Enhancing the Innovation Performance by Employing Criteria - A Multiple Case Study of How Decision-Makers at Large Enterprises in Sweden Can Employ Criteria to Evaluate Early-Stage Innovation Projects

Abstract

Background and Purpose: Innovation cycles continues to become progressively shorter, hence making it more important for companies to make the right decision regarding what ideas to develop further, and which ones to reject. Ideas emerge in the front end of the innovation process, characterized by high uncertainty and low level of available information. Suitable approaches for evaluation as well as criteria for selection is argued to help companies to manage the challenge of selecting the right ideas. In practice, uncertainty and information shortages make companies end up with using inconsistent approaches and intuition to evaluate early-stage innovation projects. Activities in the front end is suggested to have implications on the companies’ performance throughout the rest of the innovation process, hence, turning the choice of which innovation project to carry forward into a key challenge of large enterprises. Consequently, this study aims to investigate how decision-makers at large enterprises in Sweden can employ criteria to evaluate early-stage innovation projects. The purpose of the thesis is further to contribute with insights regarding what criteria that can be employed and how decision-makers at large enterprises in Sweden can determine the valuation of criteria. Methodology: The study includes an extensive literature review of several scholars highlighting different criteria that decision-makers at large enterprises can employ when evaluating ideas in the front end of the innovation process. Further, the literature review investigates how the valuation of criteria is determined. The literature is extended by qualitative semi-structured interviews where six experts within idea management and innovation management are invited. Further, decision-makers from six large enterprises in Sweden are interviewed regarding what criteria they employ to evaluate ideas in the front end of the innovation process, and how they are determining the valuation of these criteria. Interviews with enterprises were also qualitative and semi-structured. Findings and Conclusions: This study has showcased differences between how literature and experts suggest that decision-makers can employ criteria, and how criteria seem to be practically employed by decision-makers at large enterprises in Sweden. Literature and experts suggest enterprises either to decide on predefined criteria in advance and make a rational evaluation, or to allow the decisionmaker to form relevant criteria during the evaluation in order to make a holistic evaluation. A combination of rational- and intuitive decision-making was described by the literature as an alternative to the exclusive use of rational evaluation or holistic evaluation. Empirical data from case companies revealed that predefined criteria anchored in data and intuition were most frequently used to evaluate early stage innovation projects. It could be concluded that literature and experts recommend large enterprises to employ different criteria in different situations. Nevertheless, half of the enterprises did customize their use of criteria, however not to the same extent as literature and experts suggested. From the empirical data collection, two primary approaches to determine the valuation of criteria emerged. First, an enterprise can gather data to anchor assumptions with to determine the valuation of criteria. Second, an enterprise can make assumptions anchored in intuition to determine the valuation of criteria. The knowledge of the individual whose intuition were relied on, was identified as crucial. Moreover, a co-developing process could be identified in one of the case companies as well as in the empirical data collected from experts.