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The effects of organizational downsizing on product innovation
units will be those first to adopt a new product. We know there will be innovators and early adopters, and we know that some people or firms are traditionally among the set that will try things first. But which ones, this time, on our specific new item? A bundle of marketing research studies have focused on this issue, mostly unsuccessfully, but the current author felt a well-known innovativeness measurement tool might do the trick. That tool is the KAI, or Ku-ton-Adaption-Innovation inventory. It is a psychological test designed to scale people’s cognitive/personality styles from extreme (active) innovators to extreme adaptors (noninnovatars). (This use of the term adaptor is unfortunate because it is easily confused with adopter-the latter relates to earlier use, and the former to very late use or none at all.) Devised by a scientist named Kirton, the test has traditionally been used to measure the likelihood of a person being creative. The author proposed that the same measurement should predict whether a person (as a buyer) accepts the innovations of others. Unfortunately, after testing the hypothesis in five new product adoption studies, it is now clear that the KAI is no predictor of early adoption. The early users of the five new products included both high KAl (innovators) and low KAI (adaptors). The article then goes on to explore the possible meaning in this surprising finding. It lies in a problem for marketing strategists on new products. Traditional wisdom has held that we should select a segment of people who are the innovative types and who thus would be most likely to buy our new item. The current research shows that its new buyers in fact will be partly innovators and partly adaptors. Innovators are socially independent and require little or no personal communication before adopting a new product. But, adaptors want reassurance, lots of it. So marketers must provide it. Of course, the evidence in the five studies was that adaptors bought the new items, whether their marketers went out of their way to supply lots of confirmatory information or not! The author, in other writing, has proposed we call the first purchasers market initiators. Or, initial adopters. Both terms avoid calling them innovators. The article details the five studies, three of foods and two of software. It was speculated that perhaps these are all categories where some buyers are terribly excited about the categories and learn all about products in them. This would indicate a possible answer: even adaptors. if dedicated and knowledgeable, see new entries as easy to evaluate, not frightening or
risky. Purchase, if they want an item. follows easily. even at the very beginning. As of now, there are more problems than answers, and the author calls out for considerably more research along the previous lines above. In the meantime, new product marketers should approach market segmentation more cautiously than ever-soeking to know enough about buying habits and attitudes so as to predict adoption patterns for that product, regardless of generalizations that may or may not hold up.
The Effects of Organizational Downsizing on Product Innovation, Deborah Dougherty and Edward H. Bowman, California Management Rwiew (Summer 1995). pp. 28-44 Research here focused on two forces at work todayorganizational restructuring (downsizing) and a drive for product innovation. These researchers asked a simple question: Can a firm do both? To find out, they selected a sample of 12 large Mid-Atlantic firms, with six who clearly had downsized and six who clearly had not. Then they interviewed 106 people from a mix of functions in these firms, all of whom had been working personally on new product projects. All of the projects had been approved by senior management, and all were for unfamiliar markets or used unfamiliar technologies or both. All thus stood in need of strong direction and broad-based company support. They divided the new product project work into three bundles. First was design conceptuali.zation and fulfillment. Second was lateral organization, concerned with the product design-technical, manufacturing, and marketing-coordination. Third was activity that linked the project with resources, structure, and strategy. The measure of performance was problem solving. That is, respondents were asked about the solving of problems that came up and (in the six firms that downsized) whether the problems were better solved before downsizing. Results were apparently clear-cut: Downsizing had no effect on the design phase and no effect on the lateral organization phase. But there was a strong negative effect on the third activity bundle, linking to resources. Exploring this finding with the various respondents led to two things- first, the visualizing of a phase of product innovation management that has perhaps not been realized and second, what firms can do to keep this important phase alive during downsizing.
