Archive for June, 2007

The potential of Innovation Controlling

As the mentioned concepts made clear, there is a distinctive need for innovation controlling in practice today, especially in the strategic context of internal and external innovation.

On the other hand, too much discipline could counteract creativity which is the breeding ground for new ideas and innovations. However, innovation controlling can accomplish an important contribution to this probably most promising task of a company. The challenge is that controlling has to support innovation management and future orientation and that controllers have to act as reliable innovators and pilots for the future of an organization by giving orientation instead of building hurdles, and by providing relevant information in order to make good decision-making possible because:

“Innovation Controlling is more than competitive advantage – it’s survival!” (Enkel/Perez-Freije 2007)


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    Reichwald/Piller have emphasized within their concept of interactive value creation that systems for innovation controlling are necessary to make the contribution of customers and network partners visible and controllable for a company.  Rautenstrauch/Generotzky/Bigalke furthermore identified the goals for the controlling of networked cooperation as the protection of potential and value contributions by implementing and continuously developing appropriate instruments. The difficulty lies in the coordination and monitoring of networked contributors to the specific cooperation and in the necessary trust between all partners. Therefore the provision of a long-term information management is another task of controlling in cooperation. Especially the interdependency between trust and information is a challenge for innovation controlling because the transfer of knowledge and relevant information is important to any form of cooperation.

    Besides the necessary infrastructure for communication, an internal reporting and order management system is essential for any networked cooperation. With every new order, the network has to coordinate acquisition, configuration, realization and closure by splitting up to subtasks. The collected information is needed to control and steer the processes throughout the cooperation, what is however only conditionally possible because of the autonomous character of any company. As Keuper/Brösel pronounce companies and networks face a dilemma between effectiveness and efficiency that further-more limits the benefits of cooperation.


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  • The Challenge of Open Innovation

    The main thought behind the concept of Open Innovation, mainly shaped by Henry Chesbrough, is that companies in a world of diversified information and talent cannot entirely rely on their own research in order to be innovative, but are increasingly reliant on the integration and application of external information and competencies.  Understood in this way, Open Innovation constitutes a further development of the lead user concept by Eric von Hippel (1988, 2005) advocating the integration of competent customers into the innovation process. The potential of externally generated innovation lies in the competence to aggregate decentralized information and resources within an open process to decisions out of that innovations more likely can arise. This is not only true for the integration of lead users, but also for cooperative networks of companies forming a virtual organization. 

    Within the concept of virtual organizations Littmann/Jansen distinguish between intra-organizational, extra-organizational, inter-organizational as well as customer- and product-orientated virtualization. This approach may provide a sharper distinction in the virtualization of organizations. Recent literature pro-nounces the potential with respect to innovation that is possible to achieve for networked companies. Miles/Miles/Snow developed an exemplary model of “Collaborative Entrepreneurship”, describing how a fictional community of networked firms uses continuous innovation to create economic wealth.

    Chesbrough/Teece have examined the virtuosity of virtuality in terms of the innovativeness of a company being one of its major competencies in order to create value.  They argue that while autonomous innovations can be handled by virtualization, systemic innovations need to be developed internally in order to prevent a company from loosing its core competencies. Otherwise being open to others could be a reckless risk and lead not to the desired results of such cooperation.


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  • Creativity versus Discipline

    Because R&D takes place in a social context, the challenge is to implement a climate of active participation and minimal conflict. Too much discipline could thereby endanger the employees’ creativity, whereas too much freedom could on the other hand waste resources. The following figure (Enkel/Perez-Freije study 2007) shows this dilemma situation of Innovation Controlling.

     Dilemma Innovation Controlling

    In the early innovation phase, there has to be sufficient freedom for creativity, while in the development phase, leadership and discipline have to be guaranteed. Or in the words of the study of University St. Gallen:

    “Successful companies have an appropriately focused innovation control system; the right degree of freedom has been established and the right decisions have been made.”


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