Innovation Management

Abstract

Innovation management is the discipline that allows an organization to mindfully respond to the need to continuously develop new products and services, while also creating the infrastructure within the organization that will facilitate smoother navigation of unanticipated developments with which the organization must contend. For example, an automobile manufacturer would rely on its innovation managers to supervise the ongoing search for new ways to improve the company's cars and make them more attractive to consumers, and they would also look to this group if there were a sudden shift in the regulatory environment.

Overview

Innovation management is an idea that has garnered increasing interest in the business world, as trends toward globalization and automation have made the marketplace more competitive. Companies have come to realize that they can no longer continue to conduct business as usual until one of their employees eventually thinks of a game changing idea that the company can then pursue. Instead, it has become necessary to harness the seemingly unpredictable forces of individual creativity and to devise a process by which these can regularly be employed to generate innovations capable of sustaining the company and driving its products forward in the market. To fail to do so invites the risk of being overtaken by one's competitors, and eventually driven out of the market altogether (Nambisan et al., 2017).

The notion that one can systematize creativity is one that most people respond to with skepticism. This is because creativity has traditionally been understood as a more or less random force that seems to "come out of nowhere." An image frequently associated with this definition of creativity is that of Sir Isaac Newton seated beneath an apple tree, with an apple having just struck him on the head, instantly causing him to perceive the true nature of gravity. In popular culture, it is common for people to think of creativity as something that is unpredictable, and a force about which very little is known. If this were the case, then companies seeking to harness creativity would be in for a difficult time, because there would be no way of knowing who might have the next great idea or when it might come (Ludmila & Masadeh, 2017).

Innovation management sees creativity differently. While it is not now and may never be something that is completely predictable, it is possible to create conditions in which it is more likely to occur. This task is at the heart of what innovation managers do: They provide an environment in which creativity can flourish and establish processes through which new ideas can be generated and evaluated on a regular basis. For example, a company that does not understand innovation management might encourage its engineers to simply spend their days reading journal articles about new engineering discoveries, hoping that eventually one of them would come up with a brilliant new idea. This might work from time to time, but for the most part it would just involve a large number of highly educated people waiting around for inspiration to strike. Innovation management would not support an approach such as this one. Instead, it might employ a creativity-building strategy such as brainstorming to get the engineers to look at a problem or a particular design, and throw out ideas—no matter how bizarre—about how to fix it. Knowing about strategies like this, and when and how to employ them, is what innovation managers do (Yasini, 2016).

Many entrepreneurs enter into the world of business unaware of the need for continuous innovation. They tend to have the sense that they have already had one great idea for a business, and that one idea is all they will need. While this might be true for a coffee shop in a small town, or a manufacturer of a distinctive and classic type of toy always in demand, for most companies innovation is not and cannot be a one time affair. A business might launch based on a single, innovative product or service, but before much time has passed, other companies will seek to imitate its success by offering similar goods at a competitive price. At that stage, the only options for the original business will be to somehow outdo the competitors in terms of quality or value, or to come up with something new—in other words, to innovate (Fran & Xavier, 2017).

The fast food industry is a prime example of how innovation drives a company's fate. In the beginning, the very idea of fast food was enough of an innovation on which to base a business: A customer could have a meal quickly and conveniently, with or without staying at the restaurant. Soon, however, other fast food chains cropped up, competing with the original by offering different types of food or preparation methods, at similar prices or lower.

In order to remain competitive, the original restaurant chain needed to innovate, so it started serving breakfast as well as lunch and dinner fare. This proved popular, and almost immediately other chains followed suit, imitating the innovation and thereby neutralizing it. This made yet another innovation necessary, and the process has continued. The reason that innovation is continuously necessary for most actors in the marketplace is that there is constant change in almost all of the market's relevant factors: People's tastes and needs change over time, manufacturing capabilities and technology change, government regulations on industry change, and even societal attitudes evolve. Given this environment that is constantly in flux, it is clear that businesses must innovate merely to keep up with the pace of change, to say nothing of attempting to stay ahead of it (Innovation management in context, 2017).

