and

Measurements

4(5) High degree of

extrinsic incentives and the

option to pursue the project

personally

3(5) Low degree of

extrinsic awards but

good use of intrinsic

2(5) Rather low

employees express

wish for a higher

degree of both

extrinsic and intrinsic

Cap

turi

ng

Media Channel 5(5) Utilising both personal

and electronic channel

3(5) Using idea

hunters with success,

less fortunate with

electronic systems

2(5) Focusing too

highly on electronic

channel which

employees perceive to

be overly complicated

Required

Competence &

Information

5(5) Very good use of

pipeline information

facilitates all decisions and

forcing to use external

knowledge

2(5) Low knowledge

of pipeline situation

and external

knowledge

4(5) Possibility to gain

large degree of

pipeline information,

low use of external

knowledge

Scr

een

ing

Screening

Principles

4(5) Difficulties with

objectivity, good

documentation of decision

raises accountability

3(5) Personal

feedback

3(5) Low continuity

and feedback, high

degree of trust and

objectivity

Composition 3(5) Include a mentor

which enables resource

acquisition

5(5) Self selection

principle creates

conditions for

successful team

3(5) Including

generator is a natural

part of the process

Bu

ild

ing

Participation 3(5) Uncertainty about

job-security, however

compensated with high

monetary rewards

4(5) Put high image

persons on team, ,

team leadership focus

and visible of projects

4(5) High degree of

involvement and

enthusiasm although

lack of measurements


Analysis

137

Idea Life Time 2(5) Project are hidden

until late stages which

makes it more difficult to

get knowledge exchange

5(5) High support of

project failures, stress

importance of early

failure

2(5) High pressure

and lot of focus on

success makes it

difficult to kill projects

early Bu

ild

ing

Utilisation of

Knowledge

4(5) Innovision and R&D

are highly perceptive

towards external

environment and actively

pursue partnerships

4(5) Many forums for

knowledge sharing,

high degree of visible

projects

2(5) Frequent

presentations, low

post mortems and

spreading of learning

SUM Max 55 Generation: 7

Capturing: 12

Screening: 9

Building: 12

Total: 38

Generation: 7

Capturing: 9

Screening: 5

Building: 18 Total: 39

Generation: 5

Capturing: 8

Screening: 7

Building: 11

Total: 31

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.


Conclusions

138

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” job-rotation 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.


Conclusions

139

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.


Conclusions

140

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.


Conclusions

141

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.


Conclusions

142

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”


Conclusions

143

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.


Conclusions

144

♦ 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.


Conclusions

145

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.


References

146

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Hamel, Gary, 2000. Leading the revolution, Harvard Business School Press Hogg M.A. & Abrams, D, 1988. Social Identifications- A social Psychology of Intergruop Relations and Group Processes, London Routledge Jacobsen, Dag Ingvar & Thorsvik, Jan, 1998. Hur moderna organisationer fungerar: introduktion i organisation och ledarskap, Studentlitteratur Kilmann, R.H, 1984. Beyond the quick fix, Jossey- Bass Kilmann, R.H, 1985. Gaining control of the corporate culture, Jossey- Bass von Krogh, Georg, et al, 2000. Enabling Knowledge Creation- How to Unlock the mystery of tacit knowledge and release the power of innovation, Oxford University press Lans, Håkan, 1997. Uppfinn framtiden- Förutsättningar för innovationer och entreprenörskap i sandens tidsålder, ISF LeBoeuf, Michael, 1985. The Greatest Management Principles in the world, G P Putnam’s Sons Leifer, Richard, et al, 2000. Radical Innovation- How mature companies can outsmart upstarts, Harvard Business School Press Lekwall, Per & Wahlbin, Clas, 1993. Information för marknadsföringsbeslut, IHM Förlag AB Lindström, J., 1996. Chefers användning av kommunikationsteknik, licenciatavhandling no. 578, IDA-EIS, Universitetet och Tekniska Högskolan i Linköping. Lundahl, Ulf & Skärvad, Per-Hugo, 1992. Utredningsmetodik för samhällsvetare och ekonomer, Studentlitteratur Morgan, G., 1996. Images of organization, Thousand Oaks, California SAGE Publications. Moxnes, P., 1981. Lärande och resursutveckling i arbetsmiljön, Institutionen för socialvetenskap, Oslo Omsén, Arne H., 1992. Affärsstyrd teknikutveckling, Studentlitteratur


