Inside Corporate Innovation

¶ … Corporate Innovation

Chapters 8, 9 and 10 in Robert Burgelman's book help answer one of the questions posed for this assignment: "How do you resolve the apparent conflict between innovation as abandonment and strategy as persistence?"

Burgelman points out (151) that some big corporations seem to cling to highly conservative goals such as "minimal fluctuation, stability, and predictability" - which explains why the U.S. automobile industry was sluggish back in the 1970s and 1980s when it came to innovations. And because of that recalcitrance, the auto industry (123) was subsequently forced into change by the stunning success the Japanese auto industry's more efficient cars achieved.

To avoid those kinds of corporate hindrances, Burgelman suggests a "new-venture division" (NVD) should be part of corporate strategy. And so, within the structure of a visionary company, one should expect to see "two structures and associated cultures" (125): one, for existing technologies and a second for innovative "about-to-be-born" new products and the attendant technologies.

If one buys into that idea (of two separate divisions within a company), then one begins to answer the question at the top of the page, because there should be no "conflict" in a desperate or dramatic way, the kind of conflict that tears companies apart, simply because innovating doesn't mean a business is abandoning the old way entirely, it just implies that the business has decided to move forward with the necessary new ideas.

Yet, as Burgelman explains (126-127), there will exist, of necessity, some conflict between the two divisions ("By definition, new ventures are volatile..."), though that built-in conflict need not be debilitating to corporate momentum. If the NVD appears to want to "gain control" over the development of new product, "astute negotiating will be required," Burgelman offers. In other words, both divisions are going to be territorial and are going to try to defend their turf - that is probably a natural business dynamic, and to be expected - but if the management system isn't competent to mend wounds the divisions may inflict upon each other, progress and technological innovation could be seriously stymied, and relationships might be poisoned.

Senior management may well pay lip service to the fact that they understand new and unproven innovations may take a long time to come to fruition (132), Burgelman asserts, but in fact, those senior managers "may need constant reassuring that the whole thing is working..." Because, the bottom line almost always is, will it be profitable? And when will it be profitable? This is reasonable to expect from senior management, but going in to setting up an NVD, clear understandings must be conveyed and accepted, that there is some risk in venturing out into the unknown.

Not only is there risk in the NVD innovative productivity, there is risk that because (134) "the NVD solves some problems while creating new and often anticipated ones," friction and conflict might put up a roadblock to success. But without risk, what can a company expect to accomplish in this highly competitive 2004 global marketplace?

The Australian economist Joseph Schumpeter says that innovation requires the "creative destruction of the past" and the "planned abandonment of historical activities" in order to "grasp the future." But that sounds a bit too radical and bridge-burning to really fit into the context of accepting the need to innovate and progress and compete.

On page 138, for example, it the manager hired to head the NVD understands the critical need to "double link-up" (pulling together the "new technical knowledge" and matching that knowledge with the "market need"), and if the NVD manager also understands "the business side of the corporation," there should be no sense of "creative destruction" or "planned abandonment." Rather, there should be, if the right person is hired, a seamless transition into the future, using creative entrepreneurial innovations, while not burning bridges with the corporate past or identity.

Meantime, in Chapter 10, management can be taught lessons, Burgelman explains (151), and management needs to be taught lessons, because many organizations suffer from "rigid procedures, hierarchy-bound slowness of response," and recalcitrance when it comes to dealing with change. Some business bureaucracies even "purposely or inadvertently discourage entrepreneurially minded executives" who have a desire to change and grow into new-ventures activity (NVA).

But what to do to when a company lags behind in innovative thinking, and loses market share because of timid approaches to change? New and vita leadership, new and visionary leadership, is the key for that company, according to Richard Foster's book, Innovation: The Attacker's Advantage. On pages 24-243 Foster addresses the issue of rigid corporate structures. "...If technology is the key to continued corporate success, the case for CEO involvement is stronger than it is in other areas." Because the CEO will eventually be called upon to make choices, that means, Foster continues, "up-front involvement before any funds are committed or positions have hardened."

And to the lay person researching these important corporate change issues, it is clear that if the CEO is not forward-leaning and hands-on when it comes to deciding which technological innovations are pivotal for growth in the market, the board of directors must remove that CEO and hire a more visionary person to lead the company.

Foster notes that the CEO does not have to be a scientist, or an engineer; still, "the competitive outcome of a market battle," Foster writes on page 243, "often requires an understanding of what appears to be obscure technical details - the band gap of germanium vs. silicon, the differences in molecular structure of naphthalene and orthoxylene," to name a few.

Geoffrey A. Moore, meantime, in his book (Crossing the Chasm: Marketing and Selling Technology Products to Mainstream Customers), talks a lot about the need for a marketing model, which "describes the market penetration of any new technology product in terms of a progression in the types of consumers it attracts throughout its useful life" (11). His book is less about leadership and more about understanding that a lack of hands-on knowledge about market dynamics will doom even the most innovative technology geek and the most visionary CEO.