1 Introduction

Innovation, which broadly includes new products, new services, or new process, is regarded as the specific tool of entrepreneurship in which change is an opportunity for a different business or service (Zhao, 2005). The process of product and service innovation – progressing from concept to successful products and services – is a continuous practice for connecting market demand with technology. It is understood as a procession through the stages of searching and choosing and into execution (Bessant and Tidd, 2011). Hence, different models exist to clarify how the product/service innovation process is structured and managed, from an idea to commercialisation of the product and service, e.g linear model (Rothwell and Zegveld, 1985) and stage gate model (Cooper, 2001).

While the linear approach still dominates (Salerno et al., 2015), critics have long suggested that the existing linear model is limited, especially when it comes to smaller firms. Innovation process in SMEs is more likely to be short and low in complexity (Berends et al., 2014; March-Chorda et al., 2002), which is distinct from the formalised framework that is conventional for larger firms with complex organisational structures. Because of resource constraints, such as labour, finance, and materials, the relative innovation cost to a SME is significantly higher than for large firms (Nieto and Satamaría, 2010). This usually contributes to the diversion of product/service innovation from the systematic and linear process (Laforet, 2011).

The applicability of the linear model potentially becomes even more limited in new and innovative micro firms (1-10 employees) that develop radical or new-to-market technology product or service (Barr et al., 2009). Thisis a firm category often overlooked or assumed to be similar to SMEs (Gherhes et al., 2016). This oversight to understand the innovation practice in micro firms (tech start-ups and USOs included) is unfortunate given that in 2021 there were 5.3 million micro firms in the UK, accounting for 95% of all businesses (Hutton and Ward, 2021). Unknowns in the innovation process by these micro high-tech firms are considerably challenging since appropriate systems or established routines are not yet in place. University spin-offs (USOs) created by academic staff, amongst many kinds of innovative start-ups and micro firms, are specifically focused in high-tech and knowledge intensive sectors (Druilhe and Garnsey, 2004; Lawton Smith and Ho, 2006) and engage in the provision of novel, technologically advanced products and services (Baines & Lawton Smith, 2019). The study by Löfsten and Lindelöf (2005) suggests that USOs are significantly different to corporate spin-offs in regard to the time taken in developing product/service, the degree of modification of products and services, intermission between new patents and the modification time. Our main argument is that a theoretical extension of product/service innovation is necessary in the context of micro firms. It is also of practical relevance, given their potential and important economic role in “levelling up” UK’s disadvantaged regions (Clawson, 2022), especially in the case of USOs that significantly contribute innovative technology to UK regional economy (Rossi et al., 2021).

In this study, we explore the process of product/service innovation of USOs by adopting a practice-based perspective (Ellström, 2010) which characterises the learning process of a firm through logic of production and logic of development. We reconcile the traditional linear process (formal stages in product/service innovation) with the two practice-based logics to understand the rationale behind the apparent lack of formal standardised process of innovation that is known to be the case for small, highly innovative firms (Teirlinck & Spithoven, 2013). In so doing, in-depth interviews with 20 founders of UK USOs were conducted; an immersion approach and thematic coding were adopted. The findings suggest that the innovation process is cyclical and iterative, as suggested in much of the extant literature (Berkhout et al., 2010). Further, it is found that the interplay between logics of production and development takes place even within an individual stage (e.g. idea generation, concept testing) in the traditional linear process. Furthermore, customer involvement through collaboration and feedback plays a crucial role in how the interplay of logics may occur.

Therefore, this study contributes firstly by filling the theoretical gap related to product/service innovation within highly innovative micro firms. We have adopted the practice-based perspective which illustrates how the learning process occurring within the larger frame of the linear model can explain the divergence from the standardised process. Secondly, reconciling practice-based and linear models gives some structure to the complexity faced by academic entrepreneurs and technology transfer offices (TTOs) with regards to the operationalisation of products/services development processes. Other types of micro firms, such as start-ups, could also benefit from this process through adaptation applicable to their contexts.

The article continues with an overview of the extant literature concerning best practice processes involved in developing the product/service innovation, followed by a discussion of practice-base innovation process. Next, the methodology, sampling approach, the in-depth interviews, and analysis methods are described. In section 4, processes are explored in developing product/service. The article concludes with a discussion of the implications of the study for academic entrepreneurs and technology transfer practitioners.

