As a consequence of these findings, not only the focus of research in this area but also the notions used to characterize it changed. Many of these have a cross-disciplinary orientation, illustrating the need for innovation to be studied from different perspectives. Several journals and professional associations have also been founded. The leaning towards cross-disciplinarity that characterizes much scholarly work in this area reflects the fact that no single discipline deals with all aspects of innovation. Hence, to get a comprehensive overview, it is necessary to combine insights from several disciplines.
A lot of what happens obviously has to do with learning, a central topic in cognitive science. Such learning occurs in organized settings e.
International Journal of Entrepreneurship and Innovation Management
Moreover, as economic geographers point out, learning processes tend to be linked to specific contexts or locations. The way innovation is organized and its localization also undergo important changes through time, as underscored by the work within the field of economic history. There is also, as historians of technology have pointed out, a specific technological dimension to this; the way innovation is organized, as well as its economic and social effects, depends critically on the specific nature of the technology in question.
Two decades ago, it was still possible for a hard-working student to get a fairly good overview of the scholarly work on innovation by devoting a few years of intensive study to the subject. Not any more. Today, the literature on innovation is so large and diverse that even keeping up-to-date with one specific field of research is very challenging. The purpose of this volume is to provide the reader with a guide to this rapidly expanding literature.
A Complete Guide to Innovation Management
We do this under the following broad headings:. Part One focuses on the process through which innovations occur and the actors that take part: individuals, firms, organizations, and networks. As we will discuss in more detail below, innovation is by its very nature a systemic phenomenon, since it results from continuing interaction between different actors and organizations.
Part Two outlines the systems perspective on innovation studies and discusses the roles of institutions, organizations, and actors in this process at the national and regional level. Part Three explores the diversity in the manner in which such systems work over time and across different sectors or industries. Finally, Part Four examines the broader social and economic consequences of innovation and the associated policy issues.
The remainder of this chapter sets the stage for the discussion that follows by giving a broad overview of some of the central topics in innovation studies including conceptual issues. An important distinction is normally made between invention and innovation. Sometimes, invention and innovation are closely linked, to the extent that it is hard to distinguish one from p. In many cases, however, there is a considerable time lag between the two.
In fact, a lag of several decades or more is not uncommon Rogers Such lags reflect the different requirements for working out ideas and implementing them. While inventions may be carried out anywhere, for example in universities, innovations occur mostly in firms, though they may also occur in other types of organizations, such as public hospitals. To be able to turn an invention into an innovation, a firm normally needs to combine several different types of knowledge, capabilities, skills, and resources.
For instance, the firm may require production knowledge, skills and facilities, market knowledge, a well-functioning distribution system, sufficient financial resources, and so on.
Edited by Jan Fagerberg and David C. Mowery
It follows that the role of the innovator, 3 i. Indeed, history is replete with cases in which the inventor of major technological advances fails to reap the profits from his breakthroughs. Long lags between invention and innovation may have to do with the fact that, in many cases, some or all of the conditions for commercialization may be lacking. There may not be a sufficient need yet! Thus, although Leonardo da Vinci is reported to have had some quite advanced ideas for a flying machine, these were impossible to carry out in practice due to a lack of adequate materials, production skills, and—above all—a power source.
The Why, What, and How of Management Innovation
In fact, the realization of these ideas had to wait for the invention and subsequent commercialization and improvement of the internal combustion engine. Another complicating factor is that invention and innovation is a continuous process. In fact, the first versions of virtually all significant innovations, from the steam engine to the airplane, were crude, unreliable versions of the devices that eventually diffused widely.
Kline and Rosenberg , in an influential paper, point out:. The fact is that most important innovations go through drastic changes in their lifetimes—changes that may, and often do, totally transform their economic significance. The subsequent improvements in an invention after its first introduction maybe vastly more important, economically, than the initial availability of the invention in its original form.
Kline and Rosenberg : Joseph Schumpeter — was one of the most original social scientists of the twentieth century. He grew up in Vienna around the turn of the century, where he studied law and economics. For most of his life he worked as an academic, but he also tried his luck as politician, serving briefly as finance minister in the first post-World War I socialist government, and as a banker without much success.
He became professor at the University of Bonn in and later at Harvard University in the USA , where he stayed until his death. He published several books and papers in German early on, among these the Theory of Economic Development , published in and in a revised edition in English in Among his most well-known later works are Business Cycles in two volumes from , Capitalism, Socialism and Democracy , and the posthumously published History of Economic Analysis Very early he developed an original approach, focusing on the role of innovation in economic and social change.
It was not sufficient, Schumpeter argued, to study the economy through static lenses, focusing on the distribution of given resources across different ends. Economic development, in his view, had to be seen as a process of qualitative change, driven by innovation, taking place in historical time. As examples of innovation he mentioned new products, new methods of production, new sources of supply, the exploitation of new markets, and new ways to organize business.
