Innovation Management

Learning Outcomes

• This unit aims to teach how to manage innovation effectively.
• The unit will allow you to understand the capabilities needed to manage innovation.
• The study notes will help learners to understand the different perspectives of the innovation.
• A goal is to understand consequences of the innovation processes.
• You will become familiar with Tidd and Bessant's innovation management framework.
• The unit will let you understand the influences on the innovation process.

Innovation Management Capabilities

• A continuum exists, ranging from companies with little awareness of the need for change to those with highly developed systems.
• Some companies develop specific capabilities but may get trapped by them, stifling innovation.
• Competence traps can become organizational constraints known as core rigidities.

Firm Typology

• As firms move along a continuum concerning awareness of the need for change, they transition from passive to reactive, and ultimately to proactive and creative.
• Disruptive innovators create products/services with a price/performance ratio that has the potential to become markedly superior.

Innovation Management Capabilities

• Resources for innovation can be tangible (machinery) or intangible (knowledge).
• Core capabilities in managing innovation include: 1) search, 2) select, 3) implement, and 4) capture.
• There is an overarching capability of learning that feeds back at each stage.

Dynamic Capabilities

• Dynamic capabilities encompass sensing, learning, integrating, and coordinating.
• Sensing capability involves spotting, interpreting, and pursuing opportunities.
• Learning capability revamps operational capabilities with new knowledge.
• Integrating capability embeds new knowledge into operational capabilities through shared understanding.
• Coordinating capability orchestrates and deploys tasks, resources, and activities in new operational capabilities.

Rothwell's Innovation Models

• Rothwell identified five generations of innovation models.
• Early models were linear.
• Third-generation models were coupling models with feedback loops, which consider both technology and market aspects.
• Fourth-generation models integrate upstream suppliers and downstream customers.
• Fifth-generation models build and work in networks.
• Fifth-generation models include collaboration with universities, competitors, and partners.
• Fifth-generation models operate in broader ecosystems.

Running in Packs

• Smaller firms or entrepreneurs running in packs can find more success than going it alone.

Innovation Process: Search

• Search presents different challenges based on company size.
• Pharmaceutical companies search databases/patents.
• P&G (fast-consumer goods) starts with market research.
• Project-based organizations survey customer base/competitors.
• City councils must understand the needs of the local population.
• Tools for search include: innovation jams, Innocentive, Agorize, biomimicry.

Innovation Process: Selection

• Selection chooses an innovation concept or idea.
• Tools for selection include: stage gate models and portfolio management tools.
• Voting contests that involve customers are also a useful selection tool.

Innovation Process: Implement and Capture

• Implementation requires acquiring resources and executing the project.
• Consider whether to work solo or in collaboration (running in packs).
• Consider appetite when testing innovations.
• Creating a marketing strategy is important for implementation.
• Value can be captured through in-licensing, out-licensing, revealing or knowledge hoarding.
• Failure provides an opportunity for learning.

Key Points on Innovation

• The process model of innovation is a helpful framework, but is only a model.
• The reality is complex and varies by sector, enterprise size, and industry lifecycle.
• The car-manufacturing sector is scale intensive.
• The pharmaceutical (R&D) sector is science-intensive.
• Small firms have fewer resources than larger ones but can develop more linkages.
• Mature industries focus on process innovation more than product innovation.
• Some sectors are heavily regulated (health, food).