2 Theoretical background

2.1 Best practice of product and service innovation process

The process of product and service innovation can be conceptualised as stages of searching and choosing, into eventual execution (Bessant & Tidd, 2011). There exist different models explaining how this process – from idea to commercialisation – is structured and managed. The process is often regarded as linear in character, which arises from an economic perspective (Trott, 2008). This logic has informed many studies of product and service innovations, such as Rochford and Rudelius’ (1997) investigation into medical device manufacturer, and Krishnan and Ulrich’s (2001) definition of product innovation process as the transformation of a market opportunity into commercialisation of a product.

A more commonly known linear model is the Stage-Gate process (Cooper, 2001), which comprises a sequence of stages and gates at which the decisions are made. This model is built on five sequential stages comprising scoping, build business case, development, testing and validation, launch with five gates. The stage-gate process has also been adopted and applied in various situations and contexts (e.g Stadler, 2011; Soenksen and Yazdi, 2017). Despite its broad appeal, some caution remains over how the model is used such as that its rigidity may kill off viable and profitable projects due to miscalculation of development project planning (Van Oorschot et al., 2010).

The stage-gate model’s applicability may also vary depending on the nature of firms, especially in smaller firms. March-Chorda et al. (2002) suggested that the product innovation process in SMEs is frequently rather short, progressing from original idea to development prototype and fabrication with low complexity. Berends et al. (2014) also observed that small firms seldom adhere to formalised product innovation processes, engage in little planning, and omit activities otherwise regarded as best practice in larger firms.

Nevertheless, this cannot be dismissed as merely unplanned, chaotic, improvisational, or ad hoc. Resource limitations, amongst other constraints, stimulate small/micro firms to make do with what is available (Hudson et al., 2001). Limited resources and capabilities prevent small firms in many industries from conducting formal research and development activities (Narula, 2004). Further, small firms should be capable of detecting the unfulfilled needs of customers through customer market intelligence, and are expected to respond to that intelligence. As noted by Kaminski et al. (2008), conjoined work with suppliers and customers is usual. Customer market intelligence stimulates a more considered decision-making process. The aspect of network and collaboration with customers and suppliers is also pivotal to product innovation in SMEs (Laage-Hellman et al., 2018). SMEs therefore need to maintain alertness to emerging new resources and markets by focusing on short-term progress and real-time feedback, rather than on long-term prediction and planning. Thus, SMEs represent a distinct context when it comes to understanding management of innovation (Humphreys et al., 2005).

2.2 The product/service innovation process in USOs

Relatively even less clarity is the case in the university spin-offs (USOs) context. It is challenging to identify the nature of the conversion from emergent academic technology to market-ready products/services (Barr et al., 2009) or what the product/service innovation process entails (Shane, 2005). Only a handful of studies (e.g. Vohora et al., 2004; Shane, 2005) have explained the product/service innovation practices. Based on the discussion by Shane (2005), various tasks need to be fulfilled in the process of product/service innovation. For instance, new technologies of USOs must be altered to achieve viability in the business environment. The process involves improving performance, increasing robustness, building in supporting technology, scaling up for manufacturing, ensuring user-friendliness, and modifying mechanisms and architecture.

The myriad tasks and the complexity of the process are neither uncommon nor unexpected, given the typically embryonic stage of the academic research and technologies involved. Upon the establishment of a USO, there needs to be a decision made as to how these novel technologies could be applied to the chosen market. Several considerations are necessary, such as marketability, sales volume, value to the customer, and the ability to gain a competitive advantage (Lubik et al., 2013), most of which could be highly challenging to predict. Therefore, acquiring feedback from clients/consumers on the new technologies can be crucial given the lack of precedence in terms of existing markets and/or applications (Messina et al., 2022). Overall, there is a degree of consensus as to what characterises the process (e.g. the rarity of standardised model) and what key factors may be (e.g customer involvement). Much less can be said, however, when it comes to the processual nature of the USOs innovation activities.

2.3 Bringing learning back to innovation process: practice-based perspective

A fair share of criticism of the linear model so far has been directed at its inability to capture the complexity of an innovation process, which then gives rise to rigidity and unrealistic expectations. With regards to the USOs as discussed above, this shortfall could further be attributed to the model’s lack of capacity to account for the influence and importance of learning along the process (Sethi and Iqbal, 2008). A USO’s innovation process involves a degree of novelty and uncertainty that eludes much of the linear approach that is, by design, orderly and discreet.

