Innovation and Creativity in Management

Introduction

A critical analysis of the case study ‘Photovoltaic Breakthrough’ has been performed in this paper. The case relates to frameworks and concepts of innovative management concepts at a Palo Alto Research Centre. The company was formerly called Xerox PARX and it has a very innovative product related to photovoltaic electricity. While the product is expected to provide a vital breakthrough for the company, the required commercialization and transfer of the fabricating process to manufacturing from the R&D lab has not been happening for the past 7 years.

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Other than the technical issues, there are a number of other issues such as lack of trust, non-cooperation between different departments, the organization culture, and other issues such as the recent retrenchment of workers to reduce costs. These issues have added to the burden that the company is facing and they are delaying the commercialization of the product. Rival companies are also working on the same type of product and are expected to make an announcement very soon so the company has a short deadline. The paper has analyzed the case based on framework and theories of innovation and SWOT analysis and used them in researching the case and identifying the main issues.

Understanding different innovation Theories

Alan (2005) has argued about the importance of creating a time-bound strategy in organizations that deal with new technology, else there is no control and strategic direction and the project will flounder despite having clever people. Innovation is regarded as very competitive and smaller-sized firms are better shaped to fully exploit innovations, put their focus on new innovative technologies, and take the advantage away from the incumbent (Hicks, 2003).

Disruptive Innovation

Christensen (2007) speaks of disruptive innovation as a process or product that is emergent and would seriously endanger the viability and use of existing products, rendering them obsolete. Companies that have not anticipated this type of innovation and taken appropriate actions would soon be out of business. Disruptive innovations have to provide a new way of addressing problems and should provide benefits such as paradigm shifts in utility, new applications, vastly reduced costs of manufacturing, or the use of cheap and alternate materials. Chiara (2007) speaks of the need to recognize and streamline opportunities that arise from inventions that would impact an industry.

Porter’s Sustainable Competitive Advantage

Michael Porter propounded the sustainable competitive advantage model in which a company is able to develop a competitive advantage over its rivals when it innovates a product, process, or a market that cannot be duplicated by others. Such companies are able to derive a sustained competitive advantage over the rivals and this can only happen if the product is innovative and cannot be duplicated (Porter, 1985). Carine (2006) has highlighted the importance of patenting ongoing or completed work and this is especially true in the current business scenario where a delay of a few days can make a difference between going bankrupt or turning a venture into a success.

Chain Linked Model of Innovation

Kline (et all, 1986) defined innovation as ‘an exercise in the management and reduction of uncertainty”. According to this model, the researcher develops products that are designed for a potential market. After the invention and design stage is done, uncertainty is addressed by the technical performance and the market response. The chain-linked model of innovation is illustrated in the following figure.

Chain Linked Innovation Model.
Figure 1. Chain Linked Innovation Model (Kline, 1986).

Radical Innovation

Christensen (2007) has pointed out that radical innovation is a subset of disruptive innovation and the risk of uncertainty is very high. The innovation would require the market to be taught to use the product and there would be initial high acceptance barriers for such products. With a high risk of failure, the company that takes up such projects need to develop a strategy that would produce quick results and avoid prolonged research and development cycle.

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Schumpeter Model of Innovation

Schumpeter (1934) has provided a generic model of innovation when he suggests that innovation happens when a new product is introduced that customers are not aware of and for which there is no substitute; a new method of production that leads to better productivity; a new market that can make use of the new product; a new source of raw material that allows better goods to be manufactured; creation of a monopolistic product that gives the company a greater advantage. He suggested that larger companies are better able to develop innovative products. Aghion (1994) posits that while innovations can help a company to gain market share, the research and development must be managed else it will always be in the pipeline or under advanced stages of development.

Organisational Culture

Martins (et all, 2003) have argued that organization and corporate culture plays a very important role in defining the shared values and norms, behavior with peers and colleagues, beliefs, and work practices. An open culture helps employees to innovate and come up with new ideas and concepts. But the authors have suggested that only providing an open culture may not help the company to innovate in the required direction and produce desired results.

