The innovation game: lessons in strategy and managing operations

TLDR: The goal of the game is to enable participants to experience how strategic and operational choices made in relation to innovation strategy are interrelated and how these choices can impact on new product development success.

Abstract: Purpose – This paper seeks to present a teaching tool (the Innovation Game) which aims to demonstrate the challenges of developing an effective innovation strategy in the context of new product development The goal of the game is to enable participants to experience how strategic and operational choices made in relation to innovation strategy are interrelated and how these choices can impact on new product development success Specifically the paper aims to explore the impact of choices made in relation to capability accumulation, capacity management and product‐portfolio managementDesign/methodology/approach – After presenting the learning objectives for the game with the support of relevant literature, the paper describes the design of the game and the context in which it was played The paper reviews feedback (learning outcomes) from formal reflective post‐game sessions with participants This feedback indicates that the learning objectives have been satisfiedFindings – Through experiential learning

Figures

Table 2. Changes in game after feedback

Figure 2. Learning outcomes from the Innovation Game

Figure 1. Components of the Innovation Game

Table 1. Sample product information

Full text

Citation for published version:
Yalabik, B, Howard, MA & Roden, S 2012, 'The innovation game: lessons in strategy and managing operations',
International Journal of Operations & Production Management, vol. 32, no. 12, pp. 1441-1459.
https://doi.org/10.1108/01443571211284188
DOI:
10.1108/01443571211284188
Publication date:
2012
Document Version
Peer reviewed version
Link to publication
University of Bath
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Yalabik, B., Roden, S. and Howard, M. (2012) The innovation
game : Lessons in strategy and managing operations.
International Journal of Operations & Production Management,
32 (12). pp. 1441-1459. ISSN 0144-3577
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1
From Class to Boardroom: Developing the ‘Innovation Game’ for
Strategic Management Learning
Yalabik, B.
*,1
, Howard, M.
2
and Roden, S.
1
1
Information, Decisions & Operations (IDO)
School of Management, University of Bath
Bath, BA2 7TJ, United Kingdom
2
University of Exeter Business School
University of Exeter
Exeter, EX4 4ST, United Kingdom
*
Corresponding author, by212@bath.ac.uk

2
The Innovation Game: Lessons in Strategy and Managing Operations
Abstract
Purpose – We present a teaching tool (the Innovation Game) which aims to
demonstrate the challenges of developing an effective innovation strategy in the
context of new product development. The goal of the game is to enable participants to
experience how strategic and operational choices made in relation to innovation
strategy are interrelated and how these choices can impact on new product
development success. Specifically we explore the impact of choices made in relation
to capability accumulation, capacity management and product-portfolio management.
Design/methodology/approach – After presenting the learning objectives for the
game with the support of relevant literature, we describe the design of the game and
the context in which it was played. We review feedback (learning outcomes) from
formal reflective post-game sessions with participants. This feedback indicates that
our learning objectives have been satisfied.
Findings – Through experiential learning and reflective practice participants learn, for
example, that: capabilities need to match the intended strategy; that investing in
production capacity can be leveraged to aid negotiations with competitors, or it can be
used as a bully tactic; and, that it sometimes is better to be an R&D ‘follower’ rather
than a ‘leader’. The participants also learn that the alignment of operational and
strategic choices is necessary in order to leverage success in developing new products
but that the actions and strategies of competitors has a direct impact also and need to
be considered carefully.
Research limitations/implications – The teaching tool adopts a participative game
playing and reflective learning approach to introduce into class some of the real-life
competitive dynamics of managing new product development and decision making
normally confined to the boardroom. While we argue the game demonstrates the
challenges of developing successful strategy, the game is set in a static context in
which certain external contingencies are not accounted for.
Originality/value - Demonstration of the importance of strategy to new product
development is particularly difficult because of the longitudinal nature of product
development and the tacit nature of the decision making process which often
transpires long after projects are completed. We posit that the value of the Innovation
Game is in reflecting on it as a practical, interactive tool which helps participants
appreciate the challenges inherent in strategic and operational decision making related
to innovation strategy and new product development success.
Keywords: Innovation, Experiential Learning, Games, Decision Making,

3
The Innovation Game: Lessons in Strategy and Managing Operations
1 Introduction
Innovation is a compelling theme in management with strong associations with
growth, prosperity and the survival of the firm (Porter, 1985; Scherer, 1986; Kanter,
1990; Hamel, 2006). Understanding the key dimensions of innovation strategy is
increasingly important for managers. Yet introducing the concept of managing
innovation into boardroom discussions involving corporate strategy is fraught with
difficulties (Burgelman and Sayles, 1986; Tushman and Anderson, 2004). In this
paper we present a teaching tool, namely the ‘Innovation Game’, which highlights the
interrelated nature of the decisions which surround a firm’s innovation strategy. In the
game, teams of participants (firms) make strategic and operational decisions as part of
their innovation strategy. The primary learning objectives of the ‘Innovation Game’,
are for participants to:
1. understand the challenges associated with making operational and
strategic decisions regarding innovation strategy in a competitive
environment,
2. understand that there needs to be some alignment between operational and
strategic decisions, and that these decisions may be affected by external
environmental (competitor and market-based) factors,
3. apply the understanding from learning objectives 1 and 2 to analyse
competitor strategies and opportunities/threats in the market, making
appropriate decisions to respond accordingly
In acknowledgment of the breadth of innovation as a topic area, the game focuses on
the context of new product development. In accordance with this context, the game
focuses on strategic and operational decisions related to capability accumulation,
capacity management and product-portfolio management (Helfat, 1997; Morecroft,
1983; Cooper et al., 2001). The aim of the game is to enable participants to experience
the complex interrelationship between these decisions relating to a firm’s innovation
strategy, operations and the marketplace, and the resultant impact on firm
performance (new product development success) (Skinner, 1978; Hayes et al., 1996).

