Tacit knowledge is a catch-all term to describe a combination of practical knowledge, unconscious differences in subjective knowledge, and unarticulated but

highly contextualized objective knowledge-The key idea is that groups of people who work intensively together develop shared understandings about the world and create knowledge within the context of those understandings. The key study in the area was an investigation of Xerox photocopier repair technicians and how they taught each other about managing the idiosyncrasies of recalcitrant photocopiers. The key thing I want you to take away from this response is that the aim is not always to eradicate local subjective knowledge.) 1) Capturing artisanal knowledge so that it can be objectified. 2) Capturing and codifying customers practical knowledge so that devices and services can be designed to complement or substitute for it. (e.g. designing the gear shifters on a bicycle would require you to understand how people alter their balance as they ride a bike, and particularly as they go faster (shifting up) or come up against their physical limits (shifting down). Alternatively, Apple claims that the operating system for its phones and tablets is more consistent with customers' practical knowledge.) From my experience, differences in subjective knowledge is associated with highly emotional conflict. In this instance, people tend to interpret the actions of the other party in terms of their own worldview, and so they often find the other party's behavior incomprehensible and/or offensive. Another form of highly emotional conflict occurs when people share objective knowledge about differences in material resources. For example, people will go to war over differential access to drinking water. It is very hard to strike a balance between effective management and the right amount of bureacratic processes. Creating things necessarily involves risk and failure and many organisations have been slow to recognise that this is an essential part of creativity, therefore an inherent part of the culture of many organisations is creation reducing, by dampening creative efforts and rewarding risk free behaviours.->FBC

An explanation that draws on material from this class is that the people in these two types of organisations have incompatible worldviews. That is one type of organisation recruits and promotes people who have a strong analytic and control orientation, and therefore see the world through a 'variance reduction' lens. These people find it very difficult to engage in, or think in terms of, variance creation activities. Going along with these differences in world view will be differences in organisational systems. For instance, organisations with a strong focus on variance reduction will have systems that are highly control oriented, which is likely to further squeeze out both emergence (variance creation) and people who want to work in an organisation that fosters emergence. (Obviously, you can also make the contra-argument.) A recent paper that looks at this issue is: Adler, P. S., M. Benner, et al. (2009). "Perspectives on the productivity dilemma." Journal of operations management 27(2): 99-113.

while companies that have exciting products often have very wasteful and inefficient processes.) -didnt reward people on what they did, rewarded on outcomes (ie. Inexperiencecd staff on pathfinder mission unable to manage although they were promoted to project management levels) -outsourced technical detail to outside sources -

Macro Governance
Roles for the board to cooperate Boards cooperative-trusting, safe to fail, board takes responsibility for failures o Ensure strategy is enacted as a set of projects o Watch out for and encourage exceptions coming from below that reflect new strategic opportunities or indicate changes in the environment o As innovation departs further from existing capabilities, or as the environment shifts, strategic clarity gets harder, organisational resistance grows etc. o Delegation o Where the strategy does not results in strategic risk at an aggregate level, delegate administration of the pipeline o Where the strategy does not result in strategic risk, make the strategic decisions and/or govern the pipeline o Innovation agenda o Repeated game o Information-rich environment (board members have multiple sources) o Variable penalities as trust grows o One player can compensate for anothers deficiencies

To defect-defect o Need to manage ongoing operations o Lack of board member expertise o Unwillingness of board to work as a true team Board defective-dont trust managers, monitors managers, managers withhold information from the board o Corporate governance codes, listing rules, and their underlying assumptions o Corporations laws and their history o Asymmetric definition of risk o Blame to the board, credit to the CEO o CEO tenure-less likely to invest in innovation agenda which wont pay off until after their retire o Institutionalised norms about board behaviour o Interlocks and homosocial reproduction by boards How do companies avoid dilemma Focus on accountability Working out where its safe to trust Develop information systems that allow them to track the impact of their decisions

Micro-governance
o Aim- optimise ongoing allocation of resources o Strategic environment is changing o How projects are changing o Periods of emergence punctuated by moments of control (gate

reviews/governance events) o Hurdle criteria: risk, capabilities, value delivery

o Reasons for killing or parking o Fail to meet hurdle criteria o There are better projects in the portfolio, given emerging strategic needs o What do we need to know about the gate review process? Characteristics of typical projects o Most projects fail, but most organisations minimise o Planning for failure o Minimising its impact o Planning what resources are needed to avoid failure

Success-the less likely outcome usually receives near complete planning attention. Why? o The project must be successfully sold to someone, investors, the board, the boss etc o Start of project is when least is known o Details will emerge o The environment will shift o Typically involves an internal project champion and the external inventor o Highly optimistic view (psychologically wired) o Twice as long and four times the cost o Four times as long and twice the cost

