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Session Overview
Session
21-PM1-05: ST9.3 - Organizational Innovation Development
Time:
Friday, 21/Jun/2019:
1:00pm - 2:30pm

Session Chair: Igor Dukeov, Lappeenranta University of Technology
Session Chair: Jukka-Pekka Bergman, Lappeenranta University of Technology
Location: Room 2.2.35 (ENSTA)

Session Abstract

It was Joseph Schumpeter who introduced the term “new industrial organization”. According to the Schumpeter’s theory among the five types of innovations, he introduced one that was called “new forms of industrial organization”. The latter is nowadays understood as organizational innovation (ORI). According to the OSLO Manual the definition of ORI is as follows: “An organizational innovation is the implementation of a new organizational method in the firm business practices, workplace organization or external relations”.

In the literature, ORI has gained a minor role in studies as it is a relatively new concept to be researched and implemented. Nevertheless it still represents a broad concept which deals with issues covered by strategic management, human research management, knowledge management and other non-technological areas of firm control and evolvement. All these areas can be considered as indicators of the internal diffusion of various practices and elements of knowledge management. The effect of ORI may be visible as the increasing level of competitiveness of a firm that introduces product, process, or marketing innovations supported by simultaneously introduced ORI. This simultaneous introduction of different types of innovations may lead to the synergy of various effects.

Scholars have provided various classifications of organizational innovation in an attempt to explain and specify their characteristics in different contexts. Thus, quite a large number of definitions for ORI can be found, not to mention interpretations of the term. One can also consider different levels of ORI. For example, these may take the form of appropriate solutions on the level of particular departments or functions of a company. They can also relate to the overall structure or the functional principles of the firm. They may well be innovations that have an impact the firm’s relationship with its environment.

Despite many studies arguing that ORI should be considered as a firms’ response to technological innovation forming a pre-condition environment for it, ORI can also play its own independent role in a firm’s development and can be considered a distinct form of innovation.

Firstly, ORI might aim at implementing new procedures in processes, operations, or behaviour in a firm. These procedures could be the first introduction of a total quality management system or a PDCA cycle, or could involve just-in-time or teamwork practices that directly impact the organizational performance of the firm. Often the innovations of this type are called procedural ORIs in comparison to structural ORIs which deal with increasing the efficiency of responsibilities, accountability, divisional structure of functions, and knowledge dissemination in a firm on its various levels. Thirdly, ORI might reduce the organizational barriers of the external environment, thus facilitating enlarging the scale of the firms’ external relations with customers, suppliers, research organizations, and governmental and non-governmental institutions.

ORI may be intended to increase a firm’s performance by reducing administrative or transaction costs, enhancing labour productivity by improving workplace satisfaction, gaining access to non-tradable assets (such as non-codified external knowledge), or reducing the costs of supplies. An organizational innovation should be based on strategic decisions taken by the management of the firm to implement organizational methods in business practices, workplace organization or external relations which are new for the firm.


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Presentations

The role of tactics in R&D: Insights from an autonomous car project

Gouthanan Pushpananthan1, Ludvig Lindlöf1, Marcus Rothoff2

1Chalmers University of Technology; 2Volvo Car Corporation

Context

Large R&D organisations are increasingly adopting agile development methodology as they strive to be better equipped at handling uncertainty and new challenges (Rigby et al, 2016). These agile methods emphasise customer collaborations, cross-functional teams and flexibility in planning (Serrador & Pinto, 2015).

Literature

Literature on projects highlight the importance of both strategy and tactics for project success (Schultz et al, 1987; Slevin & Pinto, 1987). Schultz et al. (1987) emphasise that strategy is employed “in the early planning and more general objective-setting” whereas tactics consists of “action steps, or processes of task completion” taken in order to fulfil the strategy. However, it is still unclear how organisational way of working (for e.g.: waterfall, agile, etc.), influence the use of tactics and management’s role in it.

The paper builds on seminal studies on the interplay between strategy and tactics, and the importance of tactics for project success (Schultz et al, 1987; Slevin & Pinto, 1987). We contrast how tactics is conceptualised in studies on projects entrenched in traditional waterfall development approach with recent academic works exploring the use of agile development approach in R&D initiatives (Hadar & Silberman, 2008; Nerur et al, 2005).