174
J PROD INNOV 1996;13:167-178
MANAG
The new activity is a combination of networking and championing. Networks are used to permit people who need resources to accesspeople who have those resources and can provide them to the project. The authors chose the term entrepreneurial networking (EN) to describe the activity. EN serves three functions-selling the project to enough people to keep it alive, acquiring the needed resources, and getting senior management commitment. The article capitalizes on the researchers’ case method to give many quotations from respondents about actual situations-happy ones and sad onesbut they are difficult to abstract. Perhaps half of the article consists of such quotes and stories, so readers may want to see the original to get a better feel for just what the EN process is. In almost all of these situations, someone working on a new product project needs something to further the project or just to keep it alive. But that something is not readily available-it may in fact have been specifically denied. Some stories seem to imply that upper managements deliberately left resources short, just to see which projects would win the battle for the short supply. In almost all cases, the person needing the resource tried to accessthe resource through personal contacts (networking) with someone else. The resulting activity (this search) was described by the authors as “deal making, working the system, using personal credibility and influence, drawing on long-term relationships.” It is mostly informal, based on personal contacts, high on organizational knowhow, and often dependent on company experience. It can make or break a project, and downsizing can absolutely destroy its essentials. Taking three people from a network of 10 leaves many open ropes. Even one open rope can destroy linkage essential to the resource. Downsizing also eliminates senior people who play the role of sponsor, it can engender attitudes of fear (reduce network trust), and it can simply keep everyone so busy they haven’t time to work their networks. There were two exceptions to the conclusions of the study. One firm had done very little downsizing yet had very low resource linkage. Investigation disclosed that the firm was driven by sales mentality, and there really was little opportunity (or need) for entrepreneurial networking. There had never been any. The other exception was the firm that had done extensive downsizing yet showed a strong entrepreneurial networking system in place. This seems to have been due to the downsizing lasting over 8
ABSTRACTS
years-a gradual process that permitted people to keep linkages, repairing the system as it was battered. The lesson in this case was that a firm can downsize gradually (endorsed by the third abstract above) if it takes certain actions to protect the entrepreneurial networks. The article goes into some depth on what these actions are. Preparing for a Point-to-Point World, Bruce Goldman, ed., Marketing Management (1995, Number 4), pp. 30-40 This is an article on reengineering, but in this casethe reengineering of sales and marketing! The report is a consolidation of ideas from a panel of 14 top marketing people. Part of it speaks to the technological changes filling business headlines today, and another part speaks to changes in sales and marketing-the subject of this abstract. Sales people will feel the biggest brunt of change, perhaps positively. Instead of being charged with selling something, they will be charged with building a profitable revenue flow of a combination of personal service and products in integrated systems to meet customer needs. Their key roles will be (1) learning what the customer really needs, (2) bringing to the customer’s attention a composite of products from their firms and other (often competitive) firms, (3) showing how that integrated set can be used to solve customer problems, and (4) following up with the installation and fine-tuning of the set. Sales people will need to be skilled in customer research and backed up with technology that permits them to operate. Corporate information systems must access all customer information, store it retrievably, and see that sales people can get to it, anywhere and anytime. There will be few “sales calls,” because customer-contact time may be continuous for hours or days. Customers will in almost every casebe a buying/ using team, and the “selling” probably will also. Sales people will not work “out of offices.” They will constitute an office. They will be empowered (no over-the-shoulder bossing), they will have electronic access to all information about product availability, they will “build” a distribution system for each key account or subset of accounts, and their orders and customer information will go directly into company information systems. Retail operations will perhaps change the most, even though massive investments in current stores and warehouses will slow the change in many firms. “Re-
risky. Purchase, if they want an item. follows easily. even at the very beginning. As of now, there are more problems than answers, and the author calls out for considerably more research along the previous lines above. In the meantime, new product marketers should approach market segmentation more cautiously than ever-soeking to know enough about buying habits and attitudes so as to predict adoption patterns for that product, regardless of generalizations that may or may not hold up.
The Effects of Organizational Downsizing on Product Innovation, Deborah Dougherty and Edward H. Bowman, California Management Rwiew (Summer 1995). pp. 28-44 Research here focused on two forces at work todayorganizational restructuring (downsizing) and a drive for product innovation. These researchers asked a simple question: Can a firm do both? To find out, they selected a sample of 12 large Mid-Atlantic firms, with six who clearly had downsized and six who clearly had not. Then they interviewed 106 people from a mix of functions in these firms, all of whom had been working personally on new product projects. All of the projects had been approved by senior management, and all were for unfamiliar markets or used unfamiliar technologies or both. All thus stood in need of strong direction and broad-based company support. They divided the new product project work into three bundles. First was design conceptuali.zation and fulfillment. Second was lateral organization, concerned with the product design-technical, manufacturing, and marketing-coordination. Third was activity that linked the project with resources, structure, and strategy. The measure of performance was problem solving. That is, respondents were asked about the solving of problems that came up and (in the six firms that downsized) whether the problems were better solved before downsizing. Results were apparently clear-cut: Downsizing had no effect on the design phase and no effect on the lateral organization phase. But there was a strong negative effect on the third activity bundle, linking to resources. Exploring this finding with the various respondents led to two things- first, the visualizing of a phase of product innovation management that has perhaps not been realized and second, what firms can do to keep this important phase alive during downsizing.