The performance of employees and their projects should be benchmarked with the best practices in the industry. With the implementation of systems such as ISO 9000, there needs to be transparency and order in documentation and work methods and these should be made available to authorized users in the organization. Managing and leading teams is a different set of skills that have to be taught in many instances and a very reputed scientist may not be very good at instilling discipline among his team members and he may lack adequate administration skills.

Intellectual Monopoly Model

Hellwig (2001) has discussed the intellectual monopoly that is caused by innovations. According to the author, when companies or individuals develop innovative products, they tend to take IPR measures that prevent the duplication of the product by other companies and this allows the company to have a monopoly where they can dictate a price and control production and this gives them an unfair advantage. The authors point out that even individuals who are working for a company and who have developed the product tend to think in a monopolistic manner and are reluctant to reveal all details as they feel that they have a proprietary right over the invention.

Swan (1999) suggests that knowledge management and internally disbursing learnings are important if a company wants to commercialize its intellectual capital. Child (1988) argues that innovators and scientists often are driven by non-commercial reasons for taking up research and proper control has to be in place in the initial stages to make projects accountable for the money and resources they spend.

Understanding the main roles and entities – Stakeholders

As discussed in the case study by Fleming (2007), there are a number of individuals and entities and these are the stakeholders that have an impact on the case. A brief discussion of these stakeholders and their impact are discussed in this section.

Toledeo Speciality Glass company

This is the organization for which the case study analysis is done. Started in 1909, the company manufactured items for the then-fledgling automotive industry and it was a pioneer in this area. It manufactured items such as headlight covers and casings, windshield glass, and others. The organization now manufactures hardened specialty glasses, radiation-proof glass and wants to take up the production of solar photovoltaic cells.

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The company initially used the Edison recombinant approach. It has a production center at Long Beach and research units in Toledo and Palo Alto and there is a lack of cooperation and integration between these units. Long Beach wants documentation and Frank does not want to give the required documents. So engineers at Long Beach feel that Frank does not know how the thing works (Fleming, p.3).

Solar Cell Technology

There are certain technology constraints and issues that are common to solar cell technology and since this is a technical subject, this issue has not been discussed as it is not in the scope of this management study. But the root of the issues is the lack of systematic procedures in the project (Fleming, p. 16-22)

Empirical approach (Edison Recombinant search)

This was a method practiced by the famous inventor Thomas Alva Edison. In this method, a combination of new and innovative materials and the process is used for research and to develop inventions. This method was acceptable in the pioneering work of the early 19th century when there were no pressures to reduce costs and the method produced many useless inventions, increased costs substantially but also gave innovative products. This process increases the inventory, bonds the research team well but creates reticence as team members would not want to reveal their work to outsiders (Fleming, p.2).

Pilkington Process

An innovative process developed by professor Pilikington “to manufacture clear, tinted and coated glass for buildings, and clear and tinted glass for vehicles with thickness from.4 to 25 millimeters”. The process is widely used in the glass manufacturing industry (Pilkington, 2008).

Local Search

Process, where inventors used known materials they were familiar with. Subsequent tests would vary one component each time for research. This method reduces the chances of failures and decreases costs but reduces the number of breakthroughs (Fleming, p.2).

Long Beach center

It is the manufacturing unit and takes technology transfers from Toledo research center. Manufacturing wants a ready package of prototypes that would be commercialized and it wants full documentation. There is a lack of integration between the two units (Fleming, p.6).

Frank Harlan

Team head of the Solar Sandwich photovoltaic technology unit that was improving and innovating the solar photovoltaic cell. He has been working with the Toledo Speciality Glass company and pioneered research in solar cells but back then, he found few takers in the company for this product as it was not in the company’s core business area. He does not have a college degree and resents people who are more educated than him. He has an ego problem and needs constant recognition and credit. He believes in empirical discussions but is not interested in knowing why and how a particular invention worked. Unfortunately, all his team members have been adopted his behavior and mindset (Fleming, p.1, 3 – 5).