Literature Gap

Literature on R&D management, although establishing the importance of tactics, do not adequately address the ways in which R&D organisations can contemplate with tactics as a way of planning (proactively) rather than as a way to mitigate challenges (reactively).

Research Questions

The purpose of this paper is to examine the use of tactics

Research questions:

How do agile development methods facilitate the use of tactics in R&D projects?

How can organisations improve their skills in developing tactics and what is the role of management in building capabilities to use tactics?

Methodology

The paper is based on data from a longitudinal case study (Yin, 2009) at Volvo Cars Corporation (VCC). Thus, the paper builds upon extensive field observations and semi-structured interviews with personnel involved in the autonomous car project at VCC. We use an insider-outsider approach to analyse the empirical data, benefitting from the advantage of third author being an employee in the case firm and thus providing a robust way to confirm the findings as well as being able to identify misinterpretation of facts. The authors being a mix of outsiders and insider reduces the biases (Dwyer & Buckle, 2009).

Empirical Material

The case study has been ongoing at Volvo Cars’ autonomous car project since November 2016. Although case studies may be both quantitative and qualitative, due the nature of the phenomenon being both emergent and unique, qualitative data is deemed appropriate (Eisenhardt, 1989). Qualitative data consisting of field notes based on observations from meetings and activities (for more than two years) in the project are mainly used. Also, 25 semi-structured interviews between author one and employees at Volvo Cars are used. Other secondary data in the form of press releases, news articles, etc. are used in this paper.

Results

The paper illustrates how the shift from a plan-driven waterfall model to an agile development approach increases the room for employees to use tactics. The plan-driven waterfall development approach inherently leaves little room for tactical manoeuvres to be employed during the execution of a project. However, in agile way of working, due to incremental planning and empowerment of teams, there is an opportunity to address emergent challenges through employing tactics.

Contribution to Scholarship

This paper contributes to the field of R&D management by addressing the lack of attention on tactics and how tactics play a key role in agile R&D projects. Also, we illustrate the importance of tactics in R&D project activities as the nature of such projects is bound with uncertainty and challenges.

Contribution to Practice

The paper contributes to a better understanding of the importance of tactics in R&D projects. It also illustrates how plan-driven development does not support the use of tactics. We highlight how firms that shift from waterfall to agile methodologies should learn to develop plans based on tactical thinking rather than follow plans framed by the management.

Fitness

Our study is relevant for the advance of knowledge regarding the organisation of R&D activities in general and for the development of the distributed capabilities of the organisation in order to respond to innovation challenges in an ever-changing environment.

Bibliography

Dwyer, S. C., & Buckle, J. L. (2009). The space between: On being an insider-outsider in qualitative research. International journal of qualitative methods, 8(1), 54-63.

Eisenhardt, K. M. (1989) Building Theories from Case Study Research. The Academy of Management Review, 14(4), 532-550.

Hadar, E. & Silberman, G. M. (2008) Agile architecture methodology: long term strategy interleaved with short term tactics, Companion to the 23rd ACM SIGPLAN conference on Object-oriented programming systems languages and applications. ACM.

Nerur, S., Mahapatra, R. & Mangalaraj, G. J. C. o. t. A. (2005) Challenges of migrating to agile methodologies, 48(5), 72-78.

Rigby, D. K., Sutherland, J. & Takeuchi, H. (2016) Embracing agile. Harvard Business Review, 94(5), 40-50.

Schultz, R. L., Slevin, D. P. & Pinto, J. K. (1987) Strategy and Tactics in a Process Model of Project Implementation, 17(3), 34-46.

Serrador, P. & Pinto, J. K. (2015) Does Agile work?—A quantitative analysis of agile project success. International Journal of Project Management, 33(5), 1040-1051.

Slevin, D. P. & Pinto, J. K. J. S. m. r. (1987) Balancing strategy and tactics in project implementation, 29(1), 33-41.

Yin, R. K. (2009) Case study research: design and methods, 5. London: SAGE.



