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Theoretical background

In this chapter, the theoretical background of this study is presented. Due to the absence of a natural connection between the innovation process and creativity both concepts and related research fields of climate and culture are divided into two “pillars”. Figure 2 is used to visualize the relationship between the concepts and the structure of the theoretical framework. The first sub-section 2.1 introduces innovation in organisations to create an overall understanding and entry into the topic of this study. Theories about the innovation process and sub-process interfaces follow this introduction. The second sub-section 2.2 introduces the theoretical pillar of creativity and related topics of climate and culture. Within the last sub-section 2.3 to connection is made between the two pillars and the resulting conceptual framework for the fieldwork is shown

Innovation in organisations

One example of successful innovation is comes from the Sony Corporation. In 1978 the Tape Recorder Division of Sony attempted to re-design a small portable voice recorder with stereophonic sound as output. The project ended up being a failure after a lot of time, money, and effort had been invested. The aim of reducing the size of the recording device significantly was not achieved, and the project ended up with a prototype that was producing stereophonic sound, but it could not record anything. After the project had been stopped, the engineers used the prototype to play their favourite cassettes while they were working. One day the chairman of Sony made a visit to the engineers’ office and found the engineers listening to music. When he saw the prototype, he remembered a project that was on-going in another department about lightweight portable headphones. Asking the simple question “what if we combine those two projects?” which started a revolutionary project. The combination of these two projects created the product that brought a revolution to the market and Sony Corporation, the famous Walkman (Nayak & Ketteringham, 1994).
The Walkman example shows how essential innovation can be for an organisation’s renewal and adaptation to a changing environment; it provides the organisation with competitive advantage and secures their growth (Tidd et al., 2005; Eisenhardt & Tabrizi, 1995; Trott, 2008; Spithoven et al., 2012). Early innovation literature (e.g. Eisenhardt & Tabrizi) considered innovation as the primary driver for economic development combining existing resources in a new way and focused on individual entrepreneurs. Over time, the focus changed towards organisational innovation and created a broad range of research fields with various definitions accordingly to the researchers’ purpose. There are two viewpoints on organisational innovation; the first one considers the outcome (product) and the second one, the actual process to achieve the outcome as organisational innovation (Rogers, 2003). In this thesis, the process view on organisational innovation is adapted. Organisational innovation is the successful implementation, development, adoption, or creation of novel ideas, which ends in new products or processes (Amabile, 1997; Amabile et al., 1996; Damanpour, 1991; Isaksen & Ekvall, 2010).
According to Rogers (2003) the idea attribute “novelty” is an essential element in innovation as it is a subjective individual attribute if something that is perceived as new or as an imitation. Ford (1996) and Oldham & Cummings (1996) define a novel idea as a significant recombination of existing material or something entirely new that fits a particular situation or problem and is useful. This definition does not include how novel ideas are created; these various processes are described under the term creativity.1 Creativity is the “spark” at the very beginning of innovation and considers the complex individual mental process of the novel idea generation (Ford, 1996). Creativity is seen as the individuals’ raw material of “making” new ideas (Oldham & Cummings, 1996).
Based on those distinctive definitions creativity is an essential part of innovation, (Paulus & Nijstad, 2003) but not sufficient to ensure the implementation of a new idea (Amabile et al., 1996). Implementation to be successful, the combination of knowledge, resources, and skills of a company environment are necessary and known as innovation process (Fagerberg, 2004; West & Farr, 1990)

The innovation process

In manufacturing companies, the output of innovation is a product (Fagerberg, 2004; West & Farr, 1990). Through product innovation organisations can adjust themselves to their markets, technical conditions and ensure their survival (Eisenhardt & Tabrizi, 1995). A prerequisite for successful product innovation is a clear and structured process that is covering all necessary activities. This innovation process embraces all activities that foster the adoption of a new product into a market. This includes basic and applied research, design and development, market research, marketing planning, production distribution, sales, and after-sales service (Roozenburg & Eekels, 1995). Even if it is an internal process, it is an open system influenced by various environmental factors (Trott, 2008).
Both in practice and academia, the innovation process is divided in three, and some extend parallel sub-processes (Lakemond et al., 2007). The definitions of the shown parts in Figure 1 are as follows:
“Technology development is investigations undertaken to acquire new knowledge, though directed primarily towards a specific practical aim or objective” (Nobelius, 2002, p. 10). Characteristics of this process are a high degree of uncertainty, unclear time frames and a strong focus on research (ibid).
“Product development is the systematic work using existing knowledge gained from research and practical experience towards producing new material, products, processes, systems or services” (Nobelius, 2002, p. 10). It faces a higher time pressure, but there is less uncertainty (ibid).
Production refers to the process of producing products and services with support from different production factors such as labour, machinery, and raw material (Bellgran & Säfsten, 2010). This process faces the tightest deadlines, lowest uncertainty and focus on efficiency (Vandevelde & Dierdonck, 2003).
In reality, the separation or isolation of the processes are caused by organisational structures like location, aspects and activities (Drejer, 2000). For example technology development is performed in the research and development (R&D) department, while product development is done in separated projects, and production in the production area. This separation of the three processes grows the need for integration between them. Integration according to Khan (1996) comprises interaction and collaboration to a multidimensional activity, whereby interaction stands for all structural activities between the departments like meetings, calls or exchange of documents. The collaboration focuses more on mutual understanding, shared goals, and resources.
Drejer (2000) proposes three integration dimensions as a way to approach the challenge of sub-processes integration. With the integration of activities, all activities and tasks within the innovation process are seen as a chain to generate the final product. A way to improve the chain of these activities is to understand all the involved technologies and their effect on the product. The dimension of integration of aspects takes into account that product and technology development departments speak different languages. It aims to combine customer needs with the functions provided by the product and with the current technology available in the company. The last dimension is the integration of time horizon, this considers the differences between product and technology life cycle. Development and alignment of products and used technology takes into account scheduled time, specifications and expected level of performance (ibid). All those considerations point out the importance of the actual interfaces between the sub-processes in the innovation process

