What Are the Different Factors Contributing to Network Activities Across Firms With ICE Programs - Research Paper Example

Running Head: INNOVATIVE ORGANISATIONS Innovative Organisations of the of the Contents Executive summary 2. Introduction 3. Network structure and individual network leverage 3.1. Organisational-level 3.2. Individual-level 3.3. Toward a program level perspective on networks 3.4. Networks and the ICE challenge 4. Method 4.1. Research approach 4.2. Sample selection 4.3. Data collection 4.4. Analysis 4.4.1. First reliability check 4.4.2. First validation check 4.4.3. Second check: reliability and validity 4.4.4. Performance 5. Findings 5.1. Organisational network capacity 5.2. Individual network capacity 5.3. Programmatic characteristics affecting networks for ICE 5.4. The role of programmatic factors under varying levels of ONC and INC 5.5. Program network capacity 5.6. Cultivator and broker roles 6. Conclusions References 1. Executive summary This research examines the interplay among organisational, individual and programmatic components that enrich network activities for ICE. The interest lies in understanding how networks are created and leveraged within a company, rather than beyond the organisations boundaries. In addition, we focus on the development of programs aimed at nurturing ICE within an environment traditionally designed to support operational excellence. The following questions guide the analysis: (1) What are the different factors contributing to network activities across firms with ICE programs? (2) What are the relationships among these factors? This research involves a comparative case analysis of interviews in twelve industry-leading global corporations: Air Products, Albany International, Corning, Dupont, GE, IBM, Johnson and Johnson, Kodak, Mead-Westvaco, Sealed Air, Shell Chemical, and 3M. During site visits, and follow up phone calls over a four-year period, we conducted a total of 246 interviews with representatives from different managerial levels (senior managers, middle managers, and project leaders), different functional backgrounds (such as: R&D, marketing, business development), and from different business groups in each company. Innovative Organisations 2. Introduction Corporate entrepreneurship contains two fundamental components: (1) objectives focused on rejuvenating or purposefully redefining organisations, markets and industries to create or sustain a position of competitive superiority, and (2) innovation as the premier mechanism for meeting these objectives (Antoncic, 2001). This research examines the interplay among organisational, individual and programmatic components that enrich network activities for ICE. While others have explored inter-organisational networks and entrepreneurship (Walter et al., 2006), focus is on how networks are created and leveraged within a company, rather than beyond the organisations boundaries. 3. Network structure and individual network leverage Network theory examines how network structure, and the position of individuals in that structure, impacts ones ability to bring about change or produce performance advantages (Burt, 1992). This indicates two levels of analysis: 1) the overall network and (2) the individual. The objective of study is to identify how managers can facilitate the network creation process for ICE. Thus, the analysis with a third level of inquiry was investigated: ICE program-level activities. Therefore objective through a three-component lens were viewed: the organisation, the individual project leader, and the ICE program. It was next examine what network theory says about these three components. 3.1. Organisational-level Attributes of network structure include the number and strength of relationships among network members, which impact knowledge flows between individuals and across the network (Granovetter, 1992]. These relationships can vary in the extent to which there is trust, obligation, and dependence. For example, people are more comfortable exchanging knowledge with those whom they have strong and trusting relationships, particularly when that knowledge involves a high level of complexity (Hansen, 1999). 3.2. Individual-level A key skill of corporate entrepreneurs is their ability to get the right people involved with their innovations (Howell, 2005). Within a network, entrepreneurial individuals can achieve their goals by exploiting their network position and reshaping the network to suit their ambitions (Wasserman, 1994). According to Subramaniams (2005) empirical analysis of 93 organisations, the value of an organisations human capital in explaining radical innovation capability is strongly tied to social capital. Network theory, in fact, takes the position that social relationships, rather than human capital, explain why certain people are more successful vis-à-vis their objectives than others (Burt, 2000). 3.3. Toward a program level perspective on networks The analysis of network activities incorporates the programmatic level, in addition to the organisational and individual-level components described above. Companies who declare ICE as a key component of their strategy may organize groups, roles, and programs to ensure breakthrough innovation projects are identified and commercialized (DeMartino, 2006). 