Corporate Innovation (RLE Marketing)

Marketing and Strategy

Gordon Foxall

• Publisher: Routledge
• Year: 2014
• Print ISBN: 9781138966826
• eBook ISBN: 9781317647232
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

This volume is concerned with understanding the factors that determine innovation and its contribution to corporate achievement. It considers the whole range of innovation, consumer and industrial, and both final and intermediate buying behaviour. Although the tenor of the book is towards understanding and evaluation, its ultimate concerns are with the practicalities of marketing and corporate innovation.

PART ONE

EFFECTIVE INNOVATION

1	INTRODUCTION TO PART ONE

It is sometimes said that marketing is not and cannot be an academic subject in the same sense as the physical, natural and social sciences. Marketing’s practical roots, according to this view, render any attempts at theorisation and generalisation more likely to result in useless intellectualisation rather than applicable conclusions. There is something in this. Some of the most prestigious academic journals display a preoccupation with academic matters almost to the point of excluding genuine managerial concerns. And some of the research and teaching which is conducted under the marketing banner proceeds at a level of abstraction which precludes and perhaps even discourages application.

However, the idea that marketing education must be concerned with the unadorned description of practice and that more formal research and teaching inevitably go beyond the needs of managers is too far-reaching. Indeed, the suggestion that to try to systematise marketing knowledge and to conceptualise practice in ways other than those used by managers themselves cannot be helpful is somewhat disingenuous. To speak or write about marketing at all, even to describe a single case, is to abstract from observation and experience. To describe two or more cases can hardly fail to involve systématisation and some of the elements of theorisation. Language itself is, after all, a model of reality.

Academic work of the right kind can, moreover, provide a useful foundation for practice. If nine per cent of new bridges collapsed, civil engineers would, among other things, return to the intellectual basis of their profession in order to discover reasons. In marketing, where up to ninety per cent of new products fail in the market place, precious little such foundation exists. Academic research is unlikely of itself to solve this problem – not all facets of management are currently susceptible to systematic understanding, anyway – but the absence of a body of critical knowledge of new product development must be reckoned more a disadvantage rather than an advantage.

There is, of course, no shortage of checklists for the better managment of innovation, nor of books and booklets, texts and tomes which purport to show the most appropriate ways to organise and administer the new product development process. The tendency of these writings is to offer, from a distillation of knowledge and experience, the one systematic approach to corporate innovation which guarantees success.

It would be misleading to claim that none of this work has borne commercial fruit during the last quarter century but the latest accounts of the effectiveness of the innovative process do not suggest that wide-spread gains are being made. Rockwell and Particelli¹ report the results of an extensive investigation of American new product marketing in the 1970s. They conclude:

The mythical Sisyphus was condemned to push a large boulder up a mountain, only to find himself at the bottom again after almost reaching the summit. New product managers have faced a similar frustration over the past 25 years … Improvement in the new products management process has only helped us stay even in performance. On average we have seen no appreciable change in new product success rates during the past 25 years. Like Sisyphus, new product managers are still at the bottom of the mountain striving for the summit. Only the boulder seems to be getting larger and the mountain steeper.

These authors are speaking in terms of averages. They identify successful companies whose effectiveness in new product development improved during the last quarter century and describe in general terms the organisational and managerial differences between successful and less successful innovators. But, in the circumstances they describe, there is little point in producing yet another textbook on the marketing of new products. The current need is not for more managerial prescriptions but to understand better the innovative process. No single publication can develop full understanding of this highly-complex procedure. Innovation is a huge subject studied by economists, marketing specialists, engineers, designers, historians, and many more besides. This book concentrates, therefore, upon a small number of selected themes and issues.

There is an urgent need in studies of innovation to perceive and conceptualise the innovative process in its entirety, even though academic and managerial divisions of labour naturally make it necessary from time to time to concentrate upon a subset of the overall process. It is valuable, for instance, to remind oneself that innovation is not only a managerial activity but a facet also of customer behaviour. The effectiveness of the former is, moreover, dependent upon the latter. Only by understanding the dynamics of innovative buying in the market place is it possible to plan corporate new product development and to manage the innovative process over time by anticipating and responding to customers’ changing requirements. Related to this is the very nature of innovation. Many writers on this subject habitually think in terms of large scale, radical innovations based upon major technological breakthroughs. Important as such innovation is, however, the vast majority of new product launches comprise product modifications and improvements which accommodate the basic product concept more and more closely to the wants of the market. Viewing the innovative process from an industry-wide perspective, it is clear that over time the most radical of innovations provide numerous small scale, incrementally-different new products as the plasticity of demand becomes increasingly apparent. This realisation is of importance to those individuals and groups who have explored the value of industrial innovation in the stimulation of economic growth. Innovation is so highly desired that numerous commentators and politicians now advocate that the innovative process be stimulated by means which modify or supersede the market. But established efficient companies will not produce and market new products unless it is clearly within their strategic interests to do so, unless the innovative opportunities open to them are appropriate to their strengths and requirements. Sometimes, perhaps most frequently, the strategic interests of firms are such that incremental innovation rather than radical breakthrough serve them most appropriately.

