Setting Up Innovative Business Projects
Overview
For many companies, innovation is a sprawling collection of initiatives, energetic but uncoordinated, and managed with vacillating strategies. Hence, it is necessary for the companies to set up an innovative business project, infusing a systematic process. In order to capitalize on the current and future market opportunities, global, regional, and local companies are investing substantial time and resources in developing innovative business projects that can create sustainable competitive differentiation. The chapter discusses entrepreneurial attributes that are basic to develop and implement innovative business projects, and guides the process of managing resources and project cost rationally. It is a precondition for building and implementing innovative business projects to create a right and sustainable market to absorb the thrust of innovative products. This chapter discusses the ways for market creation and for developing leadership. The most challenging issues in developing nonconventional business projects include tangible and intangible organizational factors like market change management, improvement in the products and services, enhancing customer values, and building task-reporting, monitoring, and evaluation approaches. The lean thinking for implementing innovative business projects’ basic project management skills like constituting project teams, setting project charter, and developing performance measures and standards are also discussed in this chapter.
Entrepreneurial Attributes
Innovation has been embedded in the business process of the companies in order to improve their market competitiveness, enhance market leadership, and attain high business performance. However, the major challenge for the companies is to explore the market-oriented and consumer-preferred innovative ideas, and converge them with the project-management process. Innovative ideas, concepts, prototypes, and applications are grown under the entrepreneurial environment within or outside the company. As the innovations today in the business-to-consumer and business-to-business segments have shown a tendency of boom and bust, one of the major concerns for the companies carrying out innovative business projects is to make it competitive and sustainable in the marketplace over the spatial and temporal dynamics. Small start-up enterprises (SUEs) that emerge with new business innovation ideas and projected performance in business often suffer from low entrepreneurial confidence due to cost and time overrun syndrome of innovation, or ending up the innovation in a niche with less obvious performance of the project. Hence, large companies are coming forward to adopt SUEs, build required entrepreneurial attributes among the start-up innovation project teams, monitor the stage-wise performance of the innovation project, and meticulously work out the investment-return ratio on innovative business projects.
In order to reduce redundancy in new product innovation and inconsistency in the innovative business projects, companies sponsoring SUEs often find that the harder they work bringing innovative products into the marketplace and toward improving their manufacturing processes, the greater are the elusive benefits. The principal concern for innovation-driven companies is the assurance to deliver both conceptual and operational benefits to the stakeholders. Conceptual learning addresses the know-why attributes and delivers a better understanding of the cause-and-effect relationships through innovation experience and peer reviews. Operational benefit of an innovation leads to delivering a new or virgin concept to the consumers, with substantial evidence of high satisfaction and returns on investment on the innovation. Innovative business projects that deliver high levels of both learning approaches and operational advantages working with efficient project teams sustain in the global marketplace today (Lapre and van Wassenhove 2002). Innovative business projects become successful, provided they have the right leadership and team approach to manage tasks. An innovative business project needs to be developed with a goal-oriented approach, set knowledge of standards at each stage of the project among the team members, build the ability to manage project financials accurately, and build the competence to manage project risks and contingencies. A project manager should be an innovator who is deeply involved in the innovation project, understanding the concepts and operational path thereof. In addition, the project leader should demonstrate interpersonal skills, management abilities, possess the knowledge about the project environment, and should be thorough in application of innovation benefits among the consumers, stakeholders, and market players.
Innovation Entrepreneurship
Innovation projects in most companies are based on the consumer preferences and the need for competitive differentiation. Accordingly, investments in innovative business projects follow a boom-bust cycle. The contemporary trend shows that the growing SUEs at the bottom-of-the-pyramid of various geo-demographic segments keep analyzing the consumer needs and attempt on co-creating innovative products. These SUEs set their priorities and explore sponsor companies to support research budgets to continue working on the business projects. Sustainable innovation requires a new approach with better initiatives to gain access to the insights and build capabilities for managing innovation alliance with large companies (Wolpert 2002). Establishing innovative business projects for gaining market competitiveness in the global and emerging markets needs team dynamics at the grassroots, financial and human resources for working with innovation projects, and continuous investment in research and development. However, the risk of commercialization of innovation grows simultaneously as the innovative business projects move ahead.
For over a decade, multinational enterprises from developed countries have moved a substantial part of their research and development (R&D) activity to emerging markets such as India and China. As the innovation began sprouting at the low scale in the emerging markets with potential benefits across the larger markets, multinational companies tend to invest in R&D and co-create skilled manpower at low cost. The dynamics of R&D sponsored by the multinational companies are oriented toward customer-centric innovations that involve all market players in exploring new opportunities and challenges. Many SUEs in emerging markets have evolved to develop advanced technical capabilities, and innovative business projects are developed involving multinational companies. However, the thinking on low-cost innovation with capacity building of SUEs in local economic environment is often weak due to the dominant innovation mindset, structures, and unplanned processes. Hence, large companies co-designing and collaborating with the local companies should give a systematic start to innovative business projects by developing mission, goals, objectives, project portfolios, and constructing a WBS. Most of the amateur SUEs lack in such project planning measures and often suffer from the unexpected flaws during the innovation process.
It is necessary for the innovation companies to develop a sustainable framework that can be used by managers in both local and multinational companies to support the key decisions on innovating a new product and build its market competitiveness. The companies engaged in sponsoring innovation R&D in the outfits of potential markets of global, regional, local geo-demographic segments should consider developing technological capability to improve the innovation research in the innovation nurturing enterprises, measure the size of the innovation and uniqueness of the market opportunity, and build capability and competence among the employees of the innovation co-designer and managing companies (Jha et al. 2016). The innovation companies can set clear mission and goals for working with the innovative business projects considering the following attributes:
Define the innovation project objectives clearly in reference to its market potential and competitiveness.
Develop a link between their projects and the company’s mission, goals, objectives, and strategy.
Develop the right rationale for undertaking the innovation project, convergence with the innovation enterprises, and setting the time, cost, and outcome of the project.
Setting mission statement, usually at high level, providing the vision and values for the company.
List the achievements that the company wishes to accomplish by successfully managing the innovation project.
As the market competition is increasing manifold in the global marketplace, companies in many industries are feeling immense pressure to improve their ability to innovate. A well-defined and comprehensive innovation project with specific statements that the company wishes to achieve might accomplish success, provided the company develops precisely the innovation strategies and competencies with the project team. However, the major crux in investing on the in-company R&D tasks is that the best ideas do not always roll-out of laboratories. Hence, a large number of companies are leaning toward exploring the idea of open-market innovation, an approach that uses tools such as licensing, joint ventures, and strategic alliances, to bring the benefits of free trade to the flow of new ideas (Rigby and Zook 2002). ONergy, a for-profit social enterprise engaged in developing low-cost energy solution for public consumption in India, is based on the renewable energy products. This nonbusiness organization is aiming to scale up its operations for providing electricity at low cost to the underserved consumers in the bottom-of-the-pyramid market segment in India. This start-up organization has two major concerns to commercialize its innovative products—exploring a sponsor to support R&D, and marketing operations, and creating a brand in this market has proved difficult, as competition comprises many large and small players. New innovative products invariably need adequate investment in brand building as a way to ensure better acceptance by consumers and develop appropriate branding strategies. The start-up social enterprises in developing markets are getting engaged in creating unique brands that are strategically profitable in the competitive marketplace (Saikat and Aneja 2014).
