Aligning innovation to business strategy

189 Pages·2006·1.12 MB·English

ALIGNING INNOVATION TO BUSINESS STRATEGY

COMBINING CROSS-INDUSTRY AND LONGITUDINAL PERSPECTIVES ON
STRATEGIC ALIGNMENT
IN LEADING TECHNOLOGY-BASED COMPANIES
Promotoren: Prof.dr H. Dons
Wageningen Universiteit

Prof. dr drs F.H.A. Janszen
Erasmus Universiteit Rotterdam
Prof. dr L.A. Lefebvre
Ecole Polytechnique Montreal

Promotiecommissie: Prof. dr ir A.J. Oskam (Wageningen Universiteit)
Prof. dr ir J.M.L. van Engelen (Rijksuniversiteit Groningen)
Prof. dr W. van Rossum (Universiteit Twente)
Prof. dr W. Vanhaverbeke (Erasmus Universiteit)

Dit onderzoek is uitgevoerd binnen de onderzoekschool Mansholt Graduate School of Social Sciences
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Aligning Innovation to Business Strategy

Combining Cross-Industry and Longitudinal Perspectives on
Strategic Alignment in Leading Technology-based Companies

Frances T.J.M. Fortuin

Proefschrift
ter verkrijging van de graad van doctor
op gezag van de Rector Magnificus van Wageningen Universiteit,
Prof. dr M.J. Kropff
In het openbaar te verdedigen op 7 november 2006
des namiddags te vier uur in de Aula
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Fortuin, F.T.J.M. (2006), Aligning Innovation to Business Strategy. Combining cross-industry and
longitudinal perspectives on strategic alignment in leading technology-based companies
PhD thesis Wageningen University – with references – with summary in Dutch

ISBN: 90-8504-518-5

Thesis, Wageningen University and Research Center, the Netherlands

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Dedicated to my husband Onno and to my
children Anne Willem and Ilonka

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PREFACE AND ACKNOWLEDGEMENTS

For the several employments and offices of our fellows, we have twelve that sail into foreign countries
under the names of other nations (for our own conceal), who bring us the books and abstracts, and
patterns of experiments of all other parts. These we call Merchants of Light. We have three that
collect the experiments which are in all books. These we call Depredators. We have three that collect
the experiments of all mechanical arts, and also of liberal sciences, and also of practices which are not
brought into arts. These we call Mysterymen. We have three that try new experiments, such as
themselves think good. These we call Pioneers or Miners. We have three that draw the experiments of
the former four into titles and tables, to give the better light for the drawing of observations and
axioms cut of them. These we call Compilers. We have three that bend themselves, looking into the
experiments of their fellows, and cast about how to draw out of them things of use and practice for
man's life and knowledge, as well for works as for plain demonstration of causes, means of natural
divinations and the easy and clear discovery of the virtues and parts of the bodies. These we call
Dowrymen or Benefactors. Then after divers meetings and consults of our whole number to consider of
the former labors and collections, we have three that take care out of them to direct new experiments,
of a higher light, more penetrating into Nature than the former. These we call Lamps. We have three
others that do execute the experiments so directed and report them. These we call Inoculators. Lastly,
we have three that raise the former discoveries by experiments into greater observations, axioms, and
aphorisms. These we call Interpretators of Nature. We have also, as you must think, novices and
apprentices, that the succession of the former employed men do not fail; beside a great number of
servants and attendants, men and women. And this we do also: We have consultations, which of the
inventions and experiences which we have discovered shall be published, and which not: and take all
an oath of secrecy for the concealing of those which we think fit to keep secret: though, some of those we
do reveal sometimes to the State, and some not.
Nova Atlantis (Sir Francis Bacon [1625] in Omta, 1995).

