Royal Holloway University of London BSc Business Administration BA3250 Innovation Management May 2012 Examiner s Report INTRODUCTION This was a three hour paper with examinees asked to answer three questions. There was a fairly even spread of choice on questions across the discipline. GENERAL COMMENTS The papers were produced to a good standard, and the answers were more consistent than in previous exams as many were able to deliver three strong answers. However, some missed the focus of some questions and suffered as a result. This exam maintained explicitly stressing in the questions themselves the use of theoretical frameworks, as this has been central to the course. Some still failed to offer any theoretical basis or reference to literature in their answers. By reproducing the relevant references shows the examiner that you are aware of the key concepts of the course. It should be noted that this alone is not enough for top marks as we expect you to use the theories in answering the question along with relevant examples, but it is necessary. In this session, there was only a small little improvement over the past mistake of failing to answer the question set. Reproducing a pre-prepared essay is not a good way to approach the exam. Good examples were the way the latter part of some questions was missed too often: globalisation and MULTINATIONALS, or alliances and R&D. The area of examples was again a consistent weakness with some examinees not giving one. It is important to stress that giving examples is one of the easiest ways for students to show that they know the materials and understand their application and limitations. Try and revise examples along with your other revision. It is important to try and use examples from outside the course materials as these clearly demonstrate your grasp of the subject, whereas those who reproduce them from the text do not show this as strongly. STATISTICAL OVERVIEW Overall, 59 candidates sat the exam and had their scripts marked. The overall average was 64%. The marks by category were as follows: Marks % No. of students No. of students as a percentage overall 40 49 4 6.78% 50-59 10 17.00% 60-69 29 49.2% 70-80 16 27.1% TOTALS 59 100% Page 1 of 5
GENERAL COMMENTS PER QUESTION Question 1: Discuss whether you agree that innovation is a process which can be effectively managed. Be sure to refer to Rothwell s five stages model. This is a basic question asking for thoughts on the models of innovation which essentially mean it is a process which can be managed and so is not about luck. Innovation and technology management is about the study and understanding of technological change. Whilst this includes the creation of new knowledge, organizations are more concerned with its application in new products and processes. Innovation is not invention and so answers need to show they understand this difference and offering a definition is a good means of showing this. A good way of answering the question directly is to discuss the innovation process and the models examined in the course to classify innovations. It even suggested/demanded using Rothwell s 5 stages but some ignored this. Linear models address the link between the creation of knowledge and needs of society. The Schumpterian view is typified by winds of creative destruction. Empirical studies highlighted the importance of market pull. Process innovation is linked to but normally lags behind product innovation. Organisations need to ensure the closeness of coupling between different functions, innovation is not the property of one function. Fifth generation innovation models incorporate linear ideas but with much feedback and concentration on organisational capabilities. Answers need to ensure they answer the question directly do you agree with this statement. Hopefully yes, it can be managed. Question 2: Explain using theory from the course whether you think there are differences in entrepreneurial attitudes between Britain and the USA. This question demanded a review of entrepreneurial attitudes and the role of large organisation. In US there is more willingness to go alone, whilst in UK there is a tradition of doing science in organised structures. Hence the examples covered in the materials of HP, Microsoft starting in garages, whereas Manchester developed the first computer as an academic project. Much theory can be used here including the push-pull, Abernathy and Utterback s product v process innovation, Porter on competitive advantage, etc. Weak answers had no theory. Question 3: Critically examine the value of the concept of dominant designs. Be sure to incorporate examples in your answer. A good example is the automobile. Technological development as embodied in the internal combustion-driven motorcar does appear to have evolved over time but the basic architecture is fixed and impossible to shift as a new entrant. Page 2 of 5
Although engine configurations vary according to manufacturer, the basic principles remain the same and have been added to, to incorporate new innovations such as a greater number of multi valve designs, variable inlet geometries and direct injection technologies. In terms of powertrain and design, the cars of today can be plotted back through a continuum of incremental modification and adaptation. Rothwell and Gardiner s (1988) terminology is that incumbent carmakers have been investing resources in the prevailing dominant design. Abernathy talks of convergence coming after an early fluid stage, dominated by small innovative firms, to an industry dominated by large established firms producing an evolving series of long-lived design families that have proven to be very robust (i.e. market established). The value to managers is to understand when they face not just competitor power, but resistance to change in the market as a result of a dominant design. Question 4: Why are firms increasingly seeking more alliances for their R&D activities? This question needs definitions of R&D, alliances and also internationalization-globalization. These were often missed, or worse the question failed to think bout alliances in terms