Group A-INL 01[1]

INL1: Innovation processes and

Entrepreneurship

Innovation & Creativity Mng.

Group A

Mansour Ahmadi, Anna Einola, Mehrnoosh Nickpasand

2/1/2011

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Innovation & Creativity Mng. / M. Ahmadi, A.Einola, M. Nickpasand

A CASE STUDY:

GBD Lagersystem AB

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Acknowledgement

We would like to thank the company, GBD Lagersystem AB and all of its personnel for helping us to do this

report as a case study. We appreciate all the important and helpful information that we have received and

also for the pictures that we are allowed to use in our presentation.

We will continue our cooperation and hopefully we can provide some helpful solutions for GBD

Lagersystem AB.

Also an acknowledgement for the lecturers would be in order, as they have provided us with important

material to conduct this study.

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Contents Introduction ...................................................................................................................................................................... 4

Case study ......................................................................................................................................................................... 4

1-People ........................................................................................................................................................................ 4

2- Context ...................................................................................................................................................................... 4

3- Outcomes .................................................................................................................................................................. 5

4- Method ..................................................................................................................................................................... 5

Conclusions ....................................................................................................................................................................... 5

Discussion and recommendations .................................................................................................................................... 5

References ........................................................................................................................................................................ 6

Appendix 1 ........................................................................................................................................................................ 7

Appendix 2 ........................................................................................................................................................................ 7

Appendix 3 ........................................................................................................................................................................ 7

Appendix 4 ........................................................................................................................................................................ 8

Table 1 ............................................................................................................................................................................... 8

Table 2 ............................................................................................................................................................................... 8

Chart 1 ............................................................................................................................................................................... 9

Figure 1 ............................................................................................................................................................................. 9

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Introduction It requires a well-planned and managed process to succeed in building an elementary idea to the

development and implementation of an innovation for business reasons. To completely understand the

innovation processes and thus to understand the meaning of this study, it is vital to signify what an

innovation is. An idea must be replicable at an economical cost and must satisfy a specific need to be called

an innovation. Innovation involves deliberate application of information, imagination, and initiative in

deriving greater or different value from resources and encompasses all processes by which new ideas are

generated and converted into useful products. The earlier studies on the field of innovation showed the

innovation process as linear, but lately there has been an evolution to imply that the innovation process

actually is complex and includes many different elements from different spaces and times, also being a

dynamic discourse between different stakeholders [5]. To completely understand these conceptual studies of

innovation processes, it is best to implement the theory into practice, to see if and how the laws apply. To

attain this kind of comprehensive apprehension we carried out an empirical case study by using an interview

as the main tool. This report is conducted to examine the results of the interview, which consists of some

vital information of the company and its activities on the practical level of innovation processes. The main

factors of this case study are to find out what kind of organization the company has and what are the actors

and roles behind the innovation processes.

Case study GBD Lagersystem AB is a company located near Eskilstuna. It designs, fabricates and installs lager systems.

It produces 14 products (Table 1). They also offer study services for new lagers and checking services for

existing ones. We assess GBD current attitude toward innovation based on Systemic Approach prepared by

Isaksen and Tidd in [1]. This method provides a four dimensional framework: “People, Outcome, Context

and Method”. We utilized Appendices 1-4 as questionnaires in these aspects and came to these results.

1-People: GBD has wholly 9 employees positioned in Chart 1. Employees are almost in the same level of

education and age. Although employees take part in a few incremental improvements in their process, they

haven‟t been the beginner of incremental or transformational innovation in product, market or organization.

However, the degree of trust and cooperation among employees are high.

There is no independent unit, senior manager, training program or idea gathering system for innovation.

Some breakthrough innovations which have been done were initiated by mangers or customers. Nowadays,

they have incremental improvements that are restricted to customization of their products according to

customers‟ request.

2- Context: “We develop every day!” This is GBD‟s slogan. GBD was established in 1979 at Kungsgatan.

We summarized GBD‟s history into Table 2. GBD history milestones almost represent the GBD break

through innovations. These ideas were initiated by managers and in fact, there is no encouragement or

specific advantage for employees to initiate innovations. Although there is no strong database for recording

and documentation, employees have accessibility to existing information and company website is well

designed.

Company has a strategic plan that mentioned in its managing director letter:“…We want as a purpose that

our customers will always be happy and satisfied. With this small company we can have flexibility and

everlasting possibilities for new products and opportunities in order to find better and customized solutions

for different lager systems.”

http://www.businessdictionary.com/definition/economical.html

http://www.businessdictionary.com/definition/cost.html

http://www.businessdictionary.com/definition/information.html

http://www.businessdictionary.com/definition/initiative.html

http://www.businessdictionary.com/definition/value.html

http://www.businessdictionary.com/definition/resource.html

http://www.businessdictionary.com/definition/product.html

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3- Outcomes: GBD market is mostly in Sweden, but they have had some customers from USA, china,

Germany and Belgium. Although there are some other companies in Sweden which produce same products,

they cannot customize their products based on customer willing. Being small and flexible enables GBD to

tailor its services according to customers‟ and market‟s taste.

