Management of Product Innovation
Group assignment: 25%
Exam: 75% (30 multiple choice questions)
1 hour exam, with minimum pass grade 5.5 (can be seen immediately after the exam)
Mid-term exam is the final exam, and the exam during the exam week is the resit!
Literature for exam
- Video’s provided on brightspace (watch before lectures) & content of the lectures
- Book: Schilling, M. A. 2022. Strategic Management of Technological Innovation. 7th
edition. McGraw Hill. ISBN13: 9781264080939
Chapters 1, 2, 3, 4, 6, 8, 10, 11, 12
- Papers:
1. Jansen JJP, Van den Bosch FAJ, Volberda HW (2006). Exploratory innovation,
exploitative innovation, and performance: Effects of organizational antecedents
and environmental moderators. Management Science 52(11): 1661-1674.
2. Klingebiel, R., & Esser, P. (2020). Stage-Gate Escalation. Strategy Science, 5(4):
311–329.
3. Criscuolo, P., Dahlander, L., Grohsjean, T., & Salter, A. (2017). Evaluating
Novelty: The Role of Panels in the Selection of R&D Projects. Academy of
Management Journal, 60(2): 433–460.
4. Aggarwal, V. A., Hsu, D. H., & Wu, A. (2020). Organizing Knowledge Production
Teams Within Firms for Innovation. Strategy Science, 5(1): 1–16.
5. Vakili, K., & Kaplan, S. (2021). Organizing for innovation: A contingency view on
innovative team configuration. Strategic Management Journal, 42(6), 1159–1183.
,Chapter 1 Introduction Innovation
Technological innovation = the act of introducing a new device, method, or material for
application to commercial or practical objectives.
Technological innovation = the creation of new knowledge that is applied to practical
problems. Sometimes this knowledge is applied to problems hastily, without full consideration of
the consequences and alternatives, but overall it will probably serve us better to have more
knowledge than less.
Importance of Technological Innovation
Innovation is a key driver of competitive advantage and main driver of competitive success
across industries. Many firms derive over one-third of their revenues from products developed in
the past five years.
Importance of innovation is driven by globalization → Foreign competition has put
pressure on firms to continuously innovate in order to produce differentiated products
and services.
Introducing new products helps firms protect their margins, while investing in process
innovation helps firms lower their costs.
Flexible manufacturing technologies have reduced the importance of production economies of
scale → These technologies help firms develop and produce more product variants that closely
meet the needs of customers, thus achieving differentiation from competitors.
Impact on Society
Innovation enables a wider range of goods and services to be delivered to people worldwide
→ Innovation boosts GDP, enhances communication and mobility, and advances healthcare.
→ However sometimes technological innovation results in negative externalities; pollution,
resource exhaustion (= uitputting), and other unintended consequences.
Externalities = Costs (or benefits) that are borne (or reaped) by individuals other than
those responsible for creating them.
E.g., if a business emits pollutants in a community, it imposes a negative
externality on the community members; if a business builds a park in a
community, it creates a positive externality for community members.
The Innovation Funnel
Innovation is a process where many ideas are generated but only a few make it to
commercialization.
,= The New Product Development Funnel in Pharmaceuticals
Strategic Management of Innovation
Successful innovation requires:
- Crafting a solid strategy
- In-depth understanding of the dynamics of innovation
- Well-developed processes for implementing the innovation strategy.
Maximize projects being both technically and commercially successful.
Chapter 2 Sources of Innovation
Innovation = the practical implementation of an idea into a new device or process.
So not just the idea but implementing it into a new device as well.
Creativity = the ability to produce work that is useful and novel (= new). If it’s not new, then it’s
called a reinvention.
Most creative works are novel at the individual producer level, the local audience level,
and the broader societal level.
Creativity as a Source
- Individual traits (e.g., cognitive abilities, openness to experience)
- Organizational factors (e.g., culture, incentives)
Different Sources of Innovation
- Individuals → design solutions for their own needs.
○ Inventors often combine knowledge from different domains.
- Firms → firms typically have greater resources than individuals, and face incentives to
develop differentiating new products (= advantage over non-profit and government).
○ Invest heavily in R&D; build linkages with customers, suppliers, and
complementors.
- Universities & Government Labs
○ Fundamental research often leads to innovation.
- Nonprofits
○ Can also drive innovation, particularly in areas overlooked by private firms.
,Individual Creativity (source of innovation) → see pre-recorded video
= a function of intellectual abilities, knowledge, thinking styles, personality traits, intrinsic
motivation, and environment.
Organizational Creativity (source of innovation) → not a simple aggregate of the creativity of the
individuals it employs. The organization’s structure, routines, and incentives could obstruct (=
tegenwerken) individual creativity or amplify it.
Intranet = it is like the Internet but operates only within (“intra”) the organization.
R&D by firms
R&D = one of the most obvious sources for innovation.
→ Research refers to both basic and applied research
Basic research; increasing understanding of a topic without a commercial application in
mind
Applied research; aims at increasing understanding of a topic to meet a need.
