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Embedded Innovation: Exploring the Dynamics of Innovation
Halmstad University, School of Business, Engineering and Science, Centre for Innovation, Entrepreneurship and Learning Research (CIEL), Business Model Innovation (BMI). HMS Networks AB, Halmstad, Sweden.ORCID iD: 0000-0002-5892-7955
2019 (English)Doctoral thesis, comprehensive summary (Other academic)
Description
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 [en]
Embedded innovation, dynamics of innovation, diversification, exploration and exploitation
National Category
Business Administration
Identifiers
URN: urn:nbn:se:hh:diva-40386ISBN: 978-91-88749-26-0 (print)ISBN: 978-91-88749-27-7 (electronic)OAI: oai:DiVA.org:hh-40386DiVA, id: diva2:1342016
Public defence
2019-09-06, O104, Linjegatan 12, 10:00 (English)
Opponent
Supervisors
Available from: 2019-08-12 Created: 2019-08-12 Last updated: 2019-08-12
List of papers
1. In Search of Innovation: Exploring the Dynamics of Innovation
Open this publication in new window or tab >>In Search of Innovation: Exploring the Dynamics of Innovation
2016 (English)In: International Journal of Social, Behavioral, Educational, Economic, Business and Industrial Engineering, ISSN 1307-6892, Vol. 10, no 1, p. 215-229, article id 280Article in journal (Refereed) Published
Abstract [en]

HMS Industrial Networks AB has been recognized as one of the most innovative companies in the industrial communication industry worldwide. The creation of their Anybus innovation during the 1990s contributed considerably to the company’s success. From inception, HMS’ employees were innovating for the purpose of creating new business (the creation phase). After the Anybus innovation, they began the process of internationalization (the commercialization phase), which in turn led them to concentrate on cost reduction, product quality, delivery precision, operational efficiency, and increasing growth (the growth phase). As a result of this transformation, performing new radical innovations have become more complicated.

The purpose of our research was to explore the dynamics of innovation at HMS from the aspect of key actors, activities, and events, over the three phases, in order to understand what led to the creation of their Anybus innovation, and why it has become increasingly challenging for HMS to create new radical innovations for the future.

Our research methodology was based on a longitudinal, retrospective study from the inception of HMS in 1988 to 2014, a single case study inspired by the grounded theory approach. We conducted 47 interviews and collected 1 024 historical documents for our research.

Our analysis has revealed that HMS’ success in creating the Anybus, and developing a successful business around the innovation, was based on three main capabilities – cultivating customer relations on different managerial and organizational levels, inspiring business relations, and balancing complementary human assets for the purpose of business creation.

The success of HMS has turned the management’s attention away from past activities of key actors, of their behavior, and how they influenced and stimulated the creation of radical innovations. Nowadays, they are rhetorically focusing on creativity and innovation. All the while, their real actions put emphasis on growth, cost reduction, product quality, delivery precision, operational efficiency, and moneymaking. In the process of becoming an international company, HMS gradually refocused. In so doing they became profitable and successful, but they also forgot what made them innovative in the first place. Fortunately, HMS’ management has come to realize that this is the case and they are now in search of recapturing innovation once again.

Our analysis indicates that HMS’ management is facing several barriers to innovation related path dependency and other lock-in phenomena. HMS’ management has been captured, trapped in their mindset and actions, by the success of the past. But now their future has to be secured, and they have come to realize that moneymaking is not everything. In recent years, HMS’ management have begun to search for innovation once more, in order to recapture their past capabilities for creating radical innovations. In order to unlock their managerial perceptions of customer needs and their counterinnovation driven activities and events, to utilize the full potential of their employees and capture the innovation opportunity for the future.

Keywords
Barriers to innovation, dynamics of innovation, in search of excellence and innovation, radical innovation
National Category
Business Administration
Identifiers
urn:nbn:se:hh:diva-32668 (URN)
Conference
ICEID 2016: 18th International Conference on Entrepreneurship, Innovation and Development, London, United Kingdom, January 18-19, 2016
Available from: 2016-12-13 Created: 2016-12-13 Last updated: 2019-08-12Bibliographically approved
2. Collective Inclusioning: A Grounded Theory of a Bottom-Up Approach to Innovation and Leading
Open this publication in new window or tab >>Collective Inclusioning: A Grounded Theory of a Bottom-Up Approach to Innovation and Leading
2016 (English)In: The Grounded Theory Review, ISSN 1556-1542, E-ISSN 1556-1550, Vol. 15, no 1, p. 26-44Article in journal (Refereed) Published
Abstract [en]

This paper is a grounded theory study of how leaders (e.g., entrepreneurs, managers, etc.) engage people in challenging undertakings (e.g., innovation) that require everyone’s commitment to such a degree that they would have to go beyond what could be reasonably expected in order to succeed. Company leaders sometimes wonder why their employees no longer show the same responsibility towards their work, and why they are more concerned with internal politics than solving customer problems. It is because company leaders no longer apply collective inclusioning to the same extent as they did in the past. Collective inclusioning can be applied in four ways by convincing, afinitizing, goal congruencing, and engaging. It can lead to fostering strong units of people for taking on challenging undertakings. Collective inclusioning is a complementing theory to other strategic management and leading theories. It offers a new perspective on how to implement a bottom-up approach to innovation.

Place, publisher, year, edition, pages
Mill Valley: Sociology Press, 2016
Keywords
Afinitizing, convincing, engaging, goal congruencing, innovating
National Category
Business Administration
Identifiers
urn:nbn:se:hh:diva-32669 (URN)000378328000004 ()
Available from: 2016-12-13 Created: 2016-12-13 Last updated: 2019-08-12Bibliographically approved
3. Re-envisioning Innovation: From Vision to Strategy to Plan and Back Again
Open this publication in new window or tab >>Re-envisioning Innovation: From Vision to Strategy to Plan and Back Again
2019 (English)In: International Journal of Action Research, ISSN 1861-1303, E-ISSN 1861-9916, Vol. 15, no 1, p. 5-24Article in journal (Refereed) Published
Abstract [en]

HMS is a Swedish company and a global market leader in the industrial communication industry. Initially, HMS was managed with a vision of a connected industry. Gradually, that vision was complemented with strategies on how to reach that vision. In line with the company’s growth and acquisitions, these strategies started to substitute their vision and they began to be supplemented with much more detailed plans. As the company’s offer expanded, these detailed plans began to take over as the company’s primary instrument of guidance. In other words, HMS went through three phases: From a “Market Establishment” phase (with a vision as their primary guideline), to a “Market Development” phase (with strategies as their primary guideline), and finally to a “Market Maturity” phase (with detailed plans their primary guideline). In so doing, their vision became less challenging/ motivating for HMS’ employees. An action research approach was used, influenced by grounded theory. The results showed that people have different mindsets throughout these phases, and going back is challenging because while HMS’ employees need a vision, visions come without detailed plans and will not work unless they are supplemented by inspirational communication and passionate innovation champions who can push forward without any detailed plans. © 2019, Verlag Barbara Budrich. All rights reserved.

Abstract [es]

HMS es una empresa sueca, líder del mercado global en la industria de la comunicación industrial. Inicialmente, HMS se gestionó con la visión de una industria conectada. Gradualmente, esta visión se complementó con estrategias sobre cómo alcanzar esa visión. En línea con el crecimiento y las adquisiciones de la empresa, estas estrategias empezaron a sustituir esa visión y comenzaron a complementarse con planes mucho más detallados. A medida que se amplió la oferta de la compañía, estos planes detallados comenzaron a convertirse en el principal instrumento de orientación de la compañía. En otras palabras, HMS pasó por tres fases: desde una fase de “Establecimiento de Mercado” (con una visión como su directriz primaria), a una fase de “Desarrollo de Mercado” (con estrategias como su directriz primaria), y finalmente a una fase de “Madurez de Mercado” (con planos detallados como su directriz primaria). Al hacerlo, su visión se volvió menos desafiante/motivadora para los empleados de HMS. Se utilizó un enfoque de investigación-acción influenciado por la teoría fundamentada. Los resultados mostraron que las personas tuvieron una mentalidad diferente a lo largo de estas fases y el regreso es un desafío, porque mientras los empleados de HMS necesitan una visión, las visiones vienen sin planes detallados y no funcionarán a menos que se complementen con comunicaciones inspiradoras y apasionados campeones de la innovación que puedan empujar hacia adelante sin planes detallados.

