Chapter 7

Innovation and
Change

2013 Cengage Learning

 3M Headquarters
Minneapolis, Minnesota
3M has long been one of the most innovative companies in the
world.
It operates with a 30/5 goal 30% of its sales each year must
come from products less than 5 years old.
Ten years ago, the company CEO tried to make the company
more efficient with Six Sigma. This increased profits, but product
innovation lagged considerably.
Should 3M continue to adhere to Six Sigma policies, or should it
encourage innovation again?
Should 3M pursue dramatic innovations or smaller, incremental
changes over time?
How much should 3M rely on acquisitions for innovation?

2013 Cengage Learning

Organizational Innovation

After reading these sections,

you should be able to:
1. explain why innovation matters to
companies.
2. discuss the different methods that
managers can use to effectively manage
innovation in their organizations.

2013 Cengage Learning

 Why Innovation Matters

Technology
Cycles

Innovation
Streams

1 2013 Cengage Learning

1
Why Innovation Matters

2013 Cengage Learning

 Technology Cycles

A cycle that begins with the birth

of a new technology and ends when
that technology reaches its limits
and is replaced by a newer, better
technology.

1.1 2013 Cengage Learning

 S-Curves and
Technological Innovation

1.1 2013 Cengage Learning

 Innovation Streams
Innovation streams
Pattern of innovation over time that can create a
sustainable competitive advantage
Technological discontinuity
A scientific advance or unique combination of
existing technology that create a significant
breakthrough in performance or function

2013 Cengage Learning

 Innovation Streams:
Technology Cycles over Time

1.2 2013 Cengage Learning

 Innovation Streams

Technological
Discontinuities

Technological
Substitution
Discontinuous
Change
Design
Competition

Dominant Design

1.2 2013 Cengage Learning

 Managing Sources of Innovation

Creative work environments

Flow

2.1 2013 Cengage Learning

Managing Sources of Innovation
Creative work environments
Workplace cultures in which workers
perceive that new ideas are encouraged

Flow
The psychological state of effortlessness in which
you become absorbed in your work and time
seems to pass quickly

2013 Cengage Learning

 Components of Creative
Work Environments

2.1 2013 Cengage Learning

 Experiential Approach
Dealing with innovation during discontinuous
change
Innovation is occurring within an uncertain
environment

the key to innovation is to use:

intuition
flexible options
hands-on experience

2.2 2013 Cengage Learning

 Experiential Approach
to Innovation
Design Iterations

Testing
Parts of
Experiential Milestones
Approach
Multifunctional Teams

Powerful Leaders

2.2 2013 Cengage Learning

 Managing Innovation During
Incremental Change
Compression approach to innovation
assumes that innovation is a predictable
process that can be planned in steps

Generational change
based on incremental improvements to a
dominant technological design and
achieving backward compatibility with older
technology

2.3 2013 Cengage Learning

 Compression Approach
to Innovation
Planning

Supplier Involvement
Parts of
Shortening Time of
Compression Individual Steps
Approach
Overlapping Steps

Multifunctional Teams

2.3 2013 Cengage Learning

2.3 Comparing the Experiential and Compression
Approaches to Managing Innovation

2013 Cengage Learning