The theory of practice is a potentially useful perspective to improve our understanding of the knowledge-intensive and processual nature of USOs innovation. For the purpose of this paper, we start with Sole and Edmondson’s (2002: 18) definition:

“A practice-based perspective emphasizes the collective, situated and provisional nature of knowledge, in contrast to a rational-cognitive view of knowledge. Practice connotes doing and involves awareness and application of both explicit (language, tools, concepts, roles, procedures) and tacit (rules of thumb, embodied capabilities, shared worldviews) elements. Central to the practice perspective is acknowledgement of the social, historical and structural contexts in which actions take place. Contextual elements are thus seen to shape how individuals learn and how they acquire knowledge and competence.”

The definition above entails some characteristics which are key to the practice perspective that also underpin how learning takes place in an innovation process, as well as at an organisational level. Practice is a regular pattern of “what people do” and “what their work is like” (Carlile, 2002: 447). The seemingly self-explanatory notion of pattern then leads to other important implications in terms of learning in an innovation process. How people understand what they do and what their work is like are intertwined with the context in which they work, such as place, objectives, nature of problems being solved, social and workplace norms, and history (Swan et al., 2007).

The situated view of practice, both in terms of the location in which work is being done and the nature of the tasks being carried out, also implies that practice and the learning associated with it are of a “pragmatic” character (Carlile, 2002). In other words, practice contains a set of means and ends available to, and sought after by, an organisation that is directed at the work to be done.

Dynamic environment and technological advances are unsurprisingly a regular feature of innovation. Learning and practice can become correspondingly complex where the organisation, the operating context, and the work itself evolve. It could be said that USOs operate in a similar situation, as there are multiple “moving parts” and undetermined factors on both the market and technology sides. In such situations, there are numerous and (occasionally) contradictory duties that learning must fulfil.

Knowledge-intensive organisations are known to engage in multiple types of learning simultaneously, as is well-documented in the literature on organisational ambidexterity (Gibson and Birkinshaw, 2004; March, 1991) and more recently, paradox theory (Raisch et al., 2018). As a reflection of how complex learning could be, there are numerous dichotomies that have been identified as crucial for organisations to handle, such as exploration and exploitation, radical and incremental innovation, stability and flexibility, specialisation and generalisation, and separation and integration (Chang et al., 2009; Raisch and Birkinshaw, 2008; Tushman and O’Reilly, 1996).

Much of the success in a learning process has been attributed to the process of relating between the two opposites in a way that fits with the organisational context. Frameworks such as modes of tacit/explicit knowledge conversion (Nonaka, 1994) and double-loop learning (Argyris and Schön, 1978) illustrate a cyclical process that is grounded to a specific organisation and meant to generate locally relevant knowledge. As Nooteboom (2012) observes, knowledge application can also generate further ideas and thus simultaneously serve as knowledge creation. Perspectives along this line mean that seemingly contradictory activities may in fact be complementary:clear demarcation between them could prove challenging.

Ellström (2010) also conceptualises a practice-based innovation framework based on the use of the cyclical learning process as an interplay between different dimensions of work – explicit (formal, codified, prescribed) and implicit (informal, unwritten, fluid). In each cycle of learning, the interplay between explicit and implicit dimensions of work is underpinned by two complementary logics as follows:

  • Logic of production pertains to how explicit knowledge work process is implemented and understood in practice, with the intention to operate efficiently, maximise goal congruence, and minimise uncertainty. The type of learning that occurs in this process is called adaptive or reproductive learning. Adaptation may occur where there is a discrepancy between desired performance and reality, prompting the use (and perhaps also examination) of the implicit knowledge being applied.

  • Logic of development, on the other hand, focuses on practice as the source of new ideas and knowledge generation. Developmental learning emphasises the capabilities of actors to question, reflect, and modify prescribed practices into new ways of working. The renewal of the prescribed work process may come from exposure to external environments as well as the variation of ideas that were already implicitly understood by actors, but not previously codified. This logic is also associated with creativity and alternatives, thus providing some scope for innovative recombination of resources and capabilities (George et al., 2008).