→ Development (is based on applied research) refers to activities that apply knowledge to
produce useful devices, materials, or processes.
→ R&D thus refers to a range of activities that extend from early exploration of a domain to
specific commercial implementations.
Firms often form alliances with customers, suppliers, complementors (= producers of
complementary goods or services), and even competitors to jointly work on an innovation
project or to exchange information and other resources in pursuit of innovation → the most
frequent collaborations are between firms and their customers, suppliers, and local universities.
External versus Internal Sourcing of Innovation
Firms are often using external sources of technological innovation rather than investing in
original research. Doing in-house R&D helps to build the firm’s absorptive capacity (= the
ability of an organization to recognize, assimilate, and utilize new knowledge).
Collaborative Networks
The most significant source of innovation does not come from individual organizations or
people, but from the collaborative networks that leverage resources and capabilities across
multiple organizations or individuals.
, Collaborative networks are particularly important in high-technology sectors.
Collaboration is often facilitated by geographical proximity, which can lead to regional
technology clusters.
Technology Clusters
= regional clusters of firms that have a connection to a common technology.
For example: Silicon Valley’s semiconductor firms, lower Manhattan’s multimedia cluster.
- Though today’s information technology enables fast, cheap and easy communication
across the globe, knowledge does not always transfer so easily.
- Encompass an array of industries (= een reeks industrieën) that are linked through
relationships between suppliers, buyers and producers of complements.
Knowledge that is complex (= many underlying components, or many interdependencies
between those components) tacit (= can’t be codified) may require frequent and close
interaction to be meaningfully exchanged.
Agglomeration economies = the benefits firms reap by locating in close geographical
proximity to each other.
Why cluster all together in one location?
Technological spillovers or Knowledge externalities (= both benefits)
Technological spillovers occur when the benefits from the research activities of one entity/ party
spill over to other entities.
= Positive externality because it provides unintended benefits to others.
Likelihood of spillovers depends on:
- Strength of protection mechanism (e.g., patents, copyright, trade secrets)
- Nature of underlying knowledge base (e.g., complex or tacit; can it only be
transferred in person, so face-to-face contact or in written form)
- Mobility of the labor pool (is it common that knowledge purpose changes the
company from one year to another)
Chapter 3 Types and Patterns of Innovation
Types of Innovation
- Product vs. Process Innovation: New products (embodied in firm output; goods or
services) vs. better/ efficient production methods (affects the cost curve or cost function
of a company).
→ In real world they appear very often in combination
Group assignment: 25%
Exam: 75% (30 multiple choice questions)
1 hour exam, with minimum pass grade 5.5 (can be seen immediately after the exam)
Mid-term exam is the final exam, and the exam during the exam week is the resit!
Literature for exam
- Video’s provided on brightspace (watch before lectures) & content of the lectures
- Book: Schilling, M. A. 2022. Strategic Management of Technological Innovation. 7th
edition. McGraw Hill. ISBN13: 9781264080939
Chapters 1, 2, 3, 4, 6, 8, 10, 11, 12
- Papers:
1. Jansen JJP, Van den Bosch FAJ, Volberda HW (2006). Exploratory innovation,
exploitative innovation, and performance: Effects of organizational antecedents
and environmental moderators. Management Science 52(11): 1661-1674.
2. Klingebiel, R., & Esser, P. (2020). Stage-Gate Escalation. Strategy Science, 5(4):
311–329.
3. Criscuolo, P., Dahlander, L., Grohsjean, T., & Salter, A. (2017). Evaluating
Novelty: The Role of Panels in the Selection of R&D Projects. Academy of
Management Journal, 60(2): 433–460.
4. Aggarwal, V. A., Hsu, D. H., & Wu, A. (2020). Organizing Knowledge Production
Teams Within Firms for Innovation. Strategy Science, 5(1): 1–16.
5. Vakili, K., & Kaplan, S. (2021). Organizing for innovation: A contingency view on
innovative team configuration. Strategic Management Journal, 42(6), 1159–1183.
,Chapter 1 Introduction Innovation
Technological innovation = the act of introducing a new device, method, or material for
application to commercial or practical objectives.
Technological innovation = the creation of new knowledge that is applied to practical
problems. Sometimes this knowledge is applied to problems hastily, without full consideration of
the consequences and alternatives, but overall it will probably serve us better to have more
knowledge than less.
Importance of Technological Innovation
Innovation is a key driver of competitive advantage and main driver of competitive success
across industries. Many firms derive over one-third of their revenues from products developed in
the past five years.
Importance of innovation is driven by globalization → Foreign competition has put
pressure on firms to continuously innovate in order to produce differentiated products
and services.
Introducing new products helps firms protect their margins, while investing in process
innovation helps firms lower their costs.
Flexible manufacturing technologies have reduced the importance of production economies of
scale → These technologies help firms develop and produce more product variants that closely
meet the needs of customers, thus achieving differentiation from competitors.
