The Management of Innovation Prof. Edward F. McDonough III

HRM 3920 Tel: 617-373-4726; Fax: 617-373-2491

Winter 2000 emails:

Tuesday 7:25-9:25

"Business has only two basic functions: marketing and innovation. Marketing and innovation produce results. All the rest are costs."

--- Peter Drucker


This course focuses on how organizations can foster innovation, innovative thinking, turn ideas into innovations, and maintain a climate conducive to innovation. The importance of innovation is clear. It is perhaps the most important means of producing competitive advantage. But, creating an innovative organization is not easy. It is more than simply generating new ideas. Theodore Leavitt puts it bluntly:

"Creativity is thinking up new things. Innovation is doing new things. A powerful idea can kick around unused in a company for years, not because its merits are not recognized, but because nobody had assumed the responsibility for converting it from words into action. Ideas are useless unless used. the proof of their value is only in their implementation. Until then, they are in limbo."

In this course we will examine what you can do to stimulate innovation and direct it in ways that allow the organization to accomplish its goals. We will address such questions as, What organization forms are most conducive to innovation? What factors hinder innovativeness and how can they be overcome?, and What role do managers play in bringing about innovation?

Thus, we will examine the actions that companies and their managers can take to effectively design their organizations and systems in order to foster innovativeness. Elements of an organization’s infrastructure that we will discuss include, its structure, reward, communication, and control systems, leadership - at all levels, and culture.





50% - Term Project

25% - Class contribution & attendance

25% - Case Analysis


January 4 - Introduction to Creating Innovative Organizations

January 11 – Identifying the Barriers to Innovation


  • Tushman & O’Reilly, Chps. 1 & 2

1. Be prepared to discuss the following questions:

  1. What does innovation mean?
  2. What does it mean to be innovative? To be an innovative company? To be an innovative manager?
  3. How can (should) innovative (not innovation) be measured?
          1. How innovative is your company?


January 18 - Understanding a Company’s IQ


  • Tushman & O’Reilly, Chps. 3 & 4


  • Bill Gates and the Management of Microsoft – case
  1. Be prepared to discuss the following questions:
    1. What is Gates’ contribution to product development and innovation?
    2. What actions would you advise him to take to maintain innovativeness in his organization?


January 25 - Building organizational capabilities, structures, and competencies


  • "Putting Your Finger on Capability"
  • Cultivating Capabilities to Innovate: Booz-Allen & Hamilton – case


  1. Be prepared to discuss the following questions:
    1. What are BAH’s capabilities?
    2. How are they making it difficult to sell new service offerings to clients?
    3. How does the solution Christensen proposes to sustain innovativeness differ from Tushman & O’Reilly’s? Which do you favor?

February 1 - The Tyranny of Success


  • "Eisner’s Mouse Trap"
  • "Cannibalize Yourself "


  1. Be prepared to discuss the following questions:
    1. Diagnose the situation at Disney.
    2. Why are they experiencing difficulties right now?
    3. Pay particular attention to:
      1. The leadership of the company
      2. Its culture
      3. Creativity
      4. The innovation quotient
      5. How did you measure innovativeness?
    4. What actions do you recommend that they take? Why? Who is "they"?

February 8 - Sustaining an Innovative Mindset


  • Tushman & O’Reilly, Chps. 5 & 6
  • Chaparral Steel – case


  1. The management of Chaparral Steel considers one of the company’s competitive capabilities to be the rapid translation of technology into product. What makes up that capability?
  2. What is it about the strategy-making process, the corporate culture, the management systems, physical equipment and employee skills that enables Chaparral to innovate rapidly?

è Prepare a 3-page write-up of these questions. (1 page for question one and 2 pages for question 2.)

February 15 - Fostering Creativity


  • Tushman & O’Reilly, Chps. 7
  • "How to Kill Creativity"
  • What’s Stifling Creativity at CoolBurst? – case


  1. Be prepared to discuss the following questions:
    1. What is stifling creativity at CoolBurst?
    2. What can Reboredo do to foster creativity?

February 22 - Leading Innovative Organizations


  • Tushman & O’Reilly, Chps. 8
  • "Empowerment: The Emperor’s New Clothes"

February 29 - Managing Change in a Revitalization


  • "The Work of Leadership"
  • Jeanne Lewis at Staples, Inc. (A) - case


1. Please prepare your response to the four questions listed at the end of the case.


March 2 - Organization Culture & Leading Change


  • "Why Change Programs Don’t Produce Change"
  • Elmwood Health Center – case


  1. Be prepared to discuss the following questions:
    1. What problems does John Hunt face?
    2. What are your recommendations for solving them?
    3. "How" should Hunt implement these recommendations. Pay particular attention to how he should deal with the resistance he will undoubtedly encounter as he attempts to implement your recommendations.

March 9 - Managing Global Innovation


  • Tushman & O’Reilly, Chp. 9


March 16

Final Exam







Key questions addressed in this course along with associated readings.