2.4 Connecting descriptive and prescriptive views: practice-based perspective’s potential contribution to linear model

While the complex reality of innovation process could be better captured by the practice-based perspective, it is by no means a cure-all. The localised pattern of the practice that is underpinned by its “collective, situated, and provisional nature” (Sole and Edmondson, 2002:18, our emphasis) may be, to some extent, understood only retrospectively. The descriptive approach of the practice lens can be valuable in reflexive learning and continuous improvement – as is outlined by Ellström’s (2010) framework. However, a highly contextualised and constantly evolving model can be very limited in creating a mutual understanding among different stakeholders who play vital roles in an innovation process.

Despite its long-standing relevance in practice, the limitations of the linear model are unlikely to be lost on the practitioners. For its lack of descriptive power that is needed to capture nuance and complexity, the linear model provides a shared language that helps “clarify the dependencies between different cross-functional problem-solving efforts that share resources, deliverables, and deadlines” (Carlile, 2002: 451).

In principle, the linear model is therefore prescriptive rather than descriptive. In practice, however, practitioners in larger firms have long been known to adapt the seemingly standardised process at the local level, to the point that they may downplay the “linear” and “bureaucratic” sounding terminology, while making allowance for more flexibility (O’Connor, 1994: 186). This scenario could potentially be more prominent for USOs considering the circumstances outlined earlier (Fig. 1).

To paraphrase Tsang (1997), we recognise both the prescriptive view (“How should organisations manage product/service innovation?”) and the descriptive view (“How do organisations manage product/service innovation?”). Our assumption is that a more realistic understanding of the process can contribute to better practice, although it would be more practical to anchor this understanding in a shared framework understood by the various stakeholders in the innovation process. The overarching question is therefore, “What are the practices of product/service innovations adopted by USOs?” The answer from a practice perspective will strive to connect both stability and variation (cf. Conforto and Amaral, 2016; Hui, et al., 2017). Our starting assumption guiding the research is illustrated in Fig. 2.

Fig. 1
figure 1

Linear process in product/service innovation

Fig. 2
figure 2

Conceptual framework based on possible connection between the linear model of innovation and practice-based perspective Source: adapted from Bessant and Tidd (2011) and Ellström (2010)

3 Research methodology

USOs have been chosen as a sample for this study since they portray the characteristics of newness, developing radical innovation as well as scarcity of resources and capabilities (Vohora et al., 2004). Given the nature of the research question of this study, (i.e. exploratory), a qualitative method, i.e. in-depth interviews with founders of university spin-offs, is employed to explore the process of product/service development. Accordingly, the data analysis used in this study is the content analysis of interviews.

3.1 The population and sampling process

The sample used in this study involves the collation of university spin-off companies that are still active in the UK across all industries. The population in the study is USOs in the UK. In this study, while the definition given by HEFCEFootnote 1 is followed, the scope is focused more on spin-offs f that have been established by academic or university staff rather than by students, since this gives specific scope to identify the population. In addition, firms in the service sector, in which firms are set up without any appropriating of IP, are included as well as technology-based spin-off firms.

The development of a university spin-offs database, which was used as a sampling frame of this study, was drawn from the public websites of universities in the UK. The database of university spin-offs was constructed by searching through the business and innovation centres of universities, such as Oxford University Innovation (University of Oxford), UCL Advances (UCL), University of Manchester Innovation Centre (University of Manchester) and Imperial Innovation (Imperial College, London), as well as departmental websites. Since some universities do not provide a list of spin-off firms on their public website, the relevant people (such as Technology Transfer Office) in the university were contacted to ensure that there were no omissions of university spin-off firms. The data were merged and reconciled with the company list shown on website: www.spinoutsuk.co.uk, last accessed in 2021. This website provides a comprehensive list of all spin-off companies from universities in the UK. The database comprises 700 active USOs in the UK. This process also helped in the collection of founders’ contacts - name, position, e-mail and telephone number, - for the purpose of in-depth interviews subsequently. The demographic data as well as data on products/services offered by the firms were collected as follows:

  1. (1)

    University, in which the firm is spun-off;

  2. (2)

    Address (including telephone number, website, and e-mail address);

  3. (3)

    Year of establishment;

  4. (4)

    Sector of the firm according to SIC code,

  5. (5)

    Status (active, cease trading, dormant etc.);

  6. (6)

    Number of employees;

  7. (7)

    Location of the firm (e.g city and region);

  8. (8)

    Number of patents; and

  9. (9)

    Number of products and services offered.