Further Insights

Although it can be difficult to generalize about a topic as varied as innovation management, there are two broad categories of innovation that innovation management is concerned with: push innovation and pull innovation. Push innovation describes a technology that exists, but which a company wishes to improve upon in some fashion (Alecusan Ana & Dimitrescu, 2016). For example, an automobile manufacturer might have an engine design that is so efficient that the vehicle is able to get forty miles per gallon of fuel. Competition in the marketplace will eventually place pressure on the company to improve this figure, in effect, pushing the firm to innovate by making the vehicle still more fuel efficient. In other words, the technology already exists, and the innovation effort seeks to push it further to achieve greater results.

Pull innovation describes a very different scenario. Here, the company identifies an unmet need in the marketplace, and is then pulled forward by this need, to discover a means of fulfilling it. Pull innovation is basically the classic notion of seeking to "build a better mousetrap"—that is, one that actually works. The phrase comes from the idea that if an inventor were to create a truly effective means of capturing mice, the public would "beat a path to the door" in its rush to purchase it. The task with pull innovation is to come up with an innovation that will fill an existing need, as opposed to finding a way to improve a known device or process (Leonard & Fuji, 2017).

At one time it was common for companies to intensely compete with one another to try to come up with lucrative innovations before anyone else. Such innovations, whether secret recipes or top secret methods of manufacture, often became closely guarded trade secrets. In the modern world, a more collaborative approach to innovation has become necessary, and many companies now pursue this approach. The reason for collaborating with others who might once have been considered rivals is that the economy and the field of innovation has become so complex that most companies find it expedient to specialize in a part of the product life cycle, rather than try to master every stage. Whether it is due to chance or to design, one company might be far better at marketing than it is at manufacturing. Upon realizing this, the company might rationally decide to collaborate with other firms, helping them with their marketing while benefiting from their expertise in manufacturing.

The same types of cooperation occur within innovation management, with some companies better at virtual prototyping while others are adept at project management. It is therefore not uncommon for companies engaged in innovation management to participate in innovation networks, which are composed of those with experience at innovation in a particular field or region. This practice has been termed open innovation in some contexts, because it is intended to allow for the open exchange of ideas between various entities, rather than having new ideas remain locked away for fear that a competitor might stumble upon them and seize the opportunity (Saray, Patache & Ceran, 2017).

Issues

Innovation management does have its critics, primarily among those who feel that the creative process is something that is too esoteric to be managed or held to a rigid schedule of accountability. Those who hold this opinion have much in common with the traditional view of innovation as the product of sudden inspiration. Innovation, however, is known to operate a practical level, developing useful products and advances that are limited in scope yet still important, such as a more efficient engine or a more effective pain relief medication. The differences of opinion regarding the field of innovation management are thus attributable to the fact that each side of the debate is referring to a different type of innovation. It may not be possible to systematize genius-level innovation like that of an Einstein or a Picasso, but it is feasible to facilitate the type of everyday innovation that companies rely on to remain competitive (Łukowski, 2017). This sort of innovation can be encouraged by strategies as simple as creating a more relaxed workplace environment, or creating informal teams of employees tasked with working together to arrive at imaginative alternatives for solving stubborn conundrums.

From time to time there has been confusion between the activities involved in innovation management, and those that are traditionally a part of research and development (R&D). Rather than the two terms being synonymous with one another, innovation management is actually the broader concept, and contains within it R&D. R&D involves hands-on experimentation and data analysis, whether this takes the form of writing computer code, developing new materials for manufacturing, or synthesizing chemical compounds for use in experimental medications. Innovation management includes much more than this, as it addresses processes that occur long before research and development can begin, and carry on long after it has concluded.

In particular, before research and development can begin, market research and needs assessment activities must be coordinated by innovation management professionals, in order to identify a gap in the market which can be filled by a new product or service. Failing to take these necessary steps before engaging in R&D often results in resources and time being expended unnecessarily, as R&D may often uncover solutions to problems that are considered insignificant by most consumers, or solutions that are impractical to transform into products for consumers (Dorin et al., 2017).

Terms & Concepts

Creative Destruction: An idea from the field of economics that suggests that systems of innovation as well as systems of finance operate in cycles whereby the established order is undermined from within, to eventually be replaced by a new order that is the product of some form of innovation. This is termed creative destruction because the old order is destroyed as part of the creation of the new order.

Disruptive Innovation: A type of innovation seen in the business arena, where an existing system is turned on its head or made obsolete by an unexpected innovation arriving on the scene. In creative destruction the change comes from within, but with disruptive innovation the change typically arrives from outside an organization or industry. The emergence of ride sharing services is often cited as an example of an innovation that disrupted the taxi cab industry.