  1. How innovative is the organization? (T&O; Eisner’s Mouse Trap; Cannibalize Yourself)
    1. What measures will you use to determine this?
      1. # new products,
      2. whether people feel that their ideas are listened to
      3. # of new processes and procedures introduced
  2. What kind of innovation is occurring in the organization? (T&O; Eisner’s Mouse Trap; Cannibalize Yourself)
    1. Incremental/disruptive; internal/products/services
  3. What is facilitating innovation in the organization? (T&O; Cannibalize Yourself; Putting your Finger on Capability; How to Kill Creativity; The Work of Leadership; Empowerment)
    1. What are the effects of the current organizational capabilities, structures, systems, competencies, leadership, & culture?
  4. What is hindering innovativeness(T&O; Eisner’s Mouse Trap; Cannibalize Yourself; Putting your Finger on Capability; How to Kill Creativity; The Work of Leadership; Empowerment)
    1. What are the effects of the current organizational capabilities, structures, systems, competencies, leadership, & culture?
  5. What are your recommendations for overcoming obstacles to innovativeness and enhancing the innovativeness of the organization? (T&O; Cannibalize Yourself; Putting your Finger on Capability; How to Kill Creativity; The Work of Leadership; Empowerment)
    1. What organizational capabilities, structures, systems, competencies, & culture need to be changed?
    2. In what way? I.e., what should they look like?
  6. What is your action plan for bringing about changes that are needed and implementing your recommendation? (Why Change Programs Don’t Produce Change)
    1. What will the plan itself look like?
      1. what are the steps
      2. the order in which they will take place
      3. by whom
      4. etc.
    2. How will you implement the changes?




Term Project


For this project you will be asked to:

  1. conduct a diagnosis and critical evaluation of the innovativeness of your company
  2. generate a set of recommendations that will enhance its innovativeness
  3. develop an action plan to implement your recommendations.

Formulating your diagnosis, recommendations, and action plan will require you to both gather data from interviews with individuals in the company and to apply your learning from the assigned readings, our class discussions, and your group interactions. The goal is to end up with a report that can be acted upon by the company. This report is due on the last day of class and will be the major component of your grade. We will have an ongoing dialogue regarding this project throughout the quarter. As a starting point, an outline of how to conduct and structure this report is provided below.

Outline for your report

  1. Section One
    1. This section is a half page executive summary of what you found, the key problems/issues, and your suggestions for change. Feel free to list problems in bullet form.
  2. Section Two
    1. This section is a 1-page discussion of the company’s background, including its industry, its health, key issues/problems, and any other background information that would help to give me a good perspective on the company.
    2. A chart showing the segment of the organization which will be the focus of your report. This should be included in an appendix.
  3. Section Three
    1. This section will contain a 3-page discussion of your diagnosis and critical evaluation concerning the innovativeness of the company.
      1. To perform this diagnosis and evaluation you will need to interview a number of people in the company to obtain their insights concerning the degree of innovativeness within the company, and to assess the company’s infrastructure, culture and leadership.
      2. The interviews should be conducted with people from different areas and levels within the company. Choose people to interview who will provide you with the most useful and realistic data on the innovativeness of the company.
      3. There is often a tendency to report on the content of the interviews, interviewee by interviewee rather than to analyze what each person has said. But, the focus of this portion of the report should be on an analysis of the interviews, rather than on simply describing what’s in them. Perhaps the best way to accomplish this is to organize the report on an issue by issue or problem by problem basis. This will have the effect of forcing your discussion to concentrate on the issues versus what the interviewee said. While this is helpful, however, particular attention still needs to be paid to analyzing the data as it pertains to the issue being focused on. So, for example, if two interviewees disagree (or agree) on an issue, you should discuss the implications of the disagreement, the effects it may have on the organization and innovativeness, draw conclusions about the disagreement, etc.
  4. Section Four
    1. This section will contain a 2-page discussion of your recommendations for enhancing the innovativeness of the company.


  5. Section Five
    1. This section will contain a 4-page discussion of an action plan for implementing your recommendations.
  6. Section Six
    1. This section will contain your conclusions and summarize the key points you’ve made. It should be about one half page.


Please note: You should explicitly use your learning from the course, the readings, discussions, lectures, exercises, cases, etc. to identify and discuss issues/problems, make recommendations, and develop an action plan. Explicit references to these materials should be contained in the endnotes of your report.

One other note: I have very deliberately asked for a concise report. But please don’t be fooled by the brevity of this assignment. In fact, to write an excellent concise report is actually more difficult and will take more time than if the assignment were longer. While more difficult, there are several benefits to you of being asked to write a concise report. First, it forces you to crystallize your thinking. Second, it forces you to make decisions about what the most critical issues are that warrant discussion. Third, this approach forces you to write in a clear, concise, and well organized manner. I believe that all of these will provide you with substantial benefit outside the classroom in your careers as managers.






Bio-Sketch of:

Edward F. McDonough III, Ph.D.

Professor of Organizational Behavior

College of Business Administration

Northeastern University



Prof. McDonough has been conducting research in the field of new product development since joining the faculty of the College of Business Administration at Northeastern University in 1979. He has conducted research both in the US and in Great Britain on the management of the new product development process and new product projects and has consulted with numerous companies on organizing and managing their new product development efforts. Some of the organizations that Professor McDonough has consulted with include, Eastman Kodak, NYNEX, Corning, Phillips, ITT Hartford, EG&G, Litton Industries, Black & Decker, Northern Trust, Bay State Gas, Quebecor Providence Printing, Basic American Foods, New Pig, and others. He has also held administrative positions in two start-up companies prior to joining Northeastern.

Prof. McDonough has given speeches and run seminars and workshops on a variety of topics including, speeding up the product development process, leading new product development projects, creating high performance new product development teams, managing the product development process, improving the R&D/Manufacturing interface, effectively controlling new product development projects, and others. He is the Vice President of Research for the Product Development & Management Association (an international association for people with a professional interest in new product management), a past President of the College of Technology and Engineering Management in The Institute of Management Sciences, and is on the Board of Advisers of the Boston/New England Chapter of the PDMA.

In addition to presenting over three dozen papers in the US and other countries, Prof. McDonough has published extensively. His articles have appeared in a number of journals including, Harvard Business Review, Academy of Management Journal, International Journal of Project Management, Journal of Product Innovation Management, Journal of International Marketing, R&D Management Journal, IEEE Transactions on Engineering Management, Research*Technology Management, Journal of Engineering and Technology Management, Personnel, and Journal of Technology Management Research.