Creating the Innovative Organization Week 4 & 5 (INN001, 5 p.)

1. Creating the Innovative OrganizationWeek 4 & 5(INN001, 5 p.) Lecture on October 1st 2007 Emelie Stenborg

2. RepetitionChapter 11 Building the innovative organization

3. WHERE ARE WE IN THE MODEL??? FOCUS RESOURCE SCAN LEARN IMPLEMENT

4. The learning organization • Creating, acquiring and transferring knowledge and modifying the behaviour to new knowledge • Systematic problem solving • Experimentation with new approaches • Learning from own experience and past history • Learning from the experiences and best practices of others • Transferring knowledge quickly and efficiently throughout the organization • But...how to organize learning? • Create conditions conducive to learning > intangibles

5. The learning organization again… Think of innovation as a iceberg...new products and processes are only the tip Also as learning cycle – experiment, experience, reflection, consolidation Unlearning – learn from but not to repeat the past Two types of learning Technological learning: developing tech knowledge to launch new products Organisational learning: Developing routines to manage change: reflect on experience, build conceptual models, test their validity...

6. Components of innovation The virtuous checklist... Shared vision, leadership Appropriate structure Key individuals Effective team work Development of the human capital Extensive communication High involvement in innovation External focus Creative climate

7. High involvement in innovation • High level of participation improves competitiveness substantially • Associated with total quality management and lean production • The appeal to create a ’culture of innovation’ • If succesfull it creates a sustained basis for organizational learning • Easier destroyed than constructed

8. ©2005 Joe Tidd, John Bessant and Keith Pavitt

9. Chapter 12 Creating innovative firms

10. New Technology-based Firms (NTBFs) • Special type pf SME (1980s) • Biotechnology, semiconductor, software (nanotechnolgy, materials) • Incubator origin • Regional networks • Parent reliance • Three carachteristics • Highly qualified personnel • Capital intensive • Greater technical and market risk • → High barriers of entry

11. University Incubators • Commercial gain from research • Licensing • Independant firm (3-12 % but more profitable) • Technology transfer offices • Supportive environment – policy, IPR, successful past • How: • Guidelines – resources, IPR • Dual employment • Issues of ownership • When: • No existing company • An enabling technology • Strong individual reasons

12. Who is an entrepreneur? • Controversial! • Shaped by (maybe) for academic entrepreneurs • Antecedent influences • Individual incubator experiences • Environmental factors

13. Figure 12.1 Factors affecting the decision to establish an NTBF ©2005 Joe Tidd, John Bessant and Keith Pavitt

14. Funding • Often nothing to sell immediatly after starting a NBTF • Initial funding depends on potential! • Cash flow depends on developement time and cost • And on technologies!

15. Figure 12.2(a) Cash flow profile of research-based venture, e.g. biotechnology ©2005 Joe Tidd, John Bessant and Keith Pavitt

16. Figure 12.2(b) Cash flow profile of development-based venture, e.g. electronics ©2005 Joe Tidd, John Bessant and Keith Pavitt

17. Figure 12.2(c) Cash flow profile of production-based venture, e.g. software ©2005 Joe Tidd, John Bessant and Keith Pavitt

18. Funding • Initially for launch • Personally funded • Governementally funded • Second for development and growth • Largest obstacle • Third for consolidation and growth • Venture capital • Maturity or exit • Some sort of termination of funding

19. Funding • Externally • Investment • Demands control – equity or management • Business plan • Attract funding, keep business on track • Great national variety – and local

20. Figure 12.3 Venture capital as a percentage of GDP, 1997 ©2005 Joe Tidd, John Bessant and Keith Pavitt

21. Corporate venture funding • High-tech investment • 15 % of large UK firms • Return in 5-7 years • Return 20-30 % • Strategical aspect • Direct or indirect through funds • Investment in independent seed capital funds

22. Venture capital • Focussed on – 1-3 % of external funding in UK • Increasingly high-tech – perceived as risky, but based on competence • Accept 3-5 % of offerings – picking the winners • Depends on personal, market and financial factors • Actively involved • Boards • Management • Connections • Resources • High financial return • 5 years • 75 % return

23. Growth and performance • Contribution to growth, employment, regional development • Are large or small firms better? • Innovative activities • Product innovation • Niche markets • Producers of final products • External links • Growth in output and employment – not necessarily profit

