Summary
Literature Strategy & Innovation Management
Lecture 1: Introduction to Strategy & Innovation Management
® Pisano, G. (2015) You Need an Innovation Strategy. Harvard Business Review, 46 (June): 44-
54.
® Zollo, M., Minoja, M., & Coda, V. (2018) Toward an Integrated Theory of Strategy. Strategic
Management Journal, 39(6): 1753-1778.
Lecture 2: Organizational Creativity, Structure & Leadership
® Gong, Y., Kim, T-Y., Lee, D-R., and Zhu, J. (2013) A Multilevel Model of Team Goal Orientation,
Information Exchange, and Creativity. Academy of Management Journal, 56 (3): 827–851.
® Herrmann, D. and Felfe, J. (2014) Effects of Leadership Style, Creativity Technique and Per-
sonal Initiative on Employee Creativity. British Journal of Management, 25: 209–227
® Perry-Smith, J. E. and Mannucci, P. V. (2017) From Creativity to Innovation: The Social Net-
work Drivers of the Four Phases of the Idea Journey. Academy of Management Review, 42 (1):
53–79.
Lecture 3: Sources of Innovation
® Bradonjic, P., Franke, N., and Lüthje, C. (2019). Decision-makers’ Underestimation of User
Innovation. Research Policy, 48 (6), 1354-1361.
® Grimpe, C., and Kaiser, H. (2010) Balancing Internal and External Knowledge Acquisition: The
Gains and Pains from R&D Outsourcing. Journal of Management Studies, 47 (8): 1483-1509.
® Zahra, S., and George, G. (2002) Absorptive Capacity: A Review, Reconceptualization, and
Extension. Academy of Management Review, 17 (2): 185-203.
Lecture 4: Uncertainty & Strategy
® Krychowski, C., and Quelin, B. (2010) Real Options and Strategic Investment Decisions: Can
They Be of Use to Scholars? Academy of Management Perspectives, 24 (2): 65-78.
® Milliken, F. (1987) Three Types of Perceived Uncertainty about the Environment: State, Effect,
and Response Uncertainty. Academy of Management Review, 12 (1): 133-143.
® Schoemaker, P. (1993) Multiple Scenario Development: Its Conceptual and Behavioral Foun-
dation. Strategic Management Journal, 14 (3): 193-213.
Lecture 5: Innovation in MNCs
® Almeida, P., and Phene, A. (2004) Subsidiaries and Knowledge Creation: The Influence of the
MNC and Host Country Innovation. Strategic Management Journal, 25 (8/9): 847-864.
® Berry, H. (2018). The Influence of Multiple Knowledge Networks on Innovation in Foreign Op-
erations. Organization Science, 29(5), 855-872.
® Sofka, W., Shehu, E., and de Faria, P. (2014) Multinational Subsidiary Knowledge Protection -
Do Mandates and Clusters Matter? Research Policy, 43(8): 1320-1333.
Lecture 6: Innovation & Strategy at the Corporate Level
® Foss, N.J. (1997) On the Rationales of Corporate Headquarters. Industrial and Corporate
Change, 6(2): 313-338.
® Chung, W. and Alcácer, J. (2002) Knowledge Seeking and Location Choice of Foreign Direct
Investment in the United States. Management Science, 48(12): 1534-1554.
® Klingebiel, R., and Rammer, C. (2013): Resource allocation strategy for innovation portfolio
management, Strategic Management Journal, 35(2): 246-268.
,Lecture 7: Design and Structure
® Liebeskind, (1996): Knowledge, strategy, and the theory of the firm. Strategic Management
Journal, 17: 93-109.
® Lam, A. (2010) 'Innovative organizations: structure, learning and adaptation', Innovation Per-
spectives for the 21st Century, Madrid: BBVA, Spain, pp.163-175.
® Bos, B., Faems, D., and Noseleit, F. (2017): Alliance concentration in MNCs: Examining alli-
ance portfolios, firm structure, and firm performance. Strategic Management Journal, DOI:
10.1002/smj.2652.
,Lecture 1: Introduction to Strategy & Innovation Management
Pisano, G. (2015) You Need an Innovation Strategy. Harvard Business Review, 46 (June): 44-54.
