Leading Innovation - How can leaders improve companies ability to generate innovations?

Table of contents

Abstract

Acknowledgements

Table of figures

Table of tables

1 Introduction
1.1 Background
1.2 Field of study
1.3 Purpose of the study
1.4 Choosing the topic
1.5 Delimitations
1.6 Outline

2 Innovation, telecommunications, and leadership
2.1 Innovation process, creativity and change
2.2 The telecommunications industry
2.2.1 Innovative developments of wireless technology
2.2.2 The need for commitment to innovation
2.2.3 Summary
2.3 Leading the innovation
2.3.1 Leadership for an innovative environment
2.3.2 Favourable competences of leaders
2.3.3 Leaders’ possibilities of influence
2.3.3.1 People-oriented influencing possibilities
2.3.3.2 Work-oriented influencing possibilities
2.3.4 Summary
2.4 Implications for the research
2.5 Research model

3 Methodology
3.1 Research problem
3.2 Preparation of the study
3.2.1 Research approach
3.2.2 Research strategy
3.2.3 Screening the cases
3.2.4 Secondary data collection
3.2.5 Primary data collection
3.3 Execution of the study
3.4 Processing the data
3.5 Evaluating the data
3.6 Limitations
3.6.1 General limitations
3.6.2 Objectivity
3.6.3 Validity
3.6.3.1 Internal validity
3.6.3.2 Construct validity
3.6.3.3 External validity
3.6.4 Reliability

4 Presenting the empirical findings
4.1 Introducing the company: Siemens
4.2 Leader’s influence
4.3 Innovator’s perception

5 Analyzing the leader’s situation within the company
5.1 Leader’s competences
5.2 Creative people
5.3 Top management support
5.4 Resources
5.5 Work situation
5.6 Summary

6 Discussion
6.1 Leader’s competences
6.2 Creative people
6.3 Top management support
6.4 Resources
6.5 Work situation
6.6 The complex structure is the leader’s challenge
6.7 Chances within the examined industry and beyond
6.8 Review of the findings

7 Conclusions
7.1 Summary
7.2 Personal reflections
7.3 Further developments

Appendix
A.1 Chronological development of the wireless communications
A.2 The path from 1G to 3G
A.3 Technical glossary
A.4 Market shares of the wireless communications competitors
A.5 Interview guide for leaders and researchers
A.6 Correspondence with contact persons
A.7 Patent applications and ranking of Siemens

Literature

Internet references

Abstract

The thesis investigates the leaders’ possibilities to improve the ability of innovation generation and hence it examines the leading of the innovation process in the starting phase. On the basis of the increasing competition and velocity of technological developments, companies continuously try to gain competitive advantages with the help of different business strategies. Innovation is regarded as the key strategy to create ongoing success and ensure the competitiveness. However, successful innovation is no implicitness as the markets have shown and only few companies succeed in this intention. Therefore, the theoretical considerations address this problem by depicting factors that leaders can positively influence to improve the innovation ability especially in the beginning of the innovation process since this maybe constitutes the most erratic step. The empirical case study investigates the realisation of a leader’s possibilities in a highly innovative environment namely the wireless telecommunications industry. Best practise applications and solutions are obtained by interviews with one leader and one innovator out of the Siemens Research & Development department. It emerges that the leader has take a variety of factors into account which will decide on the successful realization of new ideas. Thus, the difficulty of such a leader’s mission becomes clear. Besides the satisfactory support of followers and resources, the most outstanding aspect that will advantageously influence the innovation ability is the establishment and encouragement of a penetratingly innovative climate. Such an innovative climate shall be characterized by an open-minded attitude, information sharing, and the acceptance of risky and challenging tasks. Additionally, the leader’s competences shall be qualified according to the requirements of that process step. It is supposed that the internal realisation of new ideas and solutions can be more successful if the leader is aware of the possibilities and carefully deals with these prerequisites. Thus, one determining step to more external innovations and their successful assertion on the markets will be achieved.

Acknowledgements

I am pleased to thank all persons who supported the accomplishment of my thesis and to whom this first page shall be dedicated. Without their helpful assistance it would never have been possible to achieve this work.

First of all, I want to thank the two interview partners from the Siemens R&D department who made the realization of an interesting and meaningful empirical study possible. Their openness and encouraged participation contributed positively to the successful completion of this research. Many thanks shall go to the head of executive office of Siemens’ Corporate Technology who unhesitatingly searched out the interview partners and provided support. His chameleonic reflections enriched the writing process.

I am very grateful to my tutor Leif Arnesson, lecturer at the Mid Sweden University, for continuously providing me with constructive feedback and valuable advice during the development of this thesis and throughout the entire studies in Östersund.

Additionally, I would like to thank my parents and my friends for giving me confidence and personal support during and beyond the writing process.

Table of figures

Fig. 2–1 The innovation process

Fig. 2–2 Important wireless technologies

Fig. 2–3 Research model

Fig. 3–1 Research design

Fig. 3–2 Preparation of the study

Fig. 3–3 Design of the case study

Fig. 3–4 Execution of the study

Fig. 3–5 Processing the data

Fig. 3–6 Evaluating the data

Fig. 4–1 Siemens’ expenditures for R&D according to business segments

Fig. A–1 3G market share distribution of the wireless communications competitors

Fig. A–2 Market shares of the Top 10 equipment provides

Fig. A–3 Interview guide for leaders and researchers (cover page)

Fig. A–4 Interview guide for leaders (question sections I)

Fig. A–5 Interview guide for leaders (question sections II)

Fig. A–6 Interview guide for researchers (question sections I)

Fig. A–7 Interview guide for researchers (question sections II)

Fig. A–8 Correspondence with German contact persons

Fig. A–9 Correspondence with non-German contact persons

Fig. A–10 Siemens’ published patents in Germany

Fig. A–11 Siemens’ published patents in Europe

Fig. A–12 Siemens’ published patents in the USA

Table of tables

Tab. 3–1 Composition of the question sections

Tab. 3–2 Job description of the interviewees

Tab. A–1 Historical developments I

Tab. A–2 Historical developments II

Tab. A–3 Historical developments III

Tab. A–4 Historical developments IV

Tab. A–5 Historical developments V

Tab. A–6 Developments of technological standards from the 1G era to the 3G era

Tab. A–7 Technological glossary

1 Introduction

1.1 Background

During the last decades the environment of most companies has become increasingly dynamic and competitive due to the globalisation and internationalisation of markets. The intense competition leads to reinforced campaigns to win customers with new, unique products or services defending or improving market positions. Consequently, based on the increased variety, customers’ expectations are rising while the time to market as well as the duration ot the product life cycle are decreasing. [Cum1997, p. 22] [Jon2002, p. 24, p. 31] [Yuk2002, p.294]

