Managing Knowledge Assets, Creativity and Innovation

The following sections are included:

• PREFACE

• ACKNOWLEDGEMENTS

• INTRODUCTION

• CONTENTS

As recently as the 1980s, the development of new products was considered to be within the realm of engineering, with little attention to the manufacture or marketing of the engineering innovations until the engineers had completed their technical tasks. Moreover, in most organizations, managers were assumed to be capable of steering a corporation's development processes whether or not they understood the underlying technology. Functional excellence (research, engineering, manufacturing, marketing and sales) was considered adequate for competitive advantage…

This paper examines the nature of the core capabilities of a firm, focusing in particular on their interaction with new product and process development projects. Two new concepts about core capabilities are explored here. First, while core capabilities are traditionally treated as clusters of distinct technical systems, skills, and managerial systems, these dimensions of capabilities are deeply rooted in values, which constitute an often overlooked but critical fourth dimension. Second, traditional core capabilities have a down side that inhibits innovation, here called core rigidities. Managers of new product and process development projects thus face a paradox: how to take advantage of core capabilities without being hampered by their dysfunctional flip side. Such projects play an important role in emerging strategies by highlighting the need for change and leading the way. Twenty case studies of new product and process development projects in five firms provide illustrative data.

The following sections are included:

• Development projects enable functions to integrate their work and advance their knowledge

• The FunSaver languished initially because the film division worried that the camera would hurt film sales

• The project leader wanted the CAD/CAM system to integrate the work of team members

• The project provided Kodak with an alternative to a tradition that had become a rigidity

• The reason for a company's successes can become an obstacle to developing the new capabilities that it needs

• Hewlett-Packard had virtually no mechanism for getting its divisions to work together to develop its first PC

• The low status of manufacturing people at many companies saps the function's ability to attract talent and solve problems

• HP leaders wanted the DeskJet project to alter the status of design and manufacturing

• Chaparral uses customers, suppliers, and competitors to benchmark its processes

The following sections are included:

• The Nature of Capability Gaps

• Linking Technology to Strategy

• Familiarity: The Role of Internal Development

• Causes for Capability Gaps

• External Sources for Technological Knowledge

• Mechanisms for Sourcing

• Building a Capability over Time from External Sources

• Managing the Absorption of Knowledge

• Summary

• Endnotes

The following sections are included:

• INTRODUCTION

• THE CONTEXT: NEW PRODUCTS FOR NEW MARKETS

• ALLIANCE GROUPS AND PRODUCT DEVELOPMENT

• FROM MARKET IDENTIFICATION TO MARKET EXPERIMENTATION

• CONCLUSION

• NOTES

• REFERENCES

The core capabilities of an organization include critical skills of employees, management systems, and norms and values. Core capabilities may be transferred formally and explicitly. However, much knowledge, particularly knowledge with rich tacit dimensions, is transferred informally through processes of socialization and internalization. We focus on two transfer mechanisms—mentoring and storytelling—that can leverage the knowledge of an organization, particularly its tacit knowledge, to build core capabilities. We draw on relevant research in learning and cognitive psychology to clarify the conditions under which mentoring and storytelling can be most effective as carriers of knowledge. Finally, we present recommendations for specific managerial practices that follow from our analysis.

The following sections are included:

• How Did He Do That?

• The Science Behind Deep Smarts

• Making Sure the Catcher is Ready Before You Pitch

• Transfer Techniques

• But Does It Cost Too Much?

The following sections are included:

• Experience—When Does It Matter?

• Understanding How Experience Builds Deep Smarts

• Buliding Receptors in the Brain

• Learning Through Simulations

• Limitations of Learning from Experience—Simulated or Direct

• Experience and Leadership

• Implications for Managers

• Keep in Mind

• Endnotes

The following sections are included:

• The Ten-Year Rule

• The Differences Between Experts and Novices

• How Experts Do What They Do

• The Limits of Expertise—and Deep Smarts

• Implications for Managers

• Keep in Mind

• Endnotes

In the diffusion of controversial technological innovations, experts influence the rate and extent of acceptance by serving as negative or positive opinion leaders. This study of prosthodontists and their choice of opinion leaders draws data from both national and local samples of professionals to explain the use of nonprecious alloys as a gold substitute in dental restorations. The role of innovation discontinuers is also explored.