Nowadays they think about wood industry and its material handling system. They want to produce

appropriate lager systems for wood industries without lots of modifications in their process. They also

continue producing their present products.

4- Method: There is no special method in GBD. GBD organization is almost cross-functional and they

have their customers as a part of their organization. They try to keep their systems as simple as possible and

they believe this is their success factor.

Conclusions The core competence of GBD is undoubtedly its small size and flexibility. Their competitors are big

companies that cannot customize their products in the same duration and cost as GBD. GBD wants to keep

its current size, and only develop products that don‟t need lots of modifications in their systems.

Establishing a Lager articles factory in an industrial region such as Eskilstuna, with big potential customers

like Volvo and ABB, can be counted as the greatest innovation in GBD history. Later increasing the number

of products from 1 to 14 and adding lager consulting services are also GBD innovations in product

development, market and services.

GBD innovations almost always start with customers. They combined their customers into their innovation

process and ideas begin from this point. Then GBD propose a solution for them and through presentations

and negotiation meetings GBD and customer will get to same point. Depending on the size of

transformation, this process takes between one week and more than one year. During this period GBD does

lots of modifications to have the satisfaction of customer.

They want to continue this procedure in future, and because of the problems that their potential customers

have now, they are going to be active in wood industries also. They think although market is experiencing

big changes, their flexibility allows them to customize their product according to market taste.

Discussion and recommendations “In a complete picture we must recognize not only that innovation draws on science, but also that the

demands of innovation often force the creation of science”.[6] This is Kline and Rosenberg „s opinion about

the relation of science and innovation that “is neither smooth nor linear, nor often well behaved.” J. Caraça

et al. believe that innovation process is a response to influencing, enabling and constraining factors. [7] In

addition, Isaksen and Tidd mention three factors for organizations that due to proliferating rate and volume

of change, handling more complexity and intensive competition, require managing the innovation: “Focus

on tasks, focus on people and concern for change.”[1]

According to March‟s, organization adaptiveness to these innovation streams lays in ability of organization

“to exploit its current capabilities as well explore into future opportunities.”[2] He defines exploitation and

exploration as “incremental innovation in existing products as well as architectural and/or discontinuous

innovation.” Through longitudinal data gathering of 13 business units with 22 innovations, Tushman et al.

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find that ambidextrous organization designs are more effective in performing innovation compared to

functional, cross functional and spinout designs.[3] They illustrate cross-functional design as “cross-

functional teams embedded within functional design”, spinout design as “distinct innovation unit without

general manager control and/or senior team support” and ambidextrous design as ”distinct innovation unit

with general manager control and senior team support.”

Furthermore, a research by PricewaterhouseCoopers (PwC) shows that the gap between most innovative

companies and the lowest performers among 1000 organizations in the United Kingdom was caused by three

basic capabilities:” having a deliberate process for idea management, building a creative climate and

following an inclusive approach to leadership. [4]

These researches and lots of other done and in progress studies about different aspects of innovation show

the importance of innovation systems inside the organizations. Refer to classifications of different

innovation systems by Xu, Q. et al. [5] our case study, GBD, now stands in “Product Portfolio” level and on

the second level of this five level hierarchy (Figure1). While other companies try to jump from fourth to

fifth level, GBD must obviously promote itself to upper levels.

Defining an idea gathering system in such a small organization costs a little. It can be a small database,

suggestions box or weekly meetings. In addition GBD can consider an encouragement program for

employees, for example a grant.

Whereas the small size and flexibility of GBD allows it to maneuver well, it doesn‟t seem that logistics and

manufacturing companies demand GBD technology any more. The advent of RFID, GPS and lager digital

systems which can minimize the distance, time, forklift fuel consumption and as a whole cost will change

the technology of racks, shelves and drawers also. Perhaps they will be labeled digitally and picking up the

articles become easier.

However there are some innovation ideas for GBD who doesn‟t want to make its system complex and big.

GBD can make contract with a few companies who are active in other aspect of warehousing technology,

like software companies, digital systems and try to prepare some packs for customers. In this manner they

may find some exciting innovations. The type of material also is going to be changed and plastic shelves are

becoming popular. Therefore GBD should ponder about this problem too; maybe outsourcing or cooperation

with other companies will work.

