History of IBM
Business process design modelling helps to assure that the mangers and the executive get facilitated to execute and maintain the consistency of the processes, along with a watchful eye on the organization’s strategy. However, it has significant impact on improving the process communication, then increases the consistency, control, efficiency pf the operations are improved and the organization can achieve competitive advantage (Creately Blog, 2017).
The case study of IBM denotes the collaboration within the enterprise, as it tries to reinvent itself as technology, its possible applications, and clients’ needs. Due to the vastness of IBM, it is complex to describe the complexity in the organization. The purpose of the research is critical evaluation of the IBM. This research ensures to determine success evaluation, track innovation, manage investment for innovation and the research will present the lessons learnt from critical success factors for a sustainable and encouraging innovation. Additionally, the barriers for innovation and helpful suggestions will be presented. The importance of learning, culture and employee work environment along with its impact on innovation will be argued.
The objective of this research is related to the critical analysis on the renowned organization, IBM, where its major issues will be considered for critical evaluation. The business process design, business process improvement, process performance evaluation, Potential Change Management and Risks will be evaluated for IBM. In depth analysis on the details of the organization will be investigated. The implementation of its relevant concepts and life time experiences will be argued. Various other areas will be evaluated based on logical, rational arguments and theory with supportive material.
The Company named International Business Machines Corporation is also known as IBM. It has a great history of 90 years, which is dedicated to innovation. It is an organization which carries out inventions, developments, and manufacturing information technologies, software, storage systems, microelectronics and computer systems. Armonk, New York is its headquarters. Just 60 years back, basic research programs was started by IBM.
Additionally, even professional solutions consulting and services are offered by the company throughout the world. IBM. The revenue of IBM is marked as $96.3 billion with $8.4 billion net income, in the year 2004. The total number of employees in the year 2005 (June) is observed to be nearly 319,000 and the number of stakeholders is 671,610. It effectively invests on research and development (R&D) i.e., nearly 6% of its revenue which is $5.7 billion. IBM also funds around 12% for the central research organization, which comprises of 8 research laboratories. For research it contain greater than three thousand engineers and scientists. Globally, it operates on 24 development laboratories. The main aim of IBM Research is to interact with each part of IBM like, its divisions, companies, owned subsidiaries, partnerships, joint ventures etc., for fulfilling the vision and mission of the business.
Business Process Design Modeling
Failure at IBM is approached with an Innovation Failure Philosophy, where how it is implemented for innovation depends on the unit of the organization that is involved. It is observed in the case study that some of the objectives are not meeting in IBM’s integrated supply chain, despite of IBM’s consistent approach to identify, highlight, and drive correct action for all its business scenarios. Myriad approaches are used for corrective actions. In IBM, its supply chain executives hardly characterize situations to “acceptable failures,” instead some particular objectives and metrics are occasionally and intentionally sacrificed, to benefit IBM’s broad goal.
The barriers identified in IBM refers to frequent challenges in time management, which also creates obstacles for innovation in the department of supply chain. Because, daily operational job requirements are so great that the employees and teams feel that generation of longer-term innovation and work on innovation projects should be sacrificed. Failure is accepted on a proportion of risky scientific projects, however failure rate metric is not stated by IBM. The innovation activities which see failure might either be early for the already known markets or it might hardly fit with the established channels. Therefore, work on constant improvement of methods is in progress by IBM, for driving innovation into the marketplace.
With the constantly changing world, change and innovation have a significant role for all the organizations. If adapting to the change is not possible for an organization, the organization cannot stay competitive any more. For enforcing a successful change in the organizational processes, people have a significant role. The main purpose of change is to maximize the profit of the organization, with certain changes in the structure, strategy, innovation and organizational culture.
The below section assesses the IBM organization’s ***with a critical and practical approach, with proof.
Innovation
Innovation is different from creativity (Tohidi and Jabbari, 2012). According to the belief of IBM and their higher official Nick Donofrio, in every business unit innovation is a main ingredient for strategic focus. Where, instead of allotting a separate unit for innovation responsibility, it is integrated in all the things that the company does.
As IBM relies on each employee to have innovation accountability, this has become a personal commitment of the employees. At IBM, innovation is being enhanced by shifting its resources and decisions more close to the workforce and clients, as they interaction with each other. Inspiration on innovation is expected from each IBMer by collaborating with each other using multiple channels. However, only this type of accountability is not sufficient to get best results from the employees, it is reviewed and examined that work environment plays a significant role here for enhancing the work of the employees (Fajans, 2014).