Introduction
Innovation initiatives frequently fail, and successful innovators have a hard time sustaining their perfor-
mance. The problem with innovation improvement efforts is rooted in the lack of an innovation strategy.
A strategy is nothing more than a commitment to a set of coherent, mutually reinforcing policies or
behaviors aimed at achieving a specific competitive goal. Good strategies promote alignment among
diverse groups within an organization, clarify objectives and priorities, and help focus efforts around
them.
A company without an innovation strategy won’t be able to make trade-off decisions and choose all the
elements of the innovation system. There is no one system that fits all companies equally well or works
under all circumstances. An explicit innovation strategy helps you design a system to match your spe-
cific competitive needs.
Finally, without an innovation strategy, different parts of an organization can easily wind up pursuing
conflicting priorities. Diverse perspectives (marketing, business unit heads, R&D scientists, etc.) are
critical to successful innovation. Without a strategy to integrate and align those perspectives around
common priorities, the power of diversity is blunted or becomes self-defeating.
Connecting Innovation to Strategy
Like the creation of any good strategy, the process of developing an innovation strategy should start
with a clear understanding and articulation of specific objectives related to helping the company achieve
a sustainable competitive advantage. An innovation strategy should answer the following questions:
1. How will innovation create value for potential customers? Unless innovation induces potential
customers to pay more, saves them money, or provides some larger societal benefit it is not creating
value. Choosing what kind of value (better performance, easier or convenient to use, more reliable,
more durable, cheaper, etc.) your innovation will create and then sticking to that is critical, because the
capabilities required for each are quite different and take time to accumulate.
2. How will the company capture a share of the value its innovations generate? Value-creating
innovations attract imitators as quickly as they attract customers. Rarely is intellectual property alone
sufficient to block these rivals. As imitators enter the market, they create price pressures that can reduce
the value that the original innovator captures. Moreover, if the suppliers, distributors, and other compa-
nies required to deliver an innovation are dominant enough, they may have sufficient bargaining power
to capture most of the value from an innovation.
Companies must think through what complementary assets, capabilities, products, or services could
prevent customers from defecting to rivals and keep their own position in the ecosystem strong. One of
the best ways to preserve bargaining power in an ecosystem and blunt imitators is to continue to invest
in innovation.
3. What types of innovations will allow the company to create and capture value, and what re-
sources should each type receive? In thinking about innovation opportunities, companies have a
choice about how much of their efforts to focus on technological innovation and how much to invest in
business model innovation (like Netflix, Amazon, LinkedIn, Uber). A helpful way to think about this is
depicted in the exhibit on the next page “The Innovation Landscape Map.” The map characterizes in-
novation along two dimensions:
® The degree to which it involves a change in technology, and
, ® The degree to which it involves a change in business model.
The Innovation Landscape Map
Together they suggest four quadrants of innovation:
® Routine innovation builds on a company’s existing technological competences and fits with its
existing business model – and hence its customer base.
® Disruptive innovation requires a new business model but not necessarily a technological break-
through.
® Radical innovation is the polar opposite of disruptive innovation. The challenge here is purely
technological.
® Architectural innovation combines technological and business model disruptions. These inno-
vations are the most challenging for incumbents to pursue.
The vast majority of profits are created through routine innovation. However, this does not mean com-
panies should focus solely on routine innovation. Rather, it is that there is not one preferred type. Dif-
ferent kinds of innovation can become complements, rather than substitutes, over time. Conversely, a
company that introduces a disruptive innovation cannot follow up with a stream of improvements will
not hold new entrants at bay for long.
Managing Trade-Offs
An explicit innovation strategy helps you navigate the inherent trade-offs. One popular practice:
crowdsourcing, it has a lot of merits: By inviting a vast number of people, most of whom you probably
could not have found on your own, to address your challenges, you increase the probability of develop-
ing a novel solution. Crowdsourcing can lead to faster, more-efficient, and more-creative problem solv-
ing. It is simply a tool whose strength is a benefit in some contexts (highly diffused knowledge base,
relatively inexpensive ways to test proposed solutions, modular system) but not in others (concentrated
knowledge base, expensive testing, system with integral architectures).