The emerging trend across the global market shows that innovations today are largely customer-centric and driven by the users. Customers offer solutions to the companies for commercialization, and in turn, drive companies to deliver innovative tangibles that make competitive differentiation and provide value for money. Generally, SUEs join customers though the social and peer digital networks to explore the embedded preferences and solutions to the existing gaps in the products and services and explore to develop innovative products systematically. The SUEs serve as bidirection information hub between the customers and the companies sponsoring innovative business projects. Customers, in most cases like mobile phone, tablets, photo and video equipment, computers and office equipment, reveal what they want a new product or service to do for them, and the companies need to get the right clue from the customers’ experience. In order to converge customer information with the innovative projects, companies should delineate effective steps for capturing, analyzing, and utilizing the customer input. Companies intending to carry out the innovative business projects should also rank the innovations in reference to their importance and desired satisfaction, considering the simple formula described as follows:
In the preceding equation:
IBP r tj indicates the rank of an innovation business project in a given market “j” at time “t.”
The importance of the product from the perspective of company is denoted by Iimp while Csat expresses the score of customer satisfaction.
The total cost to the company in managing and implementing the innovation projects are indicated by Itc, and
symbolizes the potential or expected market share of the innovative product in a given market “j” at time “t.”
The preceding simple mathematical formula may be used by the companies to get an approximate rank of the selected innovative ideas and projects before setting the innovative business projects. Such exercise on opportunity calculation could help companies learn the relative attractiveness innovative projects and the underlying key opportunities toward investing in the innovation projects (Ulwick 2002).
Innovation entrepreneurship necessarily entails both SUEs and sponsor companies that would be willing to commercialize the innovation. The innovative companies face risk and high levels of uncertainty as the innovation projects move the stages of commercialization and sustainability. Established organizations that intend to manage innovative business projects are typically market-oriented and develop marketing strategies to carry the innovations forward to the consumes as well to the competitive marketplace. Such companies make conscious efforts to build capability and competence among the employees of the organization and develop sustainable entrepreneurship. Commitment to entrepreneurship may cycle between high or moderate support in reference to the conditions in the internal and external environment shift. In order to improve the entrepreneurial capabilities, companies develop strategic objectives to guide entrepreneurs, offer management the structure to support their innovation projects and carry forward the innovation project tasks, and deliver relevant decision support (Kelley 2011). Through an Initiation and Implementation model, as exhibited in Figure 3.1, the innovative business projects are adjusted to the market conditions accordingly in the external environment monitor the progress of the project within the organization. The innovation entrepreneurship is a process that encompasses various backward and forward linkages embedded to the stages of innovative business projects.
Innovation entrepreneurship is a convergence of SUEs and sponsoring companies, which moves from the stage of initiation to the systematic project management to commercialization, and finally developing sustainable innovation through incremental innovations, as illustrated in the Figure 3.1. The backward linkages in the initiation stage of conceiving innovative business project constitute crowdsourcing of ideas, understanding customer needs and preferences, determining the importance of the innovation, and evaluating the expectation of consumers upon implementing the innovation project successfully. The estimated cost of the innovation, its market potential for commercialization, and search for the right sponsor to undertake the innovation project are the major forward linkage tasks to initialize such projects. Upon seeking initial approval to the project by examining various elements at the initiation stage, the innovative project enters into the real project management stage, which demands formation of project teams, training of the team members, developing project leadership, and analyzing challenges in the innovative business projects. These activities form the backward linkages, while setting project mission, goal, objectives, task management strategies constitute the forward linkages besides time and cost management and developing a WBS. One of the most scientific method to monitor progress of the innovative projects is considered to be the stage-gate process that helps managers by assigning tasks in respective stages of the project management and review them as the tasks are completed during the stage. Such project-management approaches check the defects or gaps in task administration at each stage and help managers in avoiding accumulation of defects at the end of the project, which is complex to sort and fix. The major challenges in the stage of commercialization of innovation are brand building through advertising and communication, and developing distribution, retailing, and services for the innovative products. Some innovations are conceived to serve the incipient demand, which needs creation of demand for the product. This appears to be more challenging than serving the innovation products to the existing demand. Companies need to invest substantial resources toward consumer education in order to create consumer demand. Besides, companies also have to carry out product demonstrations such as “do-it-yourself” and adaptive customization by allowing the consumers to use the new products for a reasonable period to determine their value for money. However, the opportunities for open innovation, incremental innovation, and enhancement of the use value of innovative products over the product lifecycle stages finally take the innovation business projects to the initiation stage of the next-generation innovative products.
Figure 3.1 Stages and linkages of innovation entrepreneurship
Entrepreneurial Attributes
Enterprise ecosystems include well-established firms and new ventures that are laid on the maxims of collaboration and competition, and strategic thinking to leverage a firm’s resources and capabilities. Strategic thinking and the entrepreneurial activities in an enterprise ecosystem influence one another in a cycle that diffuses and even sparks innovation (Zahra and Nambisan 2012). As awareness among the entrepreneurs about the innovation initiatives is increasing in the emerging markets, the public support to encourage innovation is gearing up, and voluntary organizations are becoming a face in the crowd to nurture local innovation in the global marketplace. For example, Fundacion Chile, a private, nonprofit corporation is contributing to technological innovation at the grassroots enterprises in the country and prompting them to develop productive links, add value, and generate technological and human skills to grow innovation at home-economic conditions. This nonprofit organization, based on science and technology has emerged as a leading technology institution recognized nationally and internationally with an objective to help amateur innovation enterprises (Tiffin and Carmona 2004).
Entrepreneurs take initiative to bundle resources in innovative ways and are willing to bear the risk and uncertainty to act. In the increasing market competition and threat of emerging new firms, entrepreneurs must exhibit the following attributes to succeed:
Continuity in creation or co-creation process
Investing time and effort in enterprise planning
Mapping risks and critical success factors in enterprise
To be competitive, companies must grow innovative new businesses. Given the nature of their decision-making environment, entrepreneurs sometimes need to effectuate, be cognitively adaptable, and learn from failure. The effectuation process in enterprise development starts with what one has (who they are, what they know, and whom they know) and selects among the possible outcomes. The entrepreneurial behavior in general is responsive to a judgmental decision under uncertainty about a possible opportunity for profit. Most entrepreneurs think in a casual process to start an enterprise with a desired outcome and focus on the means to generate that outcome.
