Research Proposal: Alignment of Innovation and Organizational Transformations Tim Kotnour, PhD University of Central Florida
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1 Research Proposal: Alignment of Innovation and Organizational Transformations Tim Kotnour, PhD University of Central Florida 1.0 Introduction Organizations have been and are continuing to be required to change their present operations to better position themselves with the ever changing environment. Often this need for change leads to a largescale transformation, including a change in mission or core business. With the change in mission, the organization must also change the manner in which it completes its core business; that is, its processes, tools, and people. An organizational transformation is redefining an organization's business (e.g., mission and products/services) and the way the business is operated (e.g., processes, technology, people, and culture). A fundamental transformation challenge is to determine the best way to ensure successful implementation of a performance improvement approach by overcoming barriers to change (Grover, 1999). Organizations are using many tools to undergo these large scale performance improvement and change efforts (e.g., total quality management, reengineering, downsizing, lean, six sigma, Baldrige, ISO certification). Other authors have identified critical success factors necessary for successful large scale changes (Appelbaum, Simpson, and Shapiro, 1987; Cameron, Freeman, Mishra, 1993, Kanter, Stein, and Jick, 1992; Marshall and Yorks, 1994; National Academy of Public Administration, 1996). However, not all of these transformations are successful (Rouse, 2011). The leaders of these organizations are looking for insights into what will make a transformation successful and what methods they should use. This research focuses on the methods to identify and implement a transformational innovation an innovation that will help the organization transform. 1.1 The Challenges of Organizational Transformations Earlier studies show that over 70% of the change efforts have failed (Champy, 1995). This success rate is not getting any better (Rouse, 2011). Some of the failure can be due to a mismatch in the initiative's goals with the internal and external issues driving the organization to change. Repositioning the organization to the external environment can vary among three levels: organizational automation, enhancement, or redefinition (Davidson, 1993). An organizational transformation is the redefinition of an organization's business (e.g., mission and products/services) and the way the business is operated (e.g., processes, technology, people, and culture). Innovation has been described as a method to transform the business model (Hamel, 2000). The intent of this research is to better understand the role of innovation approaches in organizational transformations. In response to the increasing need to transform and the decreasing success rate of transformations (Rouse, 2011), many books, training classes, and consulting support has been offered. The academic community has continued to call for developing knowledge that is useful to both the leaders of organizations and the academic researchers (e.g., Lawler, et. al, 1999). The intent of this research is to increase our collective understanding about enterprise transformations. The contribution is to provide a framework which provides insight into the factors for considering when implementing an innovation to support an enterprise transformation The audiences for this paper include three stakeholders of a transformation. The three stakeholders are from an organization accountable for making a transformation. These stakeholders include: the executive in charge of leading the transformation, the business unit directors within the organization, and the change agent supporting the executive in making the transformation a reality. These Alignment of Innovation and Organizational Transformations Tim Kotnour, PhD Page 1
2 stakeholders can use this paper to understand the issues they need to focus on when making driving an innovation within an enterprise transformation. 1.2 Research Scope To help organizations implement a transformation, this research will answer an executive's questions: What are the innovation approaches to transform the organization? Why are some of our innovations more successful than others? What is a decision making/planning process we can use to guide our thinking? How can we ensure our innovation bets are successful? More specific research questions include: How do innovation approaches impact transformational performance? How does alignment of innovation approach with the innovation situation and transformation situation (Kotnour, 2011) impact transformational performance? Figure 1 provides a conceptual model related to these questions. Transformation Situation Innovation Situation Alignment of Transformation Situation, innovation Situation & Innovation Approach Performance Innovation Transformation Organization Innovation Approach Organizational Context Figure 1. Conceptual Model of the Research. We are driven by an overall hypothesis: The greater the alignment of transformation situation, innovation situation, and innovation approach leads to greater performance. Different types of transformational situations require different types of innovations Different types of innovation situations require different types of implementation approaches The primary research deliverable includes: A decision making and planning process for managers to use when implementing a transformational innovation. Alignment of Innovation and Organizational Transformations Tim Kotnour, PhD Page 2
