Strength and Weaknesses of Innovation Implementation

Silvana Marques dos Santos Pereira - FGV

Jeovan de Carvalho - UFMS

Luiz Carlos Di Sério - FGV

POMS 25th CONFERENCE

Motivations

• Observations that innovations initiated with a certain strength

and by the time of launching it had lost the innovative

characteristic, a mimetic solution

• Observing literature on innovation, very little tapped on

aspects of the innovation's host: the organization

• Innovation discourse very open in a fashion way – looks good

to be innovative, but action not corresponding

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Objectives

• Understand innovation process within organizations

• Comprehend the connection / disconnection between the

initial intent and the final result – the translation process into

business operation

• Case study to observe what happened during implementation

process

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Research Question

• What are the factors present in the Innovation process that generated the loss of strength of the innovation it self?

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Types/Scope of Innovations

Scope of the Innovation

Typ

es o

f In

no

vati

on

Disruptive

Radical

Improvement

Focus on this type of

innovation

The Process Dynamics

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CREATION DEVELOPMENT IMPEMENTATION

Creation period in a startup: • bold, • creative, • multiple skills, • searching for

money

Investors appear • Professionalization • Team Leader replaced by start up expert • Creation replaced by management • Risk avoidance • Financial viability, • Entering in the production process

The source of effectiveness in the different stages are totally different paradigms

Innovation in Organization

• The process by which innovation is internalized in companies

may be COMPLEX and PARADOXICAL:

– Organizations need to COMPETE and to do so they

innovate in many aspects.

– Organizations INTERNAL DYNAMICS, may impose

restrictions on implementation of the innovation: change

may bring a new language, a new habit or a new set of

values and underlying beliefs.

The Internal Mecanism

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ROUTINE

SURVIVAL

STABILITY

Values and organizational rules start creating a way of doing things that, over time, leads to STABILITY. The stability is related to a

customary way that deals with SURVIVAL

On a day-to-day basis activities become ROUTINES

Repetition of this process ensures that the group constitutes its own ETHOS, standards, beliefs and rules of conduct

Stability and Survival in a Complex Environment

• Search for stability in organizational routines might generate:

– Fear of FAILURE of the innovation

– Difficulty to OVERCOME STABILITY

– RISK avoidance

• Tendency to seek innovation - a modern compulsion in the search for answers in a increasingly complex world.

The Survival in a Complex Environment

• Establishes a continuous effort to decodify the elements of

innovation into established codes minimizing the impact and

adjusting the innovation to fit into already known codes.

• The greater the impact, the greater the repercussion it will

have on the environment and the greater will be the reaction

and adaptation mechanisms.

Reactions to Innovation Process

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Power

Innovation submitted to economic power , minimize risks ensure viability and financial return.

Cultural

Occurs when an innovation is outside the scope of understanding, comprehension and habit of how that community deals with reality

Creating Routine

Mechanism that “CHEWS OVER INNOVATION” by creating routine, systematization accommodation

Creating routine ensures stability

Case Study Methodology

Chosen Case:

• A startup company in the IT sector

• Boosted by investments from a multinational group in the sector.

• Type of development: between radical and disruptive

Methodology

• Individual and group interviews , using a semi-structured script.

• The interviewees were the following groups:

– The new product/service development team

– Professionals from the purchasing organization who interfaced with the development team

– The company’s management.

• The interviews were recorded, transcribed and subsequently analyzed.

Case Description

• A startup Team that developed a breakthrough idea on IT

• Looking for invertor, they end up being bought by a large IT corporation that have

a business on IT solutions in a more conservative manner

• The paradigm differences led to the hiring of a experienced professional on

startups to be the head of the project

• Started analysis of potential profitability

• Product being developed, there were instabilities on the process

• Low tolerance and decisions that could harm the project – short term financial

results expectations

• No understanding of time required for development

Case Description

• The Corporate Management had two nature of discourses:

1. Publicly praised the new product, thus seeking to portray an image of

modernity and innovation;

2. Privately, the discourse at the organization – ironic, contemptuous,

impatience

• The Project Team was anxious by the pressure for results/loosing face on the

success of initial intention - stress

Case Description

• In this context the idea is decodified for the production and commercial processes,

using the organization’s structure:

– Conflicts become more obvious

– Areas wanted to fit the project into routine and procedures

– Establish standards for repetition and production

Analysis of the Results

• First phase: creation

– is fluid and creative, having a multi-skilled team that has no discipline or

method.

– they look for partners and struggle to survive.

– “Angels” may appear in this phase.

• Second phase: development

– continuous struggle for investment for business is viable.

– Search to control product quality, operation standards, to be repeated.

– Various product versions and ‘debugs’ are made to prepare it for the first

contracts.

– People with professional profile, discipline and specialization are boarding in

the team

Typology - Interface

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Why do they do it?

Profile

Emotional involvement

Propensity for risk/

uncertainty

Passion Ambition

Visionary committed to

the idea

High

High

Dreamer

To share the Dream, to

make money

Partner up to a certain point

Medium

Medium

Angel

To earn money

Conservative doesn't’t go in

it to loose, control

Weak

Low

Imitation

Conservative, follower, seeks comfort zone

Weak

Low

Investor

Parrot

Table 1 – The Dynamics between Dreamers, Investors, Parrot

Conclusion

• This work allowed some important points for reflection:

– Innovation seems to be important and necessary for the growth and

competitive capacity of modern organizations;

– Innovating is a growth path, but requires organization ability to deal with what

is new

– The strength or weakness here highlighted refers to the adaptation role of the

“dreamers” into the standards of the organization

– This path through which the innovation process goes through, might weaken

the innovation itself

ISRAEL and its Context

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GOVERNO

Universities

Private Sector

Angels

Investors

Army

International

Policies

Dealing with Failure

Risk taking Breakthrough thinking

Disruptive innovation

Startups

Further Steps

• Identify:

– The factors that are present in the context that enables innovation to appear with strength, as in Israel, Silicon Valley etc.

– The ingredients that constitute this “ecology”.

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References

• Abrahamson, E. 1996. Management fashion. Academy of Management Review, 21(1): 254-285. • Christensen, C. M. 1997. The innovator´s dilemma: when new technologies cause great firms to fail.

Boston: HBS Press. • Gundling, E. 2000. The 3M way to innovation: balancing people and profit. Tokyo: Kodansha

International. • Lampel, J. 2000. Product demonstrations and path creation of technological change. United

Kingdom: University of Nottingham. • March, J, 1999. Exploration and Exploitation in Organizational Learning. In The Pursuit of

Organizational Intelligence. Oxford, Blackwell. • Schein, E. H. 1984. Coming to a new awareness of organizational culture. Sloan Management

Review, 25(2): 3-16. • Schumpeter, J. 2000. Entrepreneurship as innovation. In: SWEDBERG, Richard (Ed.).

Entrepreneurship: the social science view. Oxford: Oxford University Press. • Smircich, L. 1983. Organizacional culture. Administrative Science Quarterly, 28(3): 339-358. • Weber, M. 1999. Economia e Sociedade. Brasília: UNB. • Wood Junior, T. Organizações Espetaculares. Rio de Janeiro: FGV, 2001.

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Any further contact:

silvana.pereira@fgv.br

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