3.2 Data collection

The data were collected through qualitative research. 30-45-minute in-depth interviews were conducted with 20 academic founders of USOs. The sample at this stage was selected from the database developed as explained above, aiming to show the various mix of sectors (such as design, engineering, biotech, management consultancy, software), firms’ size, and whether the academic founders still maintain academic position. The respondents were selected based on the following criteria:

  • Being a founding member of a USO;

  • Owning an equity in the firm;

  • Previously/or currently holding an academic position when establishing the company; and

  • Having product/service offerings in the market.

More than 50 academic founders, qualified with respect to the above selection criteria, were invited by e-mail to participate in the research. We received finally an agreement from 20 founders to set up 30-45 minute interviews. Most of the interviews were conducted face-to-face or via telephone. Table 1 summarises the respondents’ profile.

Table 1 Summary of spin-off firms and respondents’ profile.
Table 2 Illustrative quotes: Idea generation and Idea screening.
Table 3 Illustrative quotes: Concept testing and Business analysis.
Table 4 Illustrative quotes: development and test market.
Table 5 Illustrative quotes: commercialisation.
Table 6 Illustrative quotes: monitoring and evaluation.

3.3 Data analysis

We follow Ellström’s (2010) notion of understanding practices by looking for:

  1. (1)

    Logic of development: practice as a source of new ideas and knowledge development. This involves how the explicit dimension in the process is understood and interpreted leading to innovative ideas or knowledge.

  2. (2)

    Logic of production: how the explicit dimension in the process is reproduced and understood. This entails an explicit dimension in the process

  3. (3)

    and involves the execution of the prescribed process.

Following the above structure, how USO’s founders reflected on how the product/service innovation process was organised, logics related to the principles and development process. The analysis procedure of the data involved using two coders working together, whereby the interpretation is integrative. Even though one researcher undertook most of the coding work, the finalising of the coding and evidence was a collective effort. First, the lead author independently reviewed the interview transcripts to identify initial codes in the raw data and to categorise them according to development stages. Then, the second author challenged the codes and through an iterative process and detailed discussion, the authors achieved consensus about the final data to be included. Second, in developing an understanding of practices based on the logic of development and the logic of production, the authors searched for evidence and connections across stages. We were interested in how the two logics were employed within and across development stages. We continually reviewed the data to ensure reliability and validity, enabling us to confirm that our understanding was trustworthy and credible (Gioia et al., 2013).

To ensure dependability, we asked another academic colleague, who is independent of the research project, to audit the data, to confirm the accuracy of the analysis. This offered invaluable insights that allowed us to give better explanations of our findings. Additionally, by using an immersion approach, that is reading, re-reading, or examining data in detail, we could confirm our confidence in the quality of the data analysis. Even though we do not make any claims regarding the generalisability of our data and findings, we have given detailed descriptions of the different stages and practices.

4 Results

Based on the evidence from the in-depth interviews with 20 founders of USOs in the UK, the illustrations of development processes of products and services within the USO context were derived to address the main research question. While the focus is on the two logics of production and development, the findings are structured according to linear and traditional product/service development stages (Bessant and Tidd, 2011). The traditional stages, though demonstrably imperfect, provide a commonly understood framework regarding the agenda of activities taking place in the process. For this reason, the stage model could be a useful starting point from which to understand how the two logics may contribute and interact.

4.1 Idea generation

The process commences with the Idea generation stage, which in the case of USOs, mostly, stems from scientific or PhD research. These research outcomes are then often either published in journals or patented in the form of IP with an awareness of market demands or interests received from potential customers/clients. Also at this stage, a combination and interplay of logic of development and logic of production is observed. For example, the ideas of product/service are generated from knowledge, research (including PhD research) with an awareness of gaps in the market acquired through collaboration with business partners. The logic of production has come to play when registering for IP to give a protection to the idea and to give freedom to further develop the research to be substantial product. See Table 2.

4.2 Idea screening

During the Idea screening stage, ideas are scoped to be in line with the company’s aims and objectives. However, only one USO has mentioned idea screening. Within this stage, this particular USOs has employed the logic of production in setting a process and system in scoping the ideas to see if they are a good fit with the firm’s aims and objectives. See Table 2.

