Applying Innovation

David O′Sullivan, Lawrence Dooley

• Publisher: SAGE Publications, Inc
• Year: 2008
• Print ISBN: 9781412954556, 9781412954549
• eBook ISBN: 9781452285818
• Edition: 1
• Topic: Business
• Subtopic: Entrepreneurship
• Index: Business

A step-by-step approach to applying high-impact innovation principles in any organization

Innovation is an important force in creating and sustaining organizational growth. Effective innovation can mean the difference between leading with a particular product, process, or service—and simply following the pack. Innovation transforms mediocre companies into world leaders and ordinary organizations into stimulating environments for employees.

Applying Innovation combines the key ingredients from areas including innovation management, strategic planning, performance measurement, creativity, project portfolio management, performance appraisal, knowledge management, and teams to offer an easily applied recipe for enterprise growth. Authors David O?Sullivan and Lawrence Dooley map out the main concepts of the innovation process into a clear, understandable framework—the innovation funnel.

Unlike other texts for this course, Applying Innovation goes beyond methodologies and checklists to offer an invaluable step-by-step approach to actually applying high-impact innovation in any organization using a knowledge management systems, whether for a boutique firm or one comprised of thousands of individuals.

Key Features:

• Adopts a practical approach to overseeing innovation that focuses on useful tools and techniques rather than on theory and methodologies
• Offers student activities within the text for immediate application of key concepts, reinforcing retention and comprehension
• Teaches students to build and apply effective innovation management systems for any organization successfully, regardless of the firm?s size or structure

Intended Audience:
Applying Innovation is designed for undergraduate and graduate courses such as Innovation Management, Project Management, Strategic Planning, and Performance Management in fields of business, science, and engineering. This book appeals to instructors who want to reduce the "chalk and talk" and increase the hands-on practicality of their courses in innovation management.

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Part I

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Understanding
Innovation

All organizations need to change in order to sustