When Tradition Turns Into Innovation. How Firms Can Create and Appropriate Value Through Tradition

142 Pages·2012·11.93 MB·English

by  Antonio Petruzzelli and Vito Albino (Auth.)

When Tradition Turns
into Innovation
How firms can create and
appropriate value through
tradition
ANTONIO MESSENI PETRUZZELLI AND
VITO ALBINO
CP
CHANDOS
PUBLISHING
ppmr ^|
Oxford Cambridge New Delhi
Chandos Publishing
Hexagon House
Avenue 4
Station Lane
Witney
Oxford OX28 4BN
UK
Tel: [phone]
Email: [email protected]
www.chandospublishing.com
Chandos Publishing is an imprint of Woodhead Publishing Limited
Woodhead Publishing Limited
80 High Street
Sawston
Cambridge CB22 3HJ
UK
Tel: [phone]
www.woodheadpublishing.com
First published in 2012
ISBN: 978-1-84334-664-7 (print) (Chandos Publishing)
ISBN: 978-0-85709-173-4 (print) (Woodhead Publishing)
ISBN: 978-0-85709-382-0 (online)
© A.M. Petruzzelli and V. Albino, 2012
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library.
All rights reserved. No part of this publication may be reproduced, stored in or
introduced into a retrieval system, or transmitted, in any form, or by any means
(electronic, mechanical, photocopying, recording or otherwise) without the prior
written permission of the Publishers. This publication may not be lent, resold, hired
out or otherwise disposed of by way of trade in any form of binding or cover other
than that in which it is published without the prior consent of the Publishers. Any
person who does any unauthorized act in relation to this publication may be liable to
criminal prosecution and civil claims for damages.
The Publishers make no representation, express or implied, with regard to the accuracy
of the information contained in this publication and cannot accept any legal
responsibility or liability for any errors or omissions.
The material contained in this publication constitutes general guidelines only and does
not represent advice on any particular matter. No reader or purchaser should act on
the basis of material contained in this publication without first taking professional
advice appropriate to their particular circumstances. Any Screenshots in this
publication are the copyright of the website owner(s), unless indicated otherwise.
Typeset by ReflneCatch Ltd, Bungay, Suffolk
Printed in the UK and USA.
Printed in the UK by 4edge Limited - www.4edge.co.uk
List of figures and tables
Figures
3.1 Creating value through tradition 42
3.2 The tradition matrix 47
5.1 Tradition-based value creation strategies 124
Tables
1.1 Gross domestic product (expenditure
approach) 2
1.2 Unemployment rate (per cent) in some regional
areas 2
1.3 Public debt in some regional areas 3
1.4 Some indicators of the environmental crisis for
OECD countries 5
5.1 The companies, industries and countries of
origin 122
5.2 The companies and types of tradition 123
5.3 The companies and their tradition-based
appropriation initiatives 125
vii
Acknowledgements
The writing of this book has been a journey that has allowed
us to investigate a fascinating issue - the relationship
between tradition and innovation - and to increase our
awareness of how the past shapes the future, in life as in
business. We would like to express our gratitude to Tommaso
Savino, who has provided a significant contribution to the
collection of information and data about the analysed cases,
as well as helping to give a better understanding of what
tradition means.
ix
About the authors
Antonio Messeni Petruzzelli is a lecturer in Innovation
Management at the Politecnico di Bari, where he teaches
technology strategy, and is co-founder of the Innovation
Management Group. He gained his laureate degree in
Business Engineering at the same university. After a two-year
period as organisational analyst at Eni Group, he was
awarded a PhD in Innovation Management at the Politecnico
di Bari with a dissertation entitled 'Knowledge Relationships
and Proximity: The analysis of knowledge gatekeepers'. In
2008, he was visiting scholar at the IESE Business School,
in the Department of Strategic Management, where he
concentrated on the role that relational attributes play in the
relevance of university-industry collaborations. In 2011,
he collaborated with the Technical Committee for the
Development of the Strategic Plan of the Mechatronic
Technological District of the Apulia region (MEDIS).
His main research interests concern the area of innovation
management, including themes such as knowledge search
and recombination, inter-organisational relationships and
system dynamics modelling. Within these topics, he has
published several articles in international journals (e.g.
Technovation, Scandinavian Journal of Management,
Journal of Knowledge Management and International
Journal of Production Economics) and presented papers at
international conferences. Currently, he is a contributing
writer to Wisepreneur, an on-line magazine relating to
innovation, leadership and entrepreneurship and a member
xi
When Tradition Turns into Innovation
of several international associations, such as the Academy of
Management Association, the Strategic Management Society
and the DRUID Society.
The author may be contacted at:
Politecnico di Bari
Dipartimento di Ingegneria Meccanica e Gestionale
Viale Japigia 182
70126-Bari-Italy
E-mail: a.rnesseni.petruzzelli@polibaJt
Vito Albino is Professor in Innovation and Project
Management at the Politecnico di Bari in Italy. At the same
university, he is the Founder and Director of the Knowledge
Management Lab, co-founder of the Innovation Management
Group and, at present, in charge of the industrial liaison
office. Vito is also Vice-President of the Board of Consiglio
di Territorio Sud Continentale, a group of experts set up
from the UniCredit S.p.A., the largest Italian Bank, to sustain
the development of the business sector in southern Italy, and
is a member of the board of the Mechatronic Technological
District of Apulia region (MEDIS).
After gaining his laureate degree in Mechanical Engineering,
Vito became Visiting Researcher at the University of
Cincinnati from 1986 to 1987 before beginning his academic
career as a researcher at the University of Basilicata in 1988.
He became Associate Professor there and then moved to the
Politecnico di Bari as Professor. While Visiting Professor at