Collaboration within the Enterprise
Innovation Framework
Innovation is not new for IBM as it has been practicing it since 90 years, where it denotes innovation as a business model, which organizes the principle. The IBMers mandate in driving innovation for every single thing.
According to (Stilgoe, Owen and Macnaghten, 2013), there exists challenges for the democratic governance of the emerged innovation, and a framework is provided for a responsible innovation which addresses the concerns related to social and ethics.
Constant scanning of environment, then gathering trend related information, future realities of the project and work efforts are also beneficial for a successful innovation organization, which is actually done by IBM effectively. This efforts of IBM are to determine its future needs.
The framework is important because it contains the power to underpin the practical as well as a systematic approach for managing the processes (Stilgoe, Owen and Macnaghten, 2013).
It is exact need that IBM designed its innovation framework for, where the interlinked dimensions for innovation includes, product/offerings, process, and business model innovation. For innovation sustaining enablers support to create an environment where the innovation thrives.
Figure: Innovation Framework of IBM
It is agreed that the selection of IBM on idea development, (which contain the following aspects in innovation practice like, idea exploration, idea generation, idea championing, and idea implementation) is good. But, it fails to mention the importance of time for the idea generation for develop a new technology for enhancing innovation. Effective results are guarantee when more time is provided to the engineers and scientists for understanding the issue, defining it and framing it, for best outcome (Johnsson, 2017).
It is observed from the case study, that IBM has its own culture which it follows for having a sustainable and enabled innovation. Innovation is valued, rewarded, and encouraging innovation and risk taking.
There is no argument on the belief of IBM where mastering the innovation is considered as highly important for the long-term well-being of the organization. Because, change, innovation, transformation and adaptability has become common for success in a long run (Robertson, 2018).
Innovation Culture
For innovative culture, the organization trusts on collaboration as a key, where sharing of ideas takes place openly among the coworkers which leads to increasing knowledge and experience for all the employees. At IBM, learning is stressed more for a continuous improvement and to develop innovation. Innovation means change and any change requires learning (Innovation-management.org, 2018). Change must be managed (Keresztes and Pirger, 2014).
Barriers to Innovation
So, the researcher here wishes to determine what has cultural change to do with innovation?
If the change is not having any collectively shared motive and tried innovation, it will fail if the actions change daily. It is necessary to have organized work in all the divisions of the organization and the workforce must have aim at their shared motive, only this can support to accept change, for the accomplishment of a required activity. The authors of this paper have argued on the organizational culture, as significant to realize and understand the organizational innovation’s diffusion. Innovation cultures is expected to support innovation, by adding value to the organization. Thus, culture can be interlinked with motive, learning and objective in the activities of the workplace. However, there is argument on that for realizing this, the organizational innovations must be organized like innovation with respect to shared motives. If the failure of innovation is realized then the intended organizational innovation could be treated as changes which are dealt for maintaining the existing work motives (Brandi and Hasse, 2010).
The suggestion for IBM is that, innovation culture should be designed by the organization for inspiring all the employees and for promoting innovation this helps a lot. Make sure to treat failure as a learning experience rather than punishing the workforce. Then, the innovators must be recognized and rewarded (Hackerearth.com, 2017). Within IBM, this culture of identifying and rewarding the ones who have innovative thinking is practiced. This is taken as a best effort by IBM as the employee get motivated to get rewards, they put their best efforts and this culture leads the organization towards success.
The practical implication includes that while planning and forming a new innovation technology, the organization should make use of change as an effective tool for successful implementation of changes. This will help to overcome the problems while there is cultural change is being accepted. Therefore, it is necessary to establish a culture in the organization that contentedly accepts innovation. For both innovation Culture and Environment, it is seen that IBM relies on collaboration. There are chances of innovation to fail if innovation is tried only with changes in actions and physical spaces, and not in the workplace activity (Brandi and Hasse, 2010).
Organizational Structure and Design
In IBM, what outstands is that each employee is regarded to have the responsibility of innovation. As, here each of the employee is accountable for innovation it has become their personal commitment. The resources and decisions are being made much more close to the clients and employees, because they are the ones who have close interaction and they know things better and this will make them to think on new innovations. They even collaborate using multiple channels which forms an innovation ecosystem for increasing the inspiration to innovate.
Importance of Learning and Culture
All the efforts and decisions of IBM on making employees the center of gravity for innovation is fine, but this can be achieved if the organizational climate is good and appealing. For instance, the organization just can’t rely on the random employees, a set of procedure must be followed by the organization. The organizational creativity can flow when the right employees are hired. Thus, the recruitment patterns must characterize the attitude, behaviour, smartness and feeling that are required for living an organizational life i.e., the work environment must be well structured and designed. Thus, only then the abilities of the employees can flow (Fajans, 2014).
