II. Internal R&D Flashcards
1
Q
Innovation Process
A
- Goal = Selecting the best out of N ideas
- Funnel = 1. Research (Internally)/ 2. Development (Selection Process)/ 3. New Products
- Value skewed distribution = low number of breakthrough ideas in comparison to total number of invention
s
2
Q
Expected value of N ideas
A
- Goal = Maximizing the value out of maximal ideas
- Positively depends on:
- Number of ideas (N)
- Variance of the idea-distribution
- Expected value of the idea-distribution
3
Q
Internal R&D primary topics
A
- Incentives for R&D = How to motivate them to produce new knowledge (Assuming that people are well organized)
- Structuring the R&D process = How firms have to manage people in order to produce new knowledge (Assuming that people are well motivated)
4
Q
Intrinsic Incentives (Intrinsic)
A
- Motivated by the work itself
- Through curiosity, enjoyment, personal sense of challenge
- Results in 1. Productivity effect (Increases the value of work)/ 2. Preference effect (Decreases the necessary wage/ Is higher than productivity effect)
- But (!) implies 1. Uncertain outcome/ 2. Failure/ 3. Autonomy
5
Q
Extrinsic Incentives
A
- Desire to reach goals that are not related with the work itself
- Through reputation, money, status
6
Q
Intrinsic vs. Extrinsic Motivation
A
- Intrinsic incentives > extrinsic incentives (for creative work)
- Long-term monetary incentives > short-term monetary incentives (Long-term rewards works for intrinsic motivation but short-term doesn’t because it makes people avoiding failure)
- Firms have to do a trade-off between saving money (by productivity) vs. losing control of the project (by giving autonomy)
7
Q
Creative vs. repetitive tasks
A
- Repetitive tasks = 1. Outcome is known/ 2. Observe and evaluate both the effort and output easily/ 3. Incentives are almost exclusively monetary (e.g. factory jobs)
- Creative tasks = 1. Outcome is unknown/ 2. Observe and evaluate both the effort and output difficult/ 3. Performance is not only because for money (e.g. design company)
8
Q
Structuring R&D Managerial levers
A
- Individual vs. Team
- Heterogeneity of the team (Diversity or Specilization)
- Structure of the firm (Formalization, Standardization, Centralization)
9
Q
- Pro and Contra of Teams
A
- Wider knowledge (pro) vs. communication/coordination difficulties (con)
- Diverse perspectives (pro) vs. Group-thinking -> Ash-Effeect (con)
- Selection phase is stricter (pro) vs. free riding = Trittbrettfahren/ production blocking (con)
10
Q
- Pro and Contra of Diversity vs Specialization
A
- Avoid unnecessary information (pro) vs Increased demand of communication/coordination (con)
- Diverse knowledge could lead to path-breaking innovations (pro) vs. Combination of unrelated knowledge could lead to useless outcome
11
Q
- Structure of the firm
A
- Formalization = Degree to which firm utilizes formal rules and procedures (Less managerial oversight required vs. firm becomes rigid)
- Standardization = Degree to which activities are performed as a routine (Smooth outcomes vs. less innovations)
- Centralization = Degree to which decision-making authority is kept and activies performed at top levels (Better control vs. diverse skills)/ The closer to market the more centralization and mechanic structure is needed
- Large firms make greater use of formalization and standardization because of challenging oversight
12
Q
Mechanistic Structures vs. Organic Structures
A
- Mechanistic Structures = High formalization and standardization (Old firms like Google/ Operational efficiency but stifle creativity)
- Organic structures = Low formalization and standardization/ “free flowing” (Creativity but low reliability in manufacturing)
- Ambidextrous Organization = Mechanical + Organic Structures/ Some divisions big and mechanistic (e.g. Manufacturing) other small and organic (e.g. R&D)/ Structures can alternate over time
