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When some portion of a company is engaged in innovative new product development activity, what determines how much the larger organization learns from the new information being gained? That question is at the heart of a recent working paper by Alva Taylor and Lynn Foster-Johnson, both at the Tuck School of Business at Dartmouth, and Richard Harriman of Synectics.
After surveying numerous new product development projects in an unnamed large, global consumer goods company with multiple divisions, the researchers come to an interesting conclusion. They found that how organizations should manage learning from innovation varies — depending on how much knowledge the innovative activity generates.
The researchers suggest that, in new product development groups where there is a steady flow of new information — say, a knowledge-intensive venture like pharmaceuticals — the larger company is likely to learn more if managers are closely involved in the knowledge management process. In such circumstances, managers should also make sure workers aren’t overloaded — so they have the bandwidth to readily learn from new information. But in mature industries where there is less new information flowing from the innovation activities, managers can encourage organizational learning by giving employees autonomy to try new things and by focusing on what competitors are doing — since in such situations, competition often stimulates learning.