3 To produce this research deliverable we need to produce the following supporting deliverables: Taxonomy of transformation situations Taxonomy of innovation approaches Alignment matrix for transformational situations and innovation approaches Research case studies of transformational innovation approaches Evaluation and recommendations of transformational innovation approaches. 2.0 Alignment of Transformational Innovation Efforts This section provides a brief literature for the research. First, organizational transformations are defined. Second, the emerging factors of innovation are identified. From this foundation, we define the research approach. 2.1 Organizational Transformations A transformation is the purposeful, intentional, consistent change in business model (Kotnour, 2009). Organizational transformations create the unique need to deliver the current core business while at the same time converting over to the new business. This balancing of the current and new business model creates a set of challenges. These challenges include: 1) Developing the new overall business model concept 2) Developing the new overall business model implementation strategy 3) Creating the conditions for successful implementation 4) Balancing multiple responsibilities 5) Holding people accountable for the transformation (Kotnour, 2009). The first three challenges focus on the innovation needed to move the organization forward. Figure 2 shows the flow from the current business model to the new business model through a transformation. There may be many ways to develop and implement the new business model. We propose to better understand the innovation process as the means to transform the organization and its business model. The organization has a limited set of resources and capabilities to deliver the business and to change the business. The organization needs a process to ensure they place the bets on the right innovations and innovation strategies. 2.2 Describing Innovations This section focuses on describing the term innovation within the enterprise transformation context. We need this scope to provide clarity to the research and thought process. In this section we provide an initial model of the concepts used to describe organizational transformations. Figure 3 provides this initial model. This model is built by understanding the literature highlighted in Figure 4. Table 1 provides an example way to describe and summarize the different types of innovations. Alignment of Innovation and Organizational Transformations Tim Kotnour, PhD Page 3
4 Current business model = Right work the right way + Trigger Event Current business model = Right work the right way Deliver Current & Transition to New Future business model = Right work the right way Relevant Responsive Ready Irrelevant Unresponsive Unready Relevant Responsive Ready Why we have to transform What a transformation is Purposeful, intentional, consistent change in business model (Kotnour, 2009) Challenges 1) Develop the new business model concept 2) Develop the new business model implementation strategy 3) Create the conditions for successful implementation 4) Balance multiple responsibilities 5) Hold people accountable for the transformation Figure 2. The Challenges Created by an Organizational Transformation Drive the Need for Innovation. What are the different types of transformational situations? What are the different types of innovation situations? What is the organizational context? What is the innovation approach? What is the nature of the transformation? Evolutionary Revolutionary What is the driver for the transformation (Porter model focus)? Customers Rivalry Substitute Suppliers Potential entrants What are we trying to change? Product (new/existing) vs. customer (new/existing) Product (new/existing) vs. geographical (new/existing) How close is the change to the core? Same Change how deliver core New core How do our current and end states compare? Old to old Old to old + new Old to old + new Old to new What are we innovating? Business model Product System Technology Management system What is the level of innovation? Sustaining Disruptive What closeness to the current methods (how big is the gap)? Old to old Old to old + new Old to old + new Old to new What is the response type? Reactive Proactive What is the complexity of the innovation? Cost Schedule Technical Familiarity (see project complexity factors) What is the capability vs. capacity to make the innovation? Capability (Yes/no) vs. capacity (yes/no) What are the alternative methods? Source Internal vs external Acquisition License Acquire Merge Partner Consultant Approach Experiment Pilot All in How do the methods align to innovation type? New product development process Incubators/centers of excellence Tools Roadmaps? Figure 3. Initial Concepts to Describe Organizational Transformation Efforts. Alignment of Innovation and Organizational Transformations Tim Kotnour, PhD Page 4