The increased velocity and complexity of global business competition demand innovative, flexible and responsive solutions to emerge. Companies, especially those competing on the global scale, have to consider innovations as a key goal, a powerful influence on organisational performance and a strategy which creates a sustainable competitive advantage against a growing number of new, efficient and focused competitors. [Hal2003, p.434] [Mum2002, p.705] “Innovation is the source of increasing value and differentiation in an evermore crowded and homogeneous marketplace [Jon2002, p. 31].” Innovation is crucial in times of economic growth, remaining the source of increasing revenues and profitability, but more than ever in times of recession representing the survival in an increasingly selective market. [Jon2002, p.12]

However, innovation can be much more than this – it is the impulse of continuous advancement of the humankind. The fact that our world is moving towards the age of total mobility, in which not only all people and organisations are part of a global network, but in which access to information shall be available independently on the place and time, is leading to the increased importance and rapid growth of wireless communications possibilities. Companies within the telecommunications industry are therefore confronted with a fast growing demand for wireless solutions by end-customers and other high-tech industries (e.g. computer industry) to create the portability of a connected world. Hence, telecommunications as the key player within this field is one of the fastest growing and dynamic global businesses. [Bou2001, p.168] [God2000, p. 1034] [Sun2005, p. 107]

Yet, the companies in the telecommunications also face many problems concerning the implementation of innovative products and services, maybe even more than companies in less innovative industries. Although virtually all companies talk about innovation and set a premium on it, only a few actually succeed in the realisation of innovation. [Mum2002, p. 705] [Ahm1998, p. 30] Mainly, the problems arise from too less commitment and conversion of the propagated innovative attitude into reality. This is not only an issue of failure in successful implementation into markets; rather it reaches back to the roots of innovation. [Ett2000, p.207] While top management financially supports Research & Development divisions it often leaves them alone irrespectively the challenging leading responsibilities within innovation processes. [Ahm1998, p. 30]

The question remains what the typical issues of the innovation generation are that leadership has to deal with and to be aware of. Several studies have shaped out a set of factors that will have an impact on the innovation generation and that are well acknowledged in innovation theories. However, leadership as a sole variable was disregarded in researches for a long time. [Mum2002, p. 706] The need for more detailed investigations arises because it cannot be expected that extant models of leadership in more normative settings can be arbitrarily extended to the account of leadership in creative ventures [Ett2000, p. 370] [Mum2004, p.170]. Moreover, the different influence factors only illustrate what seems to be important while concrete specifications as well as methods for the realisation into businesses are still insufficiently exposed. Thus, it becomes very interesting how leaders can utilize these factors and consequently, how they can favourably influence the innovative potential of the company improving its ability to gain successful innovations.

1.2 Field of study

Within this study it shall be primarily considered in which manner leaders can enhance the innovative potential by asking:

- How can leaders improve companies’ ability to generate innovation?

This question poses further questions about the understanding of innovation, leadership, and favoured competences of leaders as well as the way they lead to certain influence tactics.

1.3 Purpose of the study

The aim of this study is to investigate numerous particularities of leadership and requirements which leaders shall meet in the initial phase of the innovation process to improve companies’ innovation ability. Moreover, several influence tactics from different perspectives should present leaders’ possibilities to increase the likelihood of successfully internal realisation of innovation.

With the view on the practical realisation within the telecommunications industry as one of the most innovative industrial sectors it will be shown how these problems are addressed and dealt with. The expertise of companies shall provide the chance to learn more about this topic within the high-tech industry and should give an understanding that might be helpful in innovation processes beyond this particular industrial sector.

1.4 Choosing the topic

I chose to investigate possible leader competences and influence tactics improving the innovation ability due to the fact that on the one hand innovations become more and more the essential influencing factor on companies’ competitiveness. On the other hand innovations have only recently been investigated under the variable of leadership which often remained disregarded by former researches. Furthermore, only few considerations have already been made to practically investigate that problem within the telecommunications industry. My endeavour is to connect the theoretical knowledge with successful practices in an up-to-date approach.

Additionally, this personally interesting field of research was barely discussed in leadership theory at the Mid Sweden University and in former lectures concerning innovative and technological management at the TU Dresden. The acquired knowledge could not answer my research question sufficiently and made the development of my own research even more meaningful.

1.5 Delimitations

The study deals mainly with leaders’ chances to increase the innovation generation and to decrease the internal blockades and difficulties that inhibit innovations in their formation. Herein, a distinction between product and service innovation as well as between radical and incremental innovation will not be made due to the facilitation and concentration of the study. Neither will the considerations deeply explain certain established methods of idea and innovation generation nor will it discuss general leadership methods as well as common competences of leaders that are not seen (in innovation based researches) as very important concerning this matter. All industry based considerations will be made within the telecommunications sector precisely concerned with wireless communications. The aspects of this study rather aim to address large multinational organisations than small, especially young and entrepreneurial, companies.

1.6 Outline

The thesis’ topic “Leading Innovation” is prepared in seven chapters. The following overview will shortly summarize the contents of each chapter.

Chapter one provides background information about the topic and leads to the necessity of appropriate innovation leadership. The research question, the purpose of the study, and the delimitations qualify the research. Additionally, the own motivation of the topic is depicted.

Chapter two clarifies the most important issues of innovation, the telecommunications industry, and the leading of innovation which are necessary to provide a profound framework for the empirical study. As a consequence, implications for the own research are drawn and a self-developed research model clarifies the coherences and builds the basis for the following empirical procedure.

Chapter three explains the methodology of the empirical research. The construction of the case study and its research design is described in several steps. Moreover, the selection of an appropriate case, respectively a suitable company, and the quality of the case study is discussed.

Chapter four illustrates the results of the case study. The presentation starts with a brief description of the selected company which will show the overall situation and the pertinence as best practise example. Subsequently, the empirical findings of interviews of one leader and one innovator will be summarized.