3.4. Networks and the ICE challenge As an organisation becomes large and more established, it is increasingly difficult to develop new networks (Hargadon, 2002). Most well-functioning organisations are better suited for more familiar activities building on current businesses (Bower, 1995). Attempts to pave new paths for information exchange and knowledge sharing will conflict with the organisations institutionalized environment (Dougherty, 1992). ICE therefore presents a challenge, since it represents a departure from the organisations well-established practices (Utterback, 1994). Even when there is high level support for ICE, there can be covert resistance to it. Entrepreneurs are frequently subjected to both passive and active resistance, and political pressures that act to undermine their efforts. 4. Method 4.1. Research approach This research is part of a four-year comprehensive study of programs for managing ICE in established organisations. The objective of this research was to obtain insights into new network creation within the broader context examined: that of firms organizing for repeated innovation. The nature of inquiry dictated a prospective, longitudinal research design and a multiple case study methodology (Graebner, 2007). 4.2. Sample selection It was defined breakthrough innovations as those projects identified as having the potential to offer either a) new to the world performance features; b) significant (e.g. 5–10×) improvement in known features, or c) significant (e.g. 30–50%) reduction in cost.3 It was defined an ICE Program as any initiative within the company that is driven by a formal mandate for creating new businesses based on breakthrough innovation. In assembling the sample, the research programs objectives to members of the Industrial Research Institute (IRI) were presented, a professional organisation of R&D managers of Fortune 1000 firms. Companies were sought on the basis of recommendations from IRI members, and from broad reaches across the entire membership of the IRI. Potential participants were screened to determine where the mandate had originated from. The final sample comprised twelve large multinational firms: Air Products, Albany International, Corning, Dupont, GE, IBM, Johnson and Johnson, Kodak, Mead-Westvaco, Sealed Air, Shell Chemical, and 3M.4 Table 1 provides descriptive information about the sample. Three of the companies operate in paper and packaging businesses, four are classified as primarily materials or chemical companies, three produced various consumer products, and two are characterized as diversified industrial products manufacturers. Sample companies ranged in size from just under $1 billion to $130 billion. Table 1. Descriptive data on the research sample. Company business description Age of initiative at the time of interviews Number of interviews Dedicated middle manager-led group Formal review board Diversified industrial products manufacturer Just beginning 16 N N Machinery products Just beginning 13 N N Producer of industrial gases and chemicals 1 year 28 Y Y Materials company 2 years 22 N Y Chemical ingredients and science based products 5 years 22 Y Y Diversified industrial products manufacturer Less than 1 year 24 N N Computer systems and related goods 3 years 24 N Y Consumer nondurable, non-food goods 1 year 21 N Y Diversified industrial and consumer products manufacturer 8 years 24 Y Y Specialty paper and packaging manufacturer 2 years 17 Y Y Specialty packaging manufacturer 7 years 19 N Y Chemical and plastics manufacturer 3 years 16 Y Y View Within Article 4.3. Data collection The key informant in each company was the person or persons with primary responsibility for developing and maintaining the ICE initiative. In three companies, that person was the Chief Technology Officer (CTO). In another, it was the Executive Vice President of Corporate Strategy. In the remaining eight, it was typically a senior-level director or middle manager in charge of a new ventures or new business creation group. Eight to sixteen interviews per company were conducted during the site visits: 143 interviews in total. Follow-up phone calls or emails were used to seek clarification or greater depth in particular areas. After the initial site visits, 103 follow up interviews were conducted by phone every six months with the key informants. In some cases, other individuals were identified during the site visits as capable of providing a different perspective: for example, they were involved in a particular aspect of ICE activity with which the key informant was less familiar. These individuals were included in the follow up interviews. Over the four-year period, a total of 246 interviews were conducted in site visits and follow up interviews. Table 1 reveals the number of interviews per company. 