The degree to which a firm needs creativity and discipline, the elements of creative tension, depends on the speed with which the industry changes. While some degree of freedom and flexibility is essential for productive innovation teams, management is faced with the challenge of instituting control mechanisms that lead projects in the right strategic direction, and monitor firms’ progress towards their organizational and project goals. However, the wrong type of control system may constrain firms’ capabilities. Creative tension seems to be important for successful innovation.
Two researchers analyzed 12 successful practice companies’ innovation control systems in order to define how supportive or counterproductive they are in respect of increasing R&D effectiveness and efficiency. The researchers identified three archetypes of innovation control system design, each of which depends on the dynamics of the industry in which companies act.
The study provides useful guidelines for management who confront multi-faceted and complicated control situations.
Whereas in fast-changing environments a high creativity level is necessary in order to react flexibly and effectively to changing demands, stable industries need more efficiency-oriented capabilities. Consequently, a company’s innovation control system has to be adapted to its specific needs in order to produce successful new products and services tailored to market needs and the speed of technology.
Innovation control systems that fit a company’s industry dynamics may support the decision-making process. Whereas in slow-changing industries, management is provided with detailed objective data on the predictable environment with which to make decisions based on rational evaluations, decision makers in fast-changing environments face complex situations. Creativity is indispensable for competitive innovations and decisions are often based on intuition. However, innovation control systems in fast changing industries focus management’s attention on the right issues. Key performance indicators in fast-changing industries should be more focused on monitoring and optimizing the process of constant review. Instead of past performance indicators those companies should ask questions like how fast is our feedback loop, how quick are we reacting on changes in environment, how frequent are we monitoring our environment and so force.
Additionally, companies that want to be more innovative or more resource efficient can use the results presented from a faster respectively slower industry to find leverage points. The researchers also found that companies in medium-fast changing industries face the particular task of balancing their control activities more carefully than companies acting in fast and/or slow industries.
Perez-freije, J., Enkel, E., 2007 Creative tension in the innovation process: how to support the right capabilities, European Management Journal 25 (1), 11–24.
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