Innovation management in diversified corporations: Problems of organization

Abstract

Developing a new product line or innovation within an ongoing line of business is a difficult undertaking, requiring unusual amounts of motivation, creativity, and the cooperation and trust of the persons involved. Corporate innovation processes often fail because of external factors, but more often because of internal ones, such as lack of support, insufficient preparation, or plain error. This article focuses upon internal risks of failure (“internal uncertainties”) resulting from disturbances in human relations and organizational behavior.

The author proposes a concept of favorable positioning for the firm, and postulates that – other things being equal – the firm's favorable position tends to deteriorate naturally as the technology base of the firm ages (Wolfs Law of Progress). Corporate innovation processes take time. Hence, the preconditions for success of any single innovation within the firm may deteriorate faster than organized innovative activity can move on and seize the opportunity. For many firms this reported failure of seizing the market opportunities will eventually lead to an unmanageable, irreversible situation (“shake-out”).

This article highlights the findings of an extensive exploratory, “clinical” field study of innovation processes in small, medium, and medium-large industrial firms in Berlin, Germany. Clinical research (usually preceding analytical research in a scientific enterprise such as “innovations research”) looks at “clinical syndromes” (Roethlisberger, 1977) of the type “under certain conditions, x seem to appear together with y” (rather than analyzing how x varies with y). Our clinical research reveals a set of clinical syndromes for the deterioration of the firm's position, and suggests some human resource management actions, such as participative strategy formulation, conflict resolution, and interface facilitation, which can turn the situation around and enhance the chances of success for corporate innovation processes.