Linda Choate

She is the corporate research and development director and has a Ph.D. in physics from Stanford who overlooks commercial technology transfers from research centers to production. She has to coax Frank Harlan into delivering results as the Solar Sandwich photovoltaic has been under development for 7 years, cost millions of dollars, and has not earned any revenue. Initially, she had combative relation with Frank on developing solar cells but she respects his inventions. She believes in combining science and invention with commercialization and marketing and an opportunity to improves people’s lives. (Fleming, p.1, 5-6).

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Robbie Heras

He is an industrial scientist who worked with development teams to hasten the commercialization of technology. He regarded Frank as difficult but a very good inventor. Points given in bold fonts are key issues (Fleming, p.1).

SWOT Analysis of the Company

A SWOT analysis of the company has been performed to identify the strengths, opportunities, opportunities, and threats that the organization is facing. The analysis would help in picking up key issues and drivers that are in force. The analysis is based on the case study written by Fleming (2007).

Strengths

  • The company follows an expensive high-tech strategy of using proprietary materials and processes.
  • The organization invests large amounts of money for internal research but does not want to make use of government-funded research consortiums or hire a college professor. This kind of approach ensures certain proprietary research and products.
  • Members of the founders’ family are on board and they operate on gut feel rather than facts and figures given by ‘bean counters’ and such an attitude has helped the Ceramic division to grow. The company very much supports innovation and research
  • The company gives 500 USD to the employee who files a patent and the research-oriented approach has given it many good scientists and inventors. The company has a long history of developing innovative products and has achieved commercial success.
  • The company is not listed and does not have any outside investment and it uses cost control and avoids unknown technology.
  • The company has research collaborations with colleges such as Cal Tech, Stanford, Berkley college, and also some companies in Silicon Valley

Weakness

  • Methods used by Frank are inconsistent and the results cannot be repeated and manufacturing cannot use his findings.
  • The company uses the Edison Empirical approach that is not practical in the current business scenario.
  • The company is medium in size but takes up research on the scale of large organizations and the costs are creating pressures on the bottom line
  • Frank Harlan is not ready to cooperate with others and this is putting the solar sandwich project at risk. He is not formally educated and resents people with education and degrees
  • No cooperation between the three development areas of Toledo, Palo Alto, and Long Beach.
  • The company does not reward for publication in research magazines and considers such activities as redundant. This attitude results in loss of recognition for the researcher and causes discontent
  • Involvement with institutions and colleges is slowing the process of research as teams get diverted from key tasks
  • It is easy to file a product patent but difficult to patent a process as it would be vague and if details are given, then competition can use them

Opportunity

  • The Solar Sandwich product has interested organizations such as NASA, off-grid solar towns, and many universities and commercial product companies. So there is a great potential and opportunity for the product.
  • If the company successfully and on time develops begins to manufacture the product, then there would be huge gains in the market
  • The company has an option of joining industry research consortiums funded by governments and customers and this would reduce costs
  • Linda and Heras coordinate as information gatekeepers, read academic journals, attend seminars and pass useful information, translate works to other researchers. These people know what are the latest trends and what the market needs and they can be used to show the proper path for the research.

Threats

  • Competitors are developing alternate products that could hit the market earlier and such an event would make the current research obsolete.
  • The company is impatient for results and may shut down the project facility since it wants to cut costs.
  • The company insists that developments should be patented before they are published but filing patent takes a long time and delays publication. In the industry, experts can understand the process by just reading a few journals and the company would lose its competitive advantage if results are published
  • Franks invention is subject to severe performance drop if raw materials used are impure or there are changes in the process. There is no control over raw material

Identifying the Key Issues

In the previous sections, the paper has discussed the main stakeholders, their roles, and identities that have an impact on the case. From the list, three key issues have emerged and they are identified as follows:

  1. Use of Edison’s Empirical Approach: The company still uses Edison’s empirical approach, that is used early in the beginning of 1909 when the automobile industry was evolving. There was no pressure on time and costs and there was no competition and the industry could tolerate and fund endless research using various combinations of materials and processes. The method does not believe in building upon previous research, identifying and controlling individual parameters, and leads to non-repetitive results. This method is obsolete and as relevant as the T-Model car developed by Ford. The current business environment requires speed, quality and has to grab the market before someone else steps in. Innovation and research require proper logbooks, readings of test results, forward and backward regression, records, and composition of raw materials to be maintained and hence researchers cannot know what and how results have been produced. There is no way in which the lab process can be duplicated due to the high uncertainty of materials and processes. The company should use the Local Search method for conducting research as this is more ordered and gives results that are predictable.
  2. The attitude of Frank Harlan: Frank has a very unprofessional attitude and wants to work like a medieval alchemist rather than work as modern research professional. He does not recognize that the company is a commercial organization and has to show profits and it should move to innovative commercialization of research as quickly as possible. Since he is not educated formally, he does not realize the importance of documentation of methods and processes and uses standard materials that would help to manufacture. He regards all people other than his immediate trusted team as spies who would reveal his work to outside parties. Manufacturing does not trust him and is not ready to accept the unproved inventions he has given because there is no clarity and no documentation that would help in quick manufacturing with proved results. This mutual mistrust is not good for the company
  3. Lack of Management Control: While the management encourages innovation and research, it has not attempted to control the research activities and still wants to use the age-old methods. It still believes that true innovation can only happen when researchers are given a free hand, plenty of resources and are not accountable to produce results. There is no direct pressure from the management to make Frank deliver. The company also has invested excessively in research when it could obtain results from academic institutions and the government

Mapping Theories to the case

Trott (2005) points out that when new technologies and innovative products are being developed, there is a great necessity to manage such projects professionally and with targets in mind, else the project goes into endless iterations.

As per the Chain Linked Model (Kline e al, 1986), the innovator is expected to be market-ready and watch the market needs and requirements closely. When the product is designed, it has to be tested in a sample market and problems identified and rectified and an improved product should be offered. After this advanced prototype has been tested in the market, it should be detailed, redesigned, manufactures, and sold and a proper set of documents should be created. In this case, it can be seen that while the market is interested in the product and there have been some initial interactions with the market, the rest of the model falls in disarray.

The product that has been developed has not been tested extensively in the company itself and the only prototypes that are fabricated have been manufactured in the lab. The results are not reproducible and there is no proper documentation available to help manufacturing teams to go ahead with the production. This is the state of affairs even after 7 years of continuous research and after spending millions of dollars. The risk of the present state of uncertainty being continued is very high and there is no guarantee that the company would be able to recover the expenses, let alone make a profit. The project can be deemed as a failure.

When Porter’s model of sustainable competitive advantage (Porter, 1985) is applied for the product, it can be seen that the product would certainly give a competitive advantage over the rivals. But IPR and patents can be taken for a product and it is possible to patent the product. It would be difficult to patent the production process as it becomes generic and rivals can make the required changes to the product and manufacture a competing product themselves. So in effect, the product is not able to provide an innovative sustainable competitive advantage for the company.

The organizational theories as suggested by Martins (et all, 2003) shows that while the company has provided an environment that encourages growth and innovation, Frank has not kept his side of the deal and used haphazard means of research, fostered a closed culture among his employees where information is not shared with other members of the organization. The company in its turn has not taken efforts to control its employees or set individual goals for them. The company culture still reflects the culture of the bygone era of the 1900s when Edison created his invention. Such an approach should be done away with and professional management of people, projects, and resources should be introduced.

Conclusions

The paper has discussed the case study and performed a preliminary analysis that gives details of the main entities such as Frank Harlan the team head of the solar sandwich photovoltaic technology unit, Linda Choate the corporate R&D development director, Robbie Heras the industrial scientist, and the research methods that are used. A SWOT analysis has been performed to list a number of possible issues.

From the list, three main issues have emerged that would cause the maximum impact and deem the project a non-starter and a failure. The issues are Use of Edison’s Empirical Approach in the research process that does not require a systematic scientific method of research; Frank Harlan’s Unprofessional Attitude and a Lack of Management Control over the research process.

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