Most start-up innovation enterprises at the local markets are very fragile due to risk, contingencies, cost, and time overrun in managing new product tasks. Entrepreneurs are not strong enough to face the uncertainties and loss in the innovation, as they are not often disciplined in managing the innovation projects. Although, some SUEs, which are prepared to explore the potential opportunities as well as have the capacity to absorb the risk of failure, might foresee outsized rewards as it entails manifold benefits of commercializing the innovation. The critical success factor in entrepreneurship is embedded in effectively managing the uncertainty while trying something new, independent of its ecosystem. However, believing that every contingency can be anticipated and innovation can be managed without risk might be a larger mistake made by the entrepreneurs. A disciplined approach of entrepreneurship requires to constitute an innovation team, gather awareness about the innovation these, find its ecosystem, estimate cost, time, risk, and marketability of the new innovative product, and finally, explore for a sponsor to work on an innovating business project. Accordingly, an entrepreneur formulates a working hypothesis about an opportunity, assembles the resources to test the hypothesis, and finally designs and runs real-world experiments. Depending on the results of a round of experimentation, the entrepreneur may revise the project and run another experiment close to harvest the value based on the market potential of the new innovative product (Sull 2004).
Entrepreneurship is a not an easy proposition in the competitive marketplace today. New ventures encounter variety of barriers and develop miss-match with the existing marketing systems, processes, and cultures. Nonetheless, the success of small and medium enterprises requires a balance of conventional and new organizational traits. The entrepreneurial challenges appear when the new business is pursued and the market does not respond appropriately to the products, services, and strategies of the firm. Thus, firms must perform the following balancing actions (Garvin and Levesque 2006):
Develop strategy by trial and error, which includes narrowing potential choices, learning from small samples, using prototypes to test business models, tracking progress through nonfinancial measures, and knowing how and when to pull the plug on a new venture.
Find the best combination of conventional and new operational processes by pooling adequate resources, technology, and manpower.
Learn meticulously about the capabilities to develop and to acquire, and sharing responsibility for operating decisions.
Strike the right balance of integration and autonomy by assigning both entrepreneurial and organizational strategies to new ventures and establishing creative think tanks to support the innovative ideation process.
The success factors of an innovation-driven enterprise include careful planning, accuracy in costing, and uniqueness of the project to distinguish the competitive differentiation. Companies can measure the planning and cost indicators in a scale of 1 to 10 to have a clear appraisal of success factors in implementing the innovative business projects. In reference to planning, score 1 indicates being easy to plan while score 10 denotes that the selected innovation is harder to plan and more planning requirements need to be met by the company. Similarly, score 1 for the cost indicator would suggest that the project cost works out to be lower, while score 10 indicates that the project would be very expensive and need enormous capital resources. Accordingly, the companies engaged in the innovation process may decide whether or not to take up such an innovation project. Contrary to these measure of scale, in reference to measuring the uniqueness of the innovation project, score 1 would indicate a highly common project with zero competitive differentiation, suggesting not to work on such innovation project, while score 10 for this measure would indicate that the project is highly unique and exhibits enormous competitive differentiation to make the innovation project a success. A company may undertake one or more innovation projects based on the available human and capital resources, ability to take risk, and competency in commercializing the innovation projects. Under such circumstances, it is necessary for the companies to develop innovative business projects portfolio and manage them, considering the following project rules:
Select the number of projects for processing and implementation
Maintaining a good balance among the project attributes following a score matrix
Clearly link the projects to mission, goals, and objectives of the company
Respect the uniqueness and product differentiation for each selected project
Manage project tasks on market-driven insights and create high consumer awareness about the innovative products
Develop core competencies in implementing the project
Inculcate disciplined task execution approach among the members of the project team
Calculate the payback time the project takes to recover investment
Work out the net present value of the new product in reference to the current value of returns
In the dynamic marketplace of today, entrepreneurs must move quickly as opportunity may no longer exist. Entrepreneurs should understand that the competitive marketplace today is complex and demonstrates ingenuity, spontaneity, and hustle. Profitable survival of new enterprises requires an edge derived from some combination of a creative idea and a superior capacity for execution. Effective entrepreneurs filter unpromising ideas as early as possible through judgment and reflection and do not depend on gathering lots of data to screen out the nonexecutable and unprofitable decisions. Good entrepreneurs assess realistically their financial resources, personal and organizational preferences, and goals for the firm. To ensure the right utilization of time and money, successful entrepreneurs also optimize the resources use and minimize the occurrence of flaws in production, marketing, and operations processes (Bhide 1994). However, with every enterprise, the major issue remains about the marketing of the innovative product by determining the right price point in a consumer market that is trendy and consumers would be willing to pay. Upon observing the market test results of the innovative product, most enterprises lean toward cutting back on differentiating features to reduce costs and engineer the product to an acceptable cost of goods and retail price point. For example, an entrepreneur Gauri Nanda had conceived a new idea of roll-away alarm clock—Clocky and launched the product under the aegis of Nanda Home. Clocky is the alarm clock on wheels that runs away beeping. It can be snoozed one time, but if the master of the clock does not get up, Clocky will jump off of the nightstand up to 3 feet high, and run around the room. Having achieved commercial success with the first product Clocky of Nanda Home, the innovative team of the enterprise interacted with the consumers to architect the new products functionally and emotionally appealing. After launching two more extensions of the Clocky line, the team has been engaged in designing, developing, and marketing another consumer product that would solve an everyday problem with lifelike charm and position it using psychographic strategies for consumers of all ages and gender (Ofek 2013).
The review of the available literature suggests that the marketing theory and entrepreneurial theory have evolved simultaneously. The successful entrepreneurs develop their business strategies around the market to accomplish the following objectives:
To provide the best offer to the market
Discover better solutions to the buyers’ needs at lower costs than the competitors
Create outstanding customer value
Develop consumer-, market-, and product-oriented strategies
Execute transactional and relational marketing-oriented strategies in the competitive marketplace
The entrepreneurs are largely driven by a vision to create value to customers and earn profit through their applied entrepreneurial skills and customer-centric marketing actions. Entrepreneurship and marketing theories share some commonality as both disciplines focus on identifying the opportunities and transforming resources into value-creation or co-creation for consumers. Successful entrepreneurs follow an effectuate route in entrepreneurship (Sarasvathy 2001). Entrepreneurs carry out thinking and continuous efforts to improve customer value, may be better off than what is prescribed in the traditional market theories. This attribute exhibits a better fit between the external market conditions and the internal environment in which the market decisions are made. Influence from entrepreneurship allows understanding the parts of modern market behavior better and analyzing the cognitive dimensions of entrepreneurs. The attributes of exploring opportunities and identifying the suitable one for doing business is also a symmetrical process in both marketing and entrepreneurship. In principal, opportunities are identified through market analyses in traditional marketing theory. Within entrepreneurship, this is regarded as a much more complicated process and can be regarded as an important part of the value-creating process (Hills, Hansen, and Hultman 2005). Entrepreneurial activities are an important part of today’s business world, and this should be reflected in how we teach and research marketing. The interface between entrepreneurship and marketing creates prolific business developments for marketing such as opportunity recognition processes, decision making and implementation, and strategic marketing (Hultman and Hills 2011). Market entrepreneurship has developed strongly as a result of the increasing global competition and is aimed at introducing novelty, innovation, or arbitrage into the production and exchange processes. Thus, the governments of developing countries stimulate productive entrepreneurship and make enterprises practical and operational through various public policies. The attributes and ecosystem of entrepreneurial mindset to work with innovation projects is exhibited in Figure 3.2.