4.4. Analysis The analysis aimed to uncover the essential features of the cases and then look for key relationships among these features (Ragin, 1992). In-depth analysis of the original site visits to identify key evidence were conducted first and themes associated with the importance of networks. NVivo, a computer-aided text analysis (CATA) software program was used to code the data. This software program enabled to systematically code the more than 10,000 pages of interview data collected. Table 2. Initial (data-driven) code definitions. Organisation: cultural elements. Communicating generally. How the information flows around the organisation. Sharing knowledge; exchanging information (in R & D or elsewhere). How people in the traditional organisation are viewing innovation efforts and the people involved. Visibility of the program. Management: senior leaders or middle managers providing a leadership, management or advising role relative to the program: e.g. a governance board, middle-managers, other executives. The credibility of these managers. Their experience and background. Their network. Instances describing a manager using his network, his understanding, his knowledge, power or influence as a means of helping the team. Data around advising in general. Team: the credibility of the project leader and team. Their abilities, skills, training, and understanding. Their network in general, and who they have relationships with. Relationships: any internal relationships the teams need to establish to commercialize or move projects forward, especially with business units. Interacting with people. Internal relationships and linkages. Promoting the project within the organisation. Who they talk to. How they share information. Trust, but also poor relationships (e.g. downstream with the business units). View Within Article 4.4.1. First reliability check The research assistant then coded two transcripts from another two companies, with each of the two researchers coding one. Inter-rater reliability between the coding done by the researchers, who participated in the site visits, and the research assistant, who was not involved in the site visits, nor had prior familiarity with the research, was 63%. All three met as a group to resolve any differences in coding and to revise the code definitions. Each then coded another transcript from two additional companies. Inter-rater reliability of 70% was achieved, which is the minimum level suggested by Huberman (1994). 4.4.2. First validation check To establish construct validity for the variables and relationships emerging from analysis, results with five managers from five different companies in the sample several times were reviewed during the analysis process. In addition, to enhance ability to generalize beyond research sample, These results were discussed with four managers from four companies not included in this research: Dow Corning, Hewlett Packard, Procter & Gamble, and Xerox. These companies were recruited in the same manner as the research sample: through discussions with IRI members and interviews with key informants, in particular to confirm the companies had a declared strategic intent to develop ICE programs. The purpose of assembling this second cohort was to validate emerging findings from the analysis of interview data—from the perspective of companies not involved in the original sample. 4.4.3. Second check: reliability and validity A second research assistant re-coded the initial site visit transcripts, again using NVivo, to help ascertain the consistency and reliability of the constructs. By this time, the follow up interviews were completed, so this data was included. The refined definitions of the constructs were used in the coding. Initial and ongoing meetings were held between the research assistant and two of the authors during this process to ensure understanding and agreement about the meaning and evidence for constructs and to explore their relationships. This endeavor brought out additional nuances regarding program-level elements. 4.4.4. Performance To obtain an indication of the value of the relationships among the constructs, measures of progress across the sample were sought. There are two challenges associated with measuring progress for ICE. First, while the period of the study was four years, the commercialization process for ICE is inherently a long-term activity. It is therefore important to obtain interim measures of performance. Second, traditional metrics of progress are typically less relevant for assessing and guiding innovation. Financial measures, for example, may not capture the strategic and organisational value innovation activity provides. Some organisations in sample were experimenting with various measures of ICE progress, but this was uneven across the sample. However, it included questions related to progress in interview protocol for the follow up interviews. This protocol contained questions such as, “What progress has been made relative to the specific goals you identified during the last interview?” 