TOWARDS RADICAL INNOVATION IN KNOWLEDGE-INTENSIVE SERVICE FIRMS Anna van Poucke PROMOTIECOMMISSIE PROMOTOREN Prof.dr. J.W.M. Kessels Prof.ir.drs. W.J. Vrakk:ing OVERIGE LEDEN Prof.dr. H.W. Volberda Prof.dr. P .L. Meurs Prof. J. Sundbo TABLE OF CONTENTS ACKNOWLEDGEMENTS 1. INTRODUCTION 1 1.1 CHARACTERISTICS OF KNOWLEDGE-INTENSIVE SERVICE FIRMS AND KNOWLEDGE SERVICE WORKERS 2 1.2 CONSEQUENCES FOR INNOVATIONS IN KISFS 4 1.3 CHARACTERISTICS OF INNOVATIONS IN KISFS: TOWARDS A DEFINITION 5 1.4 CONCLUSION 9 2. INNOVATION IN KISFS: AN OVERVIEW OF APPROACHES 11 2.1 INNOVATION THEORIES 11 2.1.1 Levels of innovation 11 2.1.2 Innovative capabilities and strategies and technology capabilities and strategies 12 2.1.3 Models and phases in innovation 13 2.1.4 Organizational and managerial conditions 14 2.1.5 Conclusions 15 2.2 KNOWLEDGE CREATION AND KNOWLEDGE MANAGEMENT STRATEGIES 16 2.2.1 Types and levels of knowledge 16 2.2.2 Knowledge management strategies 17 2.2.3 New strategies: from epistemologies of possession to epistemologies of practice 19 2.2.4 Conclusions 20 2.3 ORGANIZATIONAL LEARNING AND LEARNING IN ORGANIZATIONS 20 2.3.1 The work on learning in organizations: some pitfalls 21 2.3.2 Levels oflearning 23 2.3.3 Definitions of learning and approaches in learning 25 2.3.4 Coupling learning approaches to individual learning 33 2.3.5 Conclusions on learning in innovation 36 2.4 THE ROLE OF SOCIO-POLITICAL PROCESSES 36 2.5 ORGANIZATIONAL CONDITIONS AND THE ROLE OF MANAGEMENT 39 2.5 .1 The role of management 39 2.5.2 Organizational conditions 39 2.5.3 Conclusions 41 3. RESEARCH MODEL AND PROPOSITIONS 42 3.1 PROCESS OF AND PHASES IN INNOVATION: A RESEARCH MODEL 42 3.2 PROPOSITIONS 43 3 .2.1 Propositions related to information processing and learning 44 3.2.2 Propositions related to socio-political processes 45 3.2.3 Propositions related to the role of management and organizational conditions 45 3.2.4 Rival propositions 45 4. CASE STUDIES: GENERAL DESIGN AND METHODS 46 4.1 RESEARCH DESIGN 46 4.2 SELECTION OF THE CASES 50 4.3 DATA COLLECTION 51 4.4 CASE STUDY DATA BASE 53 4.5 DATA ANALYSIS 53 4.6 DEFINING THE VARIABLES 54 5. RESULTS MEDICAL EDUCATION AND SOCIAL SCIENCES 59 5.1 RESULTS CASE MEDICAL EDUCATION 59 5.1.1 Case description 59 5.1.2 Within-site analysis case medical education 62 5.2 RESULTS CASE SOCIAL SCIENCES 67 5.2.1 Case description Social Sciences 67 5.2.2 Within-site analysis Social Sciences 70 5.3 CROSS-CASE ANALYSIS 74 6. CONCLUSION AND DISCUSSION CASE STUDIES MEDICAL EDUCATION AND SOCIAL SCIENCES 76 6.1 CONCLUSIONS 76 6.1.1 Function and success of the innovation 76 6.1.2 Learning model 77 6.1.3 Information processing 78 6.1.4 Socio-political processes 78 6.1.5 Organizational conditions 79 6.2 FINDINGS RELATED TO PROPOSITIONS 80 6.3 DISCUSSION 83 6.3.1 Idea generation phase 84 6.3.2 Crystallization phase 85 6.3.3 Evolution phase 87 6.4 RESEARCH MODEL AND PROPOSITIONS REVISITED 88 7. RESULTS CASE STUDIES 91 7.1 PROPOSITIONS AND VARIABLES REVISITED 91 7.2 RESULTS CASE PIG CITY 92 7.2.1 Case description Pig City 92 7.2.2 Within-Site analysis case Pig City 96 7.3 RESULTS CASE LITE CITY 107 7.3.1 Case description Lite City 107 7.3.2 Within-Site analysis case Lite City llO 7.4 CROSS-SITE CROSS-CASE ANALYSIS 120 7.4.1 Cross-site cross-case display per phase 120 7.4.2 Cross-site cross-case analysis of the innovation process 124 8. CONCLUSION AND DISCUSSION CROSS-SITE CROSS-CASE ANALYSIS 129 8.1 CONCLUSIONS 129 8.1.1 Success and function of the innovation 130 8.1.2 Phases in the innovation process 131 8.1.3 Core concept 133 8.1.4 Earning model 134 8.1.5 Information processing activities 137 8.1.6 Socio-political processes 139 8.1.7 Organizational conditions 143 8.2 FINDINGS RELATED TO THE PROPOSITIONS 144 9. TOWARDS A PROCESS DESIGN MODEL FOR RADICAL INNOVATIONS 150 9.1 CONDITIONS 150 9.2 DEVELOPING PRACTICAL DESIGN COMPONENTS 151 9.2.1 The innovative process 151 9.2.2 Idea generation phase 153 9.2.3 Crystallization phase 155 9.2.4 Evolution phase 158 10. CASE STUDY PHARMACY: PROCEEDINGS AND RESULTS 161 10.1 PROCEEDINGS 161 10.1.1 Variables 161 10.1.2 Data collection and data analysis 162 10.2 CASE DESCRIPTION PHARMACY: CURRICULUM RENEWAL 163 10.3 WITHIN-SITE ANALYSIS CASE PHARMACY 167 11. CONCLUSIONS CASE STUDY PHARMACY 181 11.1 CONCLUSIONS 181 11.1.1 Radical innovations: success and function of the innovation 181 11.1.2 Adequate application of the process design model 182 11.1.3 Actors 184 11.1.4 Core concept 185 11.1.5 Learning model 186 11.1.6 Information processing 187 11.1.7 Socio-political processes 