Abstract: Enabling innovation Exploring the prerequisites for innovative concepts in R&DMaria ElmquistDivision of Project ManagementChalmers University of TechnologyAbstractThis thesis deals with the prerequisites for innovative concepts to impact NPD processes in large firms R&D. Based on empirical data, mainly from the automotive and pharmaceutical industries, the aim is to shed light on the actual practices of early phases of NPD, investigating the interface between innovative activities and planned development projects. The thesis further aims at suggesting a conceptual model for describing and managing innovative capabilities. The studies show that innovative concepts, especially if based on customer and market knowledge, have difficulties impacting the NPD processes. The results also indicate that although new knowledge is often generated it is not leveraged on, since innovative arenas do not have a clear interface with the established processes. Most large firms find themselves in a cost-efficiency paradigm where competing on price is no longer an option but a prerequisite for survival. NPD managers face the challenge of combining the logics of the necessary development efficiency, implying planning, structure and cost reduction, with the equally essential creation of innovative products, requiring room for creativity, exploration and learning. To enable innovation, and develop the innovative capabilities of the firm, it is proposed that the notion of absorptive capacity (ability to recognize and apply new knowledge) should be comple¬mented with a generative capacity signifying the firms ability to stimulate knowledge creation and opportunity generation. It is argued that, through modifying the assumptions of NPD, a firms innovative capabilities can be strengthened to enable innovation. Innovative arenas are proposed as a way of managing generative processes, to create both new knowledge and new concepts. It is further argued that a close integration between generative and absorptive processes is a funda¬mental dimension to enable both an efficient NPD process and the development of more innova¬tive products. To enable the innovative concepts to be properly evaluated, the need for explicitly managing the interface between the innovative activities and the NPD processes is underlined as is the need to continuously reflect on and question the existing knowledge base. A model for describing and managing innovative capabilities as a dual capacity is also proposed based on both a firms ability to absorb new knowledge through recognizing and understanding potentially valuable new knowledge, and its ability to generate new knowledge through actively experimenting and creating potentially valuable new knowledge. This new knowledge is then assimilated and applied to create commercial outputs and develop new knowledge and concepts, as well as to identify relevant gaps. Further, this thesis argues that to enable innovation, managers need to take on clear accountability for the long-term innovativeness of the firm and actively encourage activities that strengthen both aspects of the innovative capabilities simultaneously.