5 Brickley, Smith, Zimmerman (2007) Managerial Economics and Organizational Architecture (fourth edition) o Management system innovations Gronlund, Sjodin, & Frishammar (2010). Open innovation and the stage gate process: A revised model for new product development. California Management Review, vol. 52, no. 3, pp o Methods for innovation o Provide a decision tree for helping making the choice Morgan & Wang (2010). Tournaments for ideas. California Management Review, vol. 52, no. 2, pp o Methods for innovations o Provide a decision tree for helping making the choice Germand (2010). Integration of intellectual property strategy with innovation strategy. Research Technology Management (May June), pp o Need to align innovation methods and strategies at multiple levels o Need to providers managers with a model to support making the decisions Bowonder, Anirudha, Kumar, Shirodkar (2010). Innovation strategies for creating competitive advantage. Research Technology Management (May June), pp o Type of innovation strategies Cooper, Edgett (2010). Developing a product innovation and technology strategy for your business. Research Technology Management (May June), pp o Product innovation strategies and process with methods Igartua, Garrigos, Hervas Oliver (2010). How innovation management techniques support an open innovation strategy. Research Technology Management (May June), pp o Need to align the innovation methods to the type of innovation Dell Era, Marchesi, Verganti (2010). Mastering technologies in design driven innovation. Research Technology Management (March April), pp o Integrating technology push pull Foden, Berends (2010). Technology management at Rolls Royce. Research Technology Management (March April), pp o Formal process for process/mfg technology management Kim, Mauborgne (1999). Creating New market space. Harvard Business Review. (January February) o Looking for new market opportunities o Customer/product innovation Von Hippel, Thomke, Sonnack (1999). Creating breakthroughs at 3M. Harvard Business Review. (September October) o Aligning innovation method to innovation need and where at on the S curve Christensen, Overdorf (2000). Meeting the challenge of disruptive change. Harvard Business Review. (March April) o Types of innovation: sustaining vs. disruptive innovation o Need to align strategies to type o Need to build capabilities Thomke (2001). Enlightened experimentation. Harvard Business Review. (February) o Factors for successful experimentation Bower, Christensen (1995). Disruptive technologies: Catching the Wave. Harvard Business Review.(January February) o Sustaining vs. disruptive technologies o Move disruptive technologies to its own organization Johnson, Christensen, Kagermann (2008). Reinventing your business model. Harvard Business Review. (December) o 4 elements of a business model o When need a new business model Govindarajan, Trimble (2005). Building breakthrough businesses within established organizations. Harvard Business Review. (May) o Need to innovate within corporation o Forget, borrow, learn knowledge perspective to innovation Zook (2007) Finding your next core business. Harvard Business Review. (April) o 5 key questions to determine if need to change the business (link to sustain or innovate) o 7 step process Anthony, Eyring, Gibson (2006) Mapping your innovation strategy. Harvard Business Review. (May) o 3 types of product/customer strategies Figure 4. Summary of Recent Literature. Alignment of Innovation and Organizational Transformations Tim Kotnour, PhD Page 5
6 Table 1. Understanding Innovation Efforts. Type of Innovation Description Success Requirements Business Model System Technology Management Approach Challenges Approaches 3.0 Research Process This section defines the research process to be used to conduct the research. First, the research case study process is identified. Second, the cases are described. Third, the cross cases analysis is described. 3.1 Overview of the Case Research Process The overall approach will be to conduct a research case analysis (Yin, 1989). The scope for the research process is provided in Figure 5. From this research process we will: Update the integrated model of factors Update the description of the innovation efforts Define an innovation process and provide specific framework, questions, and tools for each step of the innovation process Refine the conceptual model and begin to develop a more exhaustive theory. Organization Sub cases Data Kennedy Space Center ( ) Launch Services Program ( ) Video game making organization Operations initiatives Development initiatives Management system initiatives Start a new line of business for advisory services Start a new line of business to support emerging alternative launch providers Newly launched product A (successful) Newly launched product VP (successful) Newly launched product GS (unsuccessful) In progress new product M Management process starts (SM, GL, PM) Figure 5. Scope of the Research Process. Historical document analysis Interviews with executive leaders and key members of the project teams Interviews with executive leaders, studio leaders, and key members of the project teams Alignment of Innovation and Organizational Transformations Tim Kotnour, PhD Page 6