4.3 Concept testing

When proceeding through to the Concept testing stage, networks and even potential clients also play an important role in fulfilling this stage of development by providing feedback and comments on the feasibility of the ideas. This will allow experiment as well as the adjustment of the concept to happen quickly. One unique activity that occurs during this stage is for the USO to have a proof of concept to apply for funding from the funding authorities. The funding received is then used for running a market research test to investigate the commercial potential of the concept in later stage. In addition, we have observed that the logic of development has been utilised mostly by experimenting, listening and understanding what customers want. These activities signify an informal test of the ideas amongst potential customers. See Table 3.

4.4 Business analysis

In the Business analysis stage, informal business analysis is conducted to establish the market demands of the product as well as to ascertain the pricing structure of the products and services. Again, another unique activity at this stage is the USO applying for funding either from venture capital fund (often specifically established for universities) or from the university technology transfer office (TTO), and business experts will be appointed to help develop the business and market. We have noted that the logic of development has been utilised mostly through meetings with potential clients or attending business lunches or conferences. These activities signify an informal gauge of business opportunities. It is also noted that the use of logic of development has led to setting an explicit element of the process, such as business plan or pricing structure. See Table 3.

4.5 Development

When developing products/services in the Product/service development stage, performance edge as well as needs of customers is in the frame for development. As part of the development stage, a prototype iss built, in which specific design of the product was created. The prototype was trialled by potential clients. The prototype was altered based on the feedback; additional features were built in until it had the shape of a real product.

A cyclical process is implemented, which has factored potential customers’ feedback into developing, creating, re-creating and re-testing.

Also at this stage, a combination and interplay of the logic of development and the logic of production is observed. With the customers’ needs and requirements, a prototype was developed [through the use of logic of development]. When developing the actual prototype, the logic of production was employed. Then potential clients were asked to trial and give feedback on the feasibility of the prototype [again the logic of development was employed]. The logic of production comes to play when the features of the prototype are further improved or adjusted. The interplay between these two logics is going on in a cyclical process. See Table 4.

4.6 Test market

It is also observed that during the Test market stage, evaluating and refining the product/service are carried out in collaboration with customers. The test marketing stage is almost inseparable from the development stage. When the product/service is developed at the commercially viable stage (or for some USOs, at Alpha stage – meaning the prototype at alpha stage was released to test its feasibility), the process of engaging customers to evaluate the product continues and the refinement of product features carries on. The method adopted is noted as “quick and dirty” or as a cyclical process signifying continual process of iteration and modification according to what customers want (Table 4).

Similar to the previous stage, a combination and interplay of the logic of development and the logic of production is observed. A continual process of engaging customers to receive their feedback to allow the change of the product features [the use of logic of development]. When improving the features of the prototype, the logic of production was employed. The interplay between these two logics is continuous in a cyclical process.

4.7 Commercialisation

For the Commercialisation stage, the products and services are sold through established networks. There is a clear recognition of building up the network and customer base. Help and support on administrative tasks are required when selling the products to clients, especially those from the public sector. Another important element of commercialisation of cutting edge and high technology products is hiring salespeople, who are knowledgeable technically and can describe the benefits to customers. Additionally, sales and marketing activities, such as word of mouth marketing, customers’ database creation or sales staff recruitment, have been established. At this stage, the logic of production is observed as it involves building up a customer base, a clear administrative system and contract when selling products to clients (Table 5).

4.8 Monitoring and evaluation

Emphasis has been placed on the on-going collection of customers’ feedback and comments as a mechanism for Monitoring and evaluation of the products/services’ performance. The cyclical process approach is still present. A fine balance is noted between investment and a working product. Some USOs have had a system in place to track the time and money invested. We have noted that the logic of development has been utilised mostly through continuous engagement with customers to get their comments and feedback, in order to improve and refine the commercialised products. It is also noted that for some USOs, the logic of production is implemented by setting up a system to track the time and money invested (Table 6).

Even though the discussion of the process is based on the linear model, the development process does not occur stepwise. Iterative themes have occurred throughout the process. The process has been encapsulated in Fig. 3. Additionally, Table 7 shows a summary of the different logics used at each stage.

Fig. 3
figure 3

Product and service development process within USOs. Source: Author’s interviews

Table 7 Summary of different logics used at each stage in the development process.

5 Discussion

Our starting assumption based on the literature review is that although micro new ventures rarely follow traditional product development process, the linear model remains valuable in structured communication between diverse stakeholders. We have therefore deliberately mapped the accounts of USOs onto the “linear” stages. This mapping has served two main purposes. First, it demonstrates some discrepancy between the USOs’ experiences and a formal process. Second, it highlights an interplay between the logic of production and the logic of development within an individual stage in a linear model, which could be considered counter-intuitive given the conventional wisdom.