Bases for problems

o The inventor syndrome-overly identified with project, emotionally committed o Misaligned objectives: corporate vs project champion/inventor. Company should be interested in overall portfolio, inventor interested in projectdifferent goals/ambitions, use different criteria for judgeing project

o How do we know a project is failing? Can be really hard to tell, inventor will say its fine the company will have own criteria, should be decided early on? o Early versus late in the pipeline (early in pipeline, playing poker, final implementation, financial value and ROI, should be changing as it moves down the pipeline)-companies generally don't take this change in strategy into account or are unaware of it No agreement on project evaluation criteria

Companies have innovation systems -Bad economic thinking often drives decisions o Focus on sunk costs o Wrong use of financial tools (NPV with wrong base) o Poor estimates of platform and competence benefits leading to a focus on the short term o Slim innovation portfolios are at particular risk Bonabeau et al 2008 HBR o Eli lilly-errors o First managers often ignore evidence challenging their assumptions that projects will succeed o 2nd, companies sometimes terminate projects prematurely because people fail to conduct the right expts to reveal products potential o Solution: segment NPD so the early stage organisation maintains loyalty to the experiment rather than the product, whereas the late-stage organisation pursues commercial success. o

o Stategy- Grand theory view- can construct a grand theory of innovation, which should drive the strategy o 'empirical view'- drucker- emergent - spot what is emergent- convert it into your strategy. o o Risk- emergence, complexity, epistemically differences, communications barriers - these sources of risk interact. o Capability building. o Cooper readings. o o Think about projects as set of inputs into set of outputs and risk , which you need to manage . o o Portfolio and pipelines..pipeline management. Stage gate good framework. o Digital chocolate -o Pipeline- a strategic tool. o - recursive enactments of ideation , process and execution o - pipelines device which pass as they accumulate and utilize resources and risk . o o -correlated risk - group of similar projects o General portfolio- uncorrealted risk o o -technology and market: develop set of goals and objectives -->aggregate project plan-useful-->build project plan and manage plan- put it thru an learn o o What matches budget and capabilities o o Longitudinal--> o o Optimal pipeline in steady state will look like funnel o o 3 stages- process design and ideationo Ethnographic approach

o --most important thing to generate multiple options for the one project o --ie. Have a good supervisor- come back with 10 topics and choose 1, produce 10 one page discussion how we would do the project and then Whittle down to 3-4- flesh out and choose 1 ..Critically important step-multiple choices within a given project important in managing project and hence pipeline. o o Process pipeline -- many ways of managing one project o o 3rd view - resource transformation system. o o Radical innovation-->incremental innovation--casmetic change Macro 4 deal projects -acceleratng costs -reduce risk early onhighly market focussed -delivers strategically relevant capabilities and technology platforms to help with future projects can you get modular stages??? Break project up discrete dimensions and phases-unambiguous outputs at the end

Gate reviews (at nasa) emergence and control -temproal separation-a form of process modularity early versus late gates (chess vs poker) roles of gate reviews -selelect between ideas -select between approaches for a given idea redirect a given idea or approach

-authorise the next stage -build buy in for the project across the organisation

Failing at the gate 1) fail the criteria 2) inferior or budget constraint 3) you want more projects than funds a. option value b. don't continue losing projects because of sunk costs-no choice c. option cost 4) 5) Killing projects-why killing projects and funding the iimportant-effective governance Why a probust system is important -better able to weather criticsims from the market -protects projects, inventors, inventors sponsors reduces complexity (essentially a modular process) creates options and flexibility-it is much easier to over-committ to projects if you know you will kill some killing projects on the fly is always disruptive, destructive and inefficient -makes it easier to deal with emergence that makes the gate criteria irrelevant -xerox, invented the mouse, Ethernet, etc. got rid of them because didnt fit with photocopying-could have been apple! Spun out the technologies and gave them away to apple and adobe, -what does a robust system look like? -transparant decision making criteria and process stage by stage is

-prior agreement when milestones are occurring -agreed kill criteria essential -agreement is easiest upfront-much more difficult on the fly -must remain flexible within the more structured systemanother conundrum -gates are true review points not just potential kill points -acknowledge the difficulty of working out whether or not youve actually failed -leadership gets involved early -leaders are separate from the project-agile development, people who are working on the project working on the reviews-better to have independent reviewers, more inputs -make decisions on the basis of opportunity cost (expected value), not sunk cost

how to kill projects effecitely -accept that projects need to be killed try to always have more projects than budget -redefine failure -maintaining projects beyond their actual kill point becomes a failure -deal gracefully with inventors and champions -distinguish killing of project from your idea was crap-early -hierarchical separation of responsibility -picking up the pieces -org where failure is acceptable -norms and routines to monitor and attend to memebers emotions

-lead so failure is acceptable manage yourself so failure is manageable manage learning from failure

6) 7) 8) 9)