How should management control the front end of innovation?

Estimated reading time: 4-5 minutes. A study examined the use of management control in the front end of innovation. Specifically, how the different mechanisms of control are associated with generating strategic renewal. The foundation for successful new product development is created in the front end of innovation, which refers to the activities that take place before the formal product development project. The front end of innovation has been characterized as highly uncertain and creative, thereby requiring high levels of freedom and independence for those executing front-end activities. However, a certain amount of control appears necessary to secure the effective use of resources and the achievement of the company’s long-term objectives. So, how should management control the front end of innovation?

 

front end of innovation

 

Data from the front-end phase of 133 new product development projects from different large and medium-sized companies were collected and analyzed. Data was derived from a national database of industrial companies in Finland. All companies with more than 50 employees and product development activities were included in the sample. A total of 888 companies were found that met these criteria. A questionnaire was sent to this selection, addressed to the Technical Manager, CEO or R & D responsible person for each company.

 

Management control in the front end of innovation

The results show that input control is positively associated with achieving strategic renewal in the front-end phase. The results also confirm the importance of intrinsic task motivation of the front-end group.

But under high technology uncertainty as moderating factor, the use of outcome based rewarding or front-end process formalization has a negative influence on strategic renewal.

This study’s results include a significant managerial implication. Management can well use formalized process structures to run its front-end projects. The condition is that such a control approach is justified by other reasons (e.g., clarity). Another condition is that management control can use outcome-based rewarding if it is in line with the normal rewarding system without fear of negative influence on strategic renewal.

 

References:

Poskela, J., Martinsuo, M., 2009. Management control and strategic renewal in the front end of innovation. The Journal of Product Innovation Management, 26 (6), 671-684.

Available from: http://onlinelibrary.wiley.com/doi/10.1111/j.1540-5885.2009.00692.x/abstract?deniedAccessCustomisedMessage=&userIsAuthenticated=false

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