There are two phases of the entrepreneurial mindset that demonstrate cognitive acceptance or cognitive dissonance in undertaking the innovation initiatives, as shown in the Figure 3.2. Most entrepreneurs catch up with the innovative ideas accidentally, while in social interactions than through a planned search for an innovative theme and measure their capability and competence to proceed with the innovation process, during which they also seek the support of government and society. One of the major challenges in the conventional social and cultural environment is the empowerment of entrepreneurs that builds confidence among the innovators to inculcate a proinnovation cognitive drive. Entrepreneurs need to scrutinize enormous personal and professional information of the interested people to induct into the innovation project and constitute appropriate teams. Besides driving the innovation project through the challenges of managing the resources efficiently, handling operational risk, marketability, and cost and time overrun, entrepreneurs often face market failures and piling up of sunk cost due to radical and experimental innovation approach. Such endeavors cause risk roll-outs though out the project, leading to abort the innovation untimely, which develops serious cognitive dissonances among entrepreneurs (Bettencourt and Bettencourt 2011).
Figure 3.2 Entrepreneurial mindset and the innovation project path
Entrepreneurship also runs in the family businesses. Firms desiring on continuously generative returns on investment and increasing margin of profit cannot rely on either strategy or entrepreneurship alone, but instead must successfully engage in strategic entrepreneurship. However, profitable niches evolve, shift, and disappear rapidly in the competitive market economy. Thus, some firms focus solely on entrepreneurial strategy, which might become an effective tool to sustain market competition in the long run. Without an effective strategy to create competitive advantage in pursuing these entrepreneurial opportunities, a firm will soon experience imitation by competitors whose offerings will erode its profits. Entrepreneurship begins with an appropriate mindset based on the right decisions on exploring and exploiting the opportunities. The balance of exploration and exploitation results in the key outcome of continuous innovation. One of the most pertinent challenges involved in pursuing strategic entrepreneurship is developing an appropriate mindset within the firm that can balance short- and long-term entrepreneurial objectives. A mindset refers to the cognitive frameworks through which new and existing knowledge is interpreted and used to inform decisions such as those regarding strategy and entrepreneurship (Webb, Ketchen, and Ireland 2010). The innovation entrepreneurship, which grows in the family business, largely operates in a niche as such entrepreneurs are not pro-open innovation. The entrepreneurial focus in a family-run environment does not always stay progressive; it is rather confined into a streamlined segment with low commercial vigor. The family-based innovation enterprises establish good governance practices that separate the family and the business and ensure oversight from a professional board and are careful not to lose the product uniqueness and the brand reputation woven around the family gravity. Such enterprises grow innovation leadership within the family values and learned competencies (Fernandez, Iqbal, and Ritter 2015).
The entrepreneurial thinking process demands continuous flow of new ideas. The ideas for innovations are the precious currency of the new market economy, but their generation is a mysterious process. Businesses that constantly innovate have systematized the production and testing of new ideas, and the system can be replicated by practically any organization. The best innovators use old ideas as the raw materials for new ideas. Entrepreneurs need to develop their thinking process in the following way:
Nurture good ideas from a wide variety of sources
Keep those ideas alive by steering, discussing among peers, and applying them in niche environments
Visualize new uses of conventional wisdom and encourage cross-pollination of thoughts within the organization that allow peer interactions
Turn promising concepts into real services, products, processes, or business models to gain competitive advantage in the market
Leading entrepreneurs may use the aforementioned thought process to generate innovative strategies. Most dynamic enterprises tend to move new ideas from one market to another and intend to build full-fledged consulting groups to refine the thought process and internal knowledge on entrepreneurial leadership by innovations. The most important issue in cultivating such thought process is to strike a balance between the organizational responsiveness to the innovating thinking and organizational work culture (Keidel 2013). Entrepreneurial mindset involves the ability to rapidly sense, act, and mobilize even under uncertain conditions. Most entrepreneurs learn in a dual-process way. This process suggests two-level interactive learning platforms based on the idea of the interaction by means of explicit and implicit learning through reinforcement. It accounts for many unexplained cognitive perceptions and phenomena based on casual and peer interactions. There are many applied implications of the dual-learning process, leading to the following attributes among entrepreneurial thinking process:
Entrepreneurs acquire knowledge through feelings and reactions as experienced in real situations
Realizing that the psychological and physiological outcomes caused by the feelings of loss of the right thought process are symptoms in the innovation process may reduce secondary sources of stress among entrepreneurs
There is a process of recovery to learn from failure, which offers some comfort that the current feelings of loss will eventually diminish
The recovery and learning processes can be enhanced by some degree of co-creation or peer interactions
Recovery from loss offers an opportunity to increase one’s knowledge of entrepreneurship and regenerate the thinking process
There is often an imbalance between the flow of ideas and implementing them to get solutions in a growing entrepreneurial firm. Entre-preneurs face with a problem in fitting the ideas to resolve the complexes in innovation and growth, so most entrepreneurs jump immediately to focusing on crash solutions, devoting little time to analyze why the problem exists in the first place. This is one of the flaws in traditional thinking, which may lead to conclusions without any rationale. In the marketplace today, consistent thinking for continuous innovation becomes increasingly important for the simple reason that the challenges enterprises face are becoming more complex (May 2012).
The SUEs are sensitive to the utilization of capital resources, managing liquidity, and carrying the innovation projects at the economies of scale. Most innovation enterprises at the stage of initiation set a narrow scope, but if their project outcome has the potential for commercialization of innovation, large corporations lean toward sponsoring the project and planning long into the future of innovation management. Good SUEs pursue 4Cs comprising continuity, community, connection, and command, turning these features into sources of distinction and competitive advantage. The 4C principles grow in every proprietary firm, large or small, or family-owned firms that flourish over generations (Miller and le Breton-Miller 2015).
Every small idea of an entrepreneur may be a powerful means to initiate a business revolution by putting the organization first to acquire market and achieve customer value. Putting the customer first has sparked a revolution at Hindustan Computers Limited, the services giant of India in information technology. This company banked upon the conventional wisdom of valuing the customers first, then turned the hierarchical pyramid upside down by making the management accountable to the employees. By catalyzing both the employees and customers, the emerging enterprise may be able to pave a path of transformation through innovation to enable the firm to grow fast and stay profitable among the competing firms. Entrepreneurs may create a sense of urgency for innovative thinking in the organization by enabling the employees to realize the need for change and inculcate a culture of trust by pushing the transparency in communication and information sharing. Enterprises can grow as a think tank like Toyota and General Electric by developing a bottom-up organizational hierarchy and enabling the ideation process and functions accountable to the employee as performance indicators (Nayar 2010).