24. 2 Factors • Excludability – Prevention of competition • Complementary assets – Down-stream capabilities Teece (1984) has a somewhat different approach Nature of technology + IPR → appropriability regime

25. 4 strategies • Attackers advantage (computer components) • Incumbents have no down-stream benefits • Cannot prevent incumbents from innovating • Disrupt the exisiting order – result is fragmented niches • Ideas factory (biotechnology) • Incumbents have down-stream benefits • Can stop incumbents from innovating • Ahead in technology (co-operation) – reinforced dominance of incumbents • Reputation-based (Cisco and Intel) • Incumbents have down-stream benefits • Cannot prevent incumbents from innovating • Technology is easily caught up with – fair partners for exploition • Greenfield (radical innovation) • Down-stream benefits are unimportant • Can prevent incumbents from innovating • Dominance of emerginf markets through competition or co-operation

26. Summary New technology-based firms • Carachteristics • Incubators • Entrepreneurs • Funding • Peformance

27. Home exam • Available this afternoon! • Hand in 8th of October 12.00 the latest • Individual work • Be aware of plagiarism

28. 1st part • A number of short questions related to the course literature • Tidd et al. is the reference for this • Maximum 2 000 words

29. Extra part • Additional questions. • One question per failed attendance at a seminar • A maximum of four extra questions • Up to 200 words each • Choose freely between the extra questions • Not all of you – notified 1st October • Does not replace the handing in of the written assignments • Is not graded

30. 3rd part • An open essay - select a specific firm and answer questions about its innovation activities • 2 000 words maximum • You can quote but then you must use references!

31. Questions for the third part of the home exam • What types of innovation does the firm (not) concentrate on? • Does it seem to be successful in its innovative activities? Why (not)? • To which technological trajectory does the firm belong? • How would you characterise the firm’s innovation strategy? • What parts of the firm seem most important for innovation to be successful in the firm? • Does the firm use external collaboration to enhance its innovations? If so, what types of collaboration, and why exactly those forms? And what types of partners? • What type of competition is threatening the survival of the firm on the short and the long term? • Does the firm use corporate ventures, and if so, of what type are they? • In what stage of development is the industry in which the firm is active? • What type of market (international?, local?, mass market?, niche market?) is at focus? • Are there any institutional regulations or other political developments that are particularly important influencing the innovation activities of the firm? And how does the firm itself try to influence political developments?

32. Presentation • Discussed in smaller groups • Approximately 15 minutes per person • Each student will present the second part • Each student will be an opponent on the essay – form the basis for group discussion • If power point I need to know in due time • CIRCLE M218

33. Tuesday Oct. 9th, 13-15 Amélie Khantarod William Boudoux Mattias Tyrberg Cecilia Persson Luis Murra Gustav Olsson Wednesday Oct. 10th, 10-12 Benjamin Gigleux Mårten Waern Amanecer Peña Raúl Yuste Alberto Espinola Anna Rosenberg Wednesday Oct. 10th, 13-15 Thomas Durand Isabella Gomez Andreas Roth Stefan Puchner Bernhard Winkler-Ebner Thursday Oct. 11th, 10-12 Louise Funke Linna Hafström Lee Hodgkinson Claire van Ngoc Ty Thursday Oct. 11th, 13-15 Cédric Chedaleux Julien Flouzat Jonathan Roos Laurette Reboul Ronny Roos Sara Flores Friday Oct. 12th, 10-12 Kévin Milot Maxime Bettez Francesco Palmisano Giuseppe Lippolis Pedro Faria Ignacio Montero

34. Grades Your progress and learning is assessed not only at the end of the course but throughout the entire course. Different forms of examination are used to gauge students’ progress: • Weekly written assignments in preparation for seminars • Formal presentations at seminars • Home exam, including final discussion seminar The home exam is the more important of the three.

35. About the grading • The seminar assignments are not graded as such, but you have to hand them in. Also, the performance can determine your grade if I am in doubt between two grades • You have to have 50 % of both parts to pass. The grade is then determined by the rest of the points • In total 36 points – 18 per part. No half points are given. • 50-74 % gives you grade 3 • 75-89 % gives you grade 4 • 90-100% gives you grade 5

36. If you fail • Redo it with no possibility of higher grade than 3 • A totally new exam with the possibility of any grade

37. Questions?