The latter suggestion has been a constant source of controversy ever since. Sources : Swedberg ; Shionoya ; Fagerberg Thus, what we think of as a single innovation is often the result of a lengthy process involving many interrelated innovations. This is one of the reasons why p. However, in economics, most of the focus has been on the two first of these. He defined the former type as knowledge about how to create or improve products, and the latter as knowledge about how to produce them.
For instance, while the introduction of new products is commonly assumed to have a clear, positive effect on growth of income and employment, it has been argued that process innovation, due to its cost-cutting nature, may have a more ambiguous effect Edquist et al. However, while clearly distinguishable at the level of the individual firm or industry, such differences tend to become blurred at the level of the overall economy, because the product of one firm or industry may end up as being used to produce goods or services in another.
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The focus on product and process innovations, while useful for the analysis of some issues, should not lead us ignore other important aspects of innovation. Edquist et al. However, organizational innovations are not limited to new ways to organize the process of production within a given firm. Organizational innovation, in the sense used by Schumpeter, 7 also includes arrangements across firms such as the reorganization of entire industries.
Moreover, as exemplified by the case of the USA in the first half of the previous century, many of the most important organizational innovations have occurred in distribution, with great consequences for a whole range of industries Chandler Another approach, also based on Schumpeter's work, has been to classify innovations according to how radical they are compared to current technology Freeman and Soete Schumpeter focused in particular on the latter two categories, which he believed to be of greater p.
It is a widely held view, however, that the cumulative impact of incremental innovations is just as great if not greater , and that to ignore these leads to a biased view of long run economic and social change Lundvall et al. Arguably, the bulk of economic benefits come from incremental innovations and improvements. There is also the question of how to take different contexts into account. If A for the first time introduces a particular innovation in one context, while B later introduces the same innovation in another, would we characterize both as innovators?
This is a matter of convention. A widely used practice, based on Schumpeter's work, is to reserve the term innovator for A and characterize B as an imitator. But one might argue that, following Schumpeter's own definition, it would be equally consistent to call B an innovator as well, since B is introducing the innovation for the first time in a new context. In fact, as pointed out by Kline and Rosenberg , see Box 1. Introducing something in a new context often implies considerable adaptation and, hence, incremental innovation and, as history has shown, organizational changes or innovations that may significantly increase productivity and competitiveness see Godinho and Fagerberg in this volume.
Sometimes it easier to characterize a complex phenomenon by clearly pointing out what it is NOT. Research science comes first, then development, and finally production and marketing. Since research comes first, it is easy to think of this as the critical element. Hence, this perspective, which is often associated with Vannevar Bush's programmatic statements on the organization of the US research systems Bush , is well suited to defend the interests of researchers and scientists and the organizations in which they work.
The problems with this model, Kline and Rosenberg point out, are twofold. First, it generalizes a chain of causation that only holds for a minority of innovations.
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Although some important innovations stem from scientific breakthroughs, this is not true most of the time. Firms normally innovate because they believe there is a commercial need for it, and they commonly start by reviewing and combining existing knowledge. It is only if this does not work, they argue, that firms consider investing in research science. In fact, in many settings, the experience of users, not science, is deemed to be the most important source of innovation von Hippel ; Lundvall Shortcomings and failures that occur at various stages may lead to a reconsideration of earlier steps, and this may eventually lead to totally new innovations.
Leaving definitions aside, the fundamental question for innovation research is of course to explain how innovations occur. One of the reasons innovation was ignored in mainstream social science for so long was that this was seen as impossible to do. Schumpeter, in his early works, was one of the first to object to this practice. His own account of these processes emphasized three main aspects. The first was the fundamental uncertainty inherent in all innovation projects; the second was the need to move quickly before somebody else did and reap the potential economic reward.
In practice, Schumpeter argued, these two aspects meant that the standard behavioral rules, e. Other, quicker ways had to be found. This in his view involved leadership and vision, two qualities he associated with entrepreneurship. This may, to some extent, have been an adequate interpretation of events in Europe around the turn of the nineteenth century. But during the first decades of the twentieth century, it became clear to observers that innovations increasingly involve teamwork and take place within larger organizations see Bruland and Mowery Ch.
However, he did not analyze the phenomenon in much detail although he strongly advised others to. Systematic theoretical and empirical work on innovation-projects in firms and the management of such projects was slow to evolve, but during the last decades a quite substantial literature has emerged see chapters by Pavitt and Lam in this volume. In general, research in this area coincides with Schumpeter's emphasis on uncertainty Nelson and Winter ; Nonaka and Takeuchi ; Van de Ven et al. In particular, for potentially rewarding innovations, it is argued, one may simply not know what are the most relevant sources or the best options to pursue still less how great the chance is of success.