Seasoned enterprises in the marketplace know that the opportunities for competitive advantage lie in market muddle, but they recognize the need for developing critical strategic processes. In a traditional strategy, most entrepreneurs derive advantage by exploiting resources and stable market positions for the products and services of their firms. A simple rule of strategy implementation suggests that advantage on outcome appears upon successfully seizing the opportunities. Most firms found good innovation opportunities toward key strategic processes, such as product innovation, partnering, or spinout creation. They need to create simple rules in the innovation process to help managers in pursuing such opportunities in reference to how-to work on innovations, market limitations, priority rules, scheduling, and exit rules. Entrepreneurial firms must follow the set rules meticulously to avoid distraction in the innovation process by changing them frequently. A consistent strategy helps entrepreneurs and managers in sorting out the promising opportunities and gain short-term advantage by exploiting them (Eisenhardt and Sull 2001).
Resource and Cost Management
The major challenge with the innovation companies is managing the human and capital resources efficiently. The fallacy of most innovative business projects is that more resources and cost involvement in an innovation project would lead to a wider and sustainable outcome. Small innovation projects are set with low human and capital resources that often face the serious disorder of cost overruns in the middle of the project as they are unable to manage the resources efficiently. One of the major tasks in managing the human resources is to generate sustainable value from the employees of the company, and more specifically, within the project team. It has been observed by analyzing the performance of innovation-driven companies that they perform at a higher level when they have clear job description, flow of directions, systematic performance appraisal and reporting system, and integrated talent management programs that are aligned with business strategy and project operations. Organizations can get more from their investments by managing human resources in the innovation-driven enterprises. Task allocation and performance management at various stages of the innovation projects are typically based on individual accountability than the collaborative team work. Human resources management practices tend to focus on individual competencies and experiences, entrepreneurial culture, and organizational design. Companies engaged in handling innovative business projects continuously should measure the employee performance periodically for the purpose of work force planning and networking broader collaborative contributions with other innovation management enterprises. Developing innovation networks or innovation consortium including SUEs reveal a significant strength of human resources. Companies nurture innovation networks through talent management initiatives and systematic task allocation in carrying out innovative business projects like organizations including IDEO, IKEA, Dow Chemical, and Best Buy (Schweer et al. 2012).
The most efficient entrepreneurial design in managing innovative business projects would be to develop a team culture and flexible decision making, and reporting organizational design. Such an enterprise system would provide adequate space for everyone to express ideas, develop concepts, design prototypes, and work with the commercialization of innovation projects. Most innovation nurturing organizations that follow top-down hierarchical structure often suffer from performance monitoring and reporting conflicts in the workplace.
In addition to issues of company structure and strategic decision making process, conflicts are set atop of the other questions that include what role the employees need to play to create the stakeholder value control—a scarce resource. A good innovation enterprise should build up the company by acquiring and retaining highly skilled employees, find a way to embed individual-based knowledge in the company, share knowledge across the working teams, and create an engaging, motivating, and bonding culture to attract and keep talented employees and the bonding task for managing innovation projects uninterruptedly (Bartlet and Ghoshal 2002).
Cost Management
It is the fact of market today that sustaining innovation is crucial for a long-term business performance of the company. However, the most significant question in sustaining innovation is the cost surge over the product refinement and extensions. But truly innovative products often ignore costs, like products from Apple Inc., which focus on the customers use value over the concerns on cost of innovation and price competitiveness in the market. However, most innovation management companies are serious about lowering the cost of innovation process in order to stay price-competitive in the market upon launching the product. Controlling cost in the innovation process has one conventional thumb rule to control the time overrun in all stages of the innovation process, right from initiation till the launch of the finished product. The innovation enterprises have adopted the new path of cost reduction through outsourcing the critical tasks in the innovation process that demand larger flow of capital and resources. McDonald’s, IKEA, and GE require potential innovators to lead cross-functional teams in developing promising ideas, and then present those ideas to senior management and manage the cost overrun, spillover cost, and curb the sunk costs in the innovation process. Some companies insist that they do a stint in the sales department by developing breakthrough innovators to mentor and manage peer networks to diffuse the innovation at low cost. The escalated cost of marketing also pulls down the price competitiveness of the innovative products. Thus, companies tend to control the marketing costs besides the innovation processing costs by lowering the innovation diffusion costs, reducing the expenditure on advertising, sales, and promotions. The innovations are, thus, made better known to the consumers over the social networks and virtual stores rather than from a television commercial or a billboard. Pushing the innovations to the market through the digital networks appears to be a cost-effective strategy for most enterprises. Practices like these keep companies open to new ideas and prepare them to respond nimbly to innovation (Cohn, Katzenbach, and Vlak 2008).
Commonly all entrepreneurs know that business growth does not just agglomerate, but springs from continuous innovation and improvements over the existing products and services. However, it is usually believed that companies must spend profligately on innovation-related research and development. Most companies are following the austerity measures and reducing the overhead costs in innovation management. In order to manage the costs involved in innovation projects, conscious companies tend to increase the number of innovators or team strength and reduce the time for innovation, so that the product can be launched in the market quickly and the returns on investment can be generated at a faster pace. These companies also focus on developing customer-centric but radical ideas to achieve the competitive differentiation at low cost and uphold the customer value and expectations. Companies with cost effective goals of carrying out innovations for commercialization look for innovation sources outside the organization, and outsource various tasks related to the innovation project. Increase in the learning from small, low-risk experiments, and commitment to long-term, consistent development efforts are encouraged by the innovation-driven companies in order to keep the costs low and increase the returns on investment (Hamel and Getz 2004). The outsourcing market has matured since 1990s, and innovation organizations have begun to examine how external organizational bonding on manufacturing or marketing process can not only achieve cost savings, but also enable innovation in the dynamic business environment. Most managers use the discounted cash flow (DCF) model to help them make decisions such as where to locate a new manufacturing plant or whether to use a foreign or domestic supplier. But DCF typically undervalues flexibility, and as a result, companies may end up with low-cost production as long as everything proceeds according to the plan, but any deviations from the WBS of the project plan might turn highly expensive (de Treville and Trigeorgis 2010).
Standard accounting techniques such as break-even accounting would provide an opportunity for the enterprise on managing checks and balances in order to monitor the performance of innovation projects. However, such approach may not help the companies in reducing the fixed and variable overhead expenses that are responsible for escalation of innovation cost and affecting profits. Besides cost analysis, simplifying the manufacturing process and fixing production matching with the potential demand for the new products is followed by some companies as the best way to ensure return on investment (Woodward 1976). The SUEs as well as R&D organizations in the health care sector in India have developed three powerful organizational advantages as a “hub-and-spoke” configuration of assets, an innovative way of determining the task allocation in an innovation project, and a focus on cost-effectiveness rather than just cost cutting (Govindarajan and Ramamurti 2013). The hub-and-spoke paradigm is a system of connections arranged like a wire wheel, linking the wheel along spokes connected to the hub at the center. The model is advised for managing innovation projects by connecting the project team (hub) with the project charter that delineates the cost, time, risk, deliverables, profitability, stakeholder value, and many other key performance indicators (spokes). This model is commonly used in transport and telecommunications industry.
