Organizational Theory, Design, and Change

Sixth Edition
Gareth R. Jones

Chapter 13
Innovation,
Intrapreneurship,
and Creativity
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Learning Objectives
1. Describe how innovation and
technological change affect each
other
2. Discuss the relationship among
innovation, intrapreneurship, and
creativity
3. Understand the many steps
involved in creating an
organizational setting that
fosters innovation and creativity
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Learning Objectives
(cont.)
4. Identify the ways in which
information technology can be
used to foster creativity and
speed innovation and new
product development

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Innovation and
Technological Change
Innovation: process by which
new goods and services or new
production and operating systems
are developed

Enables better response to customer

needs

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Types of Innovation
Quantum technological
change: a rare, fundamental shift
in technology that revolutionizes
products or the way they are
produced

Quantum innovation: new products

or operating systems that incorporate
quantum technological improvement
These can cause major changes in
the environment

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Types of Innovation
(cont.)
Incremental technological
change: technological change
that represents a continual
refinement of some base
technology

Incremental innovations:
products or operating systems that
incorporate refinements of some
base technology
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Types of Innovation
(cont.)
Technology cycle

Quantum innovations occur rarely

Technological discontinuity

Dominant design emerges

Era of incremental change and
innovation during which competition
is based on technology
Technological discontinuity may occur
again and the process starts all over
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Figure 13.1:
The Technology Cycle

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Property Rights
Innovation is expensive and needs
to be protected

Patents
Copyrights
Trademarks

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Innovation,
Entrepreneurship, and

Intrapreneurs: leaders of
Creativity

innovation and new product

development in established
organizations

Notice opportunities
Manage product development
May leave organization if their ideas
are not supported

Become entrepreneurs

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Innovation,
Entrepreneurship, and

Creativity: (cont.)
ideas going beyond the
Creativity

current boundaries, whether those

boundaries are based on technology,
knowledge, social norms, or beliefs

Most people are creative at some time

May involve combining and synthesizing
new things

Knowledge-creating
organization: an organization
where innovation is going on at all
levels and in all areas
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Entrepreneurship as
Creative Destruction

Creative destruction: new

companies use new global and
technological opportunities to make
better products that drive old,
inefficient companies out of business
Old inefficient companies are driven
out of business
Emergence of new industries

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Innovation and the

Product Life Cycle
Product life cycle: the changes
in demand for a product that
occur over time

Demand for most successful

products passes through four
stages:

The
The
The
The

embryonic stage
growth stage
maturity stage
decline stage

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Innovation and the

Product Life Cycle (cont.)

Product life cycle (cont.)

Embryonic stage: a product has

yet to gain widespread acceptance

Growth stage: a product has been

accepted by customers

Minimal demand

Demand increases

Mature stage: market demand

peaks because most customers
have already bought the product
Decline stage: occurs if and when
demand for a product falls
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Innovation and the

Product Life Cycle (cont.)
Determinants of the length of the
product life cycle

Rate of technological change

Faster the rate of change, the shorter the

product life cycle

Role of fads and fashion

Determine the attractiveness of products

to customers

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Figure 13.2: Technological

Change and Length of the
Product Life Cycle

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Managing the Innovation

Process

Project management: the

process of leading and controlling
a project so that it results in the
effective creation of new or
improved products

Project: a subunit whose goal

centers on developing the products
or service on time, within budget,
and in conformance with
predetermined performance
specifications
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Managing the Innovation

Process
(cont.)

Project management (cont.)

Effective product management often

begins with a clearly articulated plan

Project managers tasks are different

from regular managers

Takes a product through the concept, initial

test, modification, and manufacturing
phases

Manage high proportion of highly skilled

and educated professionals
Plan to deal with top corporate executives

Must keep project on track

Often quantitative modeling is used

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Managing the Innovation

Process (cont.)

Project management (cont.)

Quantitative modeling

Examples include PERT/CAM network of

Gantt Chart
Flowcharts of a project that can be built
with many proprietary software packages

These software packages focus on:

Modeling the sequence of actions necessary to

reach a projects goal
Relating these actions to cost and time criteria
Sorting out and defining the optimal path for
reaching the goal
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Managing the Innovation

Process (cont.)
Quantitative modeling (cont.)