The following things work well for the innovative work environment (Fajans, 2014):
- Challenge and Involvement
- Idea-Time
- Idea support
- Risk-taking
- Trust and Openness
- Conflict.
- Freedom and Autonomy
- Debate
- Playfulness and Humor
Funding Model
For IBM’s development, there exists funding internally or it is co-funded with others. Here, the internal funding refers to the funding which is managed by the business units like the corporates, researches, or the cross enterprise transformation organizations. Every single business unit in IBM specifies some amount which is set to be used for future investment, when next year’s budget takes place. This will then be utilized for innovation funding, for the whole organization. The things which IBM’s business units must keep in mind includes that, all of the business units must show their accountability for innovation. Emerging Business Opportunity (EBO) program is developed, where the process of funding and resource allocation for innovative business opportunities takes place (Garvin and Levesque, 2005). The main roles of EBO includes, to help when the leader is a seasoned executive, who has team members from strategy/marketing/communications, technology, and operations. EBO model is to focus on maturing the business, then to grow its business and benefit the business in the future.
But, the question is whether IBM can accomplish the planned target which has double digit revenue growth, just with improvement of EBO system’s performance during its management?
The thinking on why does such a huge organization like IBM find it difficult to form a new business or any funding issues. After a thorough analysis, it is determined that despite that the organization is strong outwards, IBM is insular and contains inflexible hierarchy.
Monthly reviewing with meeting is what EBO management system comprises of. This meeting will be held with the EBO leader and cross-IBM executive stakeholders with the senior vice president of strategy. They share the progress of EBO, measure and set milestone. Then, funding is carried out based on performance against the milestones and corresponding to the feedback of the market.
IBM’s Innovation Framework
The three funding mechanisms used by IBM are listed below:
a. Co-development with the business partners.
b. Co-development with the clients, and
c. Co-development with the universities.
The important fact is, this iterative process cannot fund for all the things which IBM carries out, but it is just a method for making the required resources available.
Business Transformation and Integration
Therefore, from the above sections the importance of innovation and change is determined to be essential and it includes the following factors like, “Ideas” for bringing change that is required for the new idea (Which can happen only with innovation.); the next factor is, must be a supposed “Need” for the change; then comes “Adoption” of the new idea and change; and last comes “Resources”, like people. Because, innovation is possible by human being’s creativity and ideas which contributes to the effective change.
The important points understood here are that, a constant change in the structure, culture and strategies cannot benefit the organization. Then, in an organization if the need for change is not realized, then such an organization is doomed for failure. The organizations in the world always have the need to develop, acquire and adopt to new technologies due to its significant impact on their organizations. The organization need to work on training their employees to know and understand what change is and why it is required, so that they can benefit the change and adapt to it.
Innovation Strategy
The case study highlights the following as advice for IBMers who are early or new in their innovation journey, for maintaining and sustaining the organization’s innovation strategy:
- Recruit employees based on their smartness.
- Make sure the employees to have diversity of thoughts and give them work experience in all the divisions of the organization.
- Milestones must be set.
- Give time and space for reflecting and brainstorming.
- The external relationships must be nurtured.
- Fluid community must be created, for sharing the ideas to have flexibility among the team members and for adapting to changes.
- More importantly, the risks must be embraced.
- Make sure to include reward system for success.
Considering the above points, the impact of innovation strategy on the learning of the organization and its innovation performance is assessed. The evaluation outcomes showed that, the innovation strategy has positive relation with the innovation performance of the product. Moreover, size of the organization and ownership type are some of the slight impacts of innovation strategy on innovation performance of the product (Beyene, SHI and Wu, 2016).
Leadership Team and Key Stakeholders
The leadership competencies in IBM are changed, which are desired to be in the future leaders of IBM. Further, IBM have always thought to collaborate with its clients and key stakeholders, for an effective innovation strategy, from which First of a Kind (FOAK) evolved (Frederich and Andrews, 2008).
Innovative leaders are also important in an organization as they identify and discard sources of resistance, manage accountability, support shared goals and provide an environment which encourages creativity (Hackerearth.com, 2017).
Innovation Culture
It is observed that IBM needs a strategic team meeting and Group senior vice president leadership for providing valuable growth in cross-IBM alignment. IT analysts, NGOs, Keystone clients, financial analysts, government agencies, business partners and independent software vendors are some of the people required for IBM.
Key Business Processes of Innovation
In large organizations like IBM, the requirement and benefits of business processes are noticeable. For any business, a process forms a lifeline and supports it streamline individual activities and ensures that the resources are used effectively (Padmanabhan, 2018).