Work Breakdown Structure
A company working with innovation projects can manage the cost effectiveness throughout the project by developing a clear WBS. In project management and systems engineering, WBS is a deliverable-oriented decomposition of a project with time and task plans fragmented into smaller components. Such division of tasks within a product path allows the companies to set controls over the fixed and variable costs. Deconstructing a large job over time and the cost span into a series of manageable tasks helps managers achieve their goals within the budgetary provisions of the project. Operating within WBS would help companies avoid the supplementary budget requirements and arrange project deliverables within the prescribed time frame. The WBS visually defines the scope into manageable blocks of tasks that a project team can manage within its capability and competence. The WBS incorporates work packages for each task and estimates the cost for each task to be carried out within the estimated project time. The WBS is embedded with the following attributes:
Work packages
Costs and activity durations
Size of the work
Project cost accounting
Control accounts
Detailed description of work and technical documentation
Cost estimates
WBS code
Milestone
Accountability
Cost
The work packages should include activity-wise cost and time to task, and the packages should be proportionate to the manpower and time involved in tasks. Such time-task calculation would determine the size of the work and cost approximations. As the work and cost are divided per unit, it is easy for the project team to control the accounts. The cost estimates are generally denoted by the WBS codes that make the project team easy to monitor the task-by-task cost performance and fix the accountability of team members toward managing the cost and time effectiveness. Often projects fail due to inappropriate WBS documentation and management thereof. Figure 3.3 depicts a model WBS and associated control features in an innovation project.
The attributes of WBS and cost and works management in an innovation project are illustrated in Figure 3.3. The project team creates the project WBS by identifying the major functional deliverables and subdividing those deliverables into smaller systems and subdeliverables. These subdeliverables are further decomposed until they turn manageable by a member of the team and accountability can be fixed. The work package represents the list of tasks to be performed by the specific unit of work. From the perspective of controlling costs, these work packages are usually grouped and assigned to a specific department or team to perform. By integrating the cost and work functions from the project’s WBS, the organization can track financial progress in addition to project performance.
The WBS provides the framework for organizing and managing the work in smaller deliverables through the predetermined “work packages.” The summary of the WBS identifies the key deliverables that the project should provide and assess deliverables on each work packages. Without WBS, a project would appear too broad and lack in the focus to perform the tasks accurately. The work packages of the project need to be appropriately placed in the project matrix by constituting the project team and led by the competent project manager. As the project is deemed fit to the goals, the WBS is formed in reference to the available resources with the project. The WBS will be expanded to include exactly the type of work that needs to be done working closely with the client and getting what is wanted out of the project into the WBS. By this phase, the actual work on the project is turned on.
Figure 3.3 Attributes of work breakdown structure
Market Development for Innovative Projects
The process of globalization and networking of companies and markets on the global platform began with fierce strategies in the mid-20th century. The shift in the corporate governance and business philosophies among the multinational companies across the world has driven the process of globalization and creation of the concept of global markets. The transformation of business philosophy from “marketing to customer” to “marketing with customer” has triggered the business emotions among the companies to develop customer-centric marketing strategies in order to conquer the high- and low-end markets. As multinational companies of the western hemisphere tend to penetrate into the developing regions and the bottom-of-the-pyramid market segments in search for growth, they have no choice but to compete in the big emerging markets of Brazil, Russia, India, China, Indonesia, and South Africa. The dynamism for globalization has been spread across the political thinkers and business managers hitting dual perspectives of building diplomatic relation by narrowing down trade and economy barriers across the countries in the world and equalizing the power play among the nations, and given more space for multinational companies to do business in the far reachable markets. Although globalization has driven bidirectional efforts of multinational and local companies to share their marketplace in the home and destination countries, still the common question as how these companies play smart to gain the competitive advantage and grow sustainably in the given marketplace persists. During the 1980s, multinationals gained the first-mover advantage in the emerging markets and developed meticulously every element of their business. Some companies believe that they could gain competitive advantage as the emerging markets would merely be new markets for their old products models, and penetrated with an imperialist mindset. But the strategies developed with such thinking narrowed down the success of multinational companies in most emerging markets like India and China that appeared to be innovative in bringing new products at low cost in the market against the multinational companies. Thus, going global has turned a big challenge for the multinational companies, and to evolve in the new marketplace, several critical questions remained to be resolved. Some of them include:
Who is in the emerging target in the emerging markets—affluent, middle, or bottom-of-the-pyramid market segment?
How do the distribution and logistics networks operate?
What mix of local and global leadership is necessary to foster business opportunities?
Should there be a consistent strategy for doing business in a new marketplace or diverse marketing strategies need to be employed to serve the niches?
Should there be global-local partnerships promoted to seek a win-win market share in the local markets?
In order to compete in the big emerging markets, companies need to reconfigure their strategies by ascertaining appropriate responses on the competitive fitness and redesign cost and operational dynamics (Prahalad and Lieberthal 2003). It is observed that though the premium consumer segment may attract the companies with global vision, the bottom-of-the-pyramid market appears to be more promising from the perspectives of building the brand equity and customer-centric posture of the company. Companies entering into the premium segment may push themselves to a high-profile niche, but this segment might not support the objective of increasing the market share and staying at par with the mass customers. The new commercial reality is the emergence of omnipresence of global companies across the consumer segments, and leaning toward marketing more standardized products and services than offering customized products on a previously unimagined scale of magnitude. The marketing technology for global, multidomestic, and transnational companies today is to move to digital platforms and give consumers the convenience and cost advantages over the conventional wisdom of laying nonflexible marketing standards. The companies with global standardized products enjoy the benefits of economies of scale in production, distribution, marketing, and advanced management in reference to functional, reliable, and price competitiveness (Levitt 1983).
Breaking the social, cultural, economic, and political barrier for moving the business in various destination markets is a tough challenge for the multinational companies. Though globalization of business has become the lifeline of most companies, creating a sustainable corporate strategy in tune to the local market conditions is difficult. Thus, most companies do not stay competitive in the local markets and lose their market share to the low-cost customer-centric companies. Multinational companies largely employ natives in the destination countries to inculcate the cross-cultural organizational behavior that can enable the company to compete on a worldwide basis, without straying far from headquarters. One of the effective inspirations for foreign companies is the implications of the comparative advantages on factors of products comprising land, labor, capital, workplace talent, and technology, which drive the companies to perform effectively. Overseas companies tend to meet the demands for local convergence and build distinctive competitiveness (Kogut 1999).