Chapter five continues with the analysis of the results out of chapter four. The findings will be abstracted and categorized within the factors of the research model. Hence, mostly general findings concerning the competences of leaders, the particularities of the work with creative people, the support by the top management and through resources, and the overall work situation will be analyzed.

Chapter six provides a deeper discussion of the factors of the analysis in order to answer the research question how leaders can improve companies’ ability to generate innovation. Moreover, aspects of the telecommunications industry and their transferability to other sectors as well as particularities of the case study are considered.

Chapter seven contains a brief summary of this thesis, reflects the personal view while conducting the thesis, and ends with some suggestions for further research within this topic.

2 Innovation, telecommunications, and leadership

In this chapter the theoretical issues of an extended literature review concerning the leading of innovation will be provided.^[1] First, necessary characteristics of innovation and connected issues will be defined. Subsequently, a brief introduction of the telecommunications and its innovation will be provided. In the third part, the fundamentals of leadership will be discussed and set into the context of this study. Moreover, leader’s competences that are seen as favourable for leading innovation will be illustrated and several ways how leaders can positively influence the ability to create innovations within an organisation will be examined. Finally, the theoretical considerations will conclude with the implications for the research and an educed research model combining the fundamental factors and revealing an approach for the upcoming empirical research.

2.1 Innovation process, creativity and change

The term innovation might be interpreted ambiguously by different people and hence, a clearer explanation could be helpful. [Ett2000, p. 4] Unfortunately, a global innovation theory does not exist and therefore innovation is not homogenously defined. However, there are useful proposals that describe innovation as the interspersion of technical, organizational and/or social solutions for problems which accomplish companies’ goals in a novel manner. Hereby, these solutions should better do justice to customer requirements as well as ensure competitive advantages. [Sch2003, p. 11] [Ahm1998, p. 30] Innovation is tied to economical application of new solutions providing a concrete benefit for the operator and company’s usage for the first time. It allows business to look beyond the present and create the future. [Ahm1998, p. 31] [Buc2003, p. 3]

The term innovation can be distinguished from another term: invention. Brockhoff presents invention, in particular with the view on product and service innovations, as the result of R&D activities and the prerequisite for market launch whereas strictly speaking innovation is the result of the market launch and the prerequisite for the establishment on the market. But with respect to internal progresses that innovations are confronted with the process from the start of R&D activities till the defence against competitor’s imitations (as a consequence of diffusion) certainly allegorises the holistic innovation process. [Sch2003, p. 12] Roberts abstracts the innovation process as the sum of invention and its exploitation. [Rob1988, pp. 11] The innovation process is illustrated in Fig. 2–1.

This process approach reflects more the cross-functional task character of innovations which involves not only the R&D division but additionally gives responsibility to planning, procurement, production and sales division as well as to customers and suppliers. [Sch2003, p. 17]

illustration not visible in this excerpt

Fig. 2–1 The innovation process

Also Ahmed refers to the holistic view of innovation process which he divides into three phases. The first phase called front-end deals with the generation of the idea. The second phase represents a structured methodology in which the new idea has to demonstrate its feasibility and compatibility with the company’s objectives. Finally, the commercialisation phase allows the extraction of value from all that has been created in the two earlier phases. However, he concludes that the three phases are not as usually seen sequential but rather iterative and often concurrent in reality. [Ahm1998, p. 30] Likewise, John and Austin describe innovation as the creation, selection and efficient delivery of new ideas. [Jon2002, p. 12]

Compared to this, Mumford tries to distinct between creativity as idea generation and innovation as idea implementation, but in many cases both terms become blurred. [Mum2002, p. 732] Nevertheless, it is right to designate the start of the whole innovation process with creativity because innovation depends on ideas whose sources are talented people. However, talent in creativity must not be confounded with intelligence. Divert thinking, originality, fluency of ideas, flexibility and elaborative as well as refining abilities are typical characterisations of creativity. Because of the nature of creativity and creative people – who are said to be internally driven, smart yet naïve, sceptical yet credulous, playful yet disciplined and passionate yet objective – attention and sensitiveness are advisable. [Lea2005, p. 41]

Finally, innovation can be seen as an engine of change which brings opportunities, but also uncertainty and risk. [Ahm1998, p. 31] Because the origin of the Latin word novitas already expresses “new” but additionally “unusual” and “strange”, innovation can create anxiety and resistance among people (circumvention, deceleration or variation of innovative ventures) which leaders have to deal with. [Bol2004, p. 38] [Sch2003, p. 234] Under these circumstances leading of innovation becomes one of the most important and difficult leadership responsibilities [Yuk2002, p. 273].

Summing up, innovation can arouse difficulties in its understanding. Many people regard innovation as just the new products on the market. But the situation is much more complex. Innovation should be rather conceived as a holistic process whose realisation in a touchable product represents only one of the last steps, yet for outsiders the most obvious one. However, the origin of any innovation reaches deeply back into the companies’ ability to generate new ideas as the start of the solution process. Without increased idea generation, which is also known as creativity and its consequently improved internal interspersion within the company, more successful implementations (of products or services) on the market are not possible.

2.2 The telecommunications industry

“The telecommunications industry has been the bedrock of high-tech innovation [Fal2003, p.2].”

Telecommunications is one of the most impressive examples of innovativeness on a worldwide scale, where innovation appears continuously but is also crucial for business survival. Regarding telecommunications from a technological perspective, it is purely global in nature. With the construction of networks the world was connected and now this technology is used all over the globe. Especially, the linkage of networks without wires and cables plays a vital role since the supported area coverage is constantly increasing. Therefore, the following expositions will give insights into this industry and will depict how and why innovation is so important.

Wireless communications has become an essential part of most people’s life. In so many different situations during the day you can observe for instance people talking on the cell phone, sending emails, SMS, and MMS or checking recent information on the Internet with their mobiles, PDAs, or laptops. It is very astonishing how our world is wirelessly connected and all the technology has found access to our usual habits. Only a few decades ago most people could merely communicate through a fixed net of cables, and where no cables were available communications could not take place. But today, they can communicate from nearly every position of the world connected through a system of radio towers and satellites. Hence, the total mobility of communication and information interchange is virtually realized. [Dur2005, pp. 13]

Wireless communications technologies are quite young. The evolution of wireless R&D emerged with the invention of the wireless telegraphy by Marconi in 1895. Through successive waves of technological innovation, sustaining developments have heightened several leading companies within this field. Over time, disruptive changes gave new challengers and entrants many opportunities to redefine competitive rules. Additionally, all these developments have been accelerated by globalisation. [Ste2002, p. 27] “Wireless technology is changing rapidly from day to day that it is hard for any one person or company to keep up with current trends. [Dur2005, p.14]”

2.2.1 Innovative developments of wireless technology

The transition of wireless communications has several innovative steps^[2]. It started with the wireless telegraphy, went on to the pre-cellular phase with AM and FM transmission technology mainly on the US market and has finally arrived in the cellular phase since the 1980s.