Critical path method

Goal is to determine:

Which particular tasks or activities of the

many that have to be performed are critical
in their effect on project time and cost
How to sequence or schedule critical tasks
so that a project can meet a target date at
minimum cost

Optimal sequencing of tasks is often

worked out by a team

Analysis is an important learning tool

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Figure 13.3: CPM Project

Design

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Managing the Innovation

Process (cont.)

Stage-gate development funnel

A structured and coherent innovation

process that improves control over
the product development effort
Forces managers to make choices
among competing new product
development projects so that
resources are not spread thinly over
too many projects

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Managing the
Innovation Process (cont.)
Stage-gate development funnel
(cont.)

Stage 1: Funnel has a wide mouth to

encourage as many new product ideas as
possible from both new and established
project managers
Stage 2: Specify all of the information
required to make a decision about
whether to go ahead with a full-blown
product development effort

Plans are either accepted, revised, or

rejected

Stage 3: Proceed to development phase13-23

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Figure 13.4: A Stage-Gate

Development Funnel

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Managing the Innovation

Process
(cont.)
Cross-functional teams

Coordinating R&D function with other

functions is critical but often difficult

New product development teams

Marketing, engineering, and

manufacturing need to be core
members of product teams
Core members: refers to a nucleus of
three to six people who bear primary
responsibility for the product
development effort
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Figure 13.5: Innovation as

a Cross-Functional Activity

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Managing the
Innovation Process (cont.)
Team leadership

Having cross-functional teams is not

sufficient for innovation they have
to be managed properly
Lightweight team leader: a midlevel functional manager who has
lower status than the head of a
functional department
Heavyweight team leader: a true
project manager who has higher
status within the organization
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Managing the Innovation

Process (cont.)

Skunk works: a temporary task

force that is created to expedite
new product design and to
promote innovation by
coordinating the activities of
functional groups

An island of innovation located away

from the organization
Dissolved when the product is
brought to market
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Managing the Innovation

Process (cont.)

New venture divisions: a new

division that is allocated a
complete set of value-creating
functions to manage a project
from beginning to end

Assumes full responsibility for the

commercialization of the product
Normally an independent division
Balance of control between the
division and the corporate center is
problematic
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Managing the Innovation

Process (cont.)

Joint venture: a strategic

alliance among two or more
organizations that agree to jointly
establish and share the ownership
of a new business

Allows organizations to combine their

skills and technologies and pool their
resources to embark on risky projects
Partners may disagree over future
development plans
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Managing the Innovation

Process
(cont.)

Creating a culture for innovation

Organizational structure

Creating the right setting is important to

fostering innovation
Increasing organization size, age, and
complexity may slow innovation
Organic structures tend to promote
innovation

People organizations need to guard

against too much similarity
Property rights create career paths to
show that success is closely linked with
future promotion and rewards
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Innovation and
Information Technology

Information efficiencies: the cost

and time savings that occur when IT
allows employees to perform
current tasks at a higher level

Enables employees to assume

additional tasks
Enables employees to expand their
roles in the organization due to
advances in the ability to gather and
analyze data also allows information
efficiencies
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Innovation and
Information Synergies

Information synergies: the

knowledge building created when
individuals or subunits pool their
resources and collaborate across
boundaries
Boundary-spanning activity:
the interactions of people/groups
across the organizational boundary
to obtain valuable information and
knowledge from the environment
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IT and Organizational
Structure and Culture

IT affects the innovation process

through its many effects on
organizational structure
IT gives lower-level employees more
detailed and current knowledge of
consumer and market trends and
opportunities
IT can produce information synergies

Facilitates increased communication and

coordination between decentralized
decision makers and top managers
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IT and Organizational
Structure and Culture
IT means that fewer levels of
(cont.)

managers are needed to handle

problem solving and decision
making
IT provides lower-level employees
with more freedom to coordinate
their actions

Information synergies may emerge as

employees experiment and find better
ways of performing their tasks
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IT and Organizational
Structure and Culture
(cont.)
IT facilitates the sharing of
beliefs, values, and norms

Allows for the quick transmission of

rich and detailed information
between people and subunits

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