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Organizing for Exploration at a High Tech Firm

Rosink, Jaap (2010) Organizing for Exploration at a High Tech Firm.

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Abstract:Innovation is increasingly recognized as a major driver for organizational performance. Whereas most established firms are proficient in enhancing their stream of rents on the current competences, they somehow seem to struggle when it comes to the exploration of radically new opportunities. Almost a year ago, top management of Trion Kromhout, a physical amalgamation of several distinct subsidiaries of Trion N.V., started to recognize the challenges, and moreover the importance of exploration (i.e. experimenting with new opportunities) within their own organization. Since the factors that can negatively influence exploration often grow within an organization and can be deeply rooted in its strategy, processes and structure, an in depth case study is conducted to answer the following central research question: “How has Trion Kromhout evolved over time with respect to exploration, and how can Trion Kromhout enhance exploration?” The goal of this study is to identify specific factors that negatively influence exploration at Trion Kromhout. The results of 12 open ended interviews with several top and middle managers, desk research and the collection of narratives contributed to an extensive, retrospective case description of Trion in both its early days to create a contextual view, and the contemporary Trion Kromhout. Below, the findings of this study are described in general: 1. A large production site with heavy investments is rather inflexible. Data showed that in several cases, exploration was limited due to the production site’s inflexibility. 2. A strategic shift from acquiring other companies to explore new opportunities to positioning an internal R&D department implied that R&D remained largely occupied after this shift with troubleshooting and optimization of production. R&D’s capacity to explore remained limited after an increase of the R&D department. 3. The production department still has a strong voice in early stages of NPD. Therefore new opportunities are risked to be reflected to the production capabilities, resulting in refining existing competences. Organizing for Exploration at a High Tech Firm UNRESTRICTED Master Thesis - Jaap Rosink 3 4. A mechanism of positive mutual feedback between experience and competences has been recognized, indicating that Trion Kromhout has fallen into a familiarity/maturity trap. Creating breakthroughs is therefore hard to achieve at Trion Kromhout. 5. A mainstream management system recently was introduced at Trion Kromhout. The focus of this system is on doing more with less. Many ingredients of the mainstream management system are focused on upward migration, i.e. increasing the stream of rents on current competencies. The exploration of new opportunities is therefore left unattended. Moreover, e.g. the handling of strict go-or-kill criteria hardly apply for explorative projects, decreasing the likelihood of these types of projects to get delayed or even killed. Another substantial part of this study was to create directions for Trion Kromhout to overcome these barriers to exploration. These directions are described below in general: 1. To get out of the familiarity/maturity traps, Trion Kromhout should explore novel/emerging technologies. The appendix shows which areas Trion Kromhout should explore. 2. A boundary spanning role should be formalized to initiate the exploration of the above mentioned novel/emerging technologies. 3. An innovation management system has to be created to enhance explorative activities, applying appropriate evaluation metrics. Moreover, in the case of Trion Kromhout, a platform approach around the mentioned technologies should be applied to build a knowledge base in these specific areas and reduce uncertainties. 4. Finally, the above mentioned activities should be conducted in a separate organizational space, next to the mainstream organization. Key is that exploitation and exploration will balance healthy, which can be enabled by applying contingency rewards. A main recommendation for Trion Kromhout to apply the directions is that Trion Kromhout should initiate from bottom up. This means that Trion Kromhout has Organizing for Exploration at a High Tech Firm UNRESTRICTED Master Thesis - Jaap Rosink 4 to start small with little investments. Over time when uncertainties start to reduce, investments may increase. A limitation of this study is that the relation between internal R&D and external knowledge acquisition has not been investigated. Therefore no comments can be given about whether Trion Kromhout should continue to acquisition strategy next to internal R&D. Also what not has been investigated is the initiation and integration process of the R&D department. This process also can affect the output of the contemporary R&D department. Finally, a patent analysis has been conducted. The result is that the model of innovation dynamics (Utterback, 1994) shows similarities with those at Trion Kromhout. However, Utterback’s model applies on industrial level and the patent study is on organizational level. No further investigation has been done in order to validate the results to some extent. The results of the analysis however, appeared to be useful as an awareness creating tool for a need for exploration.
Item Type:Essay (Master)
Clients:
Trion Kromhout
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:http://purl.utwente.nl/essays/59949
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