The cellular concept was not invented by national research institutions nor was it a demand-driven technological improvement. Instead, the concept emerged from the company-specific competences and capabilities of Bell Labs. [Ste2002, p. 30] On June 17, 1946 the first cell phone call was made. [Dur2005, p. 15] The main advantage of the cellular concept is the reuse of radio frequencies in a group of hexagonal shaped coverage zones, namely cells. These are arranged in a honeycomb structure which enables a wide mobility of its users. [Fal2003, p. 3] [Ste2002, p. 30] Today, the cellular technology is standardised and differentiated into four generations each representing a pace of the innovative advancement.

The following expositions will give a simplified understanding of these developments within the last 25 years^[3]. Figure 2–2 provides an overview of currently important wireless technologies^[4] and shows that wireless independence is still a relationship between mobility and data speed rates [Asc2004, p. 13].

1. Generation (1G): the analogue cellular

The first generation of wireless communications between 1980 and 1990 was an analogue system and supposed to transmit voice. The system was very unreliable, and not many users could use their cell phones simultaneously. [Dur2005, p. 16] Wireless communication was seen as a local service and there were no efforts for coordination and common standards. [Fal2003, p.3]

2. Generation (2G): the digital cellular

The second generation, commercially introduced in the early 1990s, used circuit-based digital technology. The transmission of data between two points has become possible. [Dur2005, p. 16] Hence, the system solved many problems regarding 1G and offered new opportunities (e.g. messaging and higher capacity). The world’s most common 2G standard is the GSM system. [Fal2003, p. 3] [Ste2002, p. 35]

2.5 Generation (2.5G): the step between

Technologies that are classified as 2.5 generation are upgrades to 2G using packet-based transmission. Advantages are a better connection quality as well as higher data transmission speed rates, yet insufficient for multimedia applications (e.g. video transmission). Typical standards are GPRS and EDGE. [Fal2003, p.4] Many companies are still operating on 2.5G instead of changing to the next generation. [Dur2005, p. 16]

3. Generation (3G): the multimedia cellular

With the third generation era since 2001 Internet-based wireless communications (WLAN, WiMAX) emerged besides the cell concept. Although they offer much higher data transmission rates, they are still tied to a dense net of stations (hot spots) and small moving velocity. However, the Internet-based technology (IP concept and packet switching) are picked up by mobile communications. Herein, the aim of the 3G was to find a general worldwide standard and to increase the data transmission speed. The European 3G standard is called UMTS. [Asc2004, p. 11] [Dur2005, p.17] [Ste2002, p.38] Here, figure 2–2 on the next page shows current technologies and their application possibilities depending on the mobility.

4. Generation (4G): the broadband cellular

During the 3G evolution the researchers of global mobile players are already laying the groundwork for the 4G which is expected to become operational between 2008 and 2011 [Ste2002, p. 40]. The pace from 3G to 4G will not imply such a big change as it did from 2G to 3G. The fourth generation should rather integrate different modes of wireless communications (e.g. cellular phones, wireless LANs, Bluetooth, TV broadcasting, and satellite communications). It will make high data transmission rates combined with fast moving speeds available. [Dur2005, p. 16] [Ste2002, p. 40] Wireless devices shall be able to switch between the different transmissions systems depending on the best availability in each moment. The users will not have to bother which transmission standard their mobile devices are currently using. “UMTS, WLAN, WiMAX – tomorrow’s cell phones will need to handle them all [Asc2004, p. 12].”

illustration not visible in this excerpt

Fig. 2–2 Important wireless technologies

2.2.2 The need for commitment to innovation

While the industry has benefit from an amazing growth over the last 20 years, it has to face more challenges in the present days [Fal2003, p. 2]. Two types of innovation underlie competition in the telecommunication market. While the telecommunications operators provide service innovation, equipment suppliers provide most of the network technology innovation. An innovation in the equipment sector implies an adoption in the operating sector. Because adoption of new technology is risky as well as costly and has to be well decided by the operators, adoption consequently represents innovation. [Bou2001, p. 168]

Numerous technological innovations during the past decades have created new telecommunications systems and services or have at least modernized the old ones. Although the industry underlies many regulations, the evolvement is rapid and dynamic. [God2000, pp.34] For instance, the number of cellular phone subscribers increased from 50 million in 1995 to over 1 billion in 2001 [Ayr2004, p. 322]. The development of the last years has shown that the leaders of one era can be the losers of the next and former rookies can lead the rules due to a better innovativeness. Bell Labs had its highpoint in the analogue phase. Motorola became the leader on the hardware market in the 1980s, whereas Nokia took the leading role in the late 1990s. The development around the 3G and 4G era moves further competitors into the centre.

Of course, many others factors such as political and industrial institutions had and will have an influence on the evolvement within the wireless communications, but without incessant innovation activities it would be difficult for any company to survive due “to the alternation of sustaining and disruptive change [Ste2002, p. 27]”. This need not necessarily lead to the creation of the next core technology, but rather to perceive and to support the chances of the change and to maintain the own innovative potential. “In the wireless industry, success required continuous introduction of new products and services based on the latest available technology. That translated to substantial demand on R&D activities. [Ste2002, p. 43]” Thus, many companies have constantly raised the R&D expenditures (staff, equipment, projects) during the last decade. [Ste2002, p.42] It seems true that financial resources increase the innovative potential at hand, but it might not necessarily increase the quality of the realization into innovative solutions. Herein lays the responsibility of the innovative leadership to ensure an optimal output of these investments. With the right leading of these activities it should be possible to improve the innovativeness of the company and therefore to contribute to the success of the company and its competitive advantages. On the long run, better innovativeness will also contribute to the evolvement of the whole industry.

