BUS 6513 Module 5 Evidence-Based Innovation Strategy Example

Connected Ovens and a Protected Budget: An Evidence-Based Innovation Strategy for a Wisconsin Food Service Equipment Maker

Student Name

American College of Education

BUS6513: Innovation Theory and Organizational Practice

Module 5 Assignment

Instructor Name

March 12, 2029

Introduction

Badger Line Foodservice is fictional, drawn from features of several Midwestern equipment makers. Family owned and based in Green Bay, Wisconsin, it designs and builds commercial ovens, fryers and holding cabinets for restaurant chains, schools and hospitals, employing about 1,100 people and earning roughly $310 million in annual revenue. Its products are known for durability, and its dealer network is strong. Yet larger competitors are introducing connected, energy-efficient equipment that reports performance data to chain operators. This paper develops an evidence-based innovation strategy for Badger Line, drawing on the theory, case and ethics work of this course.

An Evidence-Based Approach

Rousseau (2006) called on managers to turn well-supported research principles into everyday practice, weighing the research together with their own organization's facts, experienced judgment and the concerns of those affected. Following that approach, the strategy draws on four kinds of evidence: peer-reviewed research on innovation, the company's own sales, warranty and service records, interviews with twelve chain operators and dealers and the judgment of the leadership team gathered in two workshops. Where these sources disagree, the strategy states which it relies on and why.

Diagnosis Through the Course Lens

The integrated lens from the first module frames the diagnosis. Absorptive capacity is the first concern: Cohen and Levinthal (1990) argued that a firm's ability to use outside knowledge depends on related knowledge it already holds, and Badger Line employs only four software engineers, so it has limited ability to evaluate or absorb connected-equipment technology. Resource allocation is the second: new product funding is set each year by product line managers whose bonuses depend on current margins, a structure that resembles the starvation loop examined in the third module. Ambidexterity is the third: no unit or leader is responsible for new business models. On fit with users, the interviews showed that chain operators want remote monitoring of cooking temperatures and energy use, but independent restaurants mainly want reliable equipment at a fair price.

Three Horizons

The strategy organizes innovation in three horizons. The first improves the core: reducing energy use of existing fryers and ovens by 15 percent within three years to meet chains' sustainability targets, which suits the company's engineering strengths. The second extends the core: adding sensors and connectivity to new models so chain operators can monitor equipment and schedule maintenance before failures. The third explores new business models: offering equipment with monitoring and service as a subscription to chains, which would change how Badger Line earns revenue. Investment is planned at roughly 70, 20 and 10 percent of the innovation budget across the three horizons.

A Protected Exploration Budget

The systems analysis showed that exploratory work is drained when the core business is under pressure. The strategy therefore sets a rule approved by the family board: 30 percent of the annual innovation budget, about $4.2 million, goes to the second and third horizons and cannot be reallocated during the year without board approval. Ventures are funded in stages tied to milestones appropriate to their maturity, such as pilot installations, customer willingness to pay and service data quality, rather than to first-year margins. This mirrors the IBM practices examined earlier while scaling them to a mid-sized firm.

A Separate Unit With Senior Integration

A small connected-equipment unit of about 18 people, combining hired software and data specialists with transferred engineers, will develop the second and third horizons. It will have its own leader reporting to the chief executive, its own development methods and the freedom to partner outside the company. O'Reilly and Tushman (2013) found that ambidexterity depends on senior leaders who integrate exploratory and core units, so the chief executive will chair a monthly review that includes the unit, operations and sales, ensuring access to the factory, dealer network and customer relationships. The unit will be judged on its own milestones, not the product lines' margins.

Open Innovation With Dealers and Chains

Badger Line cannot build all the needed knowledge internally. Laursen and Salter (2006) found in a study of manufacturing firms that searching widely across external sources of knowledge was associated with greater innovation performance, although returns diminished when firms searched too broadly to manage. The strategy therefore focuses openness on a few sources: two restaurant chains that will co-develop and pilot connected equipment, the dealer network for installation and service data, a sensor supplier under a development agreement and the engineering school of a nearby university for research on energy efficiency. Building these ties also raises absorptive capacity, as Cohen and Levinthal (1990) predicted.

A Responsible Data Policy

The ethics module showed that responsible innovation requires anticipating harms before deployment. Connected equipment generates data about restaurants' operations and, indirectly, their employees' work. Stilgoe et al. (2013) emphasized anticipation, reflexivity, inclusion and responsiveness. Applying these, Badger Line will publish a data policy before launch stating that operators own their data, that data will not be sold to third parties and that the system will not be marketed for monitoring individual workers. A small advisory group of operators and kitchen employees will review new features, and security will be tested independently before each release.

Measures

Each horizon has measures suited to its stage. The first is measured by energy reduction achieved, cost of goods and warranty claims. The second is measured by pilot installations, uptime of connected units, the share of service calls scheduled before failure and chain operators' willingness to pay for monitoring. The third is measured by subscription pilots signed, revenue per unit over its life and customer retention. Across the company, leaders will watch how much of each year's sales comes from models introduced within the prior three years and the number of active external partnerships. Results are reviewed quarterly by the leadership team and annually by the family board.

Risks and Responses

Four risks are significant. Software talent is scarce in Green Bay, so the unit may hire remote specialists and partner with the university. Chains may prefer a competitor's platform, so connected units will use open communication standards where available. Dealers may see subscriptions as a threat to their service income, so the model will share service revenue with them. And the protected budget may be challenged during a downturn; the board rule makes any change visible and deliberate. A named executive watches each of these risks, and all four appear on the agenda of the monthly integration meeting.

Limits of the Evidence

The strategy rests on evidence with limits. Much innovation research studies larger firms and technology sectors, so findings may apply imperfectly to a mid-sized equipment maker. The operator interviews covered twelve organizations and may not represent smaller customers. And estimates of willingness to pay for monitoring are untested. The staged funding approach responds to these limits by treating each horizon as a set of experiments whose results will update the strategy, consistent with evidence-based practice.

Conclusion

Badger Line's innovation strategy addresses weak absorptive capacity, an allocation process that favors current margins, the absence of exploratory leadership and differing customer needs. It sets three horizons with a 70, 20, 10 investment split, protects exploration with a board rule and stage-based milestones, creates a connected-equipment unit integrated by the chief executive, focuses open innovation on a few partners and adopts a responsible data policy before launch. Measures, risks and acknowledged evidence limits allow the strategy to learn as it proceeds, applying the course's theories to a real strategic choice.

References

Cohen, W. M., & Levinthal, D. A. (1990). Absorptive capacity: A new perspective on learning and innovation. Administrative Science Quarterly, 35(1), 128-152. https://doi.org/10.2307/2393553

Laursen, K., & Salter, A. (2006). Open for innovation: The role of openness in explaining innovation performance among U.K. manufacturing firms. Strategic Management Journal, 27(2), 131-150. https://doi.org/10.1002/smj.507

O'Reilly, C. A., III, & Tushman, M. L. (2013). Organizational ambidexterity: Past, present, and future. Academy of Management Perspectives, 27(4), 324-338. https://doi.org/10.5465/amp.2013.0025

Rousseau, D. M. (2006). Is there such a thing as "evidence-based management"? Academy of Management Review, 31(2), 256-269. https://doi.org/10.5465/amr.2006.20208679

Stilgoe, J., Owen, R., & Macnaghten, P. (2013). Developing a framework for responsible innovation. Research Policy, 42(9), 1568-1580. https://doi.org/10.1016/j.respol.2013.05.008