The innovation Domain : A new organizational entity to enhance breakthrough innovation at a first tier supplier

Innovation management among first-tier suppliers in the automotive industry has become more important and more difficult. Manufacturers expect them to take the initiative and offer innovative solutions. But in the same time, introducing innovations in new vehicles has become more difficult in development processes with shorter timeframes. Several research work have also highlighted obstacles to innovation in large firms. Our contribution is based on the analysis of an organizational entity structured by a first-tier supplier in an effort to promote its growth through innovation. We formulate the challenge facing the first tier suppliers in terms of the traditional opposition between incremental innovation and radical innovation and component innovation versus architectural innovation. We discuss the concept of ambidextrous organization, (Duncan 1976, Tushman et O'Reilly 1997) that stresses the importance of developing separate structures so that these various innovations can coexist. We further characterize the ambidextrous organizational model, in focusing on how integration between these separate entity is managed. Our thesis is that this integration takes place at the level of cross-division processes which are of high strategic importance and in which managers of units dedicated at breakthrough innovation play a key role.