Overall, the findings echo the extant literature in the view that USOs rarely follow standardised product/service innovation process, and that customer knowledge plays a crucial role. Further, practice-based perspectives shed some light as to how the lack of formality is not a mere haphazard response to poor resources, but could be understood in terms of the interplay between the logics of production and development. USOs take on an iterative and flexible approach, which resonates with how small companies have used agile products/services development project planning and repeated the production, creation, selection, and alteration of targets and concepts (Berends et al., 2014).

Whilst USOs may be different from larger firms in terms of size and structure that lead to the lack of formalisation, what further distinguishes them from small and micro firms that routinely adopt “agile” practice can be attributed to the characteristics of their missions. Lean concepts such as “customer discovery” (Blank, 2013) that heavily prioritises market pull as a way to circumvent the resource constraints, would be much less applicable in USOs where the raisons d'être for both the firm and the academic inventor typically differ (Lam, 2011) from start-ups that mainly seek to profit from unmet needs. The balance must shift somewhat to the side of technology push, indicating the different kinds of learning and decision making involved in the process.

Stages that are part of the linear development process are recognised and utilised by the USOs as anticipated in our conceptual framework. Unlike in the true linear model, however, the process tends to be more cyclical and iterative as is shown in Fig. 3. It is observed that the line between each stage is somewhat perforated, such as between Idea generation and Idea screening. The activities and practices at the Idea generation and Idea screening stages are less prescribed and lack a clear demarcation as the activities still involve generating business ideas out of academic/scientific research. It is notable that only one firm was involved in a stage that could clearly be identified as “Idea Screening”, showing that not all the stages have to be deliberately followed by all firms. The permeability between so-called stages also applies to subsequent parts of the process, e.g. Concept testing/Business analysis and Development/Test market. Hence, these stages can be combined into main phases, i.e. Ideas, Opportunities, Development, and Commercialisation and Monitoring, to reflect the leaner albeit less structured process.

For the USOs that are micro and innovative in nature, they attempt to marry feedback from customers/clients with the innovative and disruptive nature of new technology. This is different from the linear model (e.g. stage-gate) used by larger companies who often command much larger resources for production and marketing (Bansal and Grewatsch, 2020), and possibly older and more predictable technologies (Linder et al., 2003). Therefore, large companies are more likely to find a formal “idea screening” necessary, due to their capacity to generate multiple product ideas to be screened in-house. USOs, on the other hand, tend to branch out from core technological competence (Löfsten and Lindelöf, 2005; Baines and Lawton Smith, 2020) and thus would find it difficult to play to the existing market categories or known market preferences. That only one out of the participating USOs had a clear screening stage illustrates this foundational difference between large firms and micro new high-tech firms.

The practice-based view of innovation, with the two complementary logics of development and production, further illustrates the cyclical learning that occurs within an individual stage with customer feedback playing a crucial role in every step of the process in USO contexts. The findings show the learning loops of academic entrepreneurs and USOs founders in terms of changing and adapting according to the problems or market’s requirements, as well as learning from the experience to feed into further improvement and development of their offerings (Deakins and Freel, 1998). Customer feedback plays a role in the adaptation and iteration of both service offerings and prototypes, aligning with Ettlie and Rosenthal's (2011) findings that both product and service processes are relatively alike in terms of recognising and prioritising the importance of customer feedback. The role of customer feedback continues beyond the launch, which appears to bridge the distance between cutting edge research and customer needs.

The role of customer feedback may explain some counter-intuitive findings. For example, USOs were found to only engage with the logic of development in the opportunity phase (i.e., concept testing and business analysis) even though systematic and formal analysis (logic of production) seemed more likely. An explanation can be offered as USOs informally gauge or evaluate business opportunities informally through meeting and discussing with potential customers. By contrast, in the commercialisation phase, only the logic of production is employed as system formalisation is required, e.g. to build customers database or to set up sales contracts. The interplay of both logics is evident in Idea (i.e. Idea generation), Development (i.e. Product/service development, test market) and Monitoring phases. For example, in idea generation, the logic of development was employed to understand and make sense of how scientific discovery or academic research can be exploited to respond to the gap in the business or market. Then, the logic of production came into play in giving a system to the ideas by either formalising, protecting the ideas (through IP or copyright) and scoping the idea to align with the firm’s objectives and missions. With the interplay, the patterns and routines have emerged and practice is created.