Place, publisher, year, edition, pages
Leverkusen: Verlag Barbara Budrich, 2019
Keywords
Employee needs, innovation champions, plans, strategies, visions, Necesidades de los empleados, campeones de innovación, planes, estrategias, visiones
National Category
Business Administration
Identifiers
urn:nbn:se:hh:diva-40379 (URN)10.3224/ijar.v15i1.02 (DOI)2-s2.0-85069654295 (Scopus ID)
Available from: 2019-08-09 Created: 2019-08-09 Last updated: 2019-08-12Bibliographically approved
4. Disguising Diversification for Innovation
Open this publication in new window or tab >>Disguising Diversification for Innovation
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
Keywords
Innovation management, Innovation Strategy, Defense mechanism, Dynamics of innovation, Horizontal diversification
National Category
Business Administration
Identifiers
urn:nbn:se:hh:diva-40380 (URN)10.1108/IJIS-05-2018-0051 (DOI)000461434100008 ()2-s2.0-85059694228 (Scopus ID)
Available from: 2019-08-09 Created: 2019-08-09 Last updated: 2019-08-12Bibliographically approved
5. Do You Know Your Customers? Do You Love Them? Reevaluating Value Creation for Customers through Business Model Innovation
Open this publication in new window or tab >>Do You Know Your Customers? Do You Love Them? Reevaluating Value Creation for Customers through Business Model Innovation
2019 (English)In: Proceedings of The IIER International Conference, The IIER International Conference , 2019, p. 6-16Conference paper, Published paper (Refereed)
Abstract [en]

What customers want is one thing, but what they actually need and what they desire is something else. In this paper we define existing customer needs as something that customers know and are aware of, can express, and new customer needs as something that customers do not yet know and are not yet fully aware of. Just like in a Johari window. Companies usually go for the former because the latter is more difficult. Particularly when the customer desire is more psychological in character. Business models are valuable innovation tools because they can turn even an old and less novel technology into a successful innovation, but as stated by Chesbrough, at the heart, a business model performs two important functions: value creation and value capture. However, how can you create value when customers don’t know what they actually need? When they cannot express what they actually desire? Maybe a deeper interaction is required, interpreting the customer’s needs, reading between the lines, inferring what is going on underneath the surface, and collaborative prototyping. This study was based on an exploratory, inductive research approach influenced by grounded theory, studying three Swedish technological companies: Axis, HMS and Sectra. Using grounded theory coding techniques, a typology of seller and buyer needs was created based on four categories: unconstrained needs, undoubtful needs, unconventional needs, and uncertain needs. The results show that depending on which category the company resides, the typology can help managers decide when it is appropriate to listen closely to customers, and when it is not. When they want to fulfill existing customer needs and when they want to fulfill new customer needs. However, discovering new customer needs requires close interaction with customers. Especially when you want to discover not just what customers know that they want, but also what they do not yet know that they actually need. Intimacy is needed when you really want to come close to customers and really want to explore and understand their deep desires.

Place, publisher, year, edition, pages
The IIER International Conference, 2019
Keywords
Business model innovation, customer desire, typology of buyer and seller needs, value capture and value creation
National Category
Business Administration
Identifiers
urn:nbn:se:hh:diva-40381 (URN)
Conference
193rd IIER International Conference, Wellington, New Zealand, 7-8 October, 2018
Available from: 2019-08-09 Created: 2019-08-09 Last updated: 2019-08-12Bibliographically approved

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