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Patel, R. & Tebelius, U., 1987. Grundbok i forskningsmetodik: kvalitativt och kvantitativt, Studentlitteratur Peters, T.J. & Waterman, R.H, 1982. In search of excellence, Harper & Row Pfeffer J & O’Reilly C, 2000. Hidden Values: How Great Companies Achieve Extraordinary Results with Ordinary People, Harvard Business School Rudestam, Kjell-Erik & Newton, Rae R, 1992. Surviving your dissertation: a comprehensive guide to content and process, SAGE Publications. Schein, E. H., 1985. Organizational culture and leadership, Jossey- Bass Sherif, M., 1972. Superordinate goals in the reduction of intergroup conflict, Classic contribution to psychology, Oxford University Press Skogen, Kjell & Sølrie, Mari-Anne, 1995. Introduktion till innovationsarbete, Studentlitteratur Tushman, M. L. & O’Reilly III, C. A., 1997. Winning through Innovation, Harvard Business school Press Utterback, James M., 1996. Mastering the Dynamics of Innovation, Harvard Business School Press

Articles Brown, Seely & Duguid, Paul, 2000. Balancing Act: How to Capture Knowledge Without Killing It? , Harvard Business Review, May-June, p73-80. Cacioppe, Ron, 1999. Using team – individual reward and recognition strategies to drive organisational success. Leadership & Organisation Development Journal, 20/6, p 3222-331. Chandy, R. & Tellis, G., 2000. The Incumbent’s Curse? Incumbency, Size and Radical Product innovation, Journal of Marketing, vol. 64, July 2000, 1-17 Cooper, Robert G., 1997. Fixing the fuzzy front end of the new product process, CMA Magazine, vol.71, Issue 8, October 1997 Hamel, Gary, 2000. Let your people go, IAC Magazine Database, 01/09/2000


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Hansén, M.T et al, 1999. What’s your strategy for managing Knowledge?. Harvard Business Review, March-April, p106-116. Irwin, Harry & More, Elizabeth, 1998. Relationship Management For Innovation: The Central Role of Communication in Australia’s, Technology Analysis & Strategic Management, December 1998, vol. 10, issue 4, p467, 15p. Jancsurak, Joe, 1998. Fuzzy Fun, Appliance Manufacturer, vol. 46, issue 9, September 1998 Khurana, Anil & Rosenthal, Stephen, 1997. Integrating the Fuzzy Front End of New Product Development. Sloan Management Review, Winter 1997, p 103-120. Koen, Peter, et al, 2001. Providing clarity and a common language to the “fuzzy front end”, Research Technology Management, March-April 2001 Louis, M. R., 1984. Sourcing organizational cultures- Some pragmatics of inquiry (Sources is missing) Meyer, J.W. & Rowan, B., 1977. Institutionalized organizations- Formal structure as myths and ceremony, 83:340-363, American journal of sociology Olve N-G, Westin, C-J, 1996. IT-mått hur kan IT-anvädning beskrivas?, Studie på uppdrag av IT-kommissionen av CEPRO AB. Prather, Charles W, 2000. Keeping Innovation Alive After the Consultants Leave, Research and Technology Management, Sep/Oct 2000, vol. 43, issue 5, p 17, 6p. Petri, Carl-Johan, 2000. Employee-propelled Information Provision: How ABB Facilitates Management uses Performance Measurements to Boost Employee Participation in the Organizational Information Provision, Journal of Human Resource Costing and Accounting, vol. 5, number 2, Autumn 2000, p 11-30. Reinertsen, Donald G, 1994. Streamlining the Fuzzy Front-end, World Class Design to Manufacture, vol.1, no 4, 1994 Reinertsen, Donald G, 1999. Taking the Fuzziness Out of the Fuzzy Front End, Research Technology Management, November- December 1999


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Schein, E. H., 1984. Coming to a new awareness of organizational culture, Sloan management review, winter1984 Smith, Gregory R., et al, 1999. Front-End Innovation at AlliedSignal and Alcoa, Research Technology Management, November- December 1999 Stevens, Greg A. & Burley, James, 1997. 3000 Raw Ideas = 1 Commercial Success!, Research Technology Management, May- June 1997 Stringer, Robert, 2000. How to manage Radical innovation, California Management Review, vol. 42, no 4, summer 2000 Thomas, E Michael, August 2000. Internalising innovation, NzBusiness, august 2000. Trott, Paul, 1998. Growing Businesses by Generating Genuine Business Opportunities: A Review of Recent Thinking, Journal of Applied Management Studies, Dec, vol. 7, issue 2, p211, 12p.

Internal references

Tetra Pak Intranet, ORBIS (Tetra Pak’s Global Intranet)

ABB, Annual report, 2000

Dow chemical, Annual report, 2000

ABB web site: www.abb.com

Dow chemicals web site: www.dow.com

Tetra Pak web site: www.tetrapak.com

http://www.abb.com/

http://www.dow.com/

http://www.tetrapak.com/


References

151

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


References

152

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


References

153

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


Appendix

154

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.


Appendix

155

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.

front end of innovation - ida > home · 2004. 4. 8. · master thesis at linköping institute of...

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