Embedded Innovation : Exploring the Dynamics of Innovation

Abstract: For this dissertation I aimed to explore HMS Networks AB and how HMS managed to transform their potential ideas into innovations. My purpose was also to develop knowledge and understanding of the dynamics between exploration of new ideas and exploitation of old solutions, which can support HMS in developing future innovations. My research orientation thus led me to perform a longitudinal study to learn about HMS' past, present, and future, from the perspective of key actors, their performed activities, and how they were affected by different events in their process of creating innovation. My approach enabled me to learn how HMS managed to create their two Anybus® innovations in the past and what they did to become a market leader in the industrial communication industry. I also used a metaphorical perspective to understand how HMS created their two innovations in the past and what HMS could do to create more innovations in the future. I used an inductive and qualitative research approach substantially influenced by grounded theory to collect empirical data that were periodically and chronologically sorted and categorized for the study of key actors and how their activities and different events changed over time. I conceptualized the collected empirical data to discover latent social and psychological processes and behavioral aspects of people in their process of creating innovation. And through my analysis I constructed two main concepts - "embedded innovation" and the "dynamics of innovation" - to capture how companies co-exist in symbiosis and create a higher value together compared to what they can do on their own, to how companies survive long-term.Embedded innovation mainly captures how companies, as organisms, struggle for survival within their (often turbulent) environment, and how they embed themselves with other organisms within their environment. Embedded innovation also focuses on capturing the needs of the different organisms within the environment, such as customer needs, employee needs, supplier and partner needs, as well as the need of the focal organization itself. Embedded innovation therefore considers the process of creating "innovation ecosystems" and performing "business model innovation" as instrumental techniques for embedding the different organisms in the environment with each other, which also makes the concept of "embeddedness" a central aspect for embedded innovation. The dynamics of innovation captures the difficulty of innovation over time and that the ever-changing environment expects its organisms (its companies and their employees) to balance the different dualities of organizational life, especially the two phases of diversification (the process of exploration) and focus (the process of exploitation). Consequently, learning how to balance between these two processes is of key importance for the organism's survival and for innovation.The study of HMS was also complemented with a study of two other companies, namely Axis Communication AB and Sectra AB, in order to gain more knowledge on the dynamics of innovation from their perspective. A strategy for diversifying close to the knitting was also proposed, since the dynamics of innovation relies on this strategy, which offers a new perspective for managers on how to balance between exploration and exploitation. This dissertation therefore intertwines embedded innovation with the dynamics of innovation, by focusing on balancing between exploring new possibilities and exploiting old certainties for the creation of innovation.