5. Findings As mentioned, several constructs emerged from the analysis. At the organisational level ‘organisational network capacity’ was conducted (ONC). At the individual (project leader) level, ‘individual network capacity’ (INC) were defined. At the ICE program level, three additional network-related constructs were recognised: ‘program network capacity’ (PNC), and the managerial facilitating roles of cultivator and broker. Table 3 shows examples from the data illustrating these constructs. In this first section of the results, on these constructs, providing exemplars of each from across the cases and a discussion of their impact on network building and reforming were defined. Then the relationships among the constructs and derive testable research propositions regarding those relationships were considered. Table 3. Exemplars of identified constructs. Construct Exemplars Organisational network capacity Its been an important element that anybody in the company is available to consult with anybody else on their program, their project, their problems. And its a worldwide thing. And it took a lot of pain and effort to maintain those links and maintain that collaboration. The company, as a culture, values networking big time. So this is the negative side of this is [the corporate] country club, right, where relationships are very important, right, theyre good at networking and whatever. The good side of this is that you are encouraged to do it, to connect. So it was expected to cross link. Individual network capacity He knows everybody in (the Division). Hes very well connected. Projects are successful if someone has close enough ties with someone in the business unit to get them to sponsor it then it would sort of work. If they did not then it might not work as well. Program network capacity It was connected some of the Project teams leaders, who are both from the current or even (matured ICE projects). Researchers wanted to connect them so they can share experiences, because sometimes verbally sharing is just as valuable. I think you need some facility to move resources relatively quickly. Get the right technical people on a project that you think is good. That can be quite hard, and I wouldnt say they do great at that, but I do think hunters network is useful in that regard. Broker Im spending my time to help him because theyre corporate and therefore cross unit in nature. So Ill call them when I need their help. So I have those types of conversations with these people. I spent 35 min trying to help somebody down in Australia with a problem they had, and I got this one through the back door, and Im going to try to leverage it. Cultivator She has a great technical background in chemistry. Shes also an amazing facilitative leader. So somebody who could easily get people in the same room and get to work together. And so one of the things that Im dealing with right now is developing the leadership team to be able to take care of their needs and developing skills within the individuals to take care of themselves and their peers. And how to reinforce each other, View Within Article 5.1. Organisational network capacity While network theory tends to focus on structural explanations regarding network activities [Hoang, 2003] findings suggest cultural qualities are important. While social cohesion considers the general willingness of individuals to devote time and effort to assisting others (Reagans, 2003), analysis revealed a quality called organisational network capacity (ONC), which includes, not only the willingness of organisation members to contribute to the extent needed for the project, but also the ease through which the organisation can be navigated in order to locate those with situation-specific knowledge. 5.2. Individual network capacity Individual network capacity refers to an individuals skill at locating and securing cooperation from organisation members in order to access knowledge needed for the project. This involves converting existing relationships to those that can serve the needs of ICE activity, and creating relationships where none existed before. An individuals existing network is clearly important to ICE, as network theory would predict (Burt, 1992 R.S. Burt, The social structure of competition. In: N. Nohria, R.C. Eccles and R.C., Editors, Networks and Organizations: Structure, Form, and Action, Harvard Business School Press, Boston (1992)Burt, 2000). 5.3. Programmatic characteristics affecting networks for ICE Aside from the organisational and individual factors previously described, study also revealed significant programmatic factors related to network development. The first is the ICE groups program network capacity (PNC): the programs network and its network-building capacity for ICE. PNC refers to qualities leading to the creation of ICE-specific networks and program-level network abilities, which can then be leveraged for individual ICE projects. PNC, in essence, creates a micro-level network within an organisation domain, but specific to ICE. Legitimacy at the ICE program level appears to be an important element in its ability to build relationships. While individuals can have credibility due to their organisational status or because of their past accomplishments, legitimacy at the program level refers to broad-level recognition and acceptance about the programs significance as a key contributor to the organisations growth objectives. 