Are Best-Practices still best when workers have Knowledge-intensive good gigs?

Martin McGuigan, Denise Currie

Queens Belfast, United Kingdom

Context

Context for the study pertains to apparent changes in work and skills demand, more emphasis on knowledge-intensive work required for innovation, and little change in the benchmarks of ‘best-practices’ in the literature evaluating the strategic importance of HR since the 1990s.

Literature

Relevant literatures include those on the significant changes in the nature of work and skill demand, especially in Europe and the United States (Autor and Salomons, 2018; Goos et al., 2014; Deming, 2017), those dealing with how HR and working practices affect innovation (Laursen and Foss, 2003; Chang et al., 2014; Haneda and Ito, 2017; Edmondson, 2018) and those dealing with how HR activity determines strategic performance of and to evaluate the strategic nature of human resource management (Pfeffer, 1998; MacDuffie, 1995; Huselid, 1995; Bloom and VanReenen, 2007).

Literature Gap

Sets of HR practices thought important to competitive advantage were conceived when the makeup of economic activity was significantly different with since spreading of economic activity and technological change. We discuss enduring relevance of these practices and nuance regarding skill demand trends, and strategic organizational functions such as R&D.

Research Questions

How have changes in the nature of work affected the applicability of High-Performance Work Practices?

Methodology

We set out major societal changes that have impacted the nature of work since the 1990s and advances in research pertaining to each of Pfeffer’s “High-Performance Work Practices” in their ability to enhance the ability, motivation and opportunity of workers. In this context, we evaluate how HR researchers might consider the sustained applicability of these foundations of Strategic Resource Management, in light of changes in competitive dynamics, how human capital has become more important to competitive advantage, the increased importance of automation, and cognitive and collaborative working for strategic, knowledge-intensive functions such as R&D.

Empirical Material

Review of current literature and available data

Results

We find Pfeffer’s framework to have a prescient quality, explained by the then already apparent importance of innovation production to competitive advantage and being built on theory concerning motivation and the workings of organization that have changed substantively little throughout the period since. We find therefore these practices to be still by in large applicable but identify some points of departure.

Emerging findings include that employee security being less important with attaining increased bargaining power in high-skill roles, a lessened expectation on employers to provide training in a traditional sense but increased expectation of other opportunities for professional development. Substantial issues are raised by the use of contract workers and the implications for team working when contract workers are treated differently, especially regarding information sharing and rewards.

Additional emphasis is needed in terms of how firms sustain competitive advantage by retaining employees in scenarios where mobility constraints traditionally highlighted in the strategic human capital literature are increasingly seen as having little potential impact. We discuss the interaction between practices traditionally thought of as improving productivity in innovation-related activity and possible supply-side mobility restraints in the form of possible increased employee embeddedness and employer attractiveness and subsequent implications for competitive advantage.

Contribution to Scholarship

This study contributes an updating review concerning the HR practices thought important to innovation and those traditionally examined in the strategic human resources literature. This article may serve as a reference for contemporary scholarship in this area.

Contribution to Practice

This paper serves as an evidence-based review for firms evaluating the potential implications for adoption of practices innovation effort, providing managers with strategic and innovation function concerns with a bridging, rounded view of how human resource strategy might be appraised in light of existing empirical evidence.

Fitness

See contribution to practice

Bibliography

Autor, D., Salomons, A., 2018. Is automation labor-displacing? Productivity growth, employment, and the labor share(No. w24871). National Bureau of Economic Research. 

Bloom, N. and Van Reenen, J., 2007. Measuring and explaining management practices across firms and countries. The Quarterly Journal of Economics, 122(4), pp.1351- 1408.  

Chang, S., Jia, L., Takeuchi, R. and Cai, Y., 2014. Do high- commitment work systems affect creativity? A multilevel combinational approach to employee creativity. Journal of Applied Psychology, 99(4), p.665.  

Deming, D.J., 2017. The growing importance of social skills in the labor market. The Quarterly Journal of Economics, 132(4), pp.1593-1640.

Edmondson, A.C., 2018. The Fearless Organization: Creating Psychological Safety in the Workplace for Learning, Innovation, and Growth. Wiley.  

