Innovating Organization and Management: New Sources of Competitive Advantage

259 Pages·2012·3.55 MB·English

by  Nicolai J. Foss

Innovating Organization and Management
Thesearchforcompetitiveadvantageservesasthebasisfor
organizationalstrategy.Thisbookhighlightsfourkeypointsinthe
analysisofcompetitiveadvantageandfinancialsuccessthathavenot
beengiventheattentiontheydeserve:First,thatorganizationaldesign
andmanagementprocessesmaybestrategicresourcesintheirown
right;second,thatorganizationaldesignandmanagementprocesses
canbedeployedtocreatenewstrategicresources;third,thatmanagers
havebeguntothinkoforganizationaldesignandmanagement
processesinaproactivewayratherthanseeingthemmorepassivelyas
necessaryfacilitatorsofsuccess;and,fourth,thatthisnewwayof
lookingatorganizationandmanagementrequiresasearchfornew
waysofstructuringorganizationaldesignandmanagerialprocesses.
ThesepointsaredrivenhomethroughcasestudiesoftheDanishfirms
LEGOGroup,VestasWindSystems,Coloplast,Chr.Hansen,IC
Companys,andNKTFlexibles.
nicolai j. foss isProfessorofOrganizationandStrategyatthe
CopenhagenBusinessSchoolandProfessorofKnowledge-basedValue
CreationattheNorwegianSchoolofEconomics.
torben pedersen isProfessorofInternationalBusinessatthe
DepartmentofStrategicManagementandGlobalizationatthe
CopenhagenBusinessSchool.
jacobpyndtworksforNordea,aleadingNordic-basedpan-European
bank,whereheisinvolvedwithbusinessstrategyissueswitha
primaryfocusontheoutsourcingoffunctionsandprocesses.
majken schultz isProfessorattheDepartmentofOrganizationat
theCopenhagenBusinessSchool,InternationalResearchFellowatthe
CentreforCorporateReputation,SaïdBusinessSchool,Universityof
Oxford,andsenioradvisortotheReputationInstitute.

