A Conceptual Framework for Production Innovation

Abstract: Production plays a central role in the global sustainability challenge the world is facing. Rising population numbers and increased middle class lead to even higher consumption and production of goods. Hence, the production industry has a large responsibility, and innovative products and ways of producing can make a significant difference in terms of sustainability, both on company and global level, by increased consideration of long-term benefits and consequences. In addition, a major shift in the global production industry takes place, from previously mainly manufacturing goods, towards currently providing more and more sophisticated solutions to satisfy the ever increasing and varying needs of customers. To address these challenges, well-developed abilities to innovate production processes are required, in order to deliver both incremental and radical improvements on a short-term and long-term basis. One of the more enduring ideas in organization science is that an organization’s long-term success depends on its ability to exploit its current capabilities while simultaneously exploring fundamentally new capabilities. Although it is known that both approaches are needed in a long-term perspective, exploitative innovations tend to be over-represented in established manufacturing firms, since short term measures, meeting demands of existing customers, and ease of measurement often are dominant concerns. To focus solely on exploitative innovation is not truly sustainable from a business perspective, since at some point the production system optimization will just start delivering marginal improvements. Hence, we need explorative production innovation in parallel to accomplish sustainable development in production. There is however very little focus in production development literature on realization of innovation that could be categorized as explorative. The overall objectives of the research presented in this thesis were to advance understanding of production innovation, and to provide support for management of explorative production innovation. As a result, a conceptual framework for production innovation is proposed, which conceptualizes and describes the phenomenon, and highlights important factors for explorative production innovation management. The conceptual framework is a result of an iterative research process of incorporating findings acquired in empirical studies and from previous research, which have been reported in five appended papers. The empirical data derive from four case studies, studying production development projects where innovative solutions have been developed in four companies in different industries. The conceptual framework describes and distinguishes between exploitative and explorative production innovation.  The application of an increased production capability that builds upon existing knowledge to improve the production systems performance could be described as exploitative production innovation, and the application of new production capability, i.e. the capability to do new tasks by exploring and using new knowledge could be described as explorative production innovation. The thesis also highlights aspects of innovation management related to the distinct characteristics of explorative production innovation that often may be perceived as challenging, i.e. the systemic nature, intangible outcomes, need for dynamic capability, and lack of process support. Based on this, four factors that have been identified as important in managing explorative production innovation are highlighted: (1) Making production innovation a strategic matter, (2) Assessing unfamiliarity in production innovation, (3) Adapting the production innovation process, and (4) Implementing a systemic change.The conceptual framework presented in this thesis provides a conceptualization of production innovation, and thereby a theoretical framing of an underexplored phenomenon. The findings also begin to frame production innovation management as a management discipline, where the conceptual framework and the identified key factors for explorative production innovation is an initial step to interpret, adapt and apply relevant theoretical knowledge from the innovation management field in a production context. The understanding provided by the conceptual framework may be valuable for companies seeking to complement existing production development efforts (e.g. continuous improvement and production optimization) with explorative production innovation.