Managing Innovation_entrepreneurship and transformation

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www.CeTIM.org Prof. Dr. Bernhard R. Katzy Session 4 Entrepreneurship and Transformation Instructor Prof. Dr. Bernhard Katzy [email protected] 2012

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Session 4 entrepreneurship and transformation

Transcript of Managing Innovation_entrepreneurship and transformation

Page 1: Managing Innovation_entrepreneurship and transformation

www.CeTIM.orgProf. Dr. Bernhard R. Katzy

Session 4 Entrepreneurship and Transformation

Instructor

Prof. Dr. Bernhard Katzy

[email protected]

2012

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Innovation Management

Basic innovation concepts

Innovation TheoryDominant theory, Main issues and developments of innovation research

Introduction based on life cases

Innovation PracticeHigh tech entrepreneurship…

Innovation System

Organization of innovation

Transformation and entrepreneurship

Innovation Governance Innovation

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Session 4: An overview

• Quick Test

• Transforming Organizations

• Capturing value from technical innovation and dynamic capabilities

• Entrepreneurship in open innovation era

PRESENTATION OUTLINE

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Session 4 Reading engagement

2 questions 10 minutes

QUICK TEST

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Introductory Discussion

What is entrepreneurship for you?

“Entrepreneurship is a normal human capacity, it can be cultivated and developed” (Ludwig von Mises – Human Action)

“ The pursuit of opportunity beyond the resources you currently control” (HBR)

VIEWS ON ENTREPRENEURSHIP

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Examples of transforming organizations

How about these organizations?

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Theories for Entrepreneurship Research

However, so far, a strong theory dedicated to entrepreneurship research is till missing

Entrepreneurship Research Themes

-Opportunity

-Entrepreneurs

-Entrepreneurship Process

-Firm Creation

-Economic Dynamics

-…

Various theories employed to examine the entrepreneurship phenomenon

-Agency theory

-Social capital theory

-Resource-based view

-Dynamic capability

-Opportunity Recognition

-Creation theory

-…

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Capturing value from technical innovation and dynamic capabilities

TRADITIONAL PRODUCT DEVELOPMENT FUNNEL

Screen 1 Screen 2

Product

introductionDevelopment

ProjectsPre-development

Investigation

Source: New product development funnel, Wheelwright and Clark

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Capturing value from technical innovation and dynamic capabilities

CAPTURING TECHNICAL INNOVATION

Core Technological

Know-how In Innovation

ComplementaryTechnology

Service

Distribution

CompetitiveManufacturing

Others

Source: Capturing Value from Technological Innovation: Integration, Strategic Partnering, and Licensing Decisions by David J.Teece 1988

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Capturing value from technical innovation and dynamic capabilities

• The competitive potential embedded in new technology is not always captured by the innovator

• Channel Selection Issues (Core Capabilities)

Contractual Mode

Integrative Mode

Mixed Mode

CAPTURING TECHNICAL INNOVATION

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Dynamic Capabilities

Are what enable a firm to integrate, build, and reconfigure internal and external competencies to address rapidly changing environments (Teece et al., 1997)

Are the firm’s processes that use resources to match and even create market change.

Are the organisational and strategic routines to learn routines (Einsenhardt et al. 2000)

DYNAMIC CAPABILITY

Process-Coordination/Integration-Learning-Reconfiguration and transformation

Position-Technological assets-Financial assets-Structural assets-……

PathPath dependency-Current position is shaped by the path it travelled-Routines constrain its future behavior

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Dynamic capabilities in details

DYNAMIC CAPABILITIES VARY IN DIFFERENT CONTEXT

Dynamic capabilities integrate resources Product development routines for profitable product and

services Strategic decision making …

Dynamic capabilities on reconfiguration resources replication and brokering routines used to copy, transfer, and

recombine resources for new products Scarce Resource allocation routines Patching routines to changing market …

others Knowledge creating routines in industries where cutting-

edge knowledge is essential Alliance and acquisition routines which bring external

resources into the firm, like BIO-TECH firms, or CISCO Exit routines as market undergo changes

