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Explore Innovation

Innovation matters – of course

Continuous innovation is the lifeblood of organisations. Otherwise they risk falling behind in today’s turbulent and complex environment; they survive or fail, grow or decline, depending on how good they are at product or service innovation as well as process innovation. The management of innovation is an important task to guarantee the necessary degree and outcome of innovation activities. At the same time, innovation management is subject to various challenges – some of which we want to address here.

We’re all still learning – and that’s where the Innovation Lab comes in.

Economic and sustainability-oriented innovation management has been predominantly concerned with guaranteeing the economic success of products and services innovations (e.g. market success). As a matter of changed environmental conditions, regulatory pressure, and changing customer preferences, firms are increasingly stimulated to also consider ecological and social aspects in innovation management. Accordingly, it has become of interest how a joint consideration of economic aspects, on the one hand, and ecological or social aspects, on the other, can be achieved. Such “sustainability-oriented innovations” aim at market success whilst simultaneously achieving ecological and/or social good (or minimizing harm). Environmental friendly products/services and technologies is one potential avenue; targeting priory disregarded markets such as the poor (“base-of-the pyramid” innovation) or elderly are others.In order to pursue such ends, cross-functional collaboration is a necessary condition and entirely new organisational skills and capabilities are required. Researchers, practitioners and other innovation experts alike are necessary for advancing the knowledge for such new perspectives.Our research reveals a number of principles around which learning on these issues can take place, based on the experience of organisations experimenting in this way. We have structured this according to a simple process model of innovation with seven key dimensions: Search, Select, Implement, Controlling, Innovation Environment, Innovation Strategy and Innovation culture.

Closed and open innovation

The research and development function with its responsibility for developing new product and services is usually said to lie at the heart of the corporation. The internal innovation projects are often considered confidential and, before market launch, few others get in touch with the new developments.  In this “closed innovation” paradigm, companies focus solely on the capabilities of the R&D function for developing new products/services or processes.
However, companies have increasingly understood that also other sources of innovation exist, for instance, customers, employees and suppliers. Moreover, even critical stakeholders such as non-governmental organizations and pressure groups can deliver important input the organisations’ innovation processes. This approach of “open innovation” multiplies the number and diversity of innovative ideas and solutions.
Together, closed and open innovation approaches maximize the potential for a successful innovation management. At the same time, each approach requires a particular set of capabilities. A range of instruments and tools already exist to support organisations in leveraging the diverse sources of innovation (e.g. lead user method, innovation contests and innovation intermediaries) and further ones are being developed. No one best approach exists for mastering such challenges. Accordingly, the interplay and mutual exchange between researchers and practitioners can be an important asset in mastering such challenges.

Continuous and discontinuous innovation

When organisations are mature and operating in mature markets, they develop sophisticated suites of routines that they constantly modify through an adaptive learning process to retain competitive edge, pushing the boundaries of existing products and processes. In this phase of a firm‘s life, there is a high degree of imitation and an incremental pattern to innovation in products and processes.However, every now and then, new technology regimes, political and/or regulatory changes, amongst others, rewrite the rules of the game. Companies that have developed the ability to deal effectively with continuous incremental innovation are not necessarily prepared to deal with discontinuous innovation. Ironically, it is often the firms that excel at managing innovation in a »steady-state« environment that suffer most when discontinuous shifts occur.In order to successfully deal with discontinuous shifts, organisations need to experiment, imitate, adapt and in other ways learn new routines, which can become structured and embedded. Searching in unlikely places, building links to strange partners, allocating resources to high risk ventures, exploring new ways of looking at the business – all of these challenge the ‘normal’ way we approach the innovation problem. And while we know a lot about how to manage the steady state kind of innovation, we’re much less clear about where and how to start building discontinuous innovation capability. Smart firms are carrying out various experiments in this direction , but no-one could claim to have found ‘the’ answer.

A generic model for innovation management

Environment

How can you better understand the complexity of a market and the forces which drive it? There are many important local, national and global factors including capital, infrastructure, regulations, workforce skills and knowledge, human resources, ecological conditions, geographical climate, etc. which define the environment and the dynamics of an industry.

Innovation Strategy

A prerequisite for successful innovation management is that the top management of an organisation embarks on a strategy. The innovation strategy has to fit to the needs, environment and culture of the company. Successful innovations require a strategy that is clearly understood by all stakeholders in the organisation.

Select
The evaluation and selection process is one of the great challenges in innovation management. One possibility is "prototyping". It can help to test technical feasibility as well as to increase awareness and understanding for customer and market requirements.

Implement
Innovative organisations have to have the ability to overcome innovation barriers like the lack of competent people, non-existing project management structures or internal resistance. Effective time and personnel management are decisive innovation factors. How can an organisation establish a cross-functional team which further develops ideas or prototypes into innovations and achieves a market success?

Control
Innovation is not easily quantifiable. The most common method of measuring innovation is by using indicators like different input-, and output-indicators. Money spent on R&D does not always equal successful innovation.

Innovation Culture

Culture can be defined as "the predominating attitudes and behaviour that characterize the functioning of a group or organisation". There is no definitive recipe for creating a culture of innovation within an organisation.

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