7 3.2 Individual Cases This section will provide the detailed case study analysis of the three organizations KSC This section will describe the results from the KSC case study LSP This section will describe the results from the LSP case study Video Game Maker This section will describe the results from the video game maker case study. 3.3 Cross Case Analysis This section will provide the results of the cross case analysis. Figure 6 provides a concept for how this analysis will occur. This cross case analysis will highlight the generalizable learnings from the cases. We Need to Conduct Cross Case Analysis. Operations Transformational Situation Innovation Situation Innovation Approach Organizational Context Alignment Performance Case Conclusion KSC Development Management Systems Advisory LSP Emerging Management system Product A Product VP Video Product GS Product M Management System Cross Case Conclusions Figure 6. Cross Case Analysis. 4.0 Conclusions This section will highlight the conclusions from the research. Alignment of Innovation and Organizational Transformations Tim Kotnour, PhD Page 7
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9 Huber, G. P., and W. H. Glick, (1993), What Was Learned About Organization Change and Redesign, In Organizational Change and Redesign, (Eds: Huber, G. P. and Glick, W. H.), New York, NY: Oxford University Press, pp Kanter, R. M., B. A. Stein, and T. D. Jick, (1992), The Challenge of Organizational Change: How Companies Experience It and Leaders Guide It, New York, NY: The Free Press. Kanter, R. (2008), "Transforming Giants." Harvard Business Review, Vol. 86, No. 1, pp Kianto, A. (2008), "Development and validation of a survey instrument for measuring organisational renewal capability." International Journal of Technology Management, Vol. 42, No. 1/2, pp Kaplan, R. and Norton, D. (2007), "Using the Balanced Scorecard as a Strategic Management System." Harvard Business Review, Vol. 85, No. 7/8, pp Kim, W. and Mauborgne, R. (2004), "Blue Ocean Strategy." Harvard Business Review, Vol. 82, No. 10, pp Kotter, J. P. (1996), Leading Change, Boston, Massachusetts: Harvard Business School Press. Kaufman, R. S. (1992), "Why operations improvement programs fail: Four managerial contradictions", Sloan Management Review, Vol. 34, No. 1, pp Kotnour, T. (2009) Transforming Organizations: Strategies and Methods, Talyor & Francis, May, Kotnour, T. (2011) Enterprise Transformations Journal of Enterprise Transformations. Lawler, E., and Worley, C. (2006), "Designing Organizations That Are Built to Change." Sloan Management Review, Vol. 48, No. 1, pp Lawler, E., Mohrman, S. & Ledford, G. (1998), Strategies for high performing organization. San Francisco: Jossey Bass Publishers. Lawrence, T., Dyck, B., Maitlis, S., and Mauws, M. (2006), "The Underlying Structure of Continuous Change." Sloan Management Review, Vol. 47, No. 4, pp Marshall, R. and L. Yorks, (1994), Planning for a Restructures, Revitalized Organization, Sloan Management Review, No. Summer, pp Montgomery, C. (2008), "Putting Leadership Back Into Strategy." Harvard Business Review, Vol. 86, No. 1, pp Mukherjee, A., Lapre, M., & Van Wassenhove, L. (1998), "Knowledge driven quality improvement", Management Science, Vol. 44, No. 11, S National Academy of Public Administration (1996), Effective Downsizing: A Compendium of Lessons Learned for Government Organizations, Washington, DC: National Academy of Public Administration. National Aeronautics and Space Administration (2006), NASA Strategic Management & Governance Handbook (NPD ), Washington, D.C: Author. Nguyen Huy, Q., and Mintzberg, H. (2003), "The rhythm of change." Sloan Management Review, Vol. 44, No. 4, pp Pascale, R. and Sternin, J. (2005), "Your Company's Secret Change Agents." Harvard Business Review, Vol. 83, No. 5, pp Roberto, M., and Levesque, L. (2005), "The Art of Making Change Initiatives Stick." MIT Sloan Management Review, Vol. 46, No. 4, pp Rouse (2011). Enterprise Transformation, Journal of Enterprise Transformations Ruff, F. (2006), "Corporate foresight: integrating the future business environment into innovation and strategy." International Journal of Technology Management, Vol. 34, No. 3/4, pp Simons, R. (1994), "How top managers use control systems as levers of strategic renewal", Strategic Management Journal, Vol. 15, Sink, D. S. and Morris W. T. (1995), By What Method?, Norcross, Georgia: Industrial Engineering and Management Press. Alignment of Innovation and Organizational Transformations Tim Kotnour, PhD Page 9
10 Sirkin, H., Keenan, P., and Jackson, A. (2005), "The Hard Side Of Change Management." Harvard Business Review, Vol. 83, No. 10, pp Stewart, T. (2006), "Architects of Change." Harvard Business Review, Vol. 84, No. 4, pp. 10. Strebel, P., and Ohlsson, A V. (2006), "The Art of Making Smart Big Moves." Sloan Management Review, Vol. 47, No. 2, pp Sull, D. (2005), "Strategy As Active Waiting." Harvard Business Review, Vol. 83, No. 9, pp United States General Accounting Office (1995), Workforce Reductions: Downsizing Strategies Used in Selected Organizations, Washington, D.C.: United States General Accounting Office, March. Van Wingerden, R. (2001), "Managing change." International Journal of Technology Management, Vol. 21, No. 5/6, pp Wyatt Company, The, (1993), Best Practices in Corporate Restructuring, Chicago, IL: The Wyatt Company. Yin, R. K., (1989). Case Study Research: Design and Methods (Revised Edition), Sage Publications, Newbury Park. Zook, C. (2007), "Finding Your Next CORE Business." Harvard Business Review, Vol. 85, No. 4, pp Alignment of Innovation and Organizational Transformations Tim Kotnour, PhD Page 10
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