5.4. The role of programmatic factors under varying levels of ONC and INC In this next step, it was developed a richer appreciation for the relationships among constructs in order to derive propositions about the factors contributing to ICE networking: in other words, the ability to access the most relevant knowledge in a timely manner for ICE projects. Table 4 highlights the relationship between organisational network capacity, individual network capacity, program network capacity, and managerial brokering and cultivating roles. This table was constructed by reviewing the data matrix containing evidence of each construct for each company. The authors reviewed the data and, after considerable discussion, rated the extent to which a firm exhibited strong or weak characteristics in each of the constructs. Table 4. Comparison of organisational, individual, and program level attributes with performance. Organisational network capacity Individual network capacity Program network capacity Cultivator role Broker role Program-level progress Organisational-level progress H1 Very high Very high Low No No High Moderate H2 Very high Very high Low No No High Moderate H3 High Very high Moderate No No Moderate High H4 Moderate Low High Weak Weak Very high Very high H5 Moderate Low Moderate Weak Weak High Moderate H6 Moderate Low Low No No Moderate Moderate L1 Moderate Very high High Yes Yes Moderate Low L2 High Low Low Yes Yes Very low Very low L3 Low Very high Low No No Low Low L4 Low High Moderate Weak Weak Moderate Low L5 Low Very low Moderate Weak Weak Low Moderate L6 Very low Very low Low No Weak Very low Very low No = no formal role identified. Yes = formal role identified. Weak = formal role identified, but indications of ineffectiveness or insufficiency. View Within Article Table 4 also includes performance ratings. Performance was rated based on the frequency of codes indicating progress at either the program or organisational level in the follow up interviews. Higher ratings therefore indicate this progress was more often cited across the timeframe of the study. As Table 4 shows, five companies (H1–H5) were rated as reporting high or very high progress on one indicator, with at least moderate progress on the other. Another company, H6, showed moderate progress on both. The bottom half (L1–L6) shows ratings of low or very low on one or both indicators, with no higher than moderate progress on one indicator. From this table, some interesting propositions were developed about the relationships among these constructs. 5.5. Program network capacity In the top three companies in Table 4 (H1–H3), network activities were predominantly reliant on individuals with high INC, operating in environments with high ONC. Individuals could facilitate their own links across organisations where others were willing to contribute and commit to the projects. The combination of high ONC and strong individual networking skills may override the need for more formal programmatic elements. The next two companies (H4 and H5) also reported high progress. H4, in fact, revealed the highest progress of the sample. These companies had moderate ONC and low INC. Yet they had high or moderate PNC. This points to an opportunity for PNC to supplement INC when ONC exists at a moderate level. Company H6 also had moderate ONC and low INC. But this company had low PNC. Given this company was a moderate performer at both the program and organisational level, this may indicate that more PNC is needed for more effective network functioning. Companies L3 and L4 had project leaders with high individual network capacity. Yet ONC was low and PNC was low or moderate. Individuals in these companies had neither an organisational or program-level network to leverage, despite their capabilities. In company L3, individuals were described as passionate and willing to try new things, and having broad networks they could leverage. But they ran up against a widespread lack of support for ICE at the organisational level. In company L4, the only way ICE could be accomplished was through those having connections to the right people. H6 and L2 had moderate and high ONC, yet low INC and PNC. H6 was a moderate performer and L2 was one of the lowest performers of the sample. This reinforces that while ONC needs to be at least moderate, it is not enough. This suggests that while ONC may need to exist at, at least, a threshold moderate level; network activities must then require either high INC or PNC. The cases of L5 and L6, both lower performers, show consistency with this proposition. These two companies had low ONC. They also had very low INC, which was balanced with only moderate or low PNC. Where possible, it is likely optimal to access organisational resources broadly. On the other hand, where this broad access is constrained, program-level networks can be useful. Researchers could conceptualize PNC as comprising a micro-network relevant to ICE. With high levels of network capacity at the organisational level, and high individual network capabilities, there may be less need for this network capacity at the program level. Yet if the overall organisation has only moderate ONC and low INC, project leaders and managers may operate within the programs network to secure the resources and people needed. This leads us to propose that PNC may supplement INC and ONC, given ONC exists at a moderate level or above. P1a A moderate level of ONC serves as a threshold for successful ICE networking. P1b Given at least a moderate level of ONC, the lower the INC and ONC, the higher the PNC will be necessary for successful ICE networking. 