Knowledge Management: Knowledge management is an important component of innovation management, and involves an organization taking stock of its collective wisdom, recording it and making it accessible, and then applying it to solve problems. The field of knowledge management began to emerge when companies came to realize that many of the most intractable problems standing between them and successful innovation were solvable using information already in the company's possession, but the problem was that the company could not access that information. The company essentially did not know what it knew.

Open Innovation: A movement within the field of innovation management that encourages researchers to share information with one another so that greater progress may be achieved by all concerned, rather than keeping research into new products secret. This is a fairly new approach to managing the process of innovation, as in the past trade secrets were closely guarded in order to avoid losing a competitive advantage.

Product Lifecycle: A description of the various stages involved in a product from its conception to its eventual discontinuation and disposal. Other stages include design, manufacturing, marketing, distribution, customer service. Innovation management is primarily concerned with the conception stage of the product lifecycle.

Step Change: A change that is sudden or unexpected and that alters a process or product in a major way. The term is similar to the concept of a disruptive innovation.

Virtual Prototyping: An innovation management technique that uses computer modeling to quickly develop digital simulations of products still in development, so they can then be tested and evaluated to determine how well they perform. Using computers to simulate a prototype is much faster than having to actually manufacture a prototype, so virtual prototyping allows companies to try a greater number of potential solutions.

Bibliography

Alecusan Ana, M., & Dimitrescu, A. (2016). Innovation management: The past, present and future of the market. Studies in Business and Economics, 11(3), 140–149. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=121014198&site=ehost-live

Dorin, M., Irmer, S., Astrid, F., & Andreea, M. (2017). Development and operationalization of a model of innovation management system as part of an integrated quality-environment-safety system. Amfiteatru Economic, 19(44), 302–314.

Fran, M., & Xavier, F. (2017). Innovation management from the inside: An approach from attention and everyday praxis. Intangible Capital, 13(3), 640–667.

Innovation management in context: Environment, organization and performance. (2017). IEEE Engineering Management Review, (2), 43.

Tchuta, L., & Fuji, X. (2017). Towards a synergic innovation management model: The interplay of market, technology, and management innovations. International Journal of Business & Economic Development, 5(1), 60–70.

Ludmila, B., & Masadeh, A. (2017). Innovation management: The importance of leadership and teamwork in business organizations. Economica, 2(100), 51–61.

Łukowski, W. (2017). The impact of leadership styles on innovation management. Marketing of Scientific and Research Organisations, 24(2), 105–136.

Nambisan, S., Lyytinen, K., Majchrzak, A., & Song, M. (2017). Digital innovation management: Reinventing innovation management research in a digital world. MIS Quarterly, 41(1), 223–238. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=121204229&site=ehost-live

Saray, H., Patache, L., & Ceran, M. B. (2017). Effects of employee empowerment as a part of innovation management. Economics, Management, and Financial Markets, (2), 88. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=124031528&site=ehost-live

Yasini, P. (2016). Specific characteristics of innovation management process. International Journal of Organizational Leadership, 162.

Suggested Reading

Brexendorf, T. O., Bayus, B., & Keller, K. L. (2015). Understanding the interplay between brand and innovation management: Findings and future research directions. Journal of the Academy of Marketing Science, (5), 548. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=108742538&site=ehost-live

Dorin, M., Livia, A., Roxana, S., & Thorsten, E. (2015). Measuring the capacity of organizations innovation—Major process of innovation management. Amfiteatru Economic, 17(9), 1156–1166.

Esmaeilpoorarabi, N., Yigitcanlar, T., & Guaralda, M. (2018). Place quality in innovation clusters: An empirical analysis of global best practices from Singapore, Helsinki, New York, and Sydney. Cities, 74, 156–168. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=127761145&site=ehost-live

Galasso, A., Mitchell, M., & Virag, G. (2018). A theory of grand innovation prizes. Research Policy, 47(2), 343–362. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=127672702&site=ehost-live

Jain, R. (2016). Innovation management: Conceptualization for practice & research. Indian Journal of Industrial Relations, (2), 203. Retrieved January 1, 2018 from EBSCO Online Database Business Source Ultimate. http://search.ebscohost.com/login.aspx?direct=true&db=bsu&AN=119789777&site=ehost-live