Problem Finding and Solving: A Knowledge-Based View of Managing Innovation

Problem Finding and Solving: A Knowledge-Based View of Managing Innovation

Bruce A. Heiman (San Francisco State University, USA) and Pia Hurmelinna-Laukkanen (University of Oulu/Lappeenranta University of Technology, Finland)
DOI: 10.4018/978-1-61520-875-3.ch005
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In this chapter the authors focus on a problem-oriented view of managing innovation. In particular, they ask what it means to manage innovation well, so that innovation outcomes are enhanced. They start by briefly reflecting on the rise in value of intangibles as an asset class (notably knowledge), and by defining terms. They then briefly review selected literature on strategic management as an example of the typical manner in which innovation has been previously approached. Looking at selected macro- and micro-organizational theories the authors reflect on several shortcomings of extant literature. They then introduce the knowledge-based view and identify a particular sub-field, the problem finding/problem solving (PF/PS) perspective, as one promising way to address these issues. They identify several challenges in the present formulation of the perspective, and discuss further research opportunities. Though the PF/PS perspective presently lacks compelling empirical evidence, it shows promise for developing into a useful logic for managing and enhancing innovation.
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This chapter briefly reviews several conversations regarding managing innovation. We seek to identify trends and promising directions for both scholars and managers. In particular, we argue for a connection between the role of knowledge in innovation, creation and management, and the emerging problem finding/problem solving literature—a recent development with strong potential for shedding light innovation management.

The transition from an industrial to an information economy has had notable effects on the ways in which companies operate and seek to establish stronger competitive positions. While the industrial economy was to a large extent driven by economies of scale, the rise of the information/services economy has made it natural to put more emphasis on knowledge. Rapid changes, uncertainty over technological trends, emerging new markets, cultural and technical convergence, and increasing vagueness of industrial boundaries force companies to manage both external and internal knowledge (e.g., Rothwell, 1994, Tidd et al., 2005, Chesbrough et al. 2006). Deregulation and sharpened competition along with the rise of complex networks and more transparent, low-cost, high bandwidth channels of communication (e.g., internet, GSM), require companies to continuously meet changing customer needs. This underscores the challenge of generating, obtaining, deploying and using knowledge for innovation. The nature of what comprises a valuable asset has fundamentally changed, and is increasingly determined by intangible rather than tangible assets (Sveiby, 1997, Johannessen et al. 1999). Knowledge assets may well soon overtake traditional resources such as labor, natural resources and capital stock as a primary source of long-term increasing returns.

In this context, knowledge-related processes, and decisions made by managers regarding these processes are central in determining innovation outcomes, and ultimately firm success. The constantly and rapidly changing business environment raises the minimum acceptable innovation performance level for most, if not all firms; technology-driven firms are particularly strongly affected. This type of highly selective environment creates a need for continuous search for new business opportunities and subsequent revenues. Put differently, the need exists in present day organizations to better understand finding and choosing appropriate problems to solve and economically exploit. This particular aspect of value creation, though, has not received all the attention that it deserves. One notable exception is Teece (2007, p. 13) who discusses actions like “sensing” and “seizing” opportunities—notions evocative of problem finding. Teece, while identifying the microfoundations of performance that suggest the importance of problem finding, stops short of suggesting a logic of these microfoundations.

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