Goos, M., Manning, A. and Salomons, A., 2014. Explaining job polarization: Routine-biased technological change and offshoring. American Economic Review, 104(8), pp.2509-26. 

Haneda, S. and Ito, K., 2018. Organizational and human resource management and innovation: Which management practices are linked to product and/or process innovation?. Research Policy, 47(1), pp.194-208. 

Huselid, M.A., 1995. The impact of human resource management practices on turnover, productivity, and corporate financial performance. Academy of management journal, 38(3), pp.635-672.  

Laursen, K. and Foss, N.J., 2003. New human resource management practices, complementarities and the impact on innovation performance. Cambridge Journal of economics, 27(2), pp.243-263.  

MacDuffie, J.P., 1995. Human resource bundles and manufacturing performance: Organizational logic and flexible production systems in the world auto industry. ILR Review, 48(2), pp.197-221.  

Pfeffer, J. and Jeffrey, P., 1998. The human equation: Building profits by putting people first. Harvard Business Press.



The revolving credit of legitimacy effect: achieving strategic renewal in highly exploitative firms

Cylien Gibert1, Véronique Steyer2, Sébastien Picard3

1Toulouse School of Management, France; 2i3-CRG, Ecole Polytechnique; 3EM Normandie

Context

What does it take to effectively contribute to the strategic renewal of a centennial industrial firm? This case study explores how the members of a recently launched innovation lab deal with internal legitimacy challenges to achieve their objective of exploring opportunities and contribute to the strategic renewal of the firm

Literature

In the last decade, strategy renewal has become a central point of concern, both for practitioners and scholars (for a review, see Schmitt, Raisch, & Volberda, 2018). Defined as the firm’s ability to adapt its pattern of value creation and appropriation by transforming its strategic intent and capabilities, strategic renewal is considered a core element in firms’ competitiveness and survival over time.

To date, scholars have revealed a wide range of intertwined antecedents, mechanisms and consequences underlying the way organizational members succeed (or not) to adapt to their evolving environments by accumulating, combining and leveraging resources (see Agarwal & Helfat, 2009). In particular, an emerging stream of research has recently pointed out the importance of balancing exploitation and exploration to ensure effective strategic renewal as it allows for accommodating multiple, often contradictory, evolving environments (Andriopolous & Lewis, 2009; Brusoni & Rosenkranz, 2014; Hill & Birkinshaw, 2014; O’Reilly & Tushman, 2008).

Literature Gap

However, this perspective has mostly focused on top management level and the strategy formulation phase, leaving underexplored the role of managers in ensuring a sufficient level of resource allocation to implement their exploitative or explorative initiative in and over time (Balogun et al., 2018; Ciabuschi et al., 2011;Tyler, 2006).

Research Questions

Indeed, at one point of time, senior leadership of highly exploitative firms face the necessity to renew their resource base to fit the evolution of their markets and environments (Agarwal & Helfat, 2009; Schmitt, Raisch, & Volberda, 2018).

Methodology

To do so, firms in the last decade increasingly recourse to innovations labs that are structurally separated in order to explore innovative or collaborative opportunities for strategic growth (Lavie et al., 2010). Referred to by a variety of labels such as “exploration entities”, “innovation centers”, or simply “labs”, these strategic initiatives consist in exploring new methods and/or new areas for the strategic renewal of established firms (Lewis & Moultrie, 2005; Magadley & Birdi 2009), while the rest of the organization stays dedicated to the exploitation of existing businesses.

Empirical Material

Yet, if innovation labs are increasingly common strategic initiatives, their performances have been severely challenged: 87% of the “billion-dollar companies” studied in a recent report own an innovation lab, but only 17% of respondents consider that innovation actually spreads across the lab’s borders . More research is thus needed to understand how the pattern of relationality that subtends the balance between exploration and exploitation. In particular, in contexts of highly exploitative firms, we believe it is crucial to understand how is achieved the resolution of legitimacy stakes that inevitably punctuate the allocation resources over time. Such issues are critical as they can impede or facilitate the success of the activities of exploring long term strategic opportunities.

