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Purchasing Innovation : The analysis and development of innovation purchasing strategies in an engineering company

Decker, Christophe LU and Günther, Thies LU (2017) MTTM02 20171
Engineering Logistics
Abstract
Nowadays, there is a tendency towards higher dynamics in markets and increasing competition especially in engineering and high tech industries. Firms today need to invent new products, acquire unique business models and thereby continuously exceed customer expectations as well as outperform competition. In contrast to the previous innovative approach that relied solely on internal capabilities, many firms are now opening up their perspectives and scan the market for ideas outside the company’s boundaries. However, despite the important role of externally sourcing innovation, the literature on purchasing innovation remains scarce. In particular, the partner Company for this degree project is unsure if the current internal resources are able... (More)
Nowadays, there is a tendency towards higher dynamics in markets and increasing competition especially in engineering and high tech industries. Firms today need to invent new products, acquire unique business models and thereby continuously exceed customer expectations as well as outperform competition. In contrast to the previous innovative approach that relied solely on internal capabilities, many firms are now opening up their perspectives and scan the market for ideas outside the company’s boundaries. However, despite the important role of externally sourcing innovation, the literature on purchasing innovation remains scarce. In particular, the partner Company for this degree project is unsure if the current internal resources are able to cover the necessary capabilities and capacity required to keep pace with the increasing speed of innovation launches.

Based on a multiple case study, the purpose of the degree the project is to provide a strategic direction for the topic of purchasing innovation. The investigation is mainly based on structured interviews with employees from different departments that have been involved in cases where innovations have been purchased. Based on the conducted interviews, a case analysis has been conducted where similarities and differences were identified and conclusions drawn. Apart from the multiple case study, a theoretical framework was created from a literature review. Lastly, a comparison between literature and empirical findings was conducted.

A first important conclusion of the degree project is the need for a classification of innovations. Based on a structured segmentation, it is possible to define strategies and processes that act as a guideline for employees. Furthermore, classifications can assist in promoting an innovation mindset in the organization and facilitate the efficient handling of innovation projects. Secondly, the internal capabilities and know-how of the partner company need to be adapted to the long-term business strategy. As identified, there is a need for internal know-how in innovation projects to incorporate the purchased technologies, business models or services. Next, innovation projects are characterized by an increased unpredictability, also called “black box”, where the final result tends to be unclear at the start of a project. Stating this, especially highly detailed specifications can represent an obstacle to creativity and agility in such projects and hence should be adapted accordingly. Looking at the spectrum of external sources and forms of collaboration, the partner company should consider a wider set of possibilities.
Especially diversifying the screening for innovations and improving the innovation network increases the likelihood of accessing disruptive ideas. Herein, Communication platforms with stakeholders could be an efficient tool to access a vast pool of ideas. Additionally, in order to reduce the financial risk of innovation projects, a dedicated funding for innovation projects is suggested. (Less)
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author
Decker, Christophe LU and Günther, Thies LU
supervisor
organization
course
MTTM02 20171
year
type
H2 - Master's Degree (Two Years)
subject
report number
5831
language
English
id
8909809
date added to LUP
2017-05-31 14:05:13
date last changed
2017-05-31 14:07:46
@misc{8909809,
  abstract     = {Nowadays, there is a tendency towards higher dynamics in markets and increasing competition especially in engineering and high tech industries. Firms today need to invent new products, acquire unique business models and thereby continuously exceed customer expectations as well as outperform competition. In contrast to the previous innovative approach that relied solely on internal capabilities, many firms are now opening up their perspectives and scan the market for ideas outside the company’s boundaries. However, despite the important role of externally sourcing innovation, the literature on purchasing innovation remains scarce. In particular, the partner Company for this degree project is unsure if the current internal resources are able to cover the necessary capabilities and capacity required to keep pace with the increasing speed of innovation launches.

Based on a multiple case study, the purpose of the degree the project is to provide a strategic direction for the topic of purchasing innovation. The investigation is mainly based on structured interviews with employees from different departments that have been involved in cases where innovations have been purchased. Based on the conducted interviews, a case analysis has been conducted where similarities and differences were identified and conclusions drawn. Apart from the multiple case study, a theoretical framework was created from a literature review. Lastly, a comparison between literature and empirical findings was conducted.

A first important conclusion of the degree project is the need for a classification of innovations. Based on a structured segmentation, it is possible to define strategies and processes that act as a guideline for employees. Furthermore, classifications can assist in promoting an innovation mindset in the organization and facilitate the efficient handling of innovation projects. Secondly, the internal capabilities and know-how of the partner company need to be adapted to the long-term business strategy. As identified, there is a need for internal know-how in innovation projects to incorporate the purchased technologies, business models or services. Next, innovation projects are characterized by an increased unpredictability, also called “black box”, where the final result tends to be unclear at the start of a project. Stating this, especially highly detailed specifications can represent an obstacle to creativity and agility in such projects and hence should be adapted accordingly. Looking at the spectrum of external sources and forms of collaboration, the partner company should consider a wider set of possibilities.
Especially diversifying the screening for innovations and improving the innovation network increases the likelihood of accessing disruptive ideas. Herein, Communication platforms with stakeholders could be an efficient tool to access a vast pool of ideas. Additionally, in order to reduce the financial risk of innovation projects, a dedicated funding for innovation projects is suggested.},
  author       = {Decker, Christophe and Günther, Thies},
  language     = {eng},
  note         = {Student Paper},
  title        = {Purchasing Innovation : The analysis and development of innovation purchasing strategies in an engineering company},
  year         = {2017},
}