2.2.3 Summary

Telecommunications is an actively innovative industry and the wireless communications sector in particular has thrilled amazing developments which extremely influenced our daily lives during the last three decades. Before the 1990s only a few big players have ruled the technological evolvement and the market. But time has changed. Competition on the market and the fight for technology leadership has become more intensive, also due to the globalisation of the market as well as of the technology. Although the industry depends on regulations and standardisation processes, wireless communications has remained a dynamic growing business adherent to an explosion of the market potential. As one consequence many big companies have constantly increased their R&D expenditures. Consequently, the innovativeness should be increased to secure a meaningful usage of the high investments. Therefore, enormous interest will be placed on the leadership of these innovative ventures as it is considered to have certain possibilities to influence the innovation ability.

2.3 Leading the innovation

After illustrating the term of innovation and related important specifics within the telecommunications industry, the leading of innovation in its initial phase will be the central subject in this part. Starting with considerations of leadership, further pro-innovative issues of leaders’ competences and influencing possibilities will be examined.

2.3.1 Leadership for an innovative environment

To understand the way leadership and the creation of innovation work together, leadership has to be defined first. Several definitions of leadership can be found in the literature depending on the subject the researcher was working on and most interested in. In fact, Stogdill concluded that “there are almost as many definitions of leadership as there are persons who have attempted to define the concept [Yuk2002, p. 2]”.

Regarding the context of this study the definition according to Yukl will be appropriated: “Leadership is the process of influencing others to understand and agree about what needs to be done and how it can be done effectively, and the process of facilitating individual and collective efforts to accomplish the shared objectives [Yuk2002, p. 7]”. This definition does not only stress the influence on the present work of groups or whole organisations but also ensures a preparation for future challenges with regard to the developing process. Moreover, the possibility to share and distribute leadership and objectives is included.

Unfortunately, it is very difficult to evaluate the effectiveness of leadership as there is a variety of alternative measurements like consequences for all participants, successful task and goal achievement and the attitude of subordinates towards the leaders, only to mention some of them. [Yuk2002, p. 8] However, some clues from current researches provide moderate conditions for leader’s effectiveness regarding the innovation process [Mum2004, p. 164] [Ahm1998, pp. 33]:

- Creativity of followers
- Group process including innovation support, objectives’ clarity and participation
- Work characteristic as well as complexity and challenges
- Organisational climate and structure

Mumford indicates that leadership makes a difference in the nature and success of creative work and the generation of viable new products and ideas. [Mum2004, p. 164] Leadership has been and will continue to be the single most important factor of innovation management [Ett2000, p. 372] and finally it “makes the crucial difference in the innovation process, because the process is not a pre-programmed activity [Ett2000, p. 370]”. The challenge for the leadership is to manage the different circumstances appropriately. This can certainly be transferred to a proper set of leaders’ skills, behaviour and influence tactics. Because creative efforts represent novel and ill-defined tasks, leaders cannot rely on predefined structures. Instead they have to be able to induce structure and directions. [Mum2002, p.711] Leadership of creative venture also differs, as Mumford explains, in the exercise of influence whereby the leader cannot access position power, conformity pressure and organisational commitment. A further difference derives from the inherent conflict between innovation and organisation, because innovations are seen as expensive and risky which arouses several resistances in the organization [Yuk2002, p. 273]. As players on the boundary between the two sides leaders have to manage organisational relationships as well as promote innovations. [Mum2002, p. 711]

As may be expected after understanding the innovation process, leadership of innovative ventures will differ in several categories from leadership of more stable and periodic projects. Fortunately, researchers have established some starting points that are going to increase leaders’ effectiveness and uncover certain problems within this field. Next, it seems interesting how leaders can meet these special circumstances on the level of their own competences and on the level of their leading influences.

2.3.2 Favourable competences of leaders

In this part the leader’s skills, traits and characteristics that are discussed as favourable in accordance to the particular demands of innovation’s promotion will be presented. Hereby the expertise and problem-solving skills, the planning and organisational skills, as well as persuasion and social intelligence are of enhanced importance.

Some scholars have assumed that leaders do not have to share the expertise and problem-solving skills, because followers especially in technological field can completely substitute them. Certainly, a loss of objectivity due to detailed specialized knowledge could make it difficult for leaders to evaluate effectively the implications of new ideas and innovations for the organisation. This can further lead to functional “fixedness” within domain-relevant skills and can constraint new perspectives. [Ahm1998, p. 36] But there are available evidences that these argumentations are not necessarily right. Proven by researchers^[5] technical skills of leaders were the best predictors of creative performance and innovations. [Mum2002, p.713] Leaders’ technical expertise and problem-solving skills are becoming more complex in terms of their social consequences. Because with lacks of knowledge leaders for example can hardly communicate with the group effectively, represent the group adequately and appraise their needs as well as concerns. Additionally, it would be very difficult for leaders to evaluate new ideas and to give feedback with little or no expertise and problem-solving competence^[6]. [Mum2002, p. 713] [Mum2004, p. 164] However, the dynamic and complexity of creative venture in companies can quickly exceed the expertise of leaders, rather forcing them to use delegation and consulting.

Following the definition of leadership, accomplishing goals and objectives might be influenced by leader’s planning skills. Although researchers^[7] found out that scientists’ evaluation of their supervisor depends on his planning and goal clarity and that scientists’ satisfaction with the supervisor was positively related to planning performance, Mumford argues that detailed work plans will inhibit the performance of creativity. Therefore, the leader’s planning ought to focus more on project progress (timing) and the type of pursued projects (structure) than on the conduct of a specific element of work. [Mum2002, p.716] Subsequently it can be assumed that the leader should be able to scan the internal environment and to forecast certain occurrences to avoid emergencies. Ahmed also emphasizes leader’s action orientation with less addiction to bureaucracy. [Ahm1998, p. 41]

Regarding the planning skills, Mumford responds not only to the leading of creativity to gain new ideas, but for the first time he also addresses the progress to the development and implementation phase. Should new ideas really become innovations, more resources and interactions with more constituencies have to be managed and coordinated. Moreover, the support from the top management should be acquired to strengthen the internal competition and to antagonize the resistance against the innovation. Additionally, implementing the innovation requires not only the knowledge about product, process and technology (technical expertise), but also a profound understanding of the organisation and its markets (organisational expertise). [Mum2002, p. 717] Because innovations have become an influencing factor of competitive success leaders should have an essential scouting function to identify new trends and their implications for the organisation. [Mum2002, p. 734]

