Innovating Against Inertia: How a Scientific Method for Decision-making Affects Innovation-related Decisions in Large Organizations

Giada Carlassara

Student thesis: Master thesis

Abstract

Innovation has become essential for every company to remain competitive. However, organizations can apply several types of innovation, and startups are those which are usually able to succeed in the most disruptive ones. It has been proved that the differences between managers and entrepreneurs plays a key role in the choice of an innovation strategy due to different mindsets: while entrepreneurs are fed by experimentation, managers are usually affected by inertia. This research aims at studying whether managers can learn to approach innovation in a more experimenting and scientific manner, by attending a course that teaches a theory-experiment-review approach. In particular, the analysis focuses on whether the scientific approach to decision making increases the probability that a risk averse individual will undertake a disruptive innovation rather than an incremental one and the probability that people are ready to accept feedbacks and change their decisions accordingly, even in the presence of sunk costs. The hypotheses are answered through an experiment that entails distributing a survey to business students, where they have to identify themselves with managers in large organizations and decide the innovation strategy of their company. In the questionnaire, information is also gathered about the type of degree and previous professional experiences of respondents. The analysis based on responses shows that the hypotheses are corrected only partially: the scientific approach neither increases nor decreases the probability that managers are able to fight against inertia in large organizations, helps managers to recognize when it is time to change plan by assimilating signals from objective data, leads managers to be more cautious when undertaking very risky projects and affects differently people participating in different types of projects. On this basis, it is recommended that companies start to create educational paths for their managers and employees where they can learn what it means to behave scientifically. However, further research is recommended on the topic through an experiment with real managers to be able to give a strong recommendation.

EducationsMSc in Management of Innovation and Business Development, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2018
Number of pages74
SupervisorsKeld Laursen