There have been many notions on globalization of business comprising various social, economic, political, and ethnic points of views. However, from the perspective of empowering people to access the global markets, demand for products and services has been identified as crystallization of the world as a single place and as the emergence of the global human needs (Robertson 1987). Integration of various digital socioeconomic communication platforms explains that globalization is a reflexive process, and it brings the global markets on one boundary-less play field. The development of new technology allows mass media to become universally available to consumers, and this combines with the cross-border marketing opportunity for the multinational companies (Ritzer 2007). These market trends lead to a homogenization of consumer needs and develop proinnovation and overseas cultures in the emerging markets through new consumption trends, standardization, intercultural collaboration and coordination, and cross-border competition (Zou and Cavusgil 2002). Consistent with the globalization trend, many international companies begin to utilize a global approach, in which companies market their products on a global basis to take the place of the traditional multidomestic approach, in which local subsidiaries market local products to the local markets (Kotabe and Helsen 2010).
Many factors are driving the world toward greater globalization. These factors include the rise of worldwide networks for investment, production, and marketing, advances in telecommunication technologies and the Internet, increase in world travel, and the growth of global media (Yu, Byun, and Lee 2013). Globalization involves the homogenization of international markets and an increasing similarity in the needs and habits of international customers. Using globalized strategies can help international companies create consistent brand images worldwide and use their resources more efficiently. However, any attempt to globally standardize service delivery may encounter difficulties, and it may be argued that every market is unique, and a globalized approach cannot adequately take account of the cultural differences in ethnic markets (Alden, Steenkamp, and Batra 1999). Some leading multinational consumer products companies like Unilever have leaned toward a localized approach, based on the continued desire for maintaining local culture. Indeed, it is clear that many people prefer local consumption imagery, because they can more easily identify with local lifestyles, values, and attitudes. Some studies suggest that neither consumption nor marketing can be made globally uniform. These studies emphasize the powerful influence of local cultures, and demonstrate how customers are developing hybrid cultures or growing with global and local cultural influences (Steenkamp and De Jong 2010).
Most companies also experience a countervailing trend as many consumers seek unique services that reflect their local cultures, lifestyles, and customs. In response, some companies have begun to design their business strategies to fit the special needs and distinct tastes of consumers in particular regions. This localized management approach requires international companies to invest large amounts of time and resources for R&D in an effort to better understand and respond to specific local markets. Companies moving into mass markets and bottom-of-the-pyramid markets in the developing countries grow with localized strategies in different regions (Liu et al. 2014). In view of the experiences of many companies engaged in market expansion amidst the thriving market competition at both the high-end and low-end markets, it may be argued that the globalization of consumer preferences does not necessarily imply convergence in management practices. Globalization (or convergence) and localization (or divergence) are two extremes in the formation of company strategies. Companies often find themselves somewhere in the middle, on the continuum between these two extremes (Yu, Byun, and Lee 2013).
Evolution of the market at the lower end of the global markets is identified as a set of localization processes through which the forces of globalization move in the destination markets (Hansen 2002). The success of McDonald’s, Pepsi-Cola, Coca-Cola, and so on is based on variation, that is not offering the same products everywhere around the world, which evidences that globalization does penetrate into the local markets and acquires them or threatens competition to the local firms but in a curious way contributes to its revitalization. For example, take a view at the Cadbury’s expansion into the Chinese market as an experiment to investigate whether a company needs to modify its products, production process, product names, and other factors to compete in a new local market (Wood and Grosvenor 2003). Similarly, the chain of small convenience stores, the Seven-Eleven Group, has marked the global success, as the result shows that the success is largely dependent on the company’s localized strategies. These cases emphasize the continued desire of customers to maintain their local culture, because people in different markets have different goals, needs, uses for products, and ways of living (Steenkamp and De Jong 2010). The concept of glocalization is a hybrid strategy that embraces elements of global culture and integrates them into the local culture. Robertson has developed the term glocalization to explain that global forces do not override locality, and heterogeneity in consumption is an important feature of the modern society (Robertson 1995).
The process of localization of global companies has emerged as the penetration of the global marketing strategies into ethnic business across the wide range of products and preferences, causing rapid business growth for the global firms in different geo-demographic consumer segments. For example, McDonald’s uses hybrid, glocalized approaches to incorporate local food preferences and lifestyles by serving spicy cottage cheese burgers in India, beer in The Netherlands, and wine in France (Alden, Steenkamp, and Batra 2006). Management experts in favor of glocalization argue that consumers often draw their preferences, blending the available global and local, and continental and traditional information. Consumers use products to position themselves in the local age, gender, social class, religion, and ethnic hierarchies (Ger and Belk 1996).
Going global seemed to be a glamorous vision for every company in the world till the end of the 20th century. However, the political ideology in the 21st century moved to meticulously develop a global market platform in all destinations by driving cooperation between the domestic and international companies for ensuring mutual business growth of the companies and national economic development. But there are many incidences of multinational companies cannibalizing the market share of local companies and positing economic threats to the country in terms of money laundering, disrupting primary consumer markets, and causing national security concerns. Accordingly, governments of most developing countries have raised the concept of guarded globalization to protect economic, consumer, and national security. Such concern has prompted the developing countries to improve their stakes in the public sector industries. Indeed, the rise of state capitalism in some of the world’s most important emerging markets has altered the playing field. Multinational companies must understand globalization’s new risks, but project their strategic importance to the host government and their home government and play safe to enter in the destination markets by developing alliances with local players, exploring new ways to add value abroad, and expand business in multiple sectors both at home and overseas destination (Bremmer 2014).
Chaos in market is commonly caused due to congestion of competitors, frequent introduction and withdrawal of products and services, and extensive price promotions. Small differences yield widely diverging outcomes in dynamic market systems, often rendering long-term prediction impossible, in general, in a market or a business. This happens even though the market systems are deterministic, meaning that their future behavior is fully determined overruling the uncertainties. In consumer markets, the chaos is frequent, and these markets are very susceptible to the butterfly effects. The chaos and butterfly effects are very popular in fashion products and consumer electronics. The preceding figure illustrates that the success of any innovation, which has been target for the mass market, may trigger the market chaos as fierce competition begins at the low-end markets. Such competition would divert consumers from the principal brands and acquire them for low-price utilitarian or social status products. The growth of virtual channels would also drive the competition and chaos in the market. The market chaos at the low-end markets is generally prompted by the local companies, which gives way to the international and virtual companies to push through the market space. On the contrary, chaos in the high-end market occurs due to the rush of identical products by high-priced brand icons. Such competition at the high-end markets fragments the market share of companies and drives most consumers to adapt to the fashion consumption behavior, without developing loyalty for any brand. Many firms that enter with one-touch technology fall into the high-end market chaos.
Chaotic market behavior is predictable for a while and then it appears to become random, driving consumers in a dilemma to respond to the uncertain marketing strategies of the companies. The amount of time for which the behavior of market chaos can be effectively predicted depends on what is the tolerance limit of uncertainties in the market, how accurately market dynamism and chain causes and effects can be measured, and how effectively a temporal and spatial scale can be created to monitor and control the market uncertainties in a given time. Chaos in the market is often initiated by the companies that would like to have a leap-frog experience in competition by earning higher market share, applying price-driven tactics. Companies under such market conditions experience high uncertainties and are unable to develop strategic plans. Thus, embracing chaos seems the opposite of discipline and planning. However, uncertainty is embedded in negotiations, and the negotiators who ignore this fact and follow rigid strategies blind themselves to unexpected threats and slip potential opportunities (Wheeler 2004).