Another practice subject to trade-offs is customer involvement in the innovation process. Advocates of
“co-creation” approaches argue that close collaboration with customers reveals insights that can lead
Literature Strategy & Innovation Management
Lecture 1: Introduction to Strategy & Innovation Management
® Pisano, G. (2015) You Need an Innovation Strategy. Harvard Business Review, 46 (June): 44-
54.
® Zollo, M., Minoja, M., & Coda, V. (2018) Toward an Integrated Theory of Strategy. Strategic
Management Journal, 39(6): 1753-1778.
Lecture 2: Organizational Creativity, Structure & Leadership
® Gong, Y., Kim, T-Y., Lee, D-R., and Zhu, J. (2013) A Multilevel Model of Team Goal Orientation,
Information Exchange, and Creativity. Academy of Management Journal, 56 (3): 827–851.
® Herrmann, D. and Felfe, J. (2014) Effects of Leadership Style, Creativity Technique and Per-
sonal Initiative on Employee Creativity. British Journal of Management, 25: 209–227
® Perry-Smith, J. E. and Mannucci, P. V. (2017) From Creativity to Innovation: The Social Net-
work Drivers of the Four Phases of the Idea Journey. Academy of Management Review, 42 (1):
53–79.
Lecture 3: Sources of Innovation
® Bradonjic, P., Franke, N., and Lüthje, C. (2019). Decision-makers’ Underestimation of User
Innovation. Research Policy, 48 (6), 1354-1361.
® Grimpe, C., and Kaiser, H. (2010) Balancing Internal and External Knowledge Acquisition: The
Gains and Pains from R&D Outsourcing. Journal of Management Studies, 47 (8): 1483-1509.
® Zahra, S., and George, G. (2002) Absorptive Capacity: A Review, Reconceptualization, and
Extension. Academy of Management Review, 17 (2): 185-203.
Lecture 4: Uncertainty & Strategy
® Krychowski, C., and Quelin, B. (2010) Real Options and Strategic Investment Decisions: Can
They Be of Use to Scholars? Academy of Management Perspectives, 24 (2): 65-78.
® Milliken, F. (1987) Three Types of Perceived Uncertainty about the Environment: State, Effect,
and Response Uncertainty. Academy of Management Review, 12 (1): 133-143.
® Schoemaker, P. (1993) Multiple Scenario Development: Its Conceptual and Behavioral Foun-
dation. Strategic Management Journal, 14 (3): 193-213.
Lecture 5: Innovation in MNCs
® Almeida, P., and Phene, A. (2004) Subsidiaries and Knowledge Creation: The Influence of the
MNC and Host Country Innovation. Strategic Management Journal, 25 (8/9): 847-864.
® Berry, H. (2018). The Influence of Multiple Knowledge Networks on Innovation in Foreign Op-
erations. Organization Science, 29(5), 855-872.
® Sofka, W., Shehu, E., and de Faria, P. (2014) Multinational Subsidiary Knowledge Protection -
Do Mandates and Clusters Matter? Research Policy, 43(8): 1320-1333.
Lecture 6: Innovation & Strategy at the Corporate Level
® Foss, N.J. (1997) On the Rationales of Corporate Headquarters. Industrial and Corporate
Change, 6(2): 313-338.
® Chung, W. and Alcácer, J. (2002) Knowledge Seeking and Location Choice of Foreign Direct
Investment in the United States. Management Science, 48(12): 1534-1554.
® Klingebiel, R., and Rammer, C. (2013): Resource allocation strategy for innovation portfolio
management, Strategic Management Journal, 35(2): 246-268.
,Lecture 7: Design and Structure
® Liebeskind, (1996): Knowledge, strategy, and the theory of the firm. Strategic Management
Journal, 17: 93-109.
® Lam, A. (2010) 'Innovative organizations: structure, learning and adaptation', Innovation Per-
spectives for the 21st Century, Madrid: BBVA, Spain, pp.163-175.
® Bos, B., Faems, D., and Noseleit, F. (2017): Alliance concentration in MNCs: Examining alli-
ance portfolios, firm structure, and firm performance. Strategic Management Journal, DOI:
10.1002/smj.2652.
,Lecture 1: Introduction to Strategy & Innovation Management
Pisano, G. (2015) You Need an Innovation Strategy. Harvard Business Review, 46 (June): 44-54.
