Innovation management

Innovation management is the management of innovation processes. It refers both to product and organizational innovation.

Innovation management includes a set of tools that allow managers and engineers to cooperate with a common understanding of processes and goals. Innovation management allows the organization to respond to external or internal opportunities, and use its creativity to introduce new ideas, processes or products.[1] It is not relegated to R&D; it involves workers at every level in contributing creatively to a company's product development, manufacturing and marketing.

By utilizing innovation management tools, management can trigger and deploy the creative capabilities of the work force for the continuous development of a company.[2] Common tools include brainstorming, virtual prototyping, product lifecycle management, idea management, TRIZ, Phase–gate model, project management, product line planning and portfolio management. The process can be viewed as an evolutionary integration of organization, technology and market by iterating series of activities: search, select, implement and capture.[3]

Innovation processes can either be pushed or pulled through development. A pushed process is based on existing or newly invented technology, that the organization has access to, and tries to find profitable applications for.

A pulled process is based on finding areas where customers needs are not met, and then find solutions to those needs.[4] To succeed with either method, an understanding of both the market and the technical problems are needed. By creating multi-functional development teams, containing both engineers and marketers, both dimensions can be solved.[5]

The product lifecycle of products is getting shorter because of increased competition. This forces companies to reduce the time to market. Innovation managers must therefore decrease development time, without sacrificing quality or meeting the needs of the market.[4]

Definition

In a survey of literature on innovation, Edison et al.[6] found over 40 definitions. They also performed an industrial survey to capture how innovation is defined in the software industry. After analysis of the existing definitions whether these definitions comprehensively cover all the dimensions of innovation, they found the following definition to be the most complete: "Innovation is: production or adoption, assimilation, and exploitation of a value-added novelty in economic and social spheres; renewal and enlargement of products, services, and markets; development of new methods of production; and establishment of new management systems. It is both a process and an outcome.". This definition was given by Crossan and Apaydin and it builds on the OECD manual's definition.

Edison et al.[7] also found two interesting dimensions of innovation including: degree of novelty (i.e. whether an innovation is new to the firm, new to the market, new to the industry, and new to the world) and type of innovation (whether it is process or product/service innovation).

Innovation Management

Innovation management is based on some of the ideas put forth by the Austrian economist Joseph Schumpeter, working during the 1930s, who identified innovation as a significant factor in economic growth.[8] His book “Capitalism, Socialism and Democracy” first fully developed the concept of creative destruction.

Innovation management helps an organization grasp an opportunity and use it to create and introduce new ideas, processes, or products industriously.[1] Creativity is the basis of innovation management; the end goal is a change in services or business process. Innovative ideas are the result of two consecutive steps, imitation and invention.[9]

By utilizing innovation management tools, management can trigger and deploy the creative capabilities of the work force for the continuous development of a company.[2] Common tools include brainstorming, virtual prototyping, product lifecycle management, idea management, TRIZ, Phase–gate model, project management, product line planning and portfolio management. The process can be viewed as an evolutionary integration of organization, technology, and market, by iterating series of activities: search, select, implement and capture.[3]

Innovation processes can either be pushed or pulled through development. A pushed process is based on existing or newly invented technology that the organization has access to. The goal is to find profitable applications for the already-existing technology. A pulled process, by contrast, is based on finding areas where customers' needs are not met and finding solutions to those needs.[4] To succeed with either method, an understanding of both the market and the technical problems are needed. By creating multi-functional development teams, containing both engineers and marketers, both dimensions can be solved.[10]

Innovation, although not sufficient, is a necessary prerequisite for the continued survival and development of enterprises. The most direct way of business innovation is technological innovation and institutional innovation. Management innovation, however, plays a significant role in promoting technological and institutional innovation.

The goal of innovation management within a company is to cultivate a suitable environment to encourage innovation.[11] The suitable environment would help the firms get more cooperation projects, even ‘the take-off platform for business ventures’.[11]:57 Senior management's support is crucial to successful innovation; clear direction, endorsement, and support are essential to innovation pursuits.[12]

Innovation measurement

A key fundamental requirement for being able to manage innovation is to be able to measure and assess the various aspects of the process of innovation and its outcome. Henry et al.[6] in their review of literature on innovation management found 232 metrics. They categorized these measures along five dimensions i.e. inputs to the innovation process, output from the innovation process, impact of the innovation output, measures to assess the activities in an innovation process and availability of factors that facilitate such a process.[6]

Managing complex innovation

Innovation is a change that outperforms a previous practice. To lead or sustain with innovations, managers need to concentrate heavily on the innovation network, which requires deep understanding of the complexity of innovation. Collaboration is an important source of innovation. Innovations are increasingly brought to the market by networks of firms, selected according to their comparative advantages, and operating in a coordinated manner.

When a technology goes through a major transformation phase and yields a successful innovation, it becomes a great learning experience, not only for the parent industry but other industries as well. Big innovations are generally the outcome of intra- and interdisciplinary networking among technological sectors, along with combination of implicit and explicit knowledge. Networking is required, but network integration is the key to success for complex innovation. Social economic zones, technology corridors, free trade agreements, and technology clusters are some of the ways to encourage organizational networking and cross-functional innovations.

See also


References

  1. 1 2 Kelly, P. and Kranzburg M. (1978). Technological Innovation: A Critical Review of Current Knowledge. San Francisco: San Francisco Press.
  2. 1 2 Clark, Charles H. (1980). Idea Management: How to Motivate Creativity and Innovation. New York: AMACOM.
  3. 1 2 Tidd, Joe and Bessant, John (2009). Managing Innovation: Integrating Technological, Market and Organizational Change 4e - first ed. with Keith Pavitt. Chichester: Wiley.
  4. 1 2 3 Trott, Paul (2005). Innovation Management and New Product Development. Prentice Hall. ISBN 0273686437.
  5. ↑ Boutellier, Roman; Gassmann, Oliver and von Zedtwitz, Maximilian (2000). Managing Global Innovation. Berlin: Springer. p. 30. ISBN 3-540-66832-2.
  6. 1 2 3 Edison, H., Ali, N.B., & Torkar, R. (2013). Towards innovation measurement in the software industry. Journal of Systems and Software 86(5), 1390-1407. Available at: http://www.torkar.se/resources/jss-edisonNT13.pdf
  7. ↑ Edison, H., Ali, N.B., & Torkar, R. (2013). Towards innovation measurement in the software industry. Journal of Systems and Software 86(5), 1390-1407. Available at: http://www.torkar.se/resources/jss-edisonNT13.pdf
  8. ↑ Scocco, Daniel (29 July 2006). "Innovation and Schumpeter’s Theories". Retrieved 2014.
  9. ↑ Godin, Benoît (2008). "Innovation: the History of a Category". Project on the Intellectual History of Innovation.
  10. ↑ Boutellier, Roman; Gassmann, Oliver and von Zedtwitz, Maximilian (2000). Managing Global Innovation. Berlin: Springer. p. 30. ISBN 3-540-66832-2.
  11. 1 2 Rickne, Annika; Laestadius, Staffan; Etzkowitz, Henry (2012). Innovation Governance in an Open Economy: Shaping Regional Nodes in a Globalized World. United States and Canada: Routledge.
  12. ↑ Wong, Stanley Kam Sing (2012). "The role of management involvement in innovation". Management Decision 51 (4): 709–729.

Further reading

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