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Capturing value from technical innovation and dynamic capabilities

ENTREPRENEURIAL DYNAMICS AND DYNAMIC CAPABILITIES

Source: Strehle, Katzy, Davila, Learning Capabilities and the Growth of Technology-based new ventures

Financial resources

Foundational technology, business

idea

Humanresources

Initial resource base

Research institutes, high-tech companies

Entrepreneur

Venture capital, corporate venture

capital

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Growth is driven by learning, not “more of the same”

LEARNING, DYNAMIC CAPABILITIES ANDTHE OPERATING CORE

Dynamic capabilities• Creation, integration, and

adaptation of routines• Path dependency

Management control system• Information-based• Documented• Tool-supported

Single-looplearning

Double-looplearning

Economic rents

Resources

Primary processes and operating routines• Execution of known procedures (e.g. order

processing)• Assurance of current profit

Source: Zollo and Winter (2002), Lant and Mezias (1992), Fiol and Lyles (1985), Argyris and Schön (1978)

LEARNING, CAPABILITIES, AND THE OPERATING CORE

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KNOWLEDGE CODIFICATION IN MANANGEMENT SYSTEMS

MCS are suited to observe organizational learning in new ventures

Budgeting with IT Toole.g. “SAP”

Frequent budgeting, self- made on Excel

Loose bundle of bank slips

Archive of costs, revenues, bank slips, and notes

ProcessNo process

Learning increase

Evolution of routinesMCS1

Budgeting example

1MCS are ”formal, information-based routines and procedures used by managers to maintain or alter patterns in organizational activities’’ (Simons, Strategic Management Journal, 1994)

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The study setting

• Questionnaire and interview with 1 to 3 top managers

• Participating companies must be: – Technology-based– In a range of 10 to 150 employees– Founded 1992 or later– Private and independent or publicly-owned– Located in regions with high entrepreneurial

activity, here Silicon Valley and Munich

Munich(44+2* STBNV)Silicon Valley

(72 STBNV)

* 2 TBNV went bankrupt during the observation

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PATH DEPENDENCY OF GROWTH

0

500

1000

1500

2000

2500

3000

3500

Year 0 Year 1 Year 2 Year 3 Year 4

Cluster 1 Cluster 2 Cluster 3

Rev

enu

e (E

UR

'0

00)

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Entrepreneurship in Open Innovation Era

OPEN INNOVATION

licensing

External Technology Base

Spin-off New Market

Other firms’ Market

Current Market

Technology insourcing

Internal Technology Base

Labor mobility/ Venture Capital/ Numerous Start-ups/ research conducted at Universities/……

Research Development

Source: The era of open innovation by Henry Chesbrough 2003

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Entrepreneurship in Open Innovation Era

-Till the end of 1999, The NVG of Lucent had invested in 19 ventures which are located in 4 areas in the left.

-The objectives: uncover new vehicles for increasing its growth; develop new mechanisms for leveraging its unparalled technology; increasing comercialisation rate of its technology.

-Focus on internal ideas

THE CASE OF BELL LABCorporate investment objective

Lin

k to

op

era

tion

al c

ap

ab

ility

DrivingAdvances strategy

of current business

EnablingComplements strate-

gy of current business

EmergentExploration of poten

-tial new business

PassiveProvides financial

returns only

Tight

Loose

Strategic Financial

Source: Henry W.Chesbrough 2002

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Entrepreneurship in Open Innovation Era

LUCENT NVG'S OPERATING MODEL

Source: Henry W.Chesbrough and Stephen J.Socolof

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Readings for session 5: Innovation System

S5 Innovation System

Article 1: Michael E. Porter. Clusters and The New Economics of Competition. Harvard Business Review, November- December, 1998.

Article 2: Anna L. Saxenian. Comment on Kenney and von BURG, "Technology, Entrepreneurship and Path dependence: Industrial Clustering in Silicon Valley and Route 128". Industrial and corporate change, Volume8, Number1, 1999.

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