To define business process effectively, the following the main reasons (Padmanabhan, 2018):
a. Recognize the significant tasks, for the larger business goals.
b. Improve efficiency.
c. Improve communication among the workforce and departments for handling specific tasks.
d. The hierarchy for getting the approvals must be set.
e. Discard disordered operations.
f. The operations must be standardized.
The influence of business process modelling on business performance is evaluated, where it is determined that for performing an efficient internal audit it is must to have a good working internal audit system. The other way to deal with this includes modelling an effective business process for company’s internal audit (Kovalova and Turcok, 2014).
The business Processes mainly must comprise the following:
- Goals
- Plan
- Set of actions
- Test for any gaps.
- Implementation
- Monitoring
- Repetition
Role of Research in Innovation
Within IBM, Research manages its resources based on line and strategy, and it is managed as a portfolio across all eight labs. Every single laboratory contains its own budget, but however it is funded centrally. Strategy is considered as a cross-cutting dimension for IBM. The area strategists are held responsible to direct each strategy both at a higher and sub level. The strategists determine what the employees in that area must work on and influence on which projects.
The research organization repeats their plan, on a quarterly basis which undergoes major planning process. IBM Research includes exploratory components like, nanotechnology etc. Even the milestones exists which could be tracked easily. The research organization looks across all the strategic areas. Especially, IBM with a big history is good at research stage.
Process Performance Management and Balanced Scorecard Method
To ensure that collaboration is occurring, there is often a common set of performance measurements for cross-functional teams.
For product development, IBM uses a balanced scorecard to measure and track the success and impact of product innovations. Appropriate measurements vary from one business unit to another, but all business units are expected to look at measurements as a balanced scorecard. Providing a balanced scorecard implies that the measurements answer four questions. 1. How do customers see the business? 2. What must the business unit excel at doing? 3. Is the business continuing to improve, learn, innovate, and create value? 4. How does the business look to shareholders?
Relationship between Cultural Change and Innovation
Process Measurement and Product Development Cycle Time
The product development measures helps in tracking the performance of the products and services post-market launch. There are goals based on strategic objectives, historical performance, and the gap between IBM and the competition, as revealed through benchmarking. Also, quantifiable goals are tied to the personal business commitments of team members. With respect to metrics, integrated portfolio management teams are required to report the following metrics to the corporate organization on a quarterly basis:
- Investment efficiency (development expense divided by revenue)
- Development expense for abandoned projects.
A number of other metrics are commonly tracked by portfolio management teams:
a. Customer satisfaction
b. Decision checkpoint management
c. Customer service and support cost
d. Pipeline loading.
e. Portfolio newness
Dealing with Failure
Failure is doomed, when the change has no collectively shared motive and tried innovation. It is important to organize the work in the organization’s divisions. Additionally, the employees should aim to have a shared motive, which is the only thing can only support to accept the change for the accomplishment of a required activity (Brandi and Hasse, 2010).
According to Townsend, failure is a concept which contains various connotations related to innovation value measurement. Failure is said to help in capturing the innovation’s value, caused due to valuation metrics’ incomplete application. Innovation that is measured has all its valuation metrics as static measures. Further, innovation is assessed when the markets, structure and strategies of the organization are parametric (Townsend, 2010).
There is an argument of whether the failure is good or bad for the success of the organization. Most of the researchers agree that the failure must be considered as a stepping stone and it can later lead to success (Estrem, 2016). But, there are researchers who wish to avoid failure. It is a fact that, every single big product innovations as well as process innovations hails from failure (Higginbottom, 2017).
Generally, failure is a result of organization’s internal and external factors. No matter what, the failure must be managed. Various researchers believe and demonstrate that the failure experiences can act as a substantial source which can push towards the organization’s improvement, in terms of work knowledge and skills (Atsan, 2016).
Barriers and Enablers of Innovation
At IBM the barriers for innovation are identified, where the root causes for innovation which led to missing various opportunities, to find a breakthrough for new ventures includes:
a. Strategic business building was not valued by the management system on a long term basis.
b. The business model mainly stressed on sustained profit, instead of driving the profits to a higher price-to-earnings ratios.
c. IBM was preoccupied with the currently served markets and offerings.
d. Inadequate method to gather and use the insight of market.
e. Lack of discipline, to select, experiment, fund, and terminate the business’s new growth.
f. Various ventures failed.