Results

Our findings illuminate how the members of the innovation lab had to seek, develop, and maintain sufficient internal legitimacy for their activities in order for the lab to keep its autonomy and fulfill its mission of strategic renewal for the parent firm in the long run. The results demonstrate that when the lab managers faced internal legitimacy challenges, they did not wait for the legitimacy losses to happen, and that they proactively committed to legitimacy work, through accounts and practices, to shape Top Management Team’s (hereafter TMT) legitimacy judgement on the lab.

Contribution to Scholarship

This study contributes to a better understanding of the dynamics of strategic renewal in contexts where the activities underlying strategic renewal diverge on the normative level from the dominant and legitimated activities of a firm.

Contribution to Practice

Empirically, we develop underexplored insights on innovation labs and their recurring poor performances and conclude by offering managerial recommendations to manage the recurring tension that emerge between exploration and exploitation activities.

Fitness

More and more firms that have "traditional" R&D departments launched innovation labs in the last decade in order to develop exploration capabilities and achieve strategic renewal. We offer innovative insights by shedding light on the legitimacy stakes emerging between labs and their parent firms top management.

Bibliography

Agarwal, R., & Helfat, C. E. (2009). Strategic renewal of organizations. Organization science, 20(2), 281-293.

Andriopoulos, C., & Lewis, M. W. (2009). Exploitation-exploration tensions and organizational ambidexterity: Managing paradoxes of innovation. Organization science, 20(4), 696-717.

Balogun, J., Fahy, K., & Vaara, E. (2019). The interplay between HQ legitimation and subsidiary legitimacy judgments in HQ relocation: A social psychological approach. Journal of International Business Studies, 50(2), 223-249.

Bloodgood, J. M., Hornsby, J. S., Burkemper, A. C., & Sarooghi, H. (2015). A system dynamics perspective of corporate entrepreneurship. Small Business Economics, 45(2), 383-402.

Brown, S. L., & Eisenhardt, K. M. (1997). The art of continuous change: Linking complexity theory and time-paced evolution in relentlessly shifting organizations. Administrative science quarterly, 1-34.

Brusoni, S., & Rosenkranz, N. A. (2014). Reading between the lines: Learning as a process between organizational context and individuals’ proclivities. European Management Journal, 32(1), 147-154.

Burgelman, R. A., Maidique, M. A., & Wheelwright, S. C. (1996). Strategic management of technology and innovation (Vol. 2). Chicago, IL: Irwin.

Ciabuschi et al., 2011; Ciabuschi, F., Dellestrand, H., & Kappen, P. (2011). Exploring the effects of vertical and lateral mechanisms in international knowledge transfer projects. Management International Review, 51(2), 129-155.

Day, G. S. (1994). The capabilities of market-driven organizations. Journal of marketing, 58(4), 37-52.

De Cremer, D., & Van Dijk, E. (2005). When and why leaders put themselves first: Leader behaviour in resource allocations as a function of feeling entitled. European Journal of Social Psychology, 35(4), 553-563.

Hill, S. A., & Birkinshaw, J. (2014). Ambidexterity and survival in corporate venture units. Journal of management, 40(7), 1899-1931.

Lavie, D., Stettner, U., & Tushman, M. L. (2010). Exploration and exploitation within and across organizations. The Academy of Management Annals, 4(1), 109-155.

Lewis, M., & Moultrie, J. (2005). The organizational innovation laboratory. Creativity and innovation management, 14(1), 73-83.

Magadley, W., & Birdi, K. (2009). Innovation labs: an examination into the use of physical spaces to enhance organizational creativity. Creativity and innovation management, 18(4), 315-325.

March, J. G. (1991). Exploration and exploitation in organizational learning. Organization science, 2(1), 71-87.

Martens, R., Matthyssens, P., & Vandenbempt, K. (2012). Market strategy renewal as a dynamic incremental process. Journal of Business Research, 65(6), 720-728.

O’Reilly III, C. A., & Tushman, M. L. (2008). Ambidexterity as a dynamic capability: Resolving the innovator's dilemma. Research in organizational behavior, 28, 185-206.



 
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