Innovating Organization
and Management
New Sources of Competitive
Advantage
nicolai j. foss
DepartmentofStrategicManagementandGlobalization
CopenhagenBusinessSchool
DepartmentofStrategyandManagement
NorwegianSchoolofEconomics
torben pedersen
DepartmentofStrategicManagementandGlobalization
CopenhagenBusinessSchool
jacob pyndt
NordeaBankDanmarkA/S
majken schultz
DepartmentofOrganization
CopenhagenBusinessSchool
cambridgeuniversitypress
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Informationonthistitle:www.cambridge.org/9781107648227
©NicolaiJ.Foss,TorbenPedersen,JacobPyndt,andMajkenSchultz2012
Thispublicationisincopyright.Subjecttostatutoryexception
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noreproductionofanypartmaytakeplacewithoutthewritten
permissionofCambridgeUniversityPress.
Firstpublished2012
PrintedintheUnitedKingdomattheUniversityPress,Cambridge
AcataloguerecordforthispublicationisavailablefromtheBritishLibrary
LibraryofCongressCataloguinginPublicationdata
Innovatingorganizationandmanagement:newsourcesofcompetitiveadvantage/
NicolaiJ.Foss...[etal.].
p. cm.
ISBN978-1-107-01105-2(hardback)
1. Organizationaleffectiveness. 2. Strategicplanning. 3. Management.
4. Successinbusiness. I. Foss,NicolaiJ.,1964–
HD58.9.I56 2011
658.4’063–dc23
2011025057
ISBN978-1-107-01105-2Hardback
ISBN978-1-107-64822-7Paperback
CambridgeUniversityPresshasnoresponsibilityforthepersistenceor
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Contents
Listoffigures pagevi
Listoftables viii
Listofboxes ix
1 Newsourcesofcompetitiveadvantage 1
2 Causesoffirmsuccess:Fromresourcestoorganization
andmanagement 15
3 LEGO:Redefiningtheboundaries 41
4 Vestas:Thewilltowin(d) 72
5 Coloplast:Innovatinginnovation 105
6 Chr.Hansen:Collaborativeformsunderprivateequity
ownership 138
7 ICCompanys:Creativegeniusandcommercial
attitudes 165
8 NKTFlexibles:GlobalsourcingofR&Dinnovation 198
9 Concludingreflections:Innovatingorganizationand
managementtostaycompetitive 216
Index 242
v
Figures
3.1 LEGOGroupOrganization page42
3.2 Strategydirectionandphases 45
3.3 KeyareasintheLEGOGroup’schangingbusiness
model 46
3.4 Revenuesplit,2007 47
4.1 MWdelivered,revenue,andEBITmargins,2002–7 78
4.2 VestasGovernmentandorganizationalstructure 89
4.3 Expectedgrowthinemployeeintake 94
4.4 Developmentinmarketshare,2004–7 96
5.1 Functionallydividedorganization,spring2007 108
5.2 Divisionalstructuresincethe1980s,Global
Operationsasintroducedin2005 109
5.3 Historicaltimelineandmilestones 111
5.4 Geographicalandbusinessareas,organicgrowth,
2006/7 112
5.5 Coloplast’sstrategicprioritiesfor2012 115
5.6 Coloplast’sworldwidepresence 116
5.7 Organizationalstructureofthecommercial
excellencefunction 123
5.8 Coloplast’sinnovationmodel 130
6.1 Historicaltimeline 140
6.2 Organizationalstructure 142
6.3 DevelopmentinsalesandEBITmargins 145
6.4 Developmentinworkingcapital2002–7 147
6.5 Chr.Hansen’s“must-win”battleslaiddownin
immediatecontinuationofthetakeover 150
6.6 CollaborativetiesbetweenPAI,theBoard,and
management 153
vi
list of figures vii
7.1 Revenuebybrand,2006/7,growth,andEBIT
margin 179
7.2 Comparingrevenueandprofitcontribution,2004/5 180
7.3 ICCompanysvaluechain 182
7.4 Stylecompositioninfashionclothingdesign 183
7.5 Dividinglinesbetweenthesharedplatformand
brandactivities 187
7.6a Formerorganizationalstructure 191
7.6b Currentorganizationalstructure 192
8.1 Exampleofapipeconstruction 201
8.2 NKTFlexibles’sinnovation-to-marketfunnel 209
8.3 Flexpressopticalgasmonitoringsystem 210
9.1 Degreeofdepthandbreadthofmanagement
innovations 221
Tables
3.1 Financialhighlightsandkeyratios page43
3.2 Productionoutsourcingoverview 56
4.1 Financialhighlightsandkeyratios 76
4.2 Marketgrowthinselectedmarkets 81
5.1 Fiveyearsofkeyfiguresandratios 106
5.2 Financialresults,marketvalue,andColoplast
shares 113
6.1 Chr.Hansen’spositioninvariousbusiness
segments(2005) 143
6.2 Marginsforfoodingredientsmanufacturersin2004 145
6.3 Geographicalsalesdevelopment2006–7 161
7.1 Financialhighlightsandkeyratios 167
7.2 Brandoverview 170
7.3 Salesperformancebymarket 181
9.1 Basiccharacteristicsofthesixcasecompanies 218
9.2 Keyfeaturesandstructuralcommonalitiesinthe
casestudies 226
9.3 Keydilemmasandproblemareasdiscussedinthe
casestudies 237
viii
Boxes
1.1 TheM-form page3
1.2 TheOticonspaghettiorganization 4
1.3 Managementinnovation 5
1.4 Keyideas 8
1.5 Openinnovation 10
2.1 Theresource-basedview 17
2.2 Organizationaldesignandmanagementprocesses 21
2.3 Specificorganizationalpracticesandperformance 26
2.4 Theeconomicapproachtoorganizations 29
2.5 LEGOCEOJørgenVigKnudstorpondecision
rights 33
2.6 LincolnElectric 34
3.1 Valuesandculturalheritage 51
4.1 Region-basedpoliticalincentives 78
4.2 Competitivelandscape 82
4.3 Vestas’svision,mission,andvalues 87
5.1 Coloplast’sinnovationinthewoundcaremarket 127
6.1 IntroductiontoPDIs 159
ix