174
J PROD INNOV 1996;13:167-178
MANAG
The new activity is a combination of networking and championing. Networks are used to permit people who need resources to accesspeople who have those resources and can provide them to the project. The authors chose the term entrepreneurial networking (EN) to describe the activity. EN serves three functions-selling the project to enough people to keep it alive, acquiring the needed resources, and getting senior management commitment. The article capitalizes on the researchers’ case method to give many quotations from respondents about actual situations-happy ones and sad onesbut they are difficult to abstract. Perhaps half of the article consists of such quotes and stories, so readers may want to see the original to get a better feel for just what the EN process is. In almost all of these situations, someone working on a new product project needs something to further the project or just to keep it alive. But that something is not readily available-it may in fact have been specifically denied. Some stories seem to imply that upper managements deliberately left resources short, just to see which projects would win the battle for the short supply. In almost all cases, the person needing the resource tried to accessthe resource through personal contacts (networking) with someone else. The resulting activity (this search) was described by the authors as “deal making, working the system, using personal credibility and influence, drawing on long-term relationships.” It is mostly informal, based on personal contacts, high on organizational knowhow, and often dependent on company experience. It can make or break a project, and downsizing can absolutely destroy its essentials. Taking three people from a network of 10 leaves many open ropes. Even one open rope can destroy linkage essential to the resource. Downsizing also eliminates senior people who play the role of sponsor, it can engender attitudes of fear (reduce network trust), and it can simply keep everyone so busy they haven’t time to work their networks. There were two exceptions to the conclusions of the study. One firm had done very little downsizing yet had very low resource linkage. Investigation disclosed that the firm was driven by sales mentality, and there really was little opportunity (or need) for entrepreneurial networking. There had never been any. The other exception was the firm that had done extensive downsizing yet showed a strong entrepreneurial networking system in place. This seems to have been due to the downsizing lasting over 8
ABSTRACTS
years-a gradual process that permitted people to keep linkages, repairing the system as it was battered. The lesson in this case was that a firm can downsize gradually (endorsed by the third abstract above) if it takes certain actions to protect the entrepreneurial networks. The article goes into some depth on what these actions are. Preparing for a Point-to-Point World, Bruce Goldman, ed., Marketing Management (1995, Number 4), pp. 30-40 This is an article on reengineering, but in this casethe reengineering of sales and marketing! The report is a consolidation of ideas from a panel of 14 top marketing people. Part of it speaks to the technological changes filling business headlines today, and another part speaks to changes in sales and marketing-the subject of this abstract. Sales people will feel the biggest brunt of change, perhaps positively. Instead of being charged with selling something, they will be charged with building a profitable revenue flow of a combination of personal service and products in integrated systems to meet customer needs. Their key roles will be (1) learning what the customer really needs, (2) bringing to the customer’s attention a composite of products from their firms and other (often competitive) firms, (3) showing how that integrated set can be used to solve customer problems, and (4) following up with the installation and fine-tuning of the set. Sales people will need to be skilled in customer research and backed up with technology that permits them to operate. Corporate information systems must access all customer information, store it retrievably, and see that sales people can get to it, anywhere and anytime. There will be few “sales calls,” because customer-contact time may be continuous for hours or days. Customers will in almost every casebe a buying/ using team, and the “selling” probably will also. Sales people will not work “out of offices.” They will constitute an office. They will be empowered (no over-the-shoulder bossing), they will have electronic access to all information about product availability, they will “build” a distribution system for each key account or subset of accounts, and their orders and customer information will go directly into company information systems. Retail operations will perhaps change the most, even though massive investments in current stores and warehouses will slow the change in many firms. “Re-