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Disguising Diversification for Innovation
Halmstad University, School of Business, Engineering and Science, Centre for Innovation, Entrepreneurship and Learning Research (CIEL), Business Model Innovation (BMI).ORCID iD: 0000-0002-5892-7955
2019 (English)In: International Journal of Innovation Science, ISSN 1757-2223, E-ISSN 1757-2231, Vol. 11, no 1, p. 119-138Article in journal (Refereed) Published
Abstract [en]

Purpose: Axis, HMS and Sectra are three Swedish companies whose managers argue that you should never be radical on two fronts: creating new products for new markets at the same time. This paper aims to show however that while Axis’ managers claim not to be radical on two fronts, they still perform horizontal diversification, but they do so by disguising it as product development. Just like certain animals disguise themselves for protection, Axis’ managers disguise diversification as a defense mechanism, to protect themselves. In so doing, they have learned to manage the dynamics of innovation, by shifting between periods of focus and diversification. Design/methodology/approach: This study was based on an inductive research approach influenced by grounded theory. In total, 32 interviews were performed with top and middle-line managers from three Swedish companies: Axis, Sectra and HMS. A total of 91 A4 transcript pages, 66 A4 e-mail pages, 52 annual reports (from 1999 to 2017) and 256 company presentations and newspaper articles (from 1988 to 2015) were collected and analyzed. Open and selective coding yielded 105 sub-categories, which were grouped into four main categories and presented as detailed descriptions. The results were based on the interpretation of those descriptions and related to disguise as a defense mechanism in psychology. Findings: Innovation is a difficult process often met with hostility. Axis’ managers however have found a way to go beyond their existing business domain, while still protecting themselves from internal and external opposing forces that would go against such a risky strategy. To do so, they first expand their existing business domain. Then they perform horizontal diversification and disguise it as product development, as a defense mechanism to protect their desire to create innovation from managers who would oppose their risky strategy. In so doing, they convince other stakeholders that innovation through diversification is the best strategy for their company. Research limitations/implications: This study was only performed at three Swedish technological companies. For future research, other Swedish companies could be included, and not only technological companies either, to explore whether diversification is considered a strategy that needs to be disguised in other businesses as well, and how managers from those businesses deal with internal and external forces. Practical implications: Managers from Axis, Sectra and HMS are fully aware that innovation as well as diversification is difficult. Ideas that seem interesting and full of potential for some people may seem too risky and dangerous for others. To protect diversification as a strategy for innovation, Axis’ managers have found a way to disguise diversification, and make it seem less dangerous. In so doing, they are able to diversify and create innovation. A strategy for disguising diversification therefore has practical managerial implications of how managers can deal with internal and external forces that would go against such a strategy. Originality/value: This study connects defense mechanisms in psychology with innovations strategy and innovation management and solves a practical dilemma that managers often struggle with: how to create innovation despite barriers that exists and oppose such a strategy. Managers will most likely always face different barriers to innovation, and perhaps solving them is not possible. This study shows how Axis’ managers have found a way to go around this problem, when solving it is not possible. This strategy thus shows originality and value for both theory and practice related to innovations strategy and innovation management. © 2019, Emerald Publishing Limited.

Place, publisher, year, edition, pages
Bingley: Emerald Group Publishing Limited, 2019. Vol. 11, no 1, p. 119-138
Keywords [en]
Innovation management, Innovation Strategy, Defense mechanism, Dynamics of innovation, Horizontal diversification
National Category
Business Administration
Identifiers
URN: urn:nbn:se:hh:diva-40380DOI: 10.1108/IJIS-05-2018-0051ISI: 000461434100008Scopus ID: 2-s2.0-85059694228OAI: oai:DiVA.org:hh-40380DiVA, id: diva2:1341714
Available from: 2019-08-09 Created: 2019-08-09 Last updated: 2019-08-12Bibliographically approved
In thesis
1. Embedded Innovation: Exploring the Dynamics of Innovation
Open this publication in new window or tab >>Embedded Innovation: Exploring the Dynamics of Innovation
2019 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

For this dissertation I aimed to explore HMS Networks AB and how HMS managed to transform their potential ideas into innovations. My purpose was also to develop knowledge and understanding of the dynamics between exploration of new ideas and exploitation of old solutions, which can support HMS in developing future innovations. My research orientation thus led me to perform a longitudinal study to learn about HMS' past, present, and future, from the perspective of key actors, their performed activities, and how they were affected by different events in their process of creating innovation. My approach enabled me to learn how HMS managed to create their two Anybus® innovations in the past and what they did to become a market leader in the industrial communication industry. I also used a metaphorical perspective to understand how HMS created their two innovations in the past and what HMS could do to create more innovations in the future. I used an inductive and qualitative research approach substantially influenced by grounded theory to collect empirical data that were periodically and chronologically sorted and categorized for the study of key actors and how their activities and different events changed over time. I conceptualized the collected empirical data to discover latent social and psychological processes and behavioral aspects of people in their process of creating innovation. And through my analysis I constructed two main concepts - "embedded innovation" and the "dynamics of innovation" - to capture how companies co-exist in symbiosis and create a higher value together compared to what they can do on their own, to how companies survive long-term.

Embedded innovation mainly captures how companies, as organisms, struggle for survival within their (often turbulent) environment, and how they embed themselves with other organisms within their environment. Embedded innovation also focuses on capturing the needs of the different organisms within the environment, such as customer needs, employee needs, supplier and partner needs, as well as the need of the focal organization itself. Embedded innovation therefore considers the process of creating "innovation ecosystems" and performing "business model innovation" as instrumental techniques for embedding the different organisms in the environment with each other, which also makes the concept of "embeddedness" a central aspect for embedded innovation. The dynamics of innovation captures the difficulty of innovation over time and that the ever-changing environment expects its organisms (its companies and their employees) to balance the different dualities of organizational life, especially the two phases of diversification (the process of exploration) and focus (the process of exploitation). Consequently, learning how to balance between these two processes is of key importance for the organism's survival and for innovation.

The study of HMS was also complemented with a study of two other companies, namely Axis Communication AB and Sectra AB, in order to gain more knowledge on the dynamics of innovation from their perspective. A strategy for diversifying close to the knitting was also proposed, since the dynamics of innovation relies on this strategy, which offers a new perspective for managers on how to balance between exploration and exploitation. This dissertation therefore intertwines embedded innovation with the dynamics of innovation, by focusing on balancing between exploring new possibilities and exploiting old certainties for the creation of innovation.

Place, publisher, year, edition, pages
Halmstad: Halmstad University Press, 2019. p. 342
Series
Halmstad University Dissertations ; 59
Keywords
Embedded innovation, dynamics of innovation, diversification, exploration and exploitation
National Category
Business Administration
Identifiers
urn:nbn:se:hh:diva-40386 (URN)978-91-88749-26-0 (ISBN)978-91-88749-27-7 (ISBN)
Public defence
2019-09-06, O104, Linjegatan 12, 10:00 (English)
Opponent
Supervisors
Available from: 2019-08-12 Created: 2019-08-12 Last updated: 2019-09-11Bibliographically approved

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