EDMG611Wk5

A typology for management innovations

Analyzing the actual state of art and conducting case study research

Heiko Gebauer, Mirella Haldimann and Caroline Jennings Saul Business Innovation Group, Environment Social Science Department,

Eawag, Switzerland

Abstract Purpose – The purpose of this paper is to develop a typology of management innovations. Design/methodology/approach – The authors apply a multiple-case (embedded) design, with each organization representing a case, which entails a few embedded units of analysis. Case studies are about the base-of-the-pyramid (BoP) initiatives, during which all organizations are interested in management innovations which support them in coming up with and implementing between two and four new management practices. Findings – The findings suggest four types of management innovations: efficiency-driven, externally recommended, problem-oriented, and opportunity-oriented management innovation. Research limitations/implications – This paper explores and analyses management innovations, rather than testing them. As with most qualitative research, the transferability of the findings is limited. Practical implications – Managers should vigorously pursue management innovations, not only in BoP markets, but also in all markets. Practitioners must, however, ensure that they are not fully absorbed by a single type of management innovation, and recognize the importance of pursing multiple ones. Social implications – For academics, the authors revitalize the concept of engaged scholarship. Originality/value – Surprisingly, previous research looks either into generic or specific management innovations. The typology is original, since the typology offers a more fine-grained view on management innovations. Keywords Management practices, Innovation process, Management innovation, Base-of-the-pyramid market, Innovation activities Paper type Research paper

1. Introduction Organizational needs for innovation are not only limited to products, services, or business models, but also include management innovations (Hamel, 2006; Vaccaro et al., 2012). Such innovations entail the invention and implementation of a new management practice aim at achieving organizational goals (Birkinshaw et al., 2008). Examples are lean production (Toyota), balanced scorecard (Analog Devices), Six Sigma (Motorola and General Electric), multi-divisional form (DuPont and General Motors), or brand management (Procter & Gamble) (Kaplan, 1998; Mol and Birkinshaw, 2008a; Vaccaro et al., 2012). These management innovations can be a valuable source of competitive advantage (Teece, 2007).

There was some early research on management innovations. This research describes how organizations, in general, can innovate in management. Furthermore, early research has looked into how organizational learning facilitates management innovation (e.g. Damanpour, 1991; Gruber and Niles, 1974; Stata and Almond, 1989). By shifting from technological to non-technological competitive advantages, management innovations have recently gained attention once again (Birkinshaw et al., 2008a; Nieves, 2016; Vaccaro et al., 2012). Recent research has focused on antecedents, innovation processes, and the outcomes of management innovations (Volberda et al., 2013). This research has relied on qualitative and quantitative studies to explore the necessary antecedents to succeed withmanagement innovations and the

European Journal of Innovation Management Vol. 20 No. 4, 2017 pp. 514-533 © Emerald Publishing Limited 1460-1060 DOI 10.1108/EJIM-06-2016-0059

Received 24 June 2016 Revised 9 November 2016 Accepted 18 December 2016

The current issue and full text archive of this journal is available on Emerald Insight at: www.emeraldinsight.com/1460-1060.htm

514

EJIM 20,4

outcomes in terms of achieving the competitive advantages. Researchers investigated the innovation process through which management innovations emerge successfully.

Surprisingly, this research does not distinguish between different types of management innovation. Research looks either into generic or specific management innovations. By specific, we mean that research investigates antecedents, innovation processes, and the outcomes for a single management innovation. These specific management innovations are mostly investigated in organizational situations with a long history of management practices. For example, when Kaplan (1998) described the invention of the balanced scorecard or Chandler (1962) described the M-form structure, firms had already experienced various management practices. Little is known about situations in which organizations promote management innovations, but at the same time, cannot rely on rich experiences with management practices.

Generic management innovations mean that research investigates the key issues for the entire set of management practices, without a clear distinction between different types of management innovation. A noteworthy exception is the distinction between a practice new to the state of the art and adoptive management innovation, namely, something that is new to the firm and adopted from another context (Mol and Birkinshaw, 2009).

Our present paper aims to narrow certain empirical and theoretical gaps. First, we continue previous research on the innovation process. We scrutinize key elements in this process such as innovation phases, the role of internal and/or external change agents, innovation activities, constituent parts, and the role of organizational and/or environmental context. To resonate with the research call for a more comprehensive typology of management innovation (Birkinshaw et al., 2008), we compare these key elements across multiple management practices and identify a new typology for management innovations. Second, we focus on organizations with little initial experience of management practices (Birkinshaw et al., 2008; Vaccaro et al., 2012). Our organizations are entering the base-of-the- pyramid (BoP) market (Prahalad, 2004), where they need to establish new management practices (Milstein et al., 2007).

This paper continues with a synthesis of existing research on management innovations. We then explain our research methodology followed by a presentation of results. Finally, we discuss the theoretical and managerial implications and future research opportunities.

2. Theoretical background 2.1 Definition and types of management innovations A management innovation entails both the invention and implementation of a management practice in order to achieve organizational goals (Birkinshaw et al., 2008). Innovation in management practice affects the day-to-day work of management (Alänge et al., 1998; Mol and Birkinshaw, 2008b). Put simply, management innovations cover changes in “how and what” managers do in setting strategic goals, coordinating activities, making decisions, acquiring knowledge, developing talents, and so on (Hamel, 2006).

Management practices include processes, techniques, and routines (Gebauer, 2011). Management innovation leads to novel practices, meaning that a practice is either truly original or an incremental variation of something that already exists. Similarly, Mol and Birkinshaw (2009) divide management innovations into generating a practice new to the state of the art and adoptive management innovation, namely, something that is novel to the firm and adopted from another context. The former enables the production of new knowledge (Birkinshaw et al., 2008), but is relatively rare. The latter is more common and dominates management innovation (Lin et al., 2016). However, in BoP markets, there is debate on whether management innovation should lead to non-traditional, often revolutionary new management practices (Milstein et al., 2007) or rather to practices applying basic, existing business principles to BoP markets (Garrette and Karnani, 2010).

515

Typology for management innovations

The BoP market refers to over three billion people who comprise the base of the economic pyramid, with daily incomes ranging from about $1.25 to $12 (Rangan et al., 2011). To operate in this market demands a change in the “genetic code” of organizations and new management practices in order to cope with the constraints imposed by low-income levels (London and Hart, 2010).

2.2 Key antecedents, innovation processes, and outcomes Research conceptualizes management practices as either generic or specific. Specific means that research investigates single management practices, whereas generic means that research investigates an entire set. Accordingly, the literature discusses key antecedents, innovation processes, and the outcomes of specific and generic management practices. For generic practices, managerial, intra-organizational, and inter-organizational antecedents contribute to management innovations. Managerial antecedents include leadership attributes such as transactional and transformational, and management attributes such as demographics, reflexivity, education, and tenures (Volberda et al., 2013). All these antecedents are positively associated with management innovations. Intra-organizational antecedents include workforce education, learning and implementation capabilities, absorptive capacity, as well as internal change agents. Inter-organizational antecedents include relational capabilities for benefiting from external experts as well as involvement in external networks and interaction with earlier adopters of management practices (Volberda et al., 2013). On specific practices, there is a comprehensive literature discussing antecedents, innovation processes, and the outcomes (Mol and Birkinshaw, 2008b). This literature differentiates according to studies on specific management practices across various companies and industries and on specific management practices within a single firm. Teece (1980), for example, describes the diffusion of the multi-divisional structure (“M-Form”) across large manufacturing firms, whereas Chandler (1962) describes the emergence of the M-Form in a single firm.

Despite the emergence of many management practices, literature has only relatively recently described the actual innovation process. Figure 1 depicts the innovation process for

Organizational context

Problem- driven search Trial-and-error

Reflective experimenting

1. Novel problems

Internal change agents

External change agents

Motivation Invention Implementation Theorization and Labeling

Environmental context

5. New threats and opportunities

Idea contextualizing

Idea refining

Reflective theorizing

6. New idea 7. In vitro though

experiment 8. Theorized practice

(out of immediate context)

Agenda setting

Idea linking

Idea testing

Theory Linking

2. Hypothetical new practice

3. In vivo in practice 4. Theorized new practice (in context)

Source: Adapted from Birkinshaw et al. (2008, p. 832)

Figure 1. Management innovation process framework

516

EJIM 20,4

management practices (Birkinshaw et al., 2008). The horizontal axis describes the four phases of the innovation process: motivation, invention, implementation, and theorization. Motivation is about factors that encourage organizational members to develop a new management practice. Invention is concerned with experimentation through which a new management practice emerges. Implementation is the process of establishing the value of the new management innovation. Theorization is a social process to make sense of, validate, institutionalize, and legitimize the management innovation.

The vertical axis depicts internal and external groups of individuals who shape these four phases. Internal groups are employees, who participate in the innovation process (Birkinshaw et al., 2008). Considering the antecedents, leadership attributes are important to motivate internal groups participating in management innovations (Vaccaro et al., 2012). External groups relate to change agents such as communities of experts, consultants, or academics. To utilize the knowledge of such external groups, organizations need capabilities for building relationships and acquiring resources through these relationships (Lin et al., 2016).

Figure 1 depicts the core activities in the innovation process: agenda setting, problem- driven search, idea contextualizing, trial-and-error, idea linking, idea refining, idea testing, reflective experimenting, reflective theorizing, and theory linking. These core activities are illustrated by arrows. Figure 1 also highlights constituent parts of management innovation. These parts are indicated by the text within each box. They include a novel problem, hypothetical new practice, in vivo new practice, theorized new practice (in context), new threats and/or opportunities, new idea, in vitro thought experiment, and theorized practice (beyond of the immediate context).

These core activities and constituent parts are intertwined with the above mentioned antecedents. Management attributes such as demographics, reflexivity, education, and tenures influence a firm’s recognition of the need for management innovation, that is, sensing a problem, opportunities, threats, and so on. These management attributes also contribute to agenda and idea setting, as well as to problem-driven search (Volberda et al., 2013). Relational capabilities ensure that internal and external change agents exchange knowledge through the entire innovation process (Lin et al., 2016). Absorptive capacity in terms of acquiring external knowledge facilitates problem-driven search. Learning capabilities contribute to trial-and-error processes and reflective experimenting. Workforce education strengthens the entire innovation process (Mol and Birkinshaw, 2009).

The innovation processes are intertwined with organizational and environmental context, which are considered to influence management innovation. Managers can shape the organizational context, whereas the environmental context is the broad set of exogenous stimuli, which shape the management discourse in the organization and among external change agents. Organizational context refers to administrative and social setting, which directly influence internal change agents in pursuing the core activities associated with management innovation (Bower, 1970; Burgelman, 1983).

Finally, research has investigated the outcomes of management innovation, generally agreeing that management innovations are a valuable source of competitive advantages (Mol and Birkinshaw, 2006; Teece, 2007). Such competitive advantages result frommanagement innovations strengthening dynamic capabilities, the effectiveness and efficiency of internal organizational processes, customer satisfaction, productivity growth and so on (Adams et al., 2006; Gebauer, 2011; Linderman et al., 2004; Mol and Birkinshaw, 2009; Walker et al., 2011). Management innovations aim at achieving organizational goals, but these goals are mostly about increasing effectiveness and efficiency. Management innovations seem to contribute less to explorative activities for creating new business opportunities (Volberda et al., 2013).

Our research framework focuses on the innovation process for management practices (see Table I). We investigate key elements in the innovation process, describing the

517

Typology for management innovations

innovation phases, role of internal and/or external change agents, innovation activities and constituent parts, and the role of organizational and environmental context. We assume that management innovations can be categorized according to these key elements.

3. Research methodology 3.1 Data sampling Our empirical study focuses on organizations, which have little previous experience with management practices (Birkinshaw et al., 2008; Vaccaro et al., 2012). We selected six small- to medium-sized organizations, which have recently entered the BoP market. To succeed in these BoP markets, organizations have to develop management innovations (Table II).

We apply a multiple-case (embedded) design, with each organization representing a case, which entails a few embedded units of analysis. Case studies are about the BoP initiatives, during which all organizations are interested in management innovations which support them in coming up with and implementing between two and four new management practices. These management innovations form our embedded units of analysis. Table III describes the management innovations (e.g. self-organized logistic teams, persona methods, debt management, decentralized logistic hubs, participatory strategy development, value- based selling, Kanban systems, business model thinking, collaborative supplier innovation, user-oriented design, continuous improvement programs, engineering for cost reductions, franchise system, activity-based costing, private donations, service blueprinting, sales staffing procedures, and decentralized decision making).

3.2 Data collection All organizations contacted the authors to ask for academic advice on these management innovations. The authors became engaged scholars who participated in the BoP initiative (Van de Ven, 2007). The authors compiled not only insights into multiple sources of evidence (company documentation, internal workshops, and meetings), but also observed day-to-day practices and contextualize the collected data. This is essential to theory-building with respect to management innovations (Birkinshaw et al., 2008).

Data on management innovations were obtained through two to three semi-structured interviews. The interviews lasted approximately 45 minutes and were structured around the elements of our research framework. We used a “laddering approach” to further explore the responses (Durgee, 1986) and systematic notes were taken during the interviews.

Key elements Element descriptions

Innovation phases Motivation, invention, implementation, and theorization Activities Agenda setting, problem-driven search, idea contextualizing, trial-and-error, idea

linking, idea refining, idea testing, reflective experimenting, reflective theorizing, and theory linking

Constituent parts Novel problem, hypothetical new practice, in vivo new practice, theorized new practice (in context), new threats and/or opportunities, new idea, in vitro thought experiment, and theorized practice (beyond of immediate context)

Internal and external change agents

Internal change agents: employees of the innovating focal organization who are interested in the management innovation in question External change agents: independent consultants and academics who are interested in the management innovation in question

Context Organizational context: administrative and social setting directly influencing internal change agents Environmental context: exogenous stimuli shaping management discourse in the organization

Table I. Key elements in the research framework

518

EJIM 20,4

To eliminate some of the bias associated with interview-based research (Miles and Huberman, 1994), full interview transcripts were completed shortly after the interview, and reviewed by the interviewees. These interview data were triangulated with data obtained through engaged scholarship, so as to enhance research validity and reliability. In addition, the engagement supported the research team in distinguishing between theory limitations, as opposed to poor implementation, when organizations experience difficulties applying the innovation (Birkinshaw et al., 2008).

Altogether, our total number of 18 management innovations was considered as the point at which theoretical saturation was reached. Our findings on management innovations were confirmed by interviewee feedback on the analyzed data and also made sense on the basis of prior research (Bowen, 2008).

3.3 Data analysis We compiled the interview transcripts to form case studies, which describe the emergence of the management innovations. Our data analysis started by reading through each case study, using open, axial, and selective coding (e.g. Strauss and Corbin, 1998). We began by undertaking open coding, paragraph by paragraph, to identify the key elements of our research framework in the case studies. Any insights that emerged during the analysis were transcribed in the margins and then labeled with descriptive or in vivo codes (Strauss and Corbin, 1998). We developed a preliminary coding plan that listed the key element, provided a label and definition for each elements, specified the respective properties of each element, and delivered an example to illustrate its meaning and content. For labeling and definition, we went back to the literature describing the key elements on management innovations.

The analysis commenced with a within-case analysis of each management innovation. The aim was to become familiar with each innovation as a stand-alone entity. In the within-case analysis, we identified the key elements from our research framework.

Organization characteristics Data collection periods and interviewees

Organization A Haiti, 30 people 7,500 people served with improved sanitation solutions

2013 and 2016 Chief executive officer, accountant, sales officers

Organization B Peru, 20 people 2,750 people served with improved sanitation solutions

2013 and 2016 Chief executive officer, head of design

Organization C India, 120 people 8,000 mobile toilets rented out to customers

2015 Chief executive officer

Organization D Madagascar, 5 people Profit-oriented company Piloting a sanitation solution for households

2014 and 2015 Chief Executive Officer, Head of Marketing, Sales representatives

Organization E Kenia, 100 people Sanitation franchise: 650 franchisees providing sanitation services to 29,000 slum dwellers

2014 and 2015 Chief executive officer, head of marketing, sales representatives

Organization F Kenia, 12 people 500 people served with improved sanitation solutions

2015 Sales officer, Operating officer, Sales representatives

Table II. Overview of the

research activities

519

Typology for management innovations

Management innovation Descriptions

(1) Self-organized logistic team

Instead of pre-defined collection schedules and routes, the responsibilities of the collection teams were extended. Teams organize themselves in terms of covering the existing and new locations, collection schedules, and collection routes

(2) Persona method Personas represent the user types. Marketers combine personas with market segmentation, for which the qualitative personas are constructed to be representative of specific segments. Personas can guide decisions about the service design

(3) Debt management A new practice for managing default payments was introduced. This approach entailed terminating the service agreements, if customers do not pay. This termination would lead to removing the toilets from the customers.

(4) Decentralized logistic hubs

To reduce costs, waste collection was restructured into decentralized logistic hubs. Household waste was transported to logistic hubs before being transported to the central treatment site

(5) Participatory strategy development

Employees involved in the operational processes, as well as the team leader, participated actively in strategy workshops. They were asked to share their opinions on the strategy development and implementation

(6) Value-based selling Sales techniques emphasize value-based selling. By applying the value proposition designer, the sales staff created a dialogue about customer “pains and gains” and on how services relieve customers from the pains and generate gains

(7) Kanban system Kanban became an effective tool to support running a production system as a whole, and an excellent way to promote improvement

(8) Business model thinking Business model thinking generates a common picture of the key elements in the organization (e.g. customers, distribution and marketing, customer relationship management, value proposition, key actives, key resources, and key partners, as well as cost and revenue structures)

(9) Collaborative supplier innovation

Supplier integration aims at persuading suppliers to become more innovative. Organizations collaborate with suppliers to find ways to reduce costs and make purchasing processes more efficient

(10) User-oriented design User-centered design foresees how users are likely to use the mobile toilet solution. This includes testing the validity of design assumptions with regard to user behavior in real world situations

(11) Continuous improvement programs

An incentive system was established to motivate employees to come up with improvement ideas. An improvement team was made responsible for selecting and implementing the ideas

(12) Engineering for cost reduction

Engineering for cost reductions reduces product complexity. This is about removing non-essential features, changing materials, and adapting the product design

(13) Franchise system A franchise system facilitates market development. Local entrepreneurs became franchisees, who run a sanitation business in their communities

(14) Activity-based costing Activity-based costing was used to identify activities in an organization and to assign the cost of each activity more accurately

(15) Private donations To make organizations less dependent on institutional donations, organizations started also to attract personal financial donations. This required setting-up procedures to manage the relationships with such private donors

(16) Sales staffing procedure Sales staff procedure was changed toward focusing on attitudes rather than competences. Attitudes are prioritized over competences, because competences can be taught, but attitude cannot be changed by training alone

(17) Service blueprinting The service blueprint is a technique in the service innovation process. It maps the customer activities, front- and back-end activities. It aims for improving customer experience in the interaction with the service provider

(18) Decentralized decision making

Instead of aggregating all decision-making authorities into one central board, responsibilities for developing the business are transferred to separate teams

Table III. Management innovations in terms of embedded units of analysis

520

EJIM 20,4

Once all within-case analyses were completed, we continued with the cross-case analysis through a pairwise comparison of management innovations (Eisenhardt, 1989). We placed pairs of management innovations beside each other and examined them, and decided whether the two are similar or different. The above mentioned elements from our research framework were used to evaluate the similarities and differences between management innovations. Management innovations showing similarities are classified into types (Yin, 1994).

The reliability of our findings was ensured by independent judges who reviewed the case studies and verified the accuracy of the key elements we had identified. Interjudge reliability (Perreault and Leigh, 1989) was above the threshold recommended for exploratory research (Rust and Cooil, 1994). To enhance content validity, we also provided the participants with summaries of the interviews and case study transcripts, as well as with descriptions of the management innovations. Participants returned with comments, indicated their agreement and, on several occasions, suggested changes to increase conceptual clarity.

4. Results Our cross-case analysis suggests the following similarities and differences. All management innovations are similar in terms of innovation process. They start with the motivation, continue with invention and implementation, and end with theorization. Similarities also emerge in the influence of the organizational and environmental context. Adaptations to both contexts are vital to the management innovation process. Contextualizations occur first in terms of how management practices originating from industrialized markets are contextualized to the BoP markets. Afterwards, the management practices are contextualized (adapted) to the administrative, organizational, and social setting, which directly influence internal change agents. Differences occur in the activities, constituent parts, and role of internal and external change agents. These differences lead to four types of management innovation: efficiency-driven, externally-recommended, problem-oriented, and opportunity-oriented management innovations. Table IV depicts the management innovations according to our typology.

In the next sections, each type of management innovation is presented by showing case write-ups (Appendices 1-4), summarizing the data across management innovations (Tables V-VIII), and interpreting them.

Type of management innovation Management innovation

(a) Efficiency-driven management innovation Service design Sales staffing procedures Self-organized logistic team Decentralized decision making Continuous improvement programs Participatory strategy development

(b) Externally recommended management innovation Persona method Decentralized logistic hubs Kanban system Engineering for cost reduction Franchise system Activity-based costing Private donations

(c) Problem-oriented management innovation Debt management User-oriented design Collaborative supplier innovation

(d) Opportunity-oriented management innovation Value-based selling Business model thinking

Table IV. Type of management

innovation

521

Typology for management innovations

4.1 Efficiency-driven management innovation In total, 6 out of 18 management practices can be classified as efficiency-driven management innovations. Common to these innovations was that internal organizational members observed inefficiencies in their daily operation. They become internal change agents and were motivated to improve the efficiency through “off-the-shelf” practices. Examples include service blueprinting, sales staffing procedures, self-organized logistic team, decentralized decision making, continuous improvement programs, and participatory strategy development.

Appendix 1 contains an excerpt of the case study write-up on service blueprinting for improving customer experiences. Comparing this empirical evidence with the other efficiency-driven management innovations suggests the following common key elements (see Table V). Motivation for the management innovation starts when internal change agents observe inefficiencies in their daily operation. To translate this observation into action, organizations need to acknowledge that improving the inefficiencies is necessary. Such an acknowledgment does not happen automatically. Organizations are sometimes simply overwhelmed by facing too many issues, or face internal resistance to improving efficiency. Employees may simply think that no improvements are necessary. In some circumstances, they tend to hide the reasons for the inefficiencies, because they are afraid that they themselves are causing them and that improvements will make their jobs obsolete. Such fear can cause severe internal resistance.

Thus, motivation to improve inefficiencies does not emerge automatically, but requires overcoming internal resistance. Once our organizations could overcome this resistance, they searched for ways to improve the daily operations. The search is assisted by knowledge

Efficiency-driven management innovation

Process Activities Constituent parts Internal and external change agents

Motivation Monitoring the current level of efficiency in daily operation

Reluctance toward efficiency improvement Acknowledging inefficiencies in daily operation

Internal change agents recognize inefficiencies, once they overcome resistance to improvements (e.g. hiding causes of inefficiency, afraid of being replaced and so on)

Invention Prioritizing practices and actions to improve efficiency Researching whether existing internal practices and/or external “off-the-shelf” practices can improve efficiency Selecting most suitable practices

Existing internal and external “off-the-shelf” practices

Internal change agents ask external change agents for advice on what and how “off-the-shelf” practices can improve efficiency External change agents provide knowledge about “off-the-shelf” practices

Implementation Incremental modification of selected practices Deploying modified practices Maintaining efficiency improvements in long term

Priority list of actions for improving efficiencies Incrementally modified practice

Internal change agent is responsible for implementation External change agents are partly engaged in the implementation process

Theorization Comparing efficiency improvements with expectations Intended action to continuously utilize practices Reflecting on the efficiency improvements

Reflective learning (internals and externals) Observing how actions for implementing management practices improve efficiency

Internal change agents reflect on ways to maintain efficiency over long-term Internal and external change agents maintain dialog on how practices improve efficiency

Table V. Common key elements in efficiency-driven management innovations

522

EJIM 20,4

exchange about easily accessible and existing “off-the-shelf” management practices which might improve efficiency. Employees adapt these practices with relatively little effort to the context of their organization and implementation is fairly straightforward. Thus, the challenge is not the implementation itself, but prioritizing which practices might help them most in improving daily operations.

These actions lead to incrementally modified practices, which are tested in the organizations. Organizations deploy these practices very frequently to improve operational efficiency. Organizations can, therefore, easily observe whether or not the improvements are in line with expectations. If so, internal change agents will institutionalize the practices in the organization. However, such an institutionalization should not be a result of unintended actions by individuals, but rather of deliberated ones by the organization. Such deliberate actions counteract the tendency for these practices to improve daily operations in short term, but for efficiency to erode in the long run. External agents should observe the efficiency improvements, reflecting on the utilization of management practice, which in turn generally enhances their knowledge of how management practices solve inefficiencies. Future management practices benefit from such external reflection.

4.2 Externally recommended management innovations In total, 7 out of 18 management innovations can be classified as externally recommended management practices (see Table IV). By externally recommended, we mean that external change agents play a vital role in the whole process.

Externally-recommended management innovation

Process Activities Constituent parts Internal and external change agents

Motivation Considering general challenges Proposed challenges in BoP initiatives

External change agents actively start dialog on potential challenges with the focal organizations

Invention Proposing practices to solve challenges Circumnavigating internal bias against externally recommended practices (e.g. too much effort, risky, uncertain results)

Hypothetical practice to solve challenges Doubts that the challenges are relevant to the organization

External change agents are key drivers beyond “inventing” practices to solving challenges Internal change agents evaluate cost-benefit ratio of proposed challenges and hypothetical, often fashionable practices

Implementation Converting practices into more detailed and viable ones Implementing the recommended practice Redefining the practice (e.g. setting-up trials, analyzing errors, making corrections) Including externals in the implementation participation

Detailed practices Internal change agents are responsible for implementation External change agents partly engaged in implementation process, but tend to minimize implementation efforts

Theorization Reflecting on benefits and/or value of newly implemented practices

Reflective learning (internals and externals) Theorizing on link between action and performance

Internal and external change agents maintain dialogue about how practices could avoid challenges External change agents reflect on how practices can avoid challenges External change agents develop deeper knowledge on market challenges

Table VI. Common key elements

in externally recommended management innovations

523

Typology for management innovations

Again, Appendix 2 contains an excerpt of the case study write-up on a persona method for customer segmentation. Comparing this anecdotal empirical evidence with the other externally recommended management innovations suggests following key elements (see Table VI). Externally recommended management innovations start with external change agents who consider what challenges need to be solved to make BoP initiatives more successful. They formulate potential management practices and propose them to the organizations. When internal change agents take up these suggestions, organizations may initially fear that the management practice is developed without sufficient knowledge of how organizations actually operate. Externals might impose new practices to the organizations, but instead of recommending the creation of useful practices which have been proven in the BoP market, they often recommend only practices that are regularly used in industrialized markets. Experiences in how they can be deployed in the BoP market are limited, so that organizations sometimes doubt that the practices generate the expected results.

Even if organizations overcome their doubts, these management practices might still fail, if the development and adaptation efforts are too high. In addition, externally recommended management innovations require quite complex tasks and are not easy to implement successfully. Thus, these practices generally require external support in the implementation process. On a few occasions, we observed that external change agents sometimes persuade organizations to implement the management practice, but do not participate in the process, which in turn led to implementation failures. Additionally, the implementation of externally recommended practices needs to consider potential organizational resistance, by individual

Problem-driven management innovation

Process Activities Constituent parts Internal and external change agents

Motivation Specifying potential performance Investigating short-falls between current and potential performance

Prediction and common sense surrounding potential performance Problem as gap between potential and current performance

Internal change agents actively specify potential performance and relevant problems

Invention Scrutinizing problems by distinguishing between symptoms and causes Adapting existing and/or inventing new practices, which can address the symptoms and causes

Problem-search process External change agents assist internal organizational members in problem-search process Internal change agents develop problem-solving competences

Implementation Continuing search process until satisfactory solution is achieved Developing knowledge to find solutions to the problems

Trial-and-error learning to see how practices can be implemented Variation in the practices Observation on how practices contribute to solving problems

Internal and external change agents develop knowledge about how practices provide solutions to problems Internal and external change agents gain deeper understanding of how practices need to be adapted to organizational context

Theorization Terminating search when satisfactory solution is achieved Continuous usage of problem-solving skills for future problems

Reflective learning (internals and externals) Codifying how management practices solved the problem Applying experiences gained to other problems

Internal and external change agents maintain dialogue on how practices could avoid certain problems

Table VII. Common key elements in problem-oriented management innovations

524

EJIM 20,4

organizational members assuming responsibility for implementing and contextualizing the management practices.

Since external change agents recommended the management practice to the organization, they should observe how the organizational context shapes the practice. In some cases, external change agents might simply not have a mandate for such participation. Nevertheless, we found that when externals participate actively in the learning processes, implementation was more successful. Such agents should support modification of the management practices. During such a support, externals go through a process of reflection about adapting the practice to the organizational context. Internal change agents reflect on the benefits that this newly implemented practice creates. They legitimize and institutionalize the practice in the organization, through sharing anecdotes about the benefits of the management practice in question.

4.3 Problem-oriented management innovation In total, 3 out of 18 management innovations can be classified as problem oriented (see Table IV). By problem oriented, we mean that internal change agents conduct deliberate activities in which they invent a new practice in response to a specific problem. Such a problem cannot be solved by “off-the-shelf” management practices, because problem-oriented management innovations need considerable adaptation of existing practices or in some cases, even completely new ones.

Appendix 3 contains an excerpt of the case study write-up on debt management. Comparing this anecdotal empirical evidence with the other problem-oriented management

Opportunity-oriented management innovation

Process Activities Constituent parts Internal and external change agents

Motivation Screening for potential management practices Recognizing new opportunities associated with management practices

Recognizing novel opportunities Agenda for management practices

Internal and external change agents share ideas about new management practices

Invention Describing ways to explore the opportunities Screening for potential management practices

Link between management practices and opportunities

External change agents assist internal organizational members in problem-search process Internal change agents develop competencies for problem-solving capacity

Implementation Adapting existing practices, which can support the organization in exploring these opportunities Learning about what modifications make sense or do not

Learning process throughout the adaptation process Learning process on what obstacles emerge in the implementation process and how these obstacles can be solved

Internal change agents responsible to the implementation External change agents participate in the implementation to observe obstacles

Theorization Institutionalizing practice by using it on a regular, but less frequent basis Legitimization of practice through successful exploration of opportunities

Reflective learning (internals and externals) on how management practices contribute to exploration of opportunities Regular, but less frequent usage of management practices

Internal and external change agents maintain dialogue on benefits of management practices in relation to opportunities

Table VIII. Common key elements

in opportunity- oriented management

innovations

525

Typology for management innovations

practices suggests the following specificities (see Table VII). To generate such a new practice, organizations start a problem-oriented search process. Internal change agents lead the search process for promising new practices to solve the problem. Naturally, organizations sometimes argued that they need to develop knowledge to solve the problem and cannot easily do so ad hoc.

Additionally, our findings suggest that organizations have difficulties in recognizing that they actually have a problem. While inefficiencies are quite tangible, problems are more difficult to observe. A problem results from a perceived shortfall between the organization’s current and potential performance level. As illustrated in the example in Appendix 3, potential payment rate is difficult to predict, which in turn makes default payments less obvious. Organizational members, of course, recognized that many people do not pay. However, they focus on actions like sending payment reminders as a way to improve payment efficiency. It is more difficult to recognize that there is a problem in terms of how the organization is managing default payments in general.

Thus, organizations need to understand how problems undermine the performance. Accordingly, organizations reported beginning with problem specification and continuing with a problem-oriented search for viable solutions. The process starts when internal change agents break the problem down into symptoms and causes. This also includes a clear understanding of why existing organizational practices are not adequate to solve the problems. Organizations use creativity methods to propose management practices to solve the problems. When they find a satisfactory solution, they terminate the search and implement the solution. Such a termination is an important constituent part of the innovation process, since it signals that the problem has been solved and the organizations can continue their activities more effectively than before.

Since search processes and trail-and-error learning throughout invention and implementation are quite complex, organizations need to exchange knowledge about the identified problem and promising solution-oriented practices with external experts. Such knowledge exchange helps to identify practices which can be implemented through a trial-and-error process, although organizations face difficulties in managing the implementation. Without external support, internal change agents fail in creating small variations in the practice and setting-up small experiments to test which variation in the practice is better. Once the organizations’ trial-and-error learning leads to satisfactory results regarding how the new management practice solves the problem, they start to theorize it and institutionalize it within the organization. An assessment of actual satisfaction with the results needs to consider that it might be difficult to observe how certain actions related to management practices solved the actual problem.

4.4 Opportunity-oriented management innovation Finally, 2 out of 18 management innovations can be classified as opportunity oriented (see Table IV). By opportunity oriented, we mean that the process by which management innovations emerge is not driven by problems, but rather by the discovery of new opportunities. These management practices do not solve problems directly, but create new opportunities for the organizations. Appendix 4 contains an excerpt of the case study write-up on business model thinking.

Comparing this empirical evidence with the other opportunity-oriented management innovation suggests the following key elements: motivation, invention, implementation, and theorization. The motivation phase builds on the recognition of a novel opportunity. Internal and external change agents convert new management innovations into an agenda for promising ideas regarding management practices. Our organizations reported that internal and external change agents convert their interpretation of opportunities in the environmental and organizational context into agenda-setting dialogues about ideas for

526

EJIM 20,4

future practices. To do so, organizations deal with the following obstacles. Internal change agents recognize opportunities, but might not be aware of promising management practices to explore new opportunities. Similarly, external change agents usually have deep insight into management practices, but might lack an understanding of how these practices can explore new opportunities. Thus, a continuous dialogue between internal and external change agents is vital, so that the motivation phase leads to a recognition of opportunities and agenda setting for promising management practices.

External experts know these practices from industrialized markets and/or other organizations operating in the BoP context. Therefore, opportunity-oriented management innovations are not novel in terms of a new state of the art, but are merely new for the organizations. The invention phase involves the justification that management practices can explore new opportunities. In close collaboration, internal and external change agents start to adapt the management practice to the organizational context in the implementation phase. They experiment with incremental variations in management practices and observe which variations are most suitable for the organizations. Once the management innovation generates the expected result, organizations make sense of and validate it to build its legitimacy. However, internal change agents implementing a new practice might face the following difficulty. Internal change agents are sometimes not part of the invention process, and therefore find it difficult to evaluate its progress. Evaluation is also challenged by the low causal link between actions for implementing the management practices and the performance in terms of exploring new opportunities. As a result, internal change agents have difficulties in evaluating its progress and sometimes fail to legitimize the practice within the organization. The legitimization and institutionalization of opportunity-oriented management practices require narratives about how the management practices contribute to the exploration of opportunities. For business model thinking, these narratives were about how the thinking itself led to a common vision of the actual business model(s) and made it easier to “funnel” efforts to improve the performance of business models.

5. Discussion Management innovations are regarded as theoretically and empirically important, but remain relatively poorly understood (Birkinshaw et al., 2008). Our findings provide promising implications for academics and practitioners alike.

5.1 Theoretical implications Management innovations have been often advocated in the literature as increasing competitive advantages, but mostly supported by general arguments and little empirical evidence (Volberda et al., 2013). The theoretical starting point of the present study was that scholars have yet to describe a typology of management innovation and to extend the empirical work to a context in which organizations have little initial experience with management practices (Birkinshaw et al., 2008). This paper attempts to provide a rigorous empirical investigation of management innovations. The present research makes two main and two minor theoretical and empirical contributions.

The first main contribution is about closing the empirical gap relating to organizations without much previous experience on management practices. Our focus on organizations which initially have limited experience with management practices supplements the previous empirical contributions (e.g. Birkinshaw et al., 2008; Gebauer, 2011; Vaccaro et al., 2012).

Considering the number of practices for each type of management innovation reveals a relatively high share of externally recommended and efficiency-driven management innovations. The high number of externally recommended management innovations can be explained by the minimal experiences our organizations have with management practices in general. The lack of experience also explains why external change agents play a vital role in

527

Typology for management innovations

the other three types as well. The large number of management innovations for improving the efficiency suggests that our organizations are struggling with the many operational aspects when they enter the BoP market (Garrette and Karnani, 2010). Problem- and opportunity-oriented management innovations might become more relevant, once organizations become more mature and cope better with their operational challenges. In coping with such challenges, organizations with little experience need to balance efficiency-driven, externally recommended, and problem-oriented management innovations. There might also be a knowledge spill-over effect. Once organizations successfully applied efficiency-driven management practices and benefit from externally recommended management practices, they might build critical knowledge for proceeding toward problem- and opportunity-oriented management practices.

The second main contribution is that our typology may be an interesting alternative to investigating the antecedents, innovation processes and the outcomes for generic and/or specific management innovations (Volberda et al., 2013). Antecedents and outcomes can be linked to a certain type of management innovation. For example, efficiency-oriented management innovations benefit from a high level of workforce education and can improve the efficiency of operational processes (Hamel, 2006). Problem-oriented management innovations benefit from absorbing external knowledge and thus increasing organizational effectiveness. In addition, such a link among antecedents and types of management innovations deepens our understanding of how single antecedents contribute to a certain type of management innovation. For example, relational capabilities should go beyond motivating organizations to innovate management practices (Lin et al., 2016). Relational capabilities should extend to the implementation phase, in which externals actively participate in efforts to adapt and implement management innovations.

Our typology also extends the previous distinction into a practice that is new to the state of the art and of adoptive management innovation (Mol and Birkinshaw, 2009). None of the management innovations is really a new practice. Problem-oriented management innovations present a certain novelty, since they resemble practices to solve complex problems. Nevertheless, most practices are adopted from the context of industrialized to the BoP market, and are mostly only novel to the organization. This finding substantiates previous research (e.g. Lin et al., 2016) stating that adoptive management innovations are more common.

Our typology leads to a more fine-grained understanding of the outcomes of management innovations (Nieves, 2016). Interestingly, most management innovations focus on increasing the effectiveness and efficiency of internal organizational processes. Efficiency-driven and problem-oriented management innovations substantiate the notion of the effectiveness and efficiency of organizational processes. Opportunity-oriented management innovations contribute to exploration-oriented outcomes. They could play a vital role in building dynamic capabilities and ensuring company abilities to respond to changes in the business environment (Gebauer, 2011; Volberda et al., 2013). Externally recommended management innovation could generally contribute to both exploring new business opportunities and/or increasing the effectiveness and efficiency of internal organizational processes. However, the externally recommended management innovations mostly increase the effectiveness and efficiency of internal organizational processes. The reason might be that organizations find it easier to recognize the value of externally recommended management practices, if they target improvements in organizational efficiency and effectiveness.

The first minor contribution is that our findings replicate previous descriptions on the phases of management innovation (motivation, invention, implementation, and theorization), and the role of organizational and environmental context. We extend previous knowledge about innovation activities constituent parts, and role of internal and

528

EJIM 20,4

external change agents. Previous research has pointed out various activities and constituent parts (see Figure 1) (Birkinshaw et al., 2008; Hamel, 2006; Birkinshaw and Mol, 2006). Our findings reveal additional activities such as recognizing new opportunities, screening for new potential management practices, analyzing the problems, and so on. Similarly, we extended previous descriptions on constituent parts by highlighting and acknowledging inefficiencies in daily operation, codifying how management practices solved the problem, applying the experiences gained to other problems, and so on. We offer a more comprehensive description of activities, constituent parts, and the role of internal and external change agents (see Tables V-VIII).

The second minor contribution is about our empirical context. Our insights into management innovations supplement research in BoP markets. We could establish that management innovations are a crucial factor for success in BoP markets. Our typology sheds light on the discussion on whether BoP markets require “revolutionary” new practices (Milstein et al., 2007; London and Hart, 2010) or practices using basic, existing business principles, but in BoP markets (Garrette and Karnani, 2010). Our findings support the latter argument. The management practices observed in our case studies are more an application of basic, existing business principles in BoP markets rather than revolutionary new practices. They are quite novel for the organizations, but not a new state of the art. Management practices represent basic principles, which are adopted from industrialized markets and applied to the BoP market.

5.2 Practical implications Our results have implications for both managers and academics. For academics, we revitalize the concept of engaged scholarship (Van de Ven, 2007). Scholars should becomemore engaged in management innovations, collaborating closely with practitioners. Academics can become more creative for new management practices. Merely studying historical records of management innovations is not particularly helpful in this regard. Research needs to be done on contemporary cases, and, where possible, these cases should be followed in real time. Such an engagement brings academic insight to bear on the particular organizational incidents, so as to solve comprehensive problems and discover new opportunities.

Managers should vigorously pursue management innovations, not only in BoP markets, but also in all markets. To achieve competitive advantages through management innovations, managers can learn how management innovations emerge. Managers can compare the described activities, constituent parts and roles of both internal and external change agents with their own approach to innovating new management practices. In addition, our descriptions of obstacles to management innovations offer practical guidelines for avoiding pitfalls. Practitioners must, however, ensure that they are not fully absorbed by a single type of management innovation, and recognize the importance of pursing multiple ones. Efficiency- driven management innovations are essential for succeeding in BoPmarket, but not sufficient. Problem- and opportunity-oriented management innovations make an important contribution to succeeding in BoP markets and to achieving competitive advantages. Managers should develop these practices strategically, since they are then more likely to address exploration- activities, which are relevant for long-term success in BoP markets. Managers should understand the role of externals in terms of recommending management practices. These externally recommended management practices support organizations in BoP markets, but only if managers circumnavigate obstacles such as internal doubts that these practices are relevant and are not too risky for the organization.

5.3 Limitation and further research This paper explores and analyses management innovations, rather than testing them. As with most qualitative research, the transferability of the findings is limited. Various ways of

529

Typology for management innovations

improving the potential for transferability such as contrasting organizational characteristics (e.g. organizational sizes, organizational forms, and countries) were applied. We also provided a rich description of the key elements in the research framework, from which researchers and managers can evaluate the applicability to other contexts. Nevertheless, the extent to which the results are transferable remains open. Thus, we recommend future research to use our study as a point of departure for replicating and extending the findings on management innovations. In order to substantiate our typology, researchers should explore our results in other markets. It would be interesting to replicate our findings in other empirical fields, where companies also have limited experiences with management innovations. For example, start-up companies, just entering markets in industrialized countries, could be an interesting empirical setting. Furthermore, it might be useful to apply our findings in established organizations, which have not just entered, but have a considerable history in the BoP market. It would be worthwhile investigating whether such start-ups and established organizations have similar or different types of management innovation.

