Managing innovation projects : a perspective of explore and exploit

Abstract: A company’s ability to introduce new products and services is a key success factor for sustaining competitive advantage. In parallel, the manufacturing industry faces the challenge of delivering customer-perceived value, so-called service offerings, rather than merely goods. Consequently, innovation capabilities become more important than ever. In particular, companies acting in a business-to-consumer market environment have found that launching innovations is crucial to business success.A product development process generally starts from some kind of user need or the identification of a market opportunity. Such a process is commonly described as consisting of stages and decision gates, supporting a fairly sequential process where information about a known solution is managed. Some argue that innovation projects fit into this kind of process, and some argue that they do not since the requirements of innovations cannot be known beforehand. One cause of these conflicting arguments could be that perceptions of what constitutes an innovation differ. The literature describes two types of innovation: incremental (step wise) and radical (disruptive). This thesis builds on the assumption that these two types have to be managed differently. One key issue for the company studied is that there seem to be aspects that hinder the implementation of really creative and great innovations into products. The company has a history of technical innovations, but currently needs processes that assure innovations will be implemented into products, and thus will actually benefit users and strengthen the company’s competitiveness. Consequently, an overall purpose of the research project upon which this work is based, is to increase the possibilities for implementation of innovations of products. The work outlined in this thesis has been guided by two research questions: how is innovation perceived within the company? And, how are innovation projects managed today?The study is based on an action research approach that has generated qualitative empirical data. The methodology is explorative and descriptive in nature. Data have been generated by participation in projects, interviews and workshops.The initial studies focused on innovation as a concept, and a number of keywords describing the company view were identified, thus providing a point of view for continued research efforts. The literature review has shed light on the perspectives explore (related to radical innovation) and exploit (related to incremental innovation) as adding a dimension to the management of innovation projects. The perspectives have been tested in a workshop with innovation managers and resulted in insights about how to balance different types of projects. Moreover, the study of the gated processes for product development and interviews with decision makers indicate that further investigation of the gate criteria is important. In light of the explore and exploit perspectives, it seems that the applied gates might sort out innovation early on.