If in the end it turns out that there actually existed a superior path, which some other firm equipped with more patience or luck happened to find, the early mover may be in big trouble because then, it is argued, it may simply be too costly or too late to switch paths. The principal reason for this has to do with a fundamental characteristic of innovation: that every new innovation consists of a new combination of existing ideas, capabilities, skills, resources, etc. It follows logically from this that the greater the variety of these factors within a given system, the greater the scope for them to be combined in different ways, producing new innovations which will be both more complex and more sophisticated.
This evolutionary logic has been used to explain why, in ancient times, the inhabitants of the large Eurasian landmass came to be more innovative, and technologically sophisticated, than small, isolated populations elsewhere around the globe Diamond Applied mechanically on a population of firms, this logic might perhaps be taken to p. Firms have learnt, by necessity, to monitor closely each other's steps, and search widely for new ideas, inputs, and sources of inspiration. The more firms on average are able to learn from interacting with external sources, the greater the pressure on others to follow suit.
This greatly enhances the innovativeness of both individual firms and the economic systems to which they belong regions or countries, for instance. Arguably, this is of particular importance for smaller firms, which have to compensate for small internal resources by being good at interacting with the outside world. However, the growing complexity of the knowledge bases necessary for innovation means that even large firms increasingly depend on external sources in their innovative activity Granstrand, Patel, and Pavitt, ; and in this volume: Pavitt; Powell and Grodal; Narula and Zanfei.
This arguably reflects the cumulative and embedded character of firm-specific knowledge. A journalist by trade, Chuck has over 14 years of experience in online marketing, and over 10 years experience in business-to-business public relations. His interests include creative problem solving, visual thinking, photography, business strategy and technology. His unique combination of experience and influences enables him to envision new possibilities and opportunities. Innovation management is the process by which innovation is managed or dealt with by affecting certain decisions, practices and actions, as a response to a vision or an opportunity.
These decisions, practices and actions are aimed at achieving a certain target — to generate an idea, product or a service that is of sizeable business value. The innovation management process necessitates the use of certain management tools that assist in bringing both managers and other entities on a common platform and get them to move towards a common goal. These innovation management tools can be anything from a simple brainstorming session to something more complex like planning and prototyping.
Innovation management is a continuous closed process. It cycles between the following five stages:. Stage 1: Evaluating ideas. A wide array of ideas may be considered. However, it is essential to maintain balance in the ideation process so that too many stray ideas do not overpower the core objective. Stage 2: Conceptualizing the product.
In this stage, concepts are developed based on the accepted ideas. Other important criteria like investment required, break-even time and returns are evaluated. Stage 3: Demonstrating the plan. Once the customers or end-users interact with the demonstrated plan, it becomes possible to ascertain how much value the product will deliver to the customer.
This validation is vital for continuous improvement of the planned product. Stage 5: Developing the product. In this stage, the actual development of the product takes place. The earmarked investment is utilized on planned lines in order to build the product, or to commercialize the already developed product.
Innovation can be classified into several types, based on different classification models. However broadly classified, innovation can be cataloged into four main types:. Unlike management innovation, which takes care of all external factors and implications e. Innovation management is all about eliminating the obstacles to innovation. To formulate the perfect innovation management strategy is to identify a strategy that engages all stakeholders, and that accomplishes the desired results.
The innovation management strategy is nothing without proper implementation. Before an idea can be implemented, it needs to be tested. In many instances, testing an idea throws undesirable results, so it becomes necessary to reject the idea and start afresh. However, circumstances may arise where the results cannot be predicted. In those cases, it is best to develop a stronger communication channel with the stakeholders for the idea to be accepted. Proper strategizing and implementation will ensure that the product or service is successful, and the company brings in profits.
Every organization has a finite set of core competencies — its strengths. However, these core competencies may not always be in tune with market requirements. At this juncture, it is important to differentiate between employee competency and organizational competency. While employee competency is the skill sets that employees of an organization possess, organizational competency takes on a much broader meaning.
Organizational competency is the capability of the organization as a whole to perform in core areas. Organizational competency takes into account the capability of the organization, not only to coordinate the activities of its various divisions and departments, but also to perform the following tasks:. Organizational strategy is a set of accepted rules regarding how the organization should change over time in order to meet its new business objectives. The change can be either evolutionary or revolutionary. In either case, the focus should be to compare the present state of affairs with the desired outcome and the differences observed should be noted down.
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This should be followed up with a requirement analysis of the steps needed to be undertaken to effect the change. The central focus of any organizational strategy should be to optimize resource allocation.