References 1. Isaksen, S. G & Tidd, J. (2006) “Meeting the innovation challenge: leadership for Transformation and growth”. Chichester:

Wiley, ISBN 0-470-01499-7.

2. March, J. G. (1991), „Exploration and exploitation in organizational learning,‟ Organization Science, 2(1), 71–87.

3. M. Tushman et al.‟Organizational designs and innovation streams‟, Ind Corp Change (2010) 19(5): 1331-1366 first published

online June 8, 2010.

4. Davis, T. (2000) Innovation Survey and Growth: A Global Perspective. London: PricewaterhouseCoopers.

5. Xu, Q., Chen, J., Xie, Z., Liu, J., Zheng, G., and Wang, Y. (2007). ‟Total Innovation Management: a novel paradigms of

innovation management in the 21st century‟, Journal of Technology Transfer, vol. 32:9–25.

6. S.J. Kline, N. Rosenberg, An overview of innovation, in: R. Landau, N. Rosenberg (Eds.), The Positive Sum Strategy:

Harnessing Technology for Economic Growth, National Academy Press, Washington, D.C., 1986, p. 287.

7. J. Caraça , B. Lundvall, S. Mendonça,” The changing role of science in the innovation process: From Queen to Cinderella?”

Technological Forecasting & Social Change 76 (2009) 861–867.

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Appendix 1 Questionnaire about People

1- Is there an independent unit for change and innovation?(E g. R&D) 2- Does this unit have a senior management? 3- How is the transaction of leadership and employees toward change? 4- How big is resistance against change? 5- How many employees does this organization have? 6- How diverse are they? 7- Is there any training program for employees? 8- What aspects are important for company in order to select employees? 9- How start innovations in company? 10- Is there any special system for idea gathering? 11- Do employees know mangers as trustworthy? 12- How much do mangers trust employees? 13- Is everyone in the organization included in creating new products?

Appendix 2 Questionnaire about Context

1- Do they have any big change in past? If yes, what kind? 2- How did they deal with it? How long did it take to handle it? 3- What kinds of changes does organization do now? Or is going to do? 4- Is there any encouragement program in order to do changes? 5- Which advantages does organization consider for people who take part in performing changes? 6- Is there any senior manager for innovations? 7- How is the organization chart? 8- How is the documentation of the company? 9- Does the company have strategic plan? 10- How is the accessibility of staffs to documents? 11- When and how did you come up with the business idea? 12- How long did it take to implement? Were there any change on the idea during the submitting and

implementing stages or exactly original idea was implemented?

Appendix 3 Questionnaire about Outcomes

1- Do they think to initiate an innovation or change? If yes, what kind? 2- What changes do they believe in? 3- In their change program, what is fixed and what is flexible? 4- What outcome should be accomplished in the long term? 5- Are these changes aligned with company strategy? 6- What effects do these changes have on the procedures and systems of company? 7- What actions should be taken in order to sustain these changes? 8- What kind of chaos was happened through implementing new idea? Plz give some example of reactions or

decisions were taken by in-charge men/managers. 9- Plz for each action mention where the idea came from, it means the source of idea (internal, from a staff or

manager or stakeholder, or external, from a customer or consultant or…). 10- What is the market of GBD? 11- What is the core competence of GBD?

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Appendix 4 Questionnaire about Methods

1- What method have they used? 2- How complex was that method? 3- What was the role of leader in that method? 4- Do they cooperate with outside the company in this method? 5- Was that method common or customized?

Table 1 GBD products

Table 2 GBD history

1 Racking

2 Drawers

3 FIFO - Roller Tray System

4 Tin Chests

5 Industrial Cassettes

6 Plastic Crates

7 Mezzanine floor

8 Cantilever

9 Volume Set

10 Shelves

11 Work Table

12 Conveyors

13 Pallet Collar Accessories & labeling

14 Tire Racks

1980 First product, a drawer was produced.

1984 Drawer was developed.

1985 Production of Cantilever started.

1986 Dexion racking was produced.

1994 GBD moved to Grönsta Industriväg.

1996 The first cassette was produced and received patent.

1999 Torri racking with unique quick joints developed and revolutionizaed the procedure

and assembling time.

2003 First konsoleplanet was developed with the cooperation of Atlas copco.

2006 GBD received ISO 9001 certification.

A completely new installation area was constructed.

First lager system design was performed for ITT Flygt.

2008 A new hall was constructed as warehouse and assembling area both.

2009 GBD bought CNC machines and advanced its fabrication technology.

GBD proposed checking services for existing lagers.

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Chart 1 GBD organization chart

Figure 1 Levels of Innovation Management

Managing Director

Sales Manger

Administration

Production Manager

CNC Technician

Workshop Manger

Operator Operator Operator

Documents

Group A-INL 01[1]