The art of developing an innovation

The following text was also published in Entré No 3, 2010:

An innovation must be complex and important. At least if a subsidiary wants to charm its parent company into routing the innovation through the whole group. The same principle applies to small businesses that want to attract a larger company.

A company that is part of a multinational group develops an innovation. The head office decides to help spread the innovation across the group. Or not. What determines whether headquarters gets involved? Henrik Dellestrand investigates this in his thesis Orchestrating Innovation In The Multinational Enterprise, in which he has studied 169 transfers of 72 innovations between subsidiaries in different groups.

When headquarters recognizes a subsidiary for an innovation, it is a prestige boost for the company. Headquarters’ time is limited and not all new ways of working or products can receive tangible support from senior management.

The innovations on which headquarters chooses to focus are therefore an interesting measure of what is considered particularly important within the company. But it also shows where in the group they see the biggest obstacles, and where they think extra resources need to be added to ensure that an innovation is spread effectively throughout the company as a whole.

Dellestrand says his thesis is also relevant for small business owners who want to get noticed by a larger company.

– When a subsidiary wants the attention of the head office, it’s the same thinking that is needed as if you have a small company and want to be noticed by a larger one, he says.

Even small businesses live in a globalized world and sometimes have to transfer knowledge about innovations to business contacts in other parts of the world, with different economic conditions and a different culture. Dellestrand’s thesis shows where there can be pitfalls.

If there is a need to transfer knowledge between countries speaking different languages, management is more likely to intervene, as the language differences are expected to make the transfer more difficult.

On the other hand, when it comes to transferring an innovation between companies where there is a major cultural difference, headquarters surprisingly does not intervene. It is seen as too time-consuming and energy-intensive.

– “This is contrary to what previous research says, says Henrik Dellestrand.

He points out that it can make the process even more laborious if management intervenes and adds its own, third culture to an already complicated communication process between two cultures.

– Some types of innovations get parent companies more involved. These are innovations that are applicable to a wide area and can interact with many systems.

He states that an innovation is of interest to larger companies if it is complex and important. Complex in this context means that the innovation has different subsystems and components that can affect many parts of a company’s business, and that it is created using knowledge from many different sources. An innovation is important if it contributes to making its own division, or the company as a whole, more efficient and competitive.

– If you have a small company in Sweden and create something that can interact with many technical systems, and which provides increased efficiency, you can interest a larger company, says Henrik Dellestrand.

Contact henrik.dellestrand@fek.uu.se

The most interesting innovation
– Can be applied widely, in several different areas
– Helps a company work more efficiently
– Makes a company more competitive
– Draws on knowledge from many different areas
– Is complex and consists of several components and subsystems