Managing Innovation: Controlled Chaos

Abstract

Based on the initial results of a multi-year research study, the managerial practices of successful large companies and their smaller counterparts are evaluated and patterns in their innovation approaches are considered. A combination of past and present research is used to determine factors crucial to successful small firm innovation. The primary factors identified are: (1) effective technological innovation develops from a knowledge and response to customer demand; (2) founders' commitment to their objective, being technology pioneers and good problem solvers allow them to persevere despite the set-backs, frustrations, and ambiguities that accompany innovations; (3) delays between innovation and commercial production can range from 3 to 25 years, so perseverance is key; (4) few overhead costs are incurred for some small firms (especially home-based businesses) which decreases the risk facing small operations and improves the value of their present success; (5) solutions are adopted wherever they can be found and this unencumbered approach removes limits on imagination and increases motivation; (6) undeterred by delays common in large companies, the inventor-entrepreneur can experiment, test, recycle, and try again with little time lost and can gain timing and performance advantages; (7) inventor-entrepreneurs can foresee tangible personal rewards if they succeed, unlike entrepreneurs with monetary goals who may panic or quit without monetary rewards; and (8) the number and variety of sources for small business financing available in the U.S. is a huge asset to inventor-entrepreneurs. In addition, interviews and secondary sources were used and cross-checked to establish the management patterns of several outstanding innovative large companies in Europe, the United States, and Japan. Finding show these are the most important patterns for successful innovation in large firms: (1) atmosphere and vision; (2) orientation to the market; (3) small, flat organizations; (4) multiple approaches; (5) developmental shoot-outs; (6) small teams of engineers, technicians, designers, and model makers with no intervening organizational or physical barriers to developing a new product from idea to commercial prototype stages; and (7) interactive learning. Finally, these key elements necessary for established companies wishing to innovate are identified and discussed: (1) opportunity orientation; (2) structuring for innovation; and (3) complex portfolio planning. (SFL)

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