Lean Thinking in Innovation Projects
Lean management is a contemporary practice in managing innovative business projects, which allows the companies to establish significant control over the cost spread across the various tasks in a project. The lean practice also permits reduction in inventory levels across the backward and forward supply chains, which results in better financial performance as companies achieve simultaneous declines in manufacturing and service costs. However, lean transformations generally have short-term adverse impacts on the company’s bottom line, and managers need to anticipate these challenges and fix them at the earliest before it damages the system and the project performance. Innovation companies may overcome the financial hurdles using the lean management by the value-stream accounting approach, which helps managers to plan for the short-term financial impact, monitor progress, understand the operational improvements, and develop strategies to maximize the longer-term benefit. The lean management approach also replaces the traditional cost-accounting system with a transparent accounting system that tracks the company’s value streams, which incorporate all of the value-adding and nonvalue-adding activities required in managing the innovation projects from start to finish (Cooper and Maskell 2008).
Conventionally, companies draw innovation-based projects for a longer time frame, anticipating the risks and contingencies during the project period. Only some preinnovation projects with guaranteed commercial success, go into stealth mode to develop their offerings. Lean startups, in contrast, begin by searching for a business model for each innovation project as they test, revise, and discard task and time overlaps, continually review the performance of each stage of innovation, gathering customer feedback upon commercializing the product, and rapidly iterating on and re-engineering their products. This strategy greatly reduces the chances of the startups spending a lot of time and money in launching products that no one actually will pay for. The SUEs that follow the lean innovation management approach could commence their projects quickly and successfully by reducing the incidence of aborting the project before completion (Blank 2013). The lean strategy process ensures that startups innovate in a disciplined fashion, so that they make the most of their limited resources. Lean strategy helps company builders choose viable opportunities, stay focused, and align the entire organization. The lean process requires setting the vision, defining the firm’s near-term goals for success, scope of justifying the goals of the company, and competitive advantage describing the strategies of the company to win the market (Collies 2016).
Constituting Project Teams
“Team” conceptualizes a group of people engaged in delivering a common task. In ideal situations, the individual and group behavior in a team is integrated toward the common objectives and the task delivery process is shared, which leads to set the group dynamics. The basic attributes of a good team include clear identification of goals, clarity of roles, common feeling, motivation, commitment, and collaborative attitude. The efficiency of group approach is a function of many behavioral factors, which may be expressed as (Rajagopal and Rajagopal 2006):
p = f(m, a, g)
Where, p denotes the degree of performance, m represents motivation, a exhibits abilities of the individuals associated with the team, and g is expressed as realization of goals. The team may not function effectively if any of the mentioned factors or associated variables thereof are incoherent. The reward and punishment issues in a team emerge as a post-process synergy of all associated variables and are largely governed by the factors like common feeling, motivation, commitment, and collaborative attitude (Rajagopal 2006). Hence, teams are collections of people who must rely upon group collaboration if each member is to experience the optimum success and goal achievement. Changing technology and markets have stimulated the team approach in multinational companies for performing the organizational tasks. Moreover, the complexity of the society and human needs prompted team work as a significant tool in managing the corporate tasks (Dyer 1987). Team management is employed largely in the organizations where activities are less repetitive and predictable. Such an approach demands effective liaison, appropriate delegation of powers, judicious allocations of roles of team members, sharing of information, and accuracy in evaluation of team performance (Harris and Moran 1999).
Team control has emerged as a behavioral control mechanism. The sales engineers become a part of a quasi-firm arrangement, along with the client’s engineers and managers, who supervise their work. Management efforts to ensure detailed documentation emerge as a second control mechanism (Darr 2003). Industrial organizations largely implement direct management control and influence the activities of employees leading toward improving their efficiency. The extent monitoring of sales managers, directing, evaluating, and rewarding activities in an organization intends to guide the sales team behavior through team control processes to achieve favorable results to the organization and the employees (Anderson and Oliver 1987). Team control in a sales organization is, thus, recognized as an important performance indicator of the task performed by the sales people. The innovation teams should be constituted with autonomy and enough scope for brainstorming on various task-related issues in the project. Constitution of teams should include the following attributes:
Warming: |
Educating the team members about the project and respective tasks of the members. Effective warming-up sessions would encourage the member of the project team to conceive the goals, objectives, tasks, and modalities of the innovation project. |
Forming: |
Members exhibiting similar interests in the project and demonstrating the capability and competence in conducting tasks in the innovation projects should be pooled in a company to form an efficient project team. Attract like-minded people to get into the task and project management process. |
Storming: |
It is a healthy practice to allow the members of the team to use their space in the team for loud thinking, discussions, debate over the issues, and present their point of view on managing the various tasks to be performed in the innovation projects. |
Norming: |
Though brainstorming exercises result in arriving at common approaches, solutions to the problems, and taking preventive measures, there is a need to determine the rules and standards for open discussions on the innovation projects activities. This would streamline the participation of members within the team and keep them on track for carrying out the tasks in the project. |
Performing: |
Teams constituted with the aforementioned attributes should be given autonomy or flexibility in decision making to conduct various tasks and enhance the performance of the project. However, the performance of teams should be monitored and evaluated on task-by-task basis to fix any advertence in the project operations process. |
The SMART variables may be considered to administer sales teams which include: strategy orientation, measurability, approach, reality, and time frame. The strategy orientation would drive the brainstorming discussion to result orientation, and the measurability would count on the success of the deliberations (Rajagopal 2006). Teams, which need to work within an organization and across-functional activities such as sales, marketing, purchasing, personnel, and finance, find that team working fosters as collaborative tool rather than a competitive approach. It is important that terms of reference of teams must be capable of doing the job for which they have been selected, and this clearly implies that the membership should include people who are able to contribute toward the completion of task (McGreevy 2006). Every team should choose its leader and work in a collaborative pattern rather than a hierarchical structure. The team leadership should allow the members space for expressions, reviews, and suggestions during performing the project tasks. The company should offer task and project-specific training to the team members in delivering their services efficiently during the project period.
A new project is usually initiated with a kick-off meeting whether in a start-up enterprise or at a multinational company sponsoring the innovation project with SUEs. Accordingly, the purpose of the project, roles and responsibilities, and fitness of the project within the overall goals of the organization are explained among the project teams. This technique can be used in all types of teams. However, in a matrix project team, the kick-off meetings will be specific to the tasks and contextual to the deliverables within the cost and time frame. It is essential to establish the ground rules collaboratively in a team that will operate, which will provide the team with clarity and will ease communication over issues such as boundaries, responsibilities, and team member behavior. Functional teams already have this established through the use of departmental policies and procedures. However, for newly formed matrix project teams that do not have rules of operation established as part of their formal organization structure, team agreements are a necessary aspect of building an effective team.
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