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Technology development – product development interface

As mentioned in the previous paragraph the sub-processes of technology development and product development are in reality often separated (Drejer, 2000). This increases the need for integration and creates an interface between the two sub-processes (Nobelius, 2002). This interface is affected by numerous factors and it has received great attention the recent years. Many scientists (e.g. Iansiti, Eldred and McGrath, Daim et al.) are considering this interface as an essential element for successful product innovation.
Eldred and McGrath (1997) propose a technology transfer step between the two processes as a bridge for better integration. In their view, a successful technology transfer requires three central elements: program synchronization, technology equalization, and technology transfer management. Program synchronization refers to the readiness of the technology to be transferred and the readiness of product development to receive the new technology. A careful synchronization will have a critical impact on the successful transfer. The role of technology equalization is to broaden the scope of used technologies. Technology development focuses on the development of one core technology while product development needs more than one technology to achieve their goals. Technology transfer management address the necessity of a structured transfer management process that ensures an efficient resource allocation and that all involved members are aware of the goals and their roles (Eldred and McGrath 1997).
Iansiti (1995) points out the importance of combining knowledge of new technology or processes with existing knowledge in order to achieve a more efficient product development process. A similar view as Eldred and McGrath (1997) is represented by Nobelius (2004). According to him, three aspects must be taken into consideration: strategic and operational synchronization, transfer scope and transfer management (ibid). Strategic synchronization deals with the issue of matching the technology to the product development strategy while operational synchronization is dealing with the proactive actions for initiation of a product development project. Transfer scope refers to the technology width and depth, in other words, what kind of knowledge needs to be transferred and what its complexity is (ibid). The transfer management deals with the actual process and the management of technology transfer. There is a need for transferring verified technologies into product development projects where the separation between the processes is necessary (Lakemond et al., 2013). To ensure the quality of the transferred technology, a clear hand-over between technology and product development is crucial.
Daim et al. (2009) presented a number of aspects for a successful internal transfer of technology:

  • Communication channel: A right communication between departments can decrease the time and the money spent on technology transfer. A communication channel between technology development and product development will improve the integration of those two.
  • Single point of contact: A single point of contact between technology department and product development department will accelerate the decision-making process. This practice enables the ownership of technologies, clear structure and better management of resources.
  • Technology readiness: Technologies need to be available and mature in order to integrate into products. It will prevent the development of technology inside the projects and will enhance the technology integration.
  • Technology portfolio: A technology portfolio can help companies to keep track of all the internal developed technologies. An efficient use of technology portfolio can reduce the overlapping on the product development process and fastens the technology selection at a beginning of a project.
  • Consistent criteria and metrics: A consistency in measures and metrics helps the creation of homogenous understanding and enables a comparison basis for technology and product groups.
  • Incentive structure: An incentive structure creates a collaborative environment that enhances the collaboration between groups and departments.
  • Consistent decision-making: The complexity of decisions made by managers can be very high and especially in high technology projects. Consistent decision-making will enhance the integration between departments.
  • Long-term strategy: A long-term strategy supports the decision-making in a company and enables the linking of technologies with future products. Furthermore, it steers technology and product development in the same direction and results in a smoother and better integration of technology into new products.
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The various described factors related to the interface technology development / product development can be categorized for a better understanding according their familiarities.

  • The Technology scope category contains factors related to the development of technology as long as to knowledge development. Specifically this category contains the following factors: Knowledge accessibility, knowledge complexity, technology readiness, and technology portfolio.
  • Transfer management, contains factors related to the transfer knowledge and technology, and the smooth transition from the technology development phase to the product development phase. Included factors are: clear hand-over, communication channel, and single point of contact.
  • Strategic and operational factors are related to managerial and organizational factors that affecting the interface such as: Incentive structure, consistent criteria, decision-making and long-term strategy.

Product development-production interface

The second interface between product development and production has the same root cause as the first interface and is dealing with tight time schedules and limited uncertainty (Lakemond et al., 2007). Since cost and time are the primary focus, the process integration needs to be efficient. Cooperation and coordination are essential to overcome the interface-related problems and achieve a proper integration (ibid).
Adler (1995) proposed three coordination possibilities: the pre-project coordination, the design-phase coordination and the manufacturing phase coordination. Pre-project coordination refers to the stages before starting a development project where tools like CAM or CAD can be used to ensure integration of the activities involved in developing a new product and consequently for reducing the time-to-market. Design-phase coordination refers to stage concerning product and process definition where different techniques can be adopted to achieve coordination. The establishing of standards is a valid way to reach integration among the activities performed by designers without compromising the manufacturing phase. A possible approach to ensure integration is a sign-off procedure: the manufacturing department has the responsibility to declare if the project developed in the design phase, with the relative specifications, is feasible or not. In the manufacturing phase coordination the production operations takes place. With Engineering Changes (ECs) a powerful tool for proper coordination is introduced whereby the designers first send a rough version of the project to production. The production engineers respond with a list of necessary changes in order to make the product feasible (ibid)


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