"Surprise me," the CEO said to John, who had just assumed the newly created title of Director of Business Development. "You can hire six new people. Get some young blood in here and find us some new products—ones we can bring to market in, say, three or four years. Let's see what possibilities a creative group of people can identify in eighteen months." John was thrilled; what an opportunity at age thirty-four! He recruited three of the best financially minded, calculator-wielding MBAs he could find and set them to work sifting through the hundreds of possibilities in the research pipeline. With three job openings left, he pawed through dozens of impressive resumes before selecting three highly qualified young engineers. Eighteen months passed in a whirl of financial and technical analyses. To John's delight, the group members worked well together and became good friends. However, at the end, John was the one surprised—and out of a job. The group had rejected every idea in the pipeline on the basis of either financial or technical unfeasibility; they had identified not a single new idea worth pursuing. As John moved on to a different company, he was baffled: How could such a smart, well-qualified bunch of people have failed?

The following sections are included:

• We all have preferred habits of thought that influence how we make decisions and interact with others

• In a cognitively diverse environment, a message sent is not necessarily a message received

• To innovate successfully, you must hire, work with, and promote people who are unlike you.

• Successful managers spend time getting members of diverse groups to acknowledge their differences

• Managing the process of creative abrasion means making sure that everyone in the group is talking

The following sections are included:

• What is Tacit Knowledge?

• Creativity and Social Interaction

• The Nature of Innovation

• Barriers to Generating and Sharing Tacit Knowledge

• Managerial Implications

• Conclusion

• Notes

BUSINESSES HAVE BEEN PRODUCING and marketing new goods and services around the world for centuries. Within the last couple of decades, however, globalization has entered a new phase. Competitive pressures to deliver highly customized products and services to customers' doorsteps—and sometimes within their facilities—have stimulated the need to coordinate development activities across geographic boundaries. Moreover, the market for talent is increasingly global. Fortunately, communication technologies have matured into a strong, diversified, and reasonably reliable network, connecting distant nodes and enabling a degree of long-distance coordination and innovation that was once inconceivable.

The following sections are included:

• Limits of Inquiry

• Knowledge from Nontraditional Market Research

• Developer/Designer as Observer

• User as Observer

• Developer/Designer as User

• A Final Caution (Caveat Lector)

• References

The following sections are included:

• Sometimes, customers are so accustomed to current conditions that they don't think to ask for a new solution

• Observers saw people combining beepers and cell phones not to answer calls but to screen them

• Empathic-design techniques can't replace market research; rather, they contribute to the flow of ideas that need further testing

• Nissan designers were startled to see how many people were eating in trucks – not just drinks, but whole spaghetti dinners

• Photographs show spatial arrangements and details that may go unnoticed in the field

Despite the fact that more champagne was trickling down his cheeks than had gone down his throat, Ted was feeling euphoric. As he looked around at the raucously celebrating group that had just poured a bottle of the expensive stuff over his head, he reflected back on the many trials and triumphs of the Fox Team. Their motto, "Over the Top," waving on a banner overhead, captured the spirit that had gone into producing the company's first lightweight, all-terrain hiking boot. Not only was the sales force reporting an enthusiastic response to the first batch into the market, but the team had just won the coveted corporate "First, Best" award.