A particular issue raised by this consideration is the place of marketing-oriented management in entrepreneurship and in the formulation and implementation of corporate strategy as a whole. Marketing, innovation and strategy all involve the new product development process of the firm. This book concentrates upon that process as a series of procedures designed to gather, analyse and interpret information in order to reduce the uncertainties and risks of corporate innovation. Information is required in order that efficient and effective decisions can be made throughout the process with respect to the allocation of resources among competing projects. The formidable array of new analytical tools and decision techniques could easily give the impression that much is knowable. The reverse is true. A recurring theme, particu- larly in the later chapters, is that much remains unknown even at the point of launch and beyond it. Indeed, so much is unknowable that the management of innovation is essentially an art rather than a science, to which managerial judgement and entrepreneurial alertness at the level of the individual company will long continue to make essential and unique contributions.

Note

1. Rockwell, J.R. and Particelli, M.C. ‘New Product Strategy: How the Pros do it’, Industrial Marketing (1982) p. 49. The survey covered over 13,000 new product launches by over 700 companies. Industrial product-markets comprised sixty per cent of the sample and included information technology, machinery, chemicals and textiles. The consumer goods which made up the remainder of the sample were equally-divided between durables and non-durables. The study replicates the well known investigation, The Management of New Products (New York: Booz, Allen and Hamilton, 1965 and 1968).

2	INNOVATION IN PERSPECTIVE

The Value of Innovation

Innovation and change are highly-valued components of modem industrial societies. Often they are desired simply of themselves for the intrinsic variety and interest they afford, and thereby for their capacity to enhance the quality of life. But industrial innovation is generally valued not so much as an end in itself as for its perceived consequences. Economic innovation is frequently acknowledged in these societies as a means by which many of the benefits promised by politicians and expected by voters can be delivered. Such benefits as economic growth, full employment, consumer satisfactions, international trade surpluses and the reduction of inflation have all been attributed to increases in the quantity and quality of applied scientific knowledge in industry. Moreover, one of the most entrenched values in industrial societies is the belief that further progress in living standards, national prestige and security is guaranteed by the continued pursuit of industrial innovation. Cairncross¹ expresses thus the value of innovation:

Perhaps we ought to remind ourselves more often that income levels have risen fourfold here and in other industrial countries in less than half a century … It is not because we work harder or longer that we are better off than our forefathers: hours of work are much shorter and the physical effort involved is generally a great deal less. We are better off because of the enhancement of productivity that rapid technological change has made possible.

In the same vein, Freeman² has argued that

innovation is of importance not only for increasing the wealth of nations in the narrow sense of increased prosperity, but also in the more fundamental sense of enabling men to do things which have never before been done at all … It can mean not merely more of the same goods but a pattern of goods and services which have not previously existed except in the imagination.

That industrial innovation is a source of the benefits attributed to it is not the result of commonsense observation alone. Several empirical investigations have clearly linked the exploitation of technical progress with the rate of growth of output per employee and with other indicators of economic and social wellbeing.³ Technological advance is a wider concept than industrial innovation, of course, but it is innovation in the industrial sector which is most widely perceived as the means to highly-prized ends. While such innovation is sometimes associated with increases in structural unemployment, a case may be made for its being ultimately causative of increases in real incomes, demand for specific goods and services and higher levels of aggregate demand as a result of increases in investment, all of which stimulate economic expansion and employment.⁴

Intervention for Innovation

So highly-valued are the goals of social and macroeconomic policies and so widespread the view that they can be quickly attained through industrial innovation that there are often calls for state intervention to increase the rate of development of new products and processes, particularly where unaided private industry is deemed to have failed. The argument that innovation can and should be so fostered is put especially strongly in those societies which have experienced relatively low rates of economic growth, relatively high unemployment and inflation and/or international payments deficits. In the United Kingdom, for instance, where one or another of these symptoms has been chronically suffered for a generation or more, there is a tendency to attribute industrial decline to falling levels of innovation and to look to governments to intervene in industry in order to reverse this trend.⁵ The Advisory Council for Applied Research and Development (ACARD) which advises ministers on the use of technology has stated unequivocally that ‘innovation must be at the heart of any improvement in the performance of British manufacturing industry’ and has proposed that government should incorporate greater practical encouragement to innovators. National industrial strategy should, it argues, include the provision of tax incentives for investment in new industrial equipment, more support for industrial research and training and the provision of loans to small, technologically-advanced companies.⁶ Similar co...

Table of contents

• Cover Page
• Half Title Page
• Title Page
• Copyright Page
• Title Page1
• Copyright Page1
• Contents
• Tables
• Figures
• dedication
• Preface
• Frontmatter Page
• Part One Effective Innovation
• Part Two Innovative Buying
• Part Three New Product Development
• Part Four Conclusion
• Suggestions for Further Reading
• Index