Joe Tidd

Innovation in complex products and system

Over the past 5 to 10 years, empirical study has provided a much improved understanding of how innovation occurs in complex, high value capital goods. Research has began to illustrate the specific ways in which so-called complex products and systems (CoPS) are produced by firms, often working together in projects, and how innovation processes in CoPS differ from those commonly found in mass produced goods. This is an important research endeavour for at least three reasons. First, CoPS play a vital part in the modern economy and wider society. As the major capital goods which underpin manufacturing, services, trade and distribution, CoPS play a critical role in modern industrial and economic progress. As Rosenberg, N, 1976. Technological change in the machine tool industry, 1840–1910. In: Perspectives on Technology, Cambridge Univ. Press, Cambridge.Rosenberg (1976) has argued, capital goods are a key point of entry of new technology into the economic system. Second, because much conventional innovation wisdom is derived from research on high volume consumer products, new evidence, models and concepts are needed to properly understand innovation processes in CoPS. Third, at the practical levels of firm strategy and government policy, a robust understanding of innovation in CoPS is needed to enable firms to improve their performance and to guide the policy and regulatory agencies directly involved in decision-making in CoPS. Drawing from recent research, the purpose of this special issue is to provide substantial new insights into the innovation dynamics of CoPS, dealing with firm strategy, capability building, management practices, organisational form, product life cycles, government policy, measurements and conceptual frameworks. In this introduction, we argue not only that CoPS underpin the production of modern goods and services, but that much conventional innovation wisdom derived from studies of mass produced goods (e.g. the automobile and the semiconductor) either does not apply or applies with substantial qualification to CoPS. The aim of the Issue is to put innovation in CoPS ‘centre stage’ in the analysis of innovation. Part 1 of the introduction provides a definition of CoPS, highlighting the innovation and production contrasts with mass produced, commodity goods. Part 2 outlines key innovation issues raised by CoPS, showing the importance of systems integration, software and project management as core capabilities in the production of modern systems. Part 3 briefly summarises some of the key unanswered questions posed by CoPS, while Part 4 shows how each of the papers in this special issue attempt to answer some of these questions. Finally, Part 5 maps out future research directions, stressing the importance of building a deeper historical perspective on CoPS as a key transmission mechanism for new technology within the industrial and wider economic system.

Organizational and technological antecedents for knowledge acquisition and learning

This paper examines the factors affecting the decision to acquire external technology and the relative importance of different technology acquisition strategies pursued by British and Japanese firms. The paper draws on a study of 38 firms, consisting of 23 UK-based and 15 Japanese firms. This is not a comparative study of British and Japanese technology acquisition strategies. Rather, we aim to identify common factors affecting the decision to acquire external technology and the means by which firms attempt to do this. We identify two clusters of variable which appear to affect the decision to acquire technology. Firstly, an organizations inheritance, which includes corporate strategy, competencies, culture and what we refer to as managements `comfort? with the technology. Secondly, the characteristics of the technology to be acquired, specifically, its competitive impact, complexity, codifiability and what we refer to as `credibility? potential. Together, these factors will determine the degree and nature of technology acquisition strategy. We find that contrary to the present academic preoccupation with alliances and joint ventures, the firms examined ranked universities, research consortia and licensing as the most important sources of external technology.

The Influence of Project Novelty on the New Product Development Process

In this paper we review the range of formal tools and techniques available to support the new product development process, and examine the use and usefulness of these by means of a survey of 50 projects in 25 firms. For each firm, we compare routine and novel development projects, and identify the influence of project novelty on the frequency of use and perceived usefulness of a range of different tools and methods. In terms of usefulness, focus groups, partnering customers and lead users and prototyping are all considered to be more effective for high novelty projects, and segmentation least useful. Cross-functional development teams are commonplace for all types of project, but are significantly more effective for the high novelty cases. In addition, many tools rated as useful are not commonly used, and conversely some tools in common use are considered to be of limited use.

Complexity, networks and learning: integrative themes for research on innovation management

Research on the management of innovation has been highly fragmented, and to a large extent non-cumulative. Much of the research has been conducted within three separate disciplines, with relatively little overlap or interaction: the management of research and development or technology; new product development and marketing; and organisational development and change. In this paper, we identify a number of emergent themes which have the potential to integrate these diverse streams of research, and result in a more comprehensive model of the innovation process: complexity, networks and learning. We argue that the innovation process is inherently complex, and therefore we need better characterisations of the technological, market and organisational contingencies which affect the opportunity for innovation. With growing complexity, the focus shifts from competencies based on internal assets such as R&D activities and intellectual property, to the position of a firm within an innovation network and competencies based on its relationships with other organisations. Finally, too much research has been pre-occupied with how firms develop and exploit narrow competencies based on prior experience, rather than how firms acquire new competencies. A focus on organisational learning may provide a richer explanation of the organisational factors which affect the acquisition of new technological and market knowledge.

Creating and Capturing Value from External Knowledge: The Moderating Role of Knowledge Intensity

integration with and adaptation to internal capabilities and the exploitation of these novel combinations to create and capture value in new ways. However, studies focusing on the relationships among capabilities, BMI and firm performance are rare. In this paper, we adopt broader measures of internal and external knowledge, which include codified intangibles such as patents and copyrights, and examine the effects the combinations and interactions have on sales growth based on a dataset of 310 firms from four European countries. Using the broader measure of knowledge, we find support for the curvilinear relationship reported in studies using research and development-intensity as a proxy. However, we also find that firms with low levels of internal knowledge benefit most from an ‘optimal’ investment in externally generated knowledge, but the influence on sales growth is very sensitive to the degree of external knowledge acquired. By contrast, knowledge-intensive firms are relatively freer in defining their knowledge sourcing strategy. We discuss the implications for exploiting knowledge and complementary assets in BMI.

Managing Service Innovation: The Need for Selectivity Rather than Best Practice

In this paper we contrast the notions of best practice and configurations contingent on environmental conditions. The analysis draws upon our study of 38 UK and 70 US service firms. Four system configurations are identified, and the results provide an opportunity for updating the typologies of services, and suggest that practices and performance are multi-dimensional.

Knowledge exchange and learning through international joint ventures: an Anglo-Japanese experience

In this paper we review strategies for knowledge exchange through joint ventures. Firms collaborate for a number of reasons, including the reduction of cost and risk of technological or market development, to reduce time to market and the exploitation of scale economies. We examined 12 manufacturing joint ventures in the UK co-owned by British and Japanese parents. Interviews with and a detailed survey of the British and Japanese management reveal that parents contribute different know-how to the joint venture. Of 40 functions assessed in detail, the British parent has greater influence in Accounting and Finance and Human Resource Management functions, with the exception of investment policies which are dominated by the Japanese parent. Overall, the only functions in which the Japanese parent is significantly more influential are research and product development. We observed three types of strategic conflict between parent firms: product strategy; market strategy; and pricing policy. These are primarily the result of coupling complementary resources with divergent strategies, what we refer to as the ‘trap of complementarity’. In essence, parents with complementary resources almost inevitably have different long term strategic objectives. Too many joint ventures are established to bridge gaps in short term resources, rather than for long term strategic fit.

Generative and degenerative interactions: positive and negative dynamics of open, user-centric innovation in technology and engineering consultancies

The related concepts of open innovation and user-centric innovation are currently popular in the literature on technology and innovation management. In this paper, we attempt to address two shortcomings to their practical application. First, the precise mechanisms supporting open and user innovation in different industrial contexts are poorly specified. Second, it is not clear under what circumstances they might become dysfunctional. We identify how the interaction of meso- and micro-level mechanisms contribute to project-based user-centric innovation, based on a detailed characterization of the business activities of eight technology and engineering consultancies working across a range of sectors. We develop and illustrate the notion of generative interaction, which describes a series of mechanisms that produce a self-re-enforcing ecology, which favours innovation and profitability. At the same time, we observe the opposite dynamics of self-reinforcing degenerative interaction likely to produce a cycle of declining innovation and profitability. In the specific context of project-based firms, we show that user-centric, open innovation can affect performance negatively, and we discuss the consequences (positive and negative) of different patterns of interaction with clients.

Technological innovation, organizational linkages and strategic degrees of freedom

This paper draws on case studies of seuen LK-based multinational companies to examine the relationship between different types of technological innovation, internal and external organizational linkages and technology strategy. A model of technological innovation is deueloped to help explore this relationship. The model consists of three dimensions—technology, component and product—linked by four modes of innovation—incremental, architectural, fusion and breakthrough. The findings support the contingency theory, where different organizational structures and processes are consistent with dgerent contingency theoy, where diffrent organizational structures and processes are consistent with development.

Linking Technological, Market & Financial Indicators Of Innovation

This paper describes the results of a feasibility study to develop a national Innovation Scoreboard to measure and track the innovative performance of companies in the UK. It begins with a review of potential technological, market and financial indicators of innovation, and using data in the public domain, develops a trial Innovation Scoreboard based on 40 firms from five different sectors. The preliminary findings suggest that product announcements made in the specialist press may be a viable indicator of innovation at the level of the firm. Specifically, the evidence suggests that product announcements represent a useful measure of innovative output, which combined with expenditure on research and development provide a measure of research efficiency. This measure of research efficiency is shown to be associated with higher market to book values.