Introduction
Innovation initiatives frequently fail, and successful innovators have a hard time sustaining their perfor-
mance. The problem with innovation improvement efforts is rooted in the lack of an innovation strategy.
A strategy is nothing more than a commitment to a set of coherent, mutually reinforcing policies or
behaviors aimed at achieving a specific competitive goal. Good strategies promote alignment among
diverse groups within an organization, clarify objectives and priorities, and help focus efforts around
them.
A company without an innovation strategy won’t be able to make trade-off decisions and choose all the
elements of the innovation system. There is no one system that fits all companies equally well or works
under all circumstances. An explicit innovation strategy helps you design a system to match your spe-
cific competitive needs.
Finally, without an innovation strategy, different parts of an organization can easily wind up pursuing
conflicting priorities. Diverse perspectives (marketing, business unit heads, R&D scientists, etc.) are
critical to successful innovation. Without a strategy to integrate and align those perspectives around
common priorities, the power of diversity is blunted or becomes self-defeating.
Connecting Innovation to Strategy
Like the creation of any good strategy, the process of developing an innovation strategy should start
with a clear understanding and articulation of specific objectives related to helping the company achieve
a sustainable competitive advantage. An innovation strategy should answer the following questions:
1. How will innovation create value for potential customers? Unless innovation induces potential
customers to pay more, saves them money, or provides some larger societal benefit it is not creating
value. Choosing what kind of value (better performance, easier or convenient to use, more reliable,
more durable, cheaper, etc.) your innovation will create and then sticking to that is critical, because the
capabilities required for each are quite different and take time to accumulate.
2. How will the company capture a share of the value its innovations generate? Value-creating
innovations attract imitators as quickly as they attract customers. Rarely is intellectual property alone
sufficient to block these rivals. As imitators enter the market, they create price pressures that can reduce
the value that the original innovator captures. Moreover, if the suppliers, distributors, and other compa-
nies required to deliver an innovation are dominant enough, they may have sufficient bargaining power
to capture most of the value from an innovation.
Companies must think through what complementary assets, capabilities, products, or services could
prevent customers from defecting to rivals and keep their own position in the ecosystem strong. One of
the best ways to preserve bargaining power in an ecosystem and blunt imitators is to continue to invest
in innovation.
3. What types of innovations will allow the company to create and capture value, and what re-
sources should each type receive? In thinking about innovation opportunities, companies have a
choice about how much of their efforts to focus on technological innovation and how much to invest in
business model innovation (like Netflix, Amazon, LinkedIn, Uber). A helpful way to think about this is
depicted in the exhibit on the next page “The Innovation Landscape Map.” The map characterizes in-
novation along two dimensions:
® The degree to which it involves a change in technology, and
, ® The degree to which it involves a change in business model.
The Innovation Landscape Map
Together they suggest four quadrants of innovation:
® Routine innovation builds on a company’s existing technological competences and fits with its
existing business model – and hence its customer base.
® Disruptive innovation requires a new business model but not necessarily a technological break-
through.
® Radical innovation is the polar opposite of disruptive innovation. The challenge here is purely
technological.
® Architectural innovation combines technological and business model disruptions. These inno-
vations are the most challenging for incumbents to pursue.
The vast majority of profits are created through routine innovation. However, this does not mean com-
panies should focus solely on routine innovation. Rather, it is that there is not one preferred type. Dif-
ferent kinds of innovation can become complements, rather than substitutes, over time. Conversely, a
company that introduces a disruptive innovation cannot follow up with a stream of improvements will
not hold new entrants at bay for long.
Managing Trade-Offs
An explicit innovation strategy helps you navigate the inherent trade-offs. One popular practice:
crowdsourcing, it has a lot of merits: By inviting a vast number of people, most of whom you probably
could not have found on your own, to address your challenges, you increase the probability of develop-
ing a novel solution. Crowdsourcing can lead to faster, more-efficient, and more-creative problem solv-
ing. It is simply a tool whose strength is a benefit in some contexts (highly diffused knowledge base,
relatively inexpensive ways to test proposed solutions, modular system) but not in others (concentrated
knowledge base, expensive testing, system with integral architectures).
Another practice subject to trade-offs is customer involvement in the innovation process. Advocates of
“co-creation” approaches argue that close collaboration with customers reveals insights that can lead