"I never thought of myself as a leader," Ted mused. But this project had demanded more than the usual management skills, as important as they were. For one thing, everyone on the team already had stock options and a reasonable salary. So Ted couldn't count on money to get them really charged up. Taking them out to visit hiking clubs had been a good idea—visiting customers had engendered a lot of enthusiasm and suggested some pretty radical ideas. The big one, of course, was the thin, shock-absorbing sole that the engineers had initially said was far too risky to manufacture, but which protected the foot while giving hikers a real "feel" for the terrain. And the team members he had selected certainly had a good time together, both working and playing—despite an initial rough start. But what made Ted most proud was the way the team had rallied after they got the bad news that their initial design of the boot tongue abraded the foot—so they had to go back to the drawing boards. He hoped that he had contributed to their positive attitude by presenting the bad news as a challenge he was confident they could meet and learn from. Good thing he had been right. Working on the tongue redesign had suggested a number of changes for the heel as well.

The project had been lucky, too. If Joe hadn't gone camping just the weekend that he did, and if he hadn't told the rest of the team about the way the tent lines seized up so he couldn't get the tent down, the group might never have thought of the now-patented grommets that kept the boot laces from slipping. "But just maybe I helped that happen too," thought Ted. "The group would never realize it, of course, but if I hadn't had the Monday morning 'show and tell' meetings… or if I hadn't insisted that particular Friday that we all leave the darned grommet problem until Monday to solve… In fact,…" Ted thought, with the sly grin that had inspired the team's name, "I'm getting a pretty big head over my part in this project. But they'll whittle it down to size at tonight's 'roast,' I'm sure."

The following sections are included:

• CONCLUSION

The following sections are included:

• Introduction

• Relevant concepts from literature

• Implementation misalignments

• Adaptive cycles – large to small

• Examples of adaptation options

• Conclusion and managerial implications

• References

The following sections are included:

• DESCRIPTION OF CASES STUDIED

• THE CORPORATE PERSPECTIVE: TECHNOLOGY IMPLEMENTATION LEARNING CURVES

• HIGH-VERSUS LOW-COST IMPLEMENTATIONS

• THE PLANT PERSPECTIVE

• CONCLUSION

In the implementation of an organizational innovation, managers are usually presumed to influence the extent to which the innovation is adopted and used by their subordinates. However, the findings presented in this paper suggest that the managerial influence is not equally perceived by all subordinates. Rather, certain context-specific characteristics of individual employees mediate the managerial influence. Users of the expert system studied herein who were low in personal innovativeness toward this class of innovations, for whom the subjective importance of the task being computerized was low, whose task-related skills were low or who were low performers in their sales job—all these user groups perceived their management had encouraged them to adopt. In contrast, users who rated high on any of these measures did not perceive any management influence in their adoption decision. Moreover, although access to the innovation was in fact highly similar for all users, high performers also were inclined to perceive the system as more accessible than were low performers. These findings suggest that the diffusion of an innovation within an organization perhaps could be viewed as a two-step managerial process. Employees whose characteristics incline them to adopt an innovation will do so without management support or urging if it is simply made available. Employees low on these characteristics will await a managerial directive before adopting. Implications for future research are discussed.

Effective internal technology transfer—the implementation of technical systems developed and disseminated to operational subunits within a single organization—depends not only upon the cost, quality, and compatibility of the technology, but also upon two processes of interaction between developers and users. These are user involvement in development and adaptation by the developers and users of both the technical system itself and the workplace. Analyses of data from 34 projects in four large electronics companies provide support for our hypotheses.

The following sections are included:

• Description of the Research

• The Pilot Study

• Summary and Implications

• Notes

• References

The following sections are included:

• Innovation as bundles of knowledge

• Types of knowledge

• Generating innovations: where do innovative ideas come from?

• Creative abrasion: intellectual diversity

• Accessing innovative ideas from the marketplace

• Empathic design: accessing users' tacit knowledge

• Innovation diffusion as a process of learning

• Entrepreneuring in cyber space as an innovation

• The Empty Vessel Hazard

• Knowledge transfer methods

• Knowledge coaches as change agents

• Knowledge chains: silicon valley to bangalore and delhi

• Communities of practice and horizontal diffusion

• Ev Rogers as knowledge coach

• References