of R&D. Traditional view was to use alliances for growth and market share, now they are viewed as gaining resource and skills acquisition. There are numerous reasons for collaboration and in the classes we looked at Littler s model. Tidd offers a good classification of alliances. Examples we covered are Cisco-WIPRO and Arcelor-Mittal. There is also more interest as ICT now makes collaboration easier, whilst R&D costs are getting higher and markets becoming more homogenous. Question 5: Explain whether globalisation changed the innovation process for multinationals. During the 1980s there was a rise in firm interest in how to become global and operate in a manner that covered all their markets and activities with one strategy and effectively separated them thinking in terms of traditional home and overseas markets. However, there is considerable debate as to whether these ideas are valid. Rugman and Hodgetts (2001) found little evidence of true globalisation except in the consumer electronics industry. Indeed they found that many manufacturing activities and all service industries have found it necessary to have strategies of national responsiveness and suggest that successful multinational companies have regional focussed strategies whilst the unsuccessful ones try to adopt global strategies. The move by some firms towards globalisation has an impact on their innovation processes. The advantages of efficiency in cutting down the need to develop or tailor designs and concepts for different markets is attractive as are the possible benefits of centralised production allowing longer production runs and more scope for process innovation. However, there are problems with such an approach. The conclusion is that globalisation is complex. However, it does stress the issues in that managing innovation is a task of integrating many different functional aspects. This management process becomes even more complex when there are several national differences to be considered within one functional task. Page 3 of 5
Question 6: What strategies exist to allow firms to exploit their innovations at arm s length? Be sure to draw on the use of corporate venturing. This question needed a description of the various venturing techniques: corporate venturing setting up a separate section to place radical new products within, and the closely related venture capital using outside money to start a new firm. The reason why firms choose this is to stop the existing routines and ways preventing innovation. But at the same time, the new daughter has access to the resources of the parent. The example given and discussed in the course was the European Space Agency incubator. Question 7: Discuss, incorporating at least two examples into your answer, whether it is possible for a company to manage mainstream and disruptive business within a single organisation. Work on disruptive technologies is typified by Bowyer and Christensen (1990, 1995) which explores the effects on incumbent firms of radical shakeouts. DT needs defining as emergent technologies that destroy the established firm s accumulated competencies by rendering them obsolete the process of being weak in the main measures demanded by the market but offering something to a small section, and how this leads to further development until it is good enough for the main market, needs to be described. Essays should argue that established firms are often surprised by such technologies because of initial ambiguity of future technical development and myopia over eventual application. Such technologies are disruptive because they lie outside of the established firm s set of sustained experience. Examples here include hard disk drives, the development of minicomputers and the emergence of the modern photocopier under Canon. Cohen and Levinthal (1989) is useful as it suggests that the firm s absorptive capacity depends upon its ability to identify, assimilate, and exploit know-how type knowledge from its environment. This in turn requires the firm to choose where and how it will deploy its R&D activities. Put another way, incumbents invest resources in the prevailing dominant design or technical trajectory. As Day and Schoemaker (2000) note, incumbent firms have a poor track record in developing and managing emerging technologiesespecially when competing versions come forward. After discussing DT, the essay should go on to how managers can spot DT by scanning, allowing parts of the organisation to break the rules, etc. Reference to the reading set by Haragon would be good. Question 8: Process innovation always follows product innovation. With reference to an industry sector you know, explain whether you agree or disagree with this statement. Utterback and Abernathy have ideas about the difference between incremental and radical innovation or product and process. They suggest that normally there is a fluid stage where there is a focus on product innovation. When this has settled and there are established designs or even a dominant design, focus shifts to thinking about how to product the product more efficiently. This is the process innovation and relates to the technology used in making the product. Some made the big mistake of thinking this meant the innovation process itself and went on to answer a different question. Page 4 of 5
Good industry examples used were cars Henry Ford did little innovation on the product but revolutionised the production process. A really good example extended this to the JIT system as Toyota. Another well used example was Apple which uses existing technology and concepts already developed by others, but improves them and outsources the production to innovative suppliers like Foxconn and so the ithings are dominated by process innovations rather than new to the world product innovations. There are examples where the process innovation leads to new products surface mount technology, Pilkington float glass, etc. And so the final answer should be that the statement is often true, but always so, and in most industries and firms it is the process innovation which is most prevalent and important. Page 5 of 5