Thus, it is determined that for innovative work culture the gap between ‘thinking of the ideas’ and its implementation can be a major barrier (Higginbottom, 2017) However, collaborative study on this topic shows that lack of absorptive capacity can be the barrier for innovation. This capacity refers to the ability of identifying the value of new information, assimilate it, and apply it to commercial ends” (Filip, Dencker Hansen and Thorsgaard Frølunde, 2016).
Critical Success Factors
For IBM, the identified Critical Success Factors to encourage and sustaining innovation is to build a culture which rewards the innovative thinkers by recognizing them among all the workforce of the organization. Then, for encouraging and sustaining innovation in IBM collaborative innovation is also considered as the key success factor.
Lessons Learnt and Path for Future
Innovation is valued at IBM along with business transformation, learning, environmental protection and balance between work and life. The possible suggestion for IBM is to concentrate on developing methods which can create high amount of synergy between the researchers and the business partners, so that they can explore the new growth opportunities.
For future, the following lessons are learnt, for the emerging businesses by IBM. They are:
a. To pursue new growth opportunities, declare or communicate strategic intent.
b. Recognize the highly visible short list.
c. Secure the support of high level.
d. Appropriate business units must be grouped.
e. Effective team leader must be assigned.
f. Funding must be protected.
g. Ensure cross-IBM alignment.
h. The strategic milestones must be measured, and
i. Often reviewing must take place in the organization.
The importance of failure for gathering experience and to measure innovation is also learnt. Following this the importance of leader is determined and necessary innovation culture and workplace environment is understood.
Conclusion
The business process design, business process improvement, evaluation of process performance, Potential Change Management and Risk Issues are evaluated for IBM. Critical analysis on the case of IBM is successfully completed. The objectives are met with in-depth analysis. It is observed that several areas and implementation concepts are argued for evaluating the business processes, performance, risks and change management. For innovation in IBM, the inspiration is on each IBMer, where the employees collaborate using multiple channels which forms innovation ecosystem for inspiring to have innovation efforts. Thus, with the analysis the success of IBM is evaluated, innovation is tracked, investment for innovation is managed and the research is critically argued and presented. The study highlights all the lessons that must be learnt from critical success factors, for a sustainable and encouraging innovation.
The barriers for innovation and helpful suggestions are presented. The importance of learning, culture and employee work environment along with its impact on innovation are argued.
Important fact learnt from the analysis includes that, a constant change in the structure, culture and strategies cannot benefit the organization; then if the need for change is not realized in an organization, then that organization is doomed for failure; all the organizations present globally tends to have the need for developing, acquiring and adopting to new technologies due to its significant impact on their organizations; IBM must work on training their employees to know and understand what change is and why it is required, because this could benefit the employees to adapt to change.
Some of the disclaimers of the case study includes, failure at IBM is approached with an Innovation Failure Philosophy, where its implementation of innovation relies on the unit of the involved organization. The case study witness that, few objectives are not met in IBM’s integrated supply chain, in spite of consistent approach by IBM to identify, highlight, and drive correct action for all its business scenarios. The Myriad approaches are utilized for corrective actions. The supply chain executives at IBM hardly use the term “acceptable failures.” Rather occasionally and intentionally it sacrifices some objectives and metrics, for benefiting broad goals of IBM.
The researcher of this report wishes to determine the relationship of cultural change with innovation. Then, the barriers identified in IBM refers to frequent challenges in time management, which also creates obstacles for innovation in the department of supply chain. Because, daily operational job requirements are so great that the employees and teams feel that generation of longer-term innovation and work on innovation projects should be sacrificed. Failure is accepted on a proportion of risky scientific projects, however failure rate metric is not stated by IBM. The innovation activities which see failure might either be early for the already known markets or it might hardly fit with the established channels. Therefore, work on constant improvement of methods is in progress by IBM, for driving innovation into the marketplace.
The case study highlights the following as advice for IBM’s employees who are early or new in their innovation journey, for maintaining and sustaining the organization’s innovation strategy- Hire the employees based on their smartness; the risks must be embraced; and make sure to include reward system for success; make sure that the workforce have diverse thoughts and give them work experience in all the divisions of the organization; milestones must be set; give time and space for reflecting and brainstorming; fluid community must be created, to share ideas for having flexibility among the team and to adapt to the changes; and the external relationships must be nurtured.
Various lessons on requisites that are necessary for the emerging businesses are learnt by IBM, some are- to pursue new growth opportunities, declare or communicate strategic intent; recognize the highly visible short list; secure the support of high level; appropriate business units must be grouped; effective team leader must be assigned; the funding must be protected; the strategic milestones must be measured and often reviewing must take place in the organization.
Hence, effective communication, continuous improvement, active leadership are the most common factors which organizations should master.
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