The findings have contributed firstly to the academic entrepreneurship literature. They shed light on the process of how academic research is transferred and commercialised through the practice-based lens, which has not been studied extensively in academic entrepreneurship. The study has extended the study by Vohora et al. (2004) that each development phase carried out by USOs involves an iterative, non-linear process of development, by demonstrating the process through the reconciled model of practice and the linear model. Second, this research contributes to practice-based innovation by exemplifying and substantiating on how the logics of development and production (Ellström, 2010) are used by actors and how these two logics interact to form practices to create innovation. Third, based on USOs as micro firms, this research supports the wider argument made in the product/service innovation literature, that the norms and principles of product/service development in small firms are fundamentally different to those of large businesses (Gimenez-Fernandez et al., 2020; Silva and Moreira, 2021). What is conventionally regarded as best practice (e.g. Kahn et al., 2006; Cooper and Kleinschmidt, 1995) originating from the perspective of large firms, may not be readily useful for small to micro firms such as USOs. Fourth, reconciling practice-based and linear models gives some structure to the complexity faced by academic entrepreneurs and TTOs with regards to the operationalisation of the products/services development processes. This information might be helpful to TTOs as they continue to improve a support infrastructure that is fit for purpose. Support for USOs involves a delicate balance of multiple challenges, such as the learning capacity necessitated by novel technology vs. finding a route to market under time and resource constraints, which could be further explored using the practice-based perspective.

6 Limitations

The data collected from twenty in-depth interviews has only explored and illustrated the process in developing products/services of UK USOs. They give an initial understanding and examples of how the process starts, various elements of each activity that connect to create the process, and the different logics of practices employed in the process. The data therefore do not conclusively represent the industries or sectors as a whole.

Additionally, during the process of data collection, in-depth interviews were only conducted with academic founders of USOs rather than with research and development managers or product managers, who subsequently joined these firms. This also limits the qualitative data and findings. At the early stage when the firms were established, academic founders had general and extensive knowledge on product/service development and had even performed the development of product/service from initial ideas or concepts. Hence, qualitative data from interviews with only academic founders are limited to a particular perspective on product/service development of the firms.

7 Conclusion and further implications

This article addresses the research question of “What are the practices of product/service innovations adopted by USOs?” We explore the processes and practices in developing products/services within the USOs as a proxy for micro innovative firms. The study reconciles the linear model of innovation with a practice-based perspective, recognising both the value and limitations from each concept.

The processes of developing products and services as observed in USOs are not fully structured, with cyclical feedback loops and iterations throughout. By mapping the seemingly less-structured process onto the linear model, we could identify main phases of development as Ideas, Opportunities, Development, Commercialisation and Monitoring. The cyclical learning and permeability between otherwise distinct phases in the linear model are underpinned by the logic of development (i.e. variation and knowledge creation), and the logic of production (i.e. efficiency and execution), on the basis of timely responses to customer feedback.

This study contributes to the academic entrepreneurship literature and practice-based innovation mainly by explicating the process of product and service development. The study provides some evidences to support the study by Siegel and Wessner (2012) that ties and linkages to universities add value to the success of technological start-ups. In the case of USOs, they are conceived from universities; they generally remain connected with universities and continue being recipients of knowledge and innovations that contribute to their product/service innovations as well as their future success. Bringing the practice-based perspective into the linear model demonstrates how the logics of development and production (Ellström, 2010) interact and facilitate the innovation process. This way of progressing in the new product and service development pathway traces back to the combination of technological and market novelty, as well as resource limitations, which speaks to the distinctiveness of USOs compared to larger firms and other micro firms.

There are some policy implications for those involving in USOs innovation processes. The apparent lack of standardised process should not be viewed as merely chaotic or unmanageable. Instead, when appropriately understood, practice-based and other learning perspectives could enrich the linear model that has been the commonly understood framework for the range of stakeholders from both technology and market backgrounds.

Since the process shown in this study only gives an initial illustration of how products and services are developed by broad firm types (i.e. product, consultancy, and software), further investigation by sector can be undertaken to present a clearer picture of learning and work practices, such as in engineering, biotechnology, software, or various consulting/service providers. A comparison and a more focussed picture can then be obtained regarding the differences between development sectors in which USOs operate.