To inculcate the leader’s understanding of the task in others (followers as well as supervisor/top management), social skills, namely coaching and good communication, are commonly seen as necessarily. [Yuk2002, p. 195] However, Mumford adds two other social skills: persuasion and social intelligence. Indeed, persuasion should be of interest as creative people are not easily persuaded due to their autonym and professionalism and since viable ideas can be rejected due to negative attitudes towards creativity as well as risky and expensive efforts that might fail. Researchers^[8] have shown that persuasion and involvement of top management as well as key interest groups have a considerable influence on the success of new product development effort. [Mum2002, p. 718] Social intelligence is seen as a combination of leader’s social perceptiveness, flexibility, wisdom and social appraisal skills. However, there are not many studies examining how social intelligence influences the success of creative ventures, but a certain linkage could not be denied. Surely, perception and wisdom are necessary for effective team management, knowing when, whom and how to persuade and to provide feedback. Leader’s flexibility is required to grasp the different conditions phases of innovations and to manage interactions with the very different types of involved actors.

In conclusion, successful leadership within the creation of innovation certainly depend on an appropriate leader, in particular on his personality and set of competences. Very important in this regard seem to be the leader’s technical expertise, problem-solving and planning skills, organisational expertise, as well as persuasion and social intelligence. These issues are not only important in the selection process of leaders; rather they should give advice on which behaviours the leader has to skills. However, being prepared on the leader’s personal level only constitutes the first step in the direction of improved innovative activities. Moreover, further factors which leaders should steer have to be considered.

2.3.3 Leaders’ possibilities of influence

Besides the leaders’ favourable skills, leaders have to influence the actors of the innovation process to increase the ability of innovation generation. However, in terms of leading for innovations different sets of apparently contradictory demands appear. Leaders have to reduce stress and ambiguity to enhance idea generation, but simultaneously they have to maximize challenge and risk taking, avoiding only ineffectual solutions. Additionally, they should encourage exploration, but they ought to ensure timely production of viable products. Finally, leaders must also encourage individual initiative, while integrating the different group activities. [Mum2002, p. 719] [Ahm1998, p.39]

Since innovations can be considered as quite radical changes, they require a wide range of leadership actions to be implemented in organisations. According to Yukl, these actions can be grouped into people-oriented actions and organisational actions, building two distinct but also overlapping categories. [Yuk2002, pp. 289] This addresses, on the one hand, the rather direct influencing of creative people as the source of innovations and of further involved groups (cross-functional responsibility), including top management as support and resource donors. On the other hand, a leader’s influence should also be seen in the light of changing and arranging work situation and climate which represents the organisational level. In a similar manner Mumford distinguishes between the influencing process of leading people and leading the work – a two-fold strategy which successful leaders have applied. [Mum2002, p.719]

Subsequently, several valuable and efficient influence tactics of leaders will be discussed that improve idea and consequently innovation generation. Herein, the differentiation between influencing people and influencing the work will be ensued.

2.3.3.1 People-oriented influencing possibilities

Scholars like Sessa or Scott predicted that creativity will decrease in case of rare opportunities for innovations and missing support and encouragement for idea generation. Thus, people are likely to withdraw from creative efforts. Based on these findings and those of other scholars^[9] Mumford assumed that four key dimensions are very important in leading creative people: intellectual stimulation, involvement, support and freedom. [Mum2002, p. 720] In similar manner Ahmed describes the influence factors on followers by empowerment.

Solving complex innovative problems within the creative work process demands extensive intellectual abilities. Accordingly, leaders should take actions that encourage intellectual engagement. Indeed, presents studies^[10] provide support that intellectual engagement would encourage innovation. [Mum2002, p. 720] Leavy suggests recruiting followers with a range of interests, personalities and backgrounds. [Lea2005, p. 41] But this is only the most obvious and easiest answer, because it might not consider the already existing potential. Thus, under given circumstances, how can the leader build a stimulating intellectual environment? Mumford argues that leaders should demand a creative/innovative solution, define tasks more broadly, instead of in terms of stringently financial outcomes, encourage groups to deal with and to share a variety of factually purposeful information, extend discussions on multiple idea findings and use disagreements to enclose integrative solutions. [Mum2002, p. 721] Similarly, Ahmed urges an eagerness to get things done, to expect and appreciate hard work, and to expect as well as accept conflicts. [Ahm1998, p. 37]

Normally, motivation plays an important role in influencing followers to find solutions, to do their work properly in general. Because creative people are typically highly motivated, the more challenging task of leaders is to direct their motivation in that they become more involved in the current problem solving process. [Mum2002, p. 721] The most straightforward approach to increase involvement is to allow the followers to select projects they are interested in. Moreover, participation in defining the problems that should be pursued and working on groups with peers are likely to increase involvement. [Mum2002, p. 722]

Evidences stressing the importance of support for creative work have been provided by many researchers^[11]. But what kind of support is especially necessary? Mumford concludes that three different types are essential: idea support, work support and social support. Indeed, in the idea generation process people first explore and confirm afterwards. If there is untimely criticism in the phase ideas are going to be shaped, creativity will be inhibited. Therefore, leaders should time feedback, in particular negative one, with awareness and they have to shelter ideas from premature criticism by peers. Additionally, leaders should defend new ideas against negative attitudes by opponents and they ought to recognize as well as reward new idea generation. Should the support of ideas be effective enough, resources to support work activities need to be allocated.

A noteworthy influence on creative people is also the freedom the leader grants them. [Ahm1998, p.35] It was found that if control, for instance because of brief production plans, becomes to tight, involvement and motivation decreased, resulting in less innovation activities. [Mum2002, p. 724] Otherwise, too loose control can also inhibit innovations because of a possible lack of clarity about goals and achievement strategies.