the University of South Florida (Tampa), he gave lectures
and seminars in many universities in the USA and in Europe.
In 2003, he co-founded the European Sustainability
Group, a group of organisations, researchers and consultants
in Europe who are actively working to create a sustainable
world, through creatively learning together, sharing insights
xii
About the authors
and developing practical capacity for sustainability in the
organizations they work with. Commencing in the same
year, he also chaired the Dipartimento di Ingegneria
Meccanica e Gestionale at the PoHtecnico di Bari for six
years, and from 2007 to 2009 he was the President of the
Board of the Italian Association of Business Engineering
(AilG). Also in 2003, Vito served as a member of the
Scientific Committee of the Italian Ministry of University
and Research for the internationalisation of the Italian
university system, and two years later as an expert of the
European Union in the area Innovative Environment for
the project Information Society Network (URBACT
Programme). In 2008 he was the Italian scientific coordinator
of the research project 'Sustainability Knowledge Integration
Mechanisms (SKIMs) and Green Product Strategies in
Canada and Italy: A Cross-Cultural Perspective' with a grant
from the Social Sciences and Humanities Research Council
of Canada. In 2010 he became co-director of the course
'Sustainable Strategies and Operations' at Columbia
University and had scientific responsibility for the project Ά
review and synthesis of research on the use of alternative
energy sources in cement manufacturing', with a grant from
the Network for Business Sustainability (Canada).
His research fields are related to innovation processes in
production chains and industrial clusters, with particular
interest in environmental aspects.
The author may be contacted at:
Politecnico di Bari
Dipartimento di Ingegneria Meccanica e Gestionale
Viale Japigia 182
70126-Bari-Italy
E-mail: [email protected]
xiii
Preface
Innovation, generally, has been conceived as the most
important driver leading to firms' competitiveness and
economic growth. Starting from this widely-accepted
assumption, this book aims to provide a new perspective on
the innovation process by focusing on the important role
that may be played by old knowledge and capabilities.
Specifically, we propose that general managers and corporate
executives should be able to act as the Roman god Janus,
who had two sets of eyes, one pair focusing on what lay
behind, the other on what lay ahead. As Janus, managers
must constantly look backward, attending to the products
and processes of the past, while also gazing forward,
preparing for the innovations that will define the future.
This balancing act requires executives to explore new
opportunities, as well as to exploit existing capabilities that
have contributed to their firms' success and competitiveness.
In line with the above arguments, we discuss the strategic
relevance of tradition as a source upon which companies
may shape competition by creating new value for customers
and appropriating it. Tradition is defined as the whole set of
competencies, knowledge, values and culture that characterise
a specific firm, as well as a territory and an age. Thus, relying
on tradition, companies may innovate by introducing new
products and processes and differ from competitors in terms
of both meaning and content.
This book may be considered as a useful support for both
managers and executives constantly dealing with the necessity
xv
When Tradition Turns into Innovation
of differentiating business models by finding new innovative
solutions for providing uniqueness to their products and
processes. Moreover, the proposed attention toward the
rediscovery of the past contributes to shed new light on the
value of searching knowledge over time, thus calling for
further research on the relationships between old and new.
The first chapter of the book proposes a review and
criticism of the actual innovation approaches, highlighting
how the actual economic scenario imposes the necessity of
rethinking innovation. In Chapter 2, the concept of tradition
is analysed by presenting its meaning and origin, as well
as why it may assume the semblance of a competitive driver.
In Chapter 3, we discuss the strategic role of tradition,
explaining how it may be embedded both in products and
processes, and focusing on two distinct drivers - technology
and design. Furthermore, the strategic role of tradition is
investigated from the value creation and appropriation
perspectives, showing its relationship with firms' performance.
This is followed in Chapter 4 with the presentation and
discussion of several cases of companies strategically
exploiting tradition. Firms are located worldwide and
operate in different industries, such as pharmaceutical, food,
beverage and financial services. Finally, in Chapter 5 the main
ideas, concepts and approaches emerging from the book are
summarised, thus tracing the pattern of an alternative
innovation strategy.
xvi
1
Re-thinking the innovation
approach
Abstract: This chapter presents a review and criticism of the
actual innovation approaches, highlighting how the social
and economic scenario imposes the necessity of rethinking
innovation and consumption models. Specifically, we discuss
how the recent crises - which together affect finance, food
and climate change and their implications for human
development - are forcing organisations to find new solutions
and models for responding to emerging needs and
expectations. In this regard, we elaborate on the important
role that may be played by traditional knowledge as a source
of inspiration for innovation, since creativity can find a
reliable support in what society has found to be suitable in the
past for its development needs.
Key words: triple crisis, innovation, tradition.
For most members of the Organisation for Economic
Co-operation and Development (OECD), the financial
crisis that started in 2007 triggered a global economic
downturn, which led to the worst fall in economic activity
(GDP) since the Great Depression. At first this resulted
in falling economic growth rates followed by a real
economic decline in many countries. In Table 1.1, the GDP
for some regional areas and for the years 2004-2009 is
reported.
1