Frequently asked questions

Q1. What are the contributions in "The innovation game: lessons in strategy and managing operations" ?

The authors present a teaching tool ( the Innovation Game ) which aims to demonstrate the challenges of developing an effective innovation strategy in the context of new product development. Design/methodology/approach – After presenting the learning objectives for the game with the support of relevant literature, the authors describe the design of the game and the context in which it was played. The authors review feedback ( learning outcomes ) from formal reflective post-game sessions with participants. Findings – Through experiential learning and reflective practice participants learn, for example, that: capabilities need to match the intended strategy ; that investing in production capacity can be leveraged to aid negotiations with competitors, or it can be used as a bully tactic ; and, that it sometimes is better to be an R & D ‘ follower ’ rather than a ‘ leader ’. The teaching tool adopts a participative game playing and reflective learning approach to introduce into class some of the real-life competitive dynamics of managing new product development and decision making normally confined to the boardroom. While the authors argue the game demonstrates the challenges of developing successful strategy, the game is set in a static context in which certain external contingencies are not accounted for. Originality/value Demonstration of the importance of strategy to new product development is particularly difficult because of the longitudinal nature of product development and the tacit nature of the decision making process which often transpires long after projects are completed. 

Q2. What are the future works mentioned in the paper "The innovation game: lessons in strategy and managing operations" ?

Quantitative data that can be collected more efficiently with the help of the online version can be used to ( 1 ) judge whether decision making has improved over time during the game, and to ( 2 ) gain insights into decision making which might then be used to potentially create an experimental set-up to be used for further research. The authors believe they have devised a teaching tool that helps to inject into class some of the real-life competitive dynamics of new product development and strategic decision making normally encountered only in the boardroom. 

Q3. What did the participants find to be the important part of the research?

In terms of capacity management, participants found that increasing capacity, as one might expect, gave the firms more opportunities to diversify their product portfolio without taking on too much risk. 

Q4. What can be done to improve the quality of the data collected during the game?

Quantitative data that can be collected more efficiently with the help of the online version can be used to (1) judge whether decision making has improved over time during the game, and to (2) gain insights into decision making which might then be used to potentially create an experimental set-up to be used for further research. 

Q5. What were the key learning outcomes for the participants?

The participants also made observations relating to strategy more generally, such as the notion that the quality of a certain strategy should be measured against what other firms are doing and that flexibility and responsiveness are important characteristics of firm strategy. 

Q6. What was the common use of capacity in the game?

capacity was utilised as a bargaining tool – firms with greater capacities were able to market this capability to firms with smaller capacities and run production for them. 

Q7. What is the main theme of the innovation game?

Innovation is a compelling theme in management with strong associations with growth, prosperity and the survival of the firm (Porter, 1985; Scherer, 1986; Kanter, 1990; Hamel, 2006). 

Q8. What are the main learning objectives of the game?

By using the game in a classroom setting, the authors achieve the learning objectives stated above by: Incorporating components that operationalise strategic and operationaldecisions Incorporating repeated play, which enables the revision of firm strategybetween periods of play depending on product performance and the actions of competitors Allowing for reflections and reporting back to the group of participants atthe end of the game. 

Q9. What is the role of the negotiation phase?

During this phase, firms are also able to negotiate with other firms to create strategic alliances to gain access to markets and capabilities. 

Q10. How many students were involved in the pilot run?

The pilot run was performed with a Master of Science class of 11 students, who suggested further improvements to the game while the authors made observations and took notes that allowed the game content and proceedings to be finalised. 

Q11. How many units of Product 1 are brought to the market?

Scenario 3: Firm A brings 900 units and Firm B brings 300 units of Product 1 to the market Since the total quantity in the market is now 1200 units (which is more than the 1000 allowed), the firms split the market according to the quantities they brought in: A earns (£10 million)(900/1200) = £7.5 million and B earns (£10 million)(300/1200) = £2.5 million. 

Q12. What were the major changes made after the test runs?

The major changes made after each the test and pilot runs as well as some of the improvements suggested after the real runs are summarised in Table 2.Certain aspects of real-life competition, such as pricing decisions independent from quantity decisions, were left outside the game’s domain. 

Q13. How does the innovation game simulate these dynamics?

The Innovation Game simulates these dynamics by allowing participants to invest in greater technical capabilities (in the form of improved R&D lead times and costs). 

Q14. What are the primary learning objectives of the ‘Innovation Game’?

The primary learning objectives of the ‘Innovation Game’, are for participants to:1. understand the challenges associated with making operational andstrategic decisions regarding innovation strategy in a competitive environment,2. understand that there needs to be some alignment between operational andstrategic decisions, and that these decisions may be affected by external environmental (competitor and market-based) factors,3. apply the understanding from learning objectives 1 and 2 to analysecompetitor strategies and opportunities/threats in the market, making appropriate decisions to respond accordingly