Besides the influence on the basis of innovations, another important relationship has to be taken into account. As qualitative studies^[12] have proved, innovations (in particular product innovations) are unlikely to be successful without the support of the top management. [Ahm1998, p. 39] [Rob1988, p. 11] However, this support is not easily acquired because of the risk and expensiveness of creative ventures and their possibility of failure. While leaders have to be aware of the organisation’s strategy, they ought to be able to frame requests for support by top management in terms of broader strategic objectives. [Mum2002, p. 734] Herein the leader’s persuasive skills manage to “sell” the new idea to the management and to demonstrate innovation’s benefits by integration in the business strategy, though possible changes and adoptions in the competitive strategy often demand first changes in people and work. [Yuk2002, p. 278]

Additionally, leaders can convince opponent groups to assert their innovations by finding and guiding social support. [Yuk2002, p. 289] One possibility is to win so-called product champions over, who help to acquire resources and to pursue others to adopt the innovation because they recognize the significance of the idea. [Ahm1998, p. 38] Especially in organisations where old fashioned methods are favoured champions can prevent ideas from premature death. [Yuk2002, p. 299] A similar application of these suggestions can be found in Witte’s promoters-model, whereby activities and responsibilities of power (similar to champions) and process promoters are partitioned according to their potentialities. [Sch2003, p. 237] The obstacle the leader faces is the identification and recruitment of potential champions that have a highly developed network of connections. Mumford tries to present characteristics that make it easier for leaders to identify the champions: They usually are persuasive, politically skilled visionaries that emerge from groups with vested interest in the innovation and they stand in a position favourable for taking risks. [Mum2002, p. 736] Therefore, the leader’s tasks should include an active search for transformational leaders with interest in the innovation and showing them how the innovation will serve their interests.

2.3.3.2 Work-oriented influencing possibilities

Although innovation processes start with the loose and ill-defined task of idea generation, leaders’ effort to impose at least some structure is still important like many studies have shown^[13]. Furthermore, the presence of more creative people will lead to a decrease of innovation when adequate structures are missing. [Mum2002, p. 725] [Lea2005, p. 42] In a further study^[14] two sets of structural variables were positively related to innovation. The first set consisting of specialisation, functional differentiation, professionalism and technical knowledge indicates “that a division of labor based on expertise contributes innovation”, and the second one including internal and external communication indicates “that structures promoting open, dynamic contact contribute to innovation.” [Mum2002, p. 731] Therefore, leaders should structure groups on technical work and establish a flat structure that promotes ongoing communication. Besides, Leavy argues that leaders have to find the right balance between creative “chaos” and structure, knowing when to leave hierarchy out of the process and when to bring it back. [Lea2005, p. 43]

As obviously expected (and insufficiently presented in a scientific study^[15]) formalisation and centralisation which represent characteristics of rather large mechanistic organisations can inhibit the innovation process. Thus, an organic structure will enhance innovation more than mechanistic structure. [Ahm1998, p. 36] [Mum2002, p. 730] However, the size of an organisation can provide the crucial resources and diversity for idea generation and thus, the size, formalisation and centralisation of large companies do not have to hinder innovation automatically as it rather depends on how their leaders manage the organisational relations. Like Mumford summarizes, other inhibitors are more typical in large organisations. Short time frames, strong financial control, strong process control and top management discounting of innovations are the dangerous demands that leaders should try to buffer from the sensitive work of creativity. Useful accomplishing methods might be to separate idea generation efforts (not necessarily the development and fielding) while simultaneously insuring a sufficient administrative support. Nevertheless, more research on when, where and how to apply these methods have to be done. [Mum2002, p. 732]

Executing these buffering tactics is likely to depend to some extent on the climate and culture of the organisation. While climate refers to the noticeable practices and policies, culture, closely allied to the concept of climate, is related to the invisible beliefs and values that exist as cognitive schemes and governs behaviour and actions. [Ahm1998, p. 32] Although only few researches distinguish between both terms, as Mumford appropriately notices, concurrent results occurred. [Mum2002, p. 732] Recent researches^[16] have found several dimensions that influence followers’ perception of a favourable working environment and additionally, increase the rate of idea generation. Indeed, as Ahmed recognizes, in order to become innovative companies need an organisational culture that constantly marshals their members to strive for innovations and a climate facilitating creativity. [Ahm1998, p. 30] He also assumes that positive cultural characteristics provide the organisation with the ingredients to enhance innovation activities as culture might be one of the primary determinants of innovations. Equally, Leavy and Jones & Austin remember the evident link between organisational climate and innovation effectiveness as long known practices of few companies like 3M. [Jon2002, p. 28] [Lea2005, p. 39] Since culture and climate did not arise in a vacuum and leaders can influence both, the question still remains how leaders can create or support a culture that is positively inclined to innovation. [Yuk2002, pp. 279] [Mum2002, p.732] In any case, “the culture of innovations has to be matched against the appropriate organisational context [Ahm1998, p.31].” But this would mean that there is no ultimate type of innovative culture which leaders can propose as the magic potion to compensate a lack of innovative ability.

Two tactics that Mumford considers to be useful in building a good culture and climate are recognizing as well as rewarding followers and telling stories about past successful accomplishments. Under no circumstances should failure and risk taking be punished, for that would, of course, inhibit followers from challenging new tasks. He also poses that leaders can build this culture “by framing decisions, not just in objective economic terms, but in terms of the impact of these decisions on variables such as openness, trust, and challenge [Mum2002, p. 733].” Indeed, framing decisions can maybe be one of the more effective methods of leaders to influence culture towards innovative advantages.

Ahmed, instead, argues the problem of innovative culture more as a holistic issue regarding the whole innovation process and not only the creative part of idea generation. Under norms promoting innovation he also discusses individual freedom, risk taking, challenges, trust, openness, stories and rewards. Furthermore, Ahmed recognizes for example the need for external orientation, i.e. adoption of customer, supplier and distributor perspective, and cross-functional integration between the differently involved work teams. [Ahm1998, p. 37] Leavy’s practical analysis of innovative companies^[17] also corresponds to Ahmed’s conclusions and in particular they recognize that leaders should facilitate an internal mobility of innovatively talented followers. [Lea2005, p. 39] In fact, rotation of suitable staff can stimulate the exchange of ideas and suggestions, hence increasing the innovation ability.

Accordingly, Bolko von Oetinger sees useful possibilities in an open, exchange-oriented culture to “become less anxious and more courageous about dealing with the new [Bol2004, p. 40].” In line with Yukl, he proposes that leaders should encourage looking at best practices externally (and not only internally) and to acquire knowledge from the company’s periphery. He concludes that especially in large (and global) companies ideas pop up in sales divisions, suppliers, consultants and joint ventures and refers herewith rather to the cross-functional responsibility of the innovation process. Unfortunately, copying best practices and solutions from competitors seldom provides much competitive advantage. [Bol2004, p. 40] [Yuk2002, p. 298] At least these methods can help to generate new own ideas or improve yet unsuccessful solutions of competitors.