About 1625, Sir Francis Bacon magnificently described an organization that was
totally innovation oriented in the ideal world of Nova Atlantis. Today, R&D
(Research and Development) organizations can be found in the everyday world. This
book will bring you into this world. It describes the day-to-day activities of innovation
management and the constant struggle to align innovation to business strategy. It aims
to answer such questions as:
• What causes the (lack of) strategic alignment between innovation and business?
• How can strategic alignment be achieved and maintained?
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This book presents the findings of a cross-industry study into the management and
organization of innovation in ten technology-based companies in different industries
typified by the length of their product generation life cycles (PGLCs) and a six-year
longitudinal study in one of these companies to research the dynamics of strategic
alignment. It aims to provide a sound empirical basis for a number of ideas and
statements about innovation management in general. Parts of the book have been
presented at scientific congresses and workshops, and the findings have served as a
platform for discussion with managers in R&D. The study was undertaken at the
Department of Business Administration at Wageningen University.
I would first like to thank the CTOs and R&D Directors of the companies that
participated in the cross-industry study, who gave up precious time for interviews
about innovation management, and whose insights greatly enhanced my
understanding of the subject of this thesis. In addition, my thanks go to the R&D
department heads and R&D program managers of these companies for their
willingness to fill out the self-assessment questionnaires. I am very grateful to the
company that provided me with a unique opportunity to conduct a longitudinal study.
Without the participation of the R&D staff and higher management of the strategic
business units and corporate headquarters in completing the research questionnaires
up to four times, this study would not have been possible.
My special thanks go to Felix Janszen, Louis and Elisabeth Lefebvre and Hans Dons
for their support. Felix, your enthusiasm for innovation management always
stimulated me. Louis and Elisabeth, I have very good memories of our in-depth dis-
cussions on innovation management in the Netherlands, as well as in Canada. Hans,
thank you for your willingness to participate at a late stage of the process of
completing and defending this manuscript. I also want to thank the members of the
PhD committee for their valuable comments and suggestions. In carrying out the
research, I received great help from Elsa Liefferink in the data collection phase and
from Carl St. Pierre, Ron Kemp and Erno Kuiper in different phases of the statistical
analyses. Ann Reeves improved my English and Sietze Bras took care of the cover
design of the book. This thesis was made possible by the special department for study
and professional work at DEDICON, the Federation of Dutch Libraries for the Blind
that transposed numerous inaccessible books, papers and articles into accessible
reading format for me. Finally, I would like to thank the scientific and administrative
staff and my PhD colleagues of the Department of Business Administration at
Wageningen University for their friendship and support, especially for their
willingness to lend me their eyes every time the task to be performed exceeded the
capabilities of my screen-reading software. And last but not least, I would like to thank
Onno Omta, my husband and colleague, who gave me the room to find my own way
in the field of management science but at the same time was there to support me
when needed. He patiently read the draft versions of this manuscript, traveled with me
to congresses and cared for me at difficult moments.
Frances Fortuin, September 2006
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TABLE OF CONTENTS

Preface and Acknowledgements.........................................................................7
Table of Contents................................................................................................9
Chapter 1............................................................................................................15
Introduction.......................................................................................................15
Chapter 2............................................................................................................21
Theoretical Perspectives on Strategy.................................................................21
2.1 Strategic management..............................................................................................21
2.2 The history of strategic management thought.....................................................23
2.3 Static versus dynamic strategy models..................................................................24
2.4 The two main theoretical perspectives on strategy.............................................25
2.5 The industrial organization perspective................................................................26
2.6 Competence perspective.........................................................................................28
2.6.1 Resource-based view......................................................................................30
2.6.2 Dynamic capabilities framework..................................................................31
2.7 The concept of strategic alignment..................................................................32
2.8 Concluding remarks................................................................................................35
Chapter 3...........................................................................................................37
Study Domain: Innovation................................................................................37
3.1 The phenomenon of innovation.......................................................................37
3.2 Innovation typologies..............................................................................................38
3.3 The R&D process....................................................................................................40
3.3.1 The R&D funnel............................................................................................41
3.3.2 First through fifth generation R&D............................................................42
3.4 Barriers to innovation..............................................................................................43
3.5 Drivers of innovation..............................................................................................44
3.5.1 Innovation culture..........................................................................................44
3.5.2 Innovation strategy........................................................................................44
3.5.3 Open innovation............................................................................................47
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3.6 Best practices in innovation....................................................................................47
3.6.1 Clear product definition and portfolio planning.......................................48
3.6.2 A structured R&D process...........................................................................48
3.6.3 Use of (international) cross-functional project teams..............................49
3.6.4 Use of integrated virtual development tools..............................................50
3.7 Innovation strategy and the two perspectives on strategy.................................50
3.8 Analyzing strategic alignment in the case of innovation....................................53
3.9 Concluding remarks................................................................................................54
Chapter 4...........................................................................................................55
Research Design...............................................................................................55
4.1 The general conceptual framework.......................................................................55
4.2 Overall research design............................................................................................56
4.3 The cross-industry study.........................................................................................59
4.3.1 The product generation life cycle................................................................59
4.3.2 Conceptual framework..................................................................................61
4.3.3 Operationalization of the research variables..............................................63
4.3.4 Propositions....................................................................................................64
4.3.5 Data collection................................................................................................69
4.3.6 Development of survey questionnaires and methods of data analysis..70
4.4 The longitudinal study.............................................................................................71
4.4.1 Conceptual framework..................................................................................71
4.4.2 Propositions....................................................................................................72
4.4.3 Operationalization of the research variables..............................................75
4.4.4 Methods of data collection and data analysis.............................................76
4.5 Concluding remarks................................................................................................79
Chapter 5............................................................................................................81
Cross-Industry Study Results.............................................................................81
5.1 Data collection and baseline description of the cross-industry companies81
5.2 R&D Performance...................................................................................................84
5.2.1 Revenue contribution of new products......................................................84
5.2.2 Number of patents.........................................................................................85
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