Impact on Society
Innovation enables a wider range of goods and services to be delivered to people worldwide
→ Innovation boosts GDP, enhances communication and mobility, and advances healthcare.
→ However sometimes technological innovation results in negative externalities; pollution,
resource exhaustion (= uitputting), and other unintended consequences.
Externalities = Costs (or benefits) that are borne (or reaped) by individuals other than
those responsible for creating them.
E.g., if a business emits pollutants in a community, it imposes a negative
externality on the community members; if a business builds a park in a
community, it creates a positive externality for community members.
The Innovation Funnel
Innovation is a process where many ideas are generated but only a few make it to
commercialization.
,= The New Product Development Funnel in Pharmaceuticals
Strategic Management of Innovation
Successful innovation requires:
- Crafting a solid strategy
- In-depth understanding of the dynamics of innovation
- Well-developed processes for implementing the innovation strategy.
Maximize projects being both technically and commercially successful.
Chapter 2 Sources of Innovation
Innovation = the practical implementation of an idea into a new device or process.
So not just the idea but implementing it into a new device as well.
Creativity = the ability to produce work that is useful and novel (= new). If it’s not new, then it’s
called a reinvention.
Most creative works are novel at the individual producer level, the local audience level,
and the broader societal level.
Creativity as a Source
- Individual traits (e.g., cognitive abilities, openness to experience)
- Organizational factors (e.g., culture, incentives)
Different Sources of Innovation
- Individuals → design solutions for their own needs.
○ Inventors often combine knowledge from different domains.
- Firms → firms typically have greater resources than individuals, and face incentives to
develop differentiating new products (= advantage over non-profit and government).
○ Invest heavily in R&D; build linkages with customers, suppliers, and
complementors.
- Universities & Government Labs
○ Fundamental research often leads to innovation.
- Nonprofits
○ Can also drive innovation, particularly in areas overlooked by private firms.
,Individual Creativity (source of innovation) → see pre-recorded video
= a function of intellectual abilities, knowledge, thinking styles, personality traits, intrinsic
motivation, and environment.
Organizational Creativity (source of innovation) → not a simple aggregate of the creativity of the
individuals it employs. The organization’s structure, routines, and incentives could obstruct (=
tegenwerken) individual creativity or amplify it.
Intranet = it is like the Internet but operates only within (“intra”) the organization.
R&D by firms
R&D = one of the most obvious sources for innovation.
→ Research refers to both basic and applied research
Basic research; increasing understanding of a topic without a commercial application in
mind
Applied research; aims at increasing understanding of a topic to meet a need.
→ Development (is based on applied research) refers to activities that apply knowledge to
produce useful devices, materials, or processes.
→ R&D thus refers to a range of activities that extend from early exploration of a domain to
specific commercial implementations.
Firms often form alliances with customers, suppliers, complementors (= producers of
complementary goods or services), and even competitors to jointly work on an innovation
project or to exchange information and other resources in pursuit of innovation → the most
frequent collaborations are between firms and their customers, suppliers, and local universities.
External versus Internal Sourcing of Innovation
Firms are often using external sources of technological innovation rather than investing in
original research. Doing in-house R&D helps to build the firm’s absorptive capacity (= the
ability of an organization to recognize, assimilate, and utilize new knowledge).
Collaborative Networks
The most significant source of innovation does not come from individual organizations or
people, but from the collaborative networks that leverage resources and capabilities across
multiple organizations or individuals.
, Collaborative networks are particularly important in high-technology sectors.
Collaboration is often facilitated by geographical proximity, which can lead to regional
technology clusters.
Technology Clusters
= regional clusters of firms that have a connection to a common technology.
For example: Silicon Valley’s semiconductor firms, lower Manhattan’s multimedia cluster.
- Though today’s information technology enables fast, cheap and easy communication
across the globe, knowledge does not always transfer so easily.
- Encompass an array of industries (= een reeks industrieën) that are linked through
relationships between suppliers, buyers and producers of complements.
Knowledge that is complex (= many underlying components, or many interdependencies
between those components) tacit (= can’t be codified) may require frequent and close
interaction to be meaningfully exchanged.
Agglomeration economies = the benefits firms reap by locating in close geographical
proximity to each other.
Why cluster all together in one location?
Technological spillovers or Knowledge externalities (= both benefits)
Technological spillovers occur when the benefits from the research activities of one entity/ party
spill over to other entities.
= Positive externality because it provides unintended benefits to others.
Likelihood of spillovers depends on:
- Strength of protection mechanism (e.g., patents, copyright, trade secrets)
- Nature of underlying knowledge base (e.g., complex or tacit; can it only be
transferred in person, so face-to-face contact or in written form)
- Mobility of the labor pool (is it common that knowledge purpose changes the
company from one year to another)
Chapter 3 Types and Patterns of Innovation
Types of Innovation
- Product vs. Process Innovation: New products (embodied in firm output; goods or
services) vs. better/ efficient production methods (affects the cost curve or cost function
of a company).
→ In real world they appear very often in combination