Concerning the construction of a purposeful culture it should not be wrong to assume that providing a vision can also influence creativity and innovations. As innovation is seen as change, researches on charismatic and transformational leadership indicate that visions can usefully guide the change process in organisations as well as coordinate the decisions and actions. [Yuk2002, p. 283] On the contrary, Mumford suggests that “a leader’s vision may prevent creative people from forming their own unique ideas and pursuing their own vision of the work [Mum2004, p. 166].” Mumford received affirmation from recent studies^[18] which discovered that transformational leadership did not result in higher idea generation and that transformational leadership was negatively related to individual or group creativity. [Mum2004, p. 166] Therefore, he supposes that a mission-oriented vision in term of work goals might be more useful, articulating it through project selection and project evaluation. In line with this, Buchen and Leavy stress the importance to include innovation into mission statements, whereby Ahmed certainly doubts the effectiveness of most mission statements because they often fail to grab people’s attention. [Buc2003, p. 4] [Lea2005, p. 39] [Ahm1998, p. 38]

Building up a strong innovative culture in the whole company can certainly improve future oriented openness and reduce internal resistance on all levels. “It’s only when employees see things happening around them, and to things that push them towards innovation, that they begin to internalise the value of innovation.” [Ahm1998, p. 39] However, such a strong culture can probably become a hindrance, especially when market circumstances and customer requirements demand predictability and conforming to specifications.

As depicted above, leaders have numerous influence possibilities to increase the likelihood of better innovation ability. But the described issues need not to be just seen as chances, they rather build a certain framework in which leaders are asked to act and to react. The details of this framework were differentiated into people- and work-oriented aspects. Herein, the main points of intellectual stimulation, involvement, support, freedom, structure, and work climate were presented. All in all, the task of leading these different pieces and their difficult interrelations represents a tough challenge which can hardly be compared to leader’s activities in more standardized environments. Therefore, leaders of innovation activities especially in the initial phase have a high responsibility because they are seen to contribute vastly to the innovativeness of their companies.

2.3.4 Summary

Because just the beginning of every innovation venture differs strongly in its conditions and requirements from many other projects of the company, its leadership will also differ from the usual leadership of established processes. Therefore, leading innovation, especially but not only in its initial phase, becomes a though challenge for leaders making the process successful and prospectively ensuring competitive advantages.

Many approaches try to explain leaders’ effectiveness and success on account of their appropriate set of skills, traits and behaviour. Surely, depending on the situational conditions there should be more or less effective and proper leader competences. In the situation of innovative ventures several favourable characteristics of leaders have also crystallized. Technical expertise and problem-solving skills are maybe more important than in other leading positions. Without them it really would be very difficult for leaders to understand the special mindedness of followers in creating ideas and solutions. Moreover, the leader could certainly not represent the venture appropriately when he lacks the understanding of its nature. Nevertheless, the leader must not fall into too detailed thinking, thus forgetting the required foresight for the process and the ability to manage the necessary relationships within the organisation, gaining support and realisation possibilities. Additionally, leaders have to be aware of their limits to be quickly able of find experts they can consult or delegate. More than the common social skills the leader needs a high persuasion ability and social intelligence due to the essential influence on the involved actors and the increase of their commitment as well as the innovation’s acceptance.

Herein, leaders have the possibility to influence the involved people directly or in a more indirect manner by influencing the work situation. To increase the idea generation it appears useful to me that leaders stimulate the creative people in the company with challenging tasks and demands for solutions whereby different opinions or disagreements can animate to new ideas. Unfortunately, the creative core has to get involved in the generation process first. Leaders can improve the situation by letting the followers choose the projects they are interested in and slightly decreasing the control over them. Last but not least the leaders also have to influence the top management to support the innovation and not to constrain innovation’s acceptability. A good proposal is the use of well experienced agents, so-called champions. The influence leaders can exert on the work situations should primarily concentrate on structure and culture. Although creative work needs its freedom and tolerance leaders have to induce at least some structure because otherwise the real aim could be lost out of sight. Overall, leaders should have the appropriate influence on the climate, broadly speaking on the work culture, because these can improve the appreciation of innovation on different levels in the company and can thus build the environment that boosts innovative activities.

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^[1] Most theoretical leadership explanations will base on the expositions of Mumford et al. and Ahmed due to the rare literature sources concerned with this special topic and because the authors, in particular Mumford et al., collected data from a huge variety of different single researches and processed it to an overall framework in regard to the study subject.

^[2] for a more detailed overview of historical developments see Appendix A.1

^[3] more detailed information inclusive technological standards are provided in Appendix A.2

^[4] for abbreviations and technical terms see Appendix A.3

^[5] e.g. Andreas and Farris, Barnwe, Mouly and Sankaran [Mum2002, p. 712, p.713]

^[6] like Basadur, Runco and Vega have shown in their researches [Mum2002, p. 713]

^[7] like Arvey, Dewhurst and Boling or Mossholder and Dewhurst [Mum2002, p. 715]

^[8] e.g. Dougherty & Hardy, Jelnek & Schoonhoven [Mum200, p. 718]

^[9] e.g. Andrews, Ensons et al., and Oldham & Cummings [Mum2002, p. 720]

^[10] by Enson et al., McGourty et al. and Andriopoulos & Lowe [Mum2002, p. 720]

^[11] e.g. McGourty et al., Enson et al., Bain et al., Guastello, Oldham & Cummings [Mum2002, p. 724]

^[12] e.g. Dougherty & Hardy, Jelnek & Schoonhoven [Mum2002, p. 734]

^[13] e.g. Bain et al., Anderson & West, Taggar [Mum2002, p. 725]

^[14] by Damanpour [Mum2002, p. 731]

^[15] by Damanpour [Mum2002, p. 731]

^[16] e.g. Isaksen et al., Ekvall & Ryhammer [Mum2002, p. 732]

^[17] e.g. 3M, IDEO, Nokia

^[18] conducted by Kahai, Sosik and Avolio; Jaussi and Dionne [Mum2004, p. 166]