5.6. Cultivator and broker roles In the top three companies in Table 4 (H1–H3), there were no clearly identified individuals playing cultivator or broker roles. In these companies, there was likely less need for these roles to exist in a formal capacity. If a project leader needed someone to play a cultivator or broker role for a specific purpose, he could enlist someone temporarily. In two other high performing companies, H4 and H5, cultivator and broker roles were being developed, but were weak at the time of the research. Companies L4, L5 and L6, all low performers, had managers playing cultivator and/or broker roles too, yet these were also weak. Except for L6, these companies had at least moderate PNC. The difference between the high and low performers appears to lie in the level of ONC. While this was moderate in the higher performers, it was low or very low in the lower performers. Even with L4s high INC, it appears that cultivators and brokers were not enough to overcome low ONC. In Companies L1 and L2, both low performers, higher level managers played cultivator and broker roles as part of their responsibilities in the ICE programs. L1 also had very high INC. Perhaps these highly capable individuals did not need to rely on the cultivating or brokering roles of managers. L2 shows a somewhat opposite situation. ONC was high, but INC and PNC were low. While L1 was a low to moderate performer, L2 fared much worse—a very low performer and one of the two lowest performers in the sample. This indicates that high ONC and brokers and cultivators are not enough; low INC project leaders may have difficulty navigating even a high ONC organisation, and without some program-level network capacity, brokers and cultivators may not be effective. While seven of the companies in the sample had cultivator and broker roles, at least to some extent, it was proposed that these still need to be supplemented with sufficient ONC and PNC. This suggests that cultivators and brokers can provide assistance to low INC project leaders, but there needs to be sufficient ONC and PNC to make this effective. At the same time, the evidence for H1, H2, and H3, suggests that cultivators and brokers will not be necessary when individuals have high INC, and there is also high ONC. This leads to propose the following: P2a When both ONC and INC are high, successful ICE networking will rely less on formal cultivator and broker roles. P2b For successful ICE networking, cultivator and broker roles will be most effective as support for low INC project leaders, given there is at least moderate levels of ONC and PNC. 6. Conclusions This study makes the following contributions to theory. First, it was suggested that current individual network structure is less important for ICE than the firms ability to form new networks for new purposes. Second, network theory assumes network activities happen through direct contact among network members, who may call on intermediaries or brokers to assist with this process. Brokers are deemed necessary when a pre-existing relationship, trust, or commitment is lacking between network members (Granovetter, 1973). This research indicates these elements may be more frequently missing in ICE activity because individuals must venture beyond their existing relationships into the broader organisation to access new knowledge, and because trust and commitment may be more difficult to secure when the task involves a risky activity. It was believed that this emphasizes the need for both cultivator and broker roles in network activities for nonroutine activity. Additionally, propositions call for an examination of organisational, programmatic and individual qualities in determining the formality of these roles. Managers thus need to appreciate the value of networks for ICE, yet also understand that their internal environments may more or less promote these efforts. While they may not be able to change their organisations ONC in the short term, they can select and support the individuals leading ICE projects. While traditional practices may call for project leaders with, for example, the ability to adhere to pre-set budgets and schedules and complete projects according to performance specifications, research suggests that network creation skills are particularly important for breakthrough innovation. At the same time, managers are not limited to organisational conditions and their choice of project leaders. They can develop program-level network capacities and put in place the necessary managerial support functions. By developing micro-level network abilities, and cultivator and broker roles, an organisation can develop specific capabilities for facilitating ICE activities. Based on in-depth analysis, it was recommended that executives seeking to improve their organisations ICE capabilities first assess their organisations ONC. More specifically, they should determine the ease through which people can navigate the organisation to locate people with specific knowledge needed for their projects, and the willingness of organisation members to devote time and efforts to assist those leading ICE projects. This may reveal a need for improving ONC, but it also reveals implications for the selection of project leaders and the design of ICE programs. Second, they should consider INC as a criterion in evaluating project leader effectiveness. Third, it was recommended they consider the appropriate level of PNC needed, given the current ONC levels, and incorporate this into the design of their ICE programs. 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