Ideo: the Organization and Management Innovation in a Design Firm and the Role of Alliances and Collaboration

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Schumpeter (1949) wrote of the individual and collective embodiment of the “entrepreneurial spirit” – the “Unternehmergeist”. One company that channels this “geist” is the Sillicon Valley, California-based design and consultancy firm, IDEO. Founded in 1991, this self-styled innovation and design firm balances process and product innovations grounded in a human-centred design philosophy. Through this approach IDEO elided the pitfalls of the technology push versus demand-led innovation dichotomy to produce products and services that feel just as good as they work. In the latest rankings IDEO was listed at no.10 on Fast Company's Top 25 Most Innovative Companies (2009) and no.15 on Fortune's 100 most-favored employers by MBA students (Universum 2009). This paper attempts to analyse the principles and practices at IDEO using two frameworks namely: 1. the organisation and management of innovation and research and development (R&D) and 2. strategic alliances and collaboration. The discussion on organisation and management would be focused primarily on innovation since R&D as a portfolio at IDEO is still emergent. As a consequence also, its alliances and collaboration strategies and activities are described in the context of IDEO as a highly sought-after development partner.

Analysis of the responses of senior business managers to what they considered to be the top three challenges of innovation management revealed that creating an innovative culture, attracting and maintaining diverse talents and finding the right balance of the incremental and the radical were uppermost (Tidd and Bessant 2009). Smith (2008) identified nine key factors that impact on an organisation’s ability to manage innovation: management style and leadership, resources, organisational structure, corporate strategy, technology, knowledge management, employees and the innovation process.

The Oslo Manual defines ''Innovation'' as "the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organisational method in business practices, workplace organisation or external relations." (OECD 2007). This definition encompasses the common elements of innovation as proposed by earlier authors such as Schumpeter, Freeman, Rothwell and Gardiner, Drucker, Porter, Schumann, Merrifield etc. (Tidd and Bessant 2009; Innovation Zen 2006)

Organisation and management of Innovation
Since the introduction of 'creative destruction' Schumpeter (1942), there has been a growing confidence that the basic elements of successful innovation can be distilled through careful observation, and that they can be adopted and managed by firms to create and sustain competitive advantage. A number of authors (Abernathy and Utterback 1978; Teece 1986; Henderson and Clark 1990; Tushman and Anderson 1990; Christensen 1997 etc.) have proposed various bivariate frameworks for assesing possible innovation types (incremental, radical, modular, architectural, product, process, market, organizational, complementary, disruptive etc). See Figure 1. Despite the variety, a basic conclusion however is that this mode of analysis can adequately inform strategic and organizational decisions and that different kinds of innovation require different kinds of organizational environments and managerial skills (Tushman and Anderson 1986). Figure 1: Component and architectural innovation (Henderson and Clark 1990) Source: Tidd and Bessant (2009)

Models of the Innovation process and the dynamics of its articulating phases have been proposed by a number of authors (Myers and Marquis 1969; Von Hippel 1976; Tidd et al 2001 etc.). Tidd and Bessant (2009) detailed a linear model with four phases (search, select, implement and capture). The authors made the distinction that innovation management is essentially about creating conditions within an organization to increase the likelihood of a successful resolution of multiple challenges under high...
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