189 11.1.8 Organizational conditions 190 11.2 FINDINGS RELATED TO THE PROCESS DESIGN MODEL AND PROPOSffiONS 190 11.2.1 General practical design components 190 11.2.2 Practical design components for the idea generation phase 192 11.2.3 Practical design component for the crystallization phase 193 11.2.4 Practical design components for the evolution phase 195 11.3 METHODOLOGICAL CONSIDERATIONS AND LIMITATIONS TO THIS STUDY 197 11.4 ANSWERS TO THE RESEARCH QUESTIONS 199 12. DISCUSSION: A REFINED DESIGN MODEL FOR RADICAL INNOVATIONS IN KISFS 204 12.1 REFINED PROCESS DESIGN MODEL FOR RADICAL INNOVATIONS IN KISFS I 204 12.2 INNOVATION IN KISFS AND INNOVATION IN GENERAL 207 12.2.1 Relevance of general innovation theories for KISFs 207 12.2.2 Relevance of the process design model for other types of organizations 208 12.2.3 Relevance of the process design model for other types of innovations 208 12.3 INNOVATION, CHANGE MANAGEMENT AND KNOWLEDGE ECONOMIES 209 12.3.1 Innovation as change management 209 12.3.2 Innovation as knowledge economics: strategic competitiveness 212 12.3.3 Final process design model for radical innovation in KISFs II 217 12.4 DESIGNING FOR RADICAL INNOVATIONS: APPLYING THE MODEL 217 12.4.1 Idea generation 217 12.4.2 Crystallization 223 12.4.3 Evolution 229 12.4.4 Management and organizational conditions 230 12.5 SUGGESTIONS FOR FURTHER RESEARCH 234 REFERENCES 236 APPENDICES 244 Appendix I Criteria for preliminary determination of radical vs incremental innovation 244 Appendix II Data collection protocol 245 Appendix III Questionnaire part 1 247 Appendix IV Outline for case description 251 Appendix V Definition list of codes 252 Appendix VI Transfer of codes into within-site data matrixes 256 Appendix VII Within-side data displays case 1 258 Appendix VIII Questionnaire part 2 264 SUMMARY 267 SAMENVATTING 276 ABOUT THE AUTHOR 286 ACKNOWLEDGEMENTS In 1986 I started my working life as an employee in a knowledge-intensive service firm. From the first moment I was intrigued by the strong motivation of knowledge workers, their craving for autonomy and the politics between them. Having spent time in different knowledge-intensive service firms I began to wonder why some organizations were successful in transforming their potential in new products and services while others were not. This puzzlement was the start of a Ph.D. project leading to this dissertation. I considered it a luxury to explore and reflect on a sub­ ject that proved to be so interesting. However, this luxury and its results would not have been possible without the support from a number of people. In the first place I want to thank Willem Vrakking and Joseph Kessels who supervised this pro­ ject. They proved to be a very complementary team providing new viewpoints, methodological thoroughness, the freedom to explore, and professional and emotional wisdom whenever neces­ sary. It was a privilege and pleasure to work with them. Jurian Muller assisted in the research of the second part of this study. His enthusiasm and will­ ingness to challenge my ideas provided an improvement to the final model. Members of the Ph.D-network on Knowledge and Learning in Organizations offered suggestions and methodo­ logical support. Many colleagues and clients contributed to my professional development and this Ph.D. disserta­ tion. Some of them had a special role by providing me with ideas, contacts and the means to per­ form this project. For this I want to thank Hanneke Mulder, Fried Keesen , Jan Willem Brink­ man and Ton de Leeuw. A number of persons and institutions contributed to the case studies. I want to thank them all: members of the Utrecht University Faculties of Medicine, Social Sciences and Pharmacy, and members of MVRDV. I want to thank Winny Maas, Olle ten Cate, Gerard Visser and Ton de Boer for their thought provoking interviews. Special thanks go to the members of the CURC for adopting me as one of them and showing me what professional commitment and innovation is really about. This dissertation would not have been realized without the vigorous help of two splendid people: Candy Rudmose and Harriet Droge. Candy did an enormous job in correcting all the English. Harriet edited this dissertation: never a table again! I also wish to express my love and gratitude to my family and friends. My 'paranimfs' Peter and Hanke for their friendship and the role they played in my professional development. My family and friends for believing in me and especially Hans and Miep van Poucke for the support and opportunities they provided me with in life.