‘Announced split of Philips is right move'
Companies that want to have inventive impact need to focus on a limited number of products, especially if the products concerned recombine different technologies, for example, digital cameras. “Ideally, you use 10-30% or more of your R&D time for a multiple-technology product,” Tilburg Professor Xavier Martin states on the basis of research he conducted with three fellow researchers from Spain, Switzerland, and the United States. “In this light, the announced split of Philips is the right move. It will bring the necessary R&D focus, enabling Healthtech to really catch up to its competitors and Lighting to continue the transformation of its business model.”
Press release 25-09-2014
Besides focus, another crucial factor for recombinant innovation is experience with similar technologically complex products, the researchers conclude after an analysis of failed product innovations. However, accumulated experience must be deployed with discrimination. “It is a commonly held misconception that experience is a guarantee for inventive impact”, Martin says. “It can in fact blind you to subtle difference, as a result of which you work from the wrong assumptions and your project fails.
Kodak is a case in point: it had initial success with its hybrid camera (the Advanced Photo System), whereby the company recombined analog and digital technologies. However, Kodak was unable to build further on this technological recombination. From being a market leader in analog photography it went into liquidation.” Another example of a company going through a difficult transition is Hewlett Packard, which applied its printing expertise to pioneering electronic scanning.
Building on experience to achieve recombinant innovation requires enormous focus. The more fragmented a company’s R&D projects, the harder it is to achieve this subtle focus. Companies like Samsung and Siemens, for instance, must be careful to avoid this pitfall. “Even though Siemens spun off their lighting division Osram last year, they still lack the necessary focus in other activities to keep up in areas such as medical technology.”
The researchers wanted to know what caused failed innovations. They analyzed patents filed in the US between 1977 and 2002 by organizations from the photographic imaging industry and studied the innovations that had lasting inventive impact.
Mindfulness
Martin and his colleagues conclude that experience and focus are the two key factors for all inventive impact. “Management teams need to develop mindfulness: learning to be more selective in the broad variety of organizational experiences, resisting the urge to make obvious connections, that may prove not to exist”, Martin says. The more complex a recombinant invention is, the more selective managers need to be in the experiences they apply in a complex project.”
Recommendations
To be able to profit from past experience and to avoid pitfalls, the researchers recommend the following.
- Limit the number of innovations on which you work simultaneously
- Avoid routinized decision-making
- Identify deep structural similarities
Blueprints from prior projects can be relied upon, as long as the projects for which they are used are similar as regards such key aspects as personnel, composition, milestones, and targets, as well as relevant technologies.
Note for editors
The paper entitled ‘Ambition Is Nothing Without Focus: Compensating for Negative Transfer of Experience in R&D’ was published in the March/April issue of Organization Science. The authors are Anindya Ghosh (IESE Business School), Xavier Martin (Tilburg University), Johannes M. Pennings (University of Pennsylvania), and Filippo Carlo Wezel (University of Lugano). See also http://pubsonline.informs.org/doi/abs/10.1287/orsc.2013.0845.
For more information, please contact press officer Reggy van den Bosch, at +31 13 466 8923 or per e-mail at r.vandenbosch@tilburguniversity.edu.