References Adams, R., Bessant, J. and Phelps, R. (2006), “Innovation management measurement: a review”,

International Journal of Management Reviews, Vol. 8 No. 1, pp. 21-47. Alänge, S., Jacobsson, S. and Jarnehammar, A. (1998), “Some aspects of an analytical framework for

studying the diffusion of organizational innovations”, Technology Analysis & Strategic Management, Vol. 10 No. 1, pp. 3-20.

Birkinshaw, J., Hamel, G. and Mol, M.J. (2008), “Management innovation”, Academy of Management Review, Vol. 33 No. 4, pp. 825-845.

Birkinshaw, J.M. and Mol, M.J. (2006), “How management innovation happens”, MIT Sloan Management Review, Vol. 47 No. 4, pp. 81-88.

Bowen, G. (2008), “Naturalistic inquiry and the saturation concept: a research note”, Qualitative Research, Vol. 8 No. 1, pp. 137-152.

Bower, J.L. (1970), Managing the Resource Allocation Process: A Study of Corporate Planning and Investment, HBS Division of Research, Boston, MA.

Burgelman, R.A. (1983), “A model of the interaction of strategic behavior, corporate context, and the concept of strategy”, Academy of Management Review, Vol. 8 No. 1, pp. 61-70.

Chandler, A.D. (1962), Strategy and Structure: Chapters in the History of the Industrial Enterprise, MIT Press, Cambridge, MA.

Damanpour, F. (1991), “Organizational innovation: a meta-analysis of effects of determinants and moderators”, Academy of Management Journal, Vol. 34 No. 3, pp. 555-590.

Durgee, J.E. (1986), “Depth-interview techniques for creative advertising”, Journal of Advertising Research, Vol. 26 No. 1, pp. 29-37.

Eisenhardt, K.M. (1989), “Building theories from case study research”, Academy of Management Review, Vol. 14 No. 4, pp. 532-550.

Garrette, B. and Karnani, A. (2010), “Challenges in marketing socially useful goods to the poor”, California Management Review, Vol. 52 No. 4, pp. 29-47.

Gebauer, H. (2011), “Exploring the contribution of management innovation to the evolution of dynamic capabilities”, Industrial Marketing Management, Vol. 40 No. 8, pp. 1238-1250.

Gruber, W.H. and Niles, J.S. (1974), “How to innovate in management”, Organizational Dynamics, Vol. 3 No. 2, pp. 31-47.

Hamel, G. (2006), “The why, what and how of management innovation”, Harvard Business Review, Vol. 84 No. 2, pp. 72-84.

Kaplan, R. (1998), “Innovation action research: creating new management theory and practice”, Journal of Management Accounting Research, Vol. 10 No. 1, pp. 89-118.

Lin, H.F., Su, J.Q. and Higgins, A. (2016), “How dynamic capabilities affect adoption of management innovations”, Journal of Business Research, Vol. 69 No. 2, pp. 862-876.

530

EJIM 20,4

Linderman, K., Schroeder, R.G., Zaheer, S., Liedtke, C. and Choo, A.S. (2004), “Integrating quality management practices with knowledge creation processes”, Journal of Operations Management, Vol. 22 No. 6, pp. 589-607.

London, T. and Hart, S.L. (2010), Next Generation Business Strategies for the Base of the Pyramid: New Approaches for Building Mutual Value, Pearson Education and Financial Times Press, Upper Saddle River, NJ.

Miles, M.B. and Huberman, A.M. (1994), Qualitative Data Analysis: An Expanded Source-Book, 2nd ed., Sage, Thousand Oaks, CA.

Milstein, M., Hart, S.L. and London, T. (2007), “Revolutionary routines: capturing the opportunity for creating a more inclusive capitalism”, in Piderit, S.K., Fry, R.E. and Cooperrider, D.L. (Eds), Handbook of Transformative Cooperation: New Designs and Dynamics, Stanford University Press, Stanford, CA, pp. 84-103.

Mol, M.J. and Birkinshaw, J. (2008a), Giant Steps in Management: Innovations that Change the Way We Work, FT Prentice Hall, Dorchester.

Mol, M.J. and Birkinshaw, J.M. (2008b), Giant Steps in Management: Creating Innovations that Change the Way We Work, Pearson Education.

Mol, M.J. and Birkinshaw, J. (2009), “The sources of management innovation: when firms introduce new management practices”, Journal of Business Research, Vol. 62 No. 12, pp. 1269-1280.

Nieves, J. (2016), “Outcomes of management innovation: an empirical analysis in the services industry”, European Management Review, Vol. 13 No. 2, pp. 125-136, doi: 10.1111/emre.12071.

Perreault, W. and Leigh, L. (1989), “Reliability of nominal data based on qualitative judgments”, Journal of Marketing Research, Vol. 26 No. 2, pp. 135-148.

Prahalad, C.K. (2004), The Fortune at the Bottom of the Pyramid: Eradicating Poverty through Profits, Wharton School Publishing, Upper Saddle River, NJ.

Rangan, K., Chu, M. and Petkoski, D. (2011), “Segmenting the base of the pyramid”, Harvard Business Review, Vol. 89 No. 6, pp. 113-117.

Rust, R.T. and Cooil, B. (1994), “Reliability measures for qualitative data: theory and implications”, Journal of Marketing Research, Vol. 31 No. 1, pp. 1-14.

Stata, R. and Almond, P. (1989), “Organizational learning: the key to management innovation”, The Training and Development Sourcebook, Vol. 2 No. 1, pp. 31-42.

Strauss, A. and Corbin, J. (1998), Basics of Qualitative Research: Grounded Theory Procedures and Techniques, Sage Publications, Inc., Newbury Park, CA.

Teece, D.J. (1980), “The diffusion of an administrative innovation”,Management Science, Vol. 26 No. 5, pp. 464-470.

Teece, D.J. (2007), “Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance”, Strategic Management Journal, Vol. 28 No. 13, pp. 1319-1350.

Vaccaro, I.G., Jansen, J.J., Van Den Bosch, F.A. and Volberda, H.W. (2012), “Management innovation and leadership: the moderating role of organizational size”, Journal of Management Studies, Vol. 49 No. 1, pp. 28-51.

Van de Ven, A.H. (2007),Engaged Scholarship: A Guide for Organizational and Social Research, OUP, Oxford. Volberda, H.W., van den Bosch, F.A. and Heij, C.V. (2013), “Management innovation: management as

fertile ground for innovation”, European Management Review, Vol. 10 No. 1, pp. 1-15. Walker, R.M., Damanpour, F. and Devece, C.A. (2011), “Management innovation and organizational

performance: the mediating effect of performance management”, Journal of Public Administration Research and Theory, Vol. 21 No. 2, pp. 367-386.

Yin, R.K. (1994), Case Study Research: Design and Methods, 2nd ed., Sage Publications, Inc., Newbury Park, CA.

Further reading Birkinshaw, J. (2006), “How management innovation happen”,MIT Sloan Management Review, Vol. 45

No. 4, pp. 47-55. Mishler, E.G. (1986), Research Interviewing: Context and Narrative, Harvard University Press,

Cambridge, MA.

531

Typology for management innovations

Appendix 1. Case on internal efficiency-oriented management innovation We approached the sanitation market through renting out mobile toilets for $8 per month including toilet, installation, and weekly waste collection costs […]. However, despite the benefit of paying a regular rental fee, compared to investing a couple of hundred dollars in owning a toilet […] marketing efficiency and toilet sales were very low […]. By consulting experts, we assumed that we should use service blueprinting for diagnosing inefficiencies in our marketing activities […]. This method was easy to use and needed little knowledge exchange on how to apply the blueprinting in our organization […]. Service blueprinting helped us to get transparency in our processes, starting with toilet manufacturing & assembly, sales & marketing, installation, and, finally, waste collection. This transparency helped us to allocate costs along these activities […]. In addition, service blueprinting helped us to design our ‘moments of truth’ better. Moments of truth influence the quality perceptions of our customers. This improved our own customer interaction and formed a much more positive customer impression, creating very positive word-of-mouth. Our marketing strategy still benefits from the service blueprinting method. […] The positive word-of-mouth made marketing the toilet much easier. […], it was relatively easy to legitimize the service blueprinting within our organization. To ensure that we benefit from service blueprinting in long-term, we defined deliberate actions to institutionalize it. We wanted to avoid service blueprinting improving the word-of-mouth in the short- term, but in the long-term having it erode again.

Appendix 2. Case on externally recommended management innovation To improve our sanitation marketing, external experts recommended working with persona methods as a way to segment customers. […] Sanitation is a basic need, with little differences among consumers. […] We were skeptical whether a customer segmentation is really what we needed. […] Nevertheless, we assumed that such a persona method would provide deeper insights into customer preferences and needs. […] We exchanged knowledge about these customer segmentation approaches with the external experts. […] we learned that personas and customer segments are typically based on customer attributes and preferences. However, since most of our potential customers have no experience in using mobile toilet solutions, they could not easily articulate preferences and needs. […] Thanks to the support from the externals, we adapted the customer segmentation method. […] One employee from the external institution stayed in our organization for about 6 months […] and supported our sanitation marketing. He became the owner of the persona method and was responsible for using persona descriptions to characterize four types of customers: (a) local entrepreneurs, (b) modern families, (c) traditional families, and (d) larger families. […] For example, in traditional families, various generations live in one house. The grandmother heads the family and is responsible for the expenditures. Adult family members have no regular jobs, but rather work ad hoc. […] We targeted these grandmothers to persuade them to become opinion leaders on sanitation for the entire community. They were very creative in trying out new ideas to make our value proposition more appealing […] During this trial-and-error activity, our team still exchanged experiences from the implementation & utilization with externals, even if we actually employed just one external person. This helped us to benefit from a broader knowledge pool on how customer segmentations can be used in low-income markets. It gave our customer segmentation a higher face value, since it was in collaboration with externals and not only internally driven.

Appendix 3. Case on problem-oriented management innovations When we initially introduced our long-term rental service for mobile toilets into urban slums, we were happy that the payment rate was 95%. […] However, after a couple of months, the payment rate dropped to 35%. Of course, such a low payment rate is a big problem in any market. However, we were not sure if it is really unusual in urban slums. If the disposable monthly income is only $30, a fee of $5 represents a very significant expenditure. We asked ourselves what constitutes suitable payment rate in such a setting. By discussing this with other sanitation providers, we learned that their payment rate was significantly higher and well above 90%. However, their social-economic context is different, since the disposable income of their customers is higher. Nevertheless, we acknowledged our problem on default payments and started to search for a solution […] In the search process, we discussed our problems with externals. […] there is no existing practice which can solve low payment rates. Instead, we needed to understand our organizational context better and later conducted a series of trials to increase the payment rate. […] We have different types of default payments in our organization. Some customers did not pay at all, some others paid, but could not always afford the full amount of

532

EJIM 20,4

$5 […] We questioned whether we should approach both types of default payments in a similar way. In some trials, we learned that the best solution would be to approach customers who owe us $15 and more. If this debt was caused by not paying at all, our sales staff suggested removing the rental toilet, if they still do not pay. If the debt resulted from incomplete payments, our sales staff proposed that these families change from an individual toilet to sharing with neighbors […] During the implementation process, we adapted the method continuously. Since the emerging practice on dealing with default payments produced easily measurable results, we could learn which adaptations are most suitable. […] the payment rate went up to 90% again […] we institutionalized the management practices.

Appendix 4. Case on opportunity-oriented management innovations To persuade people about market-based approaches for sanitation, business model thinking would be a great opportunity. Since we were initially not sure what a business model really is, how business model thinking can help us, and what business modeling techniques are most helpful, we talked with externals to identify promising practices. This discussion helped us to set up an agenda of practices […]. These practices would help us come up with a business model for our sanitation services. These practices were contextualized to fit into our organizational context […] business model canvases was one practice. Our knowledge exchange with externals helped us to clarify that these canvases have different elements according to whether profit-oriented companies or non-profit organizations are using them. This clarification with externals led to a draft on elements which are most suitable for developing our own business model. […] A first draft was applied in a workshop.We learned howwe can utilize business model thinking. Our staff was very positive about the workshop results. By using the business model thinking, we developed a common understanding of our own business models, including strengths, weakness, opportunities and threats. We discovered that we should divide our overall business model into three different business model components. One component focuses on social goals, aiming at giving poor families access to sanitation. The second component was about making the sanitation service more profitable, and this focused only on financial goals. The third business model was about converting human waste into compost, which can generate additional revenues to offset some of the treatment costs. This model also focuses only on financial objectives […] By applying business model thinking, we were able to balance our financial and social goals […]. Our sanitation services improved considerably. The improvement was a direct result from the common understanding about our own business models. We could funnel our efforts better and make sure these efforts contribute to improving the performance. […]

About the authors Heiko Gebauer leads the Business Innovation Group in the Environmental Social Science Department at the Eawag (Swiss Federal Institute of Aquatic Research). His research focuses on innovations in base-of-the-pyramid markets as well as services in product-oriented companies. He is furthermore a Guest Professor at Linköping University, where he focuses on Strategy and International Management, and at the Center for Service Research at Karl-stad University. He has collaborated with various industry partners including the ABB, Cat-erpillar, GeorgFischer Machine Solutions, and ZF Friedrichshafen, as well as “hidden” service and solution champions such as Fraisa, Hilti, SwissFreshWater, and Testo Industrial Services. He has published in academic journals (e.g. Journal of Service Research, Journal of Business Research, Industrial Marketing Management, Science of the Total Environment, and Journal of Service Management) as well as management journals (e.g. Harvard Business Manager). Heiko Gebauer is the corresponding author and can be contacted at: [email protected]

Mirella Haldimann is a PhD Candidate at the Linköping University and works at the Eawag. Her research focuses on innovations in the water sector in low-income countries.

Caroline Jennings Saul is a PhD Candidate at the Service Research Center at the Karlstad University and works at the Eawag. Her research focuses on innovations in the waste and sanitation sector in low-income countries.

For instructions on how to order reprints of this article, please visit our website: www.emeraldgrouppublishing.com/licensing/reprints.htm Or contact us for further details: [email protected]

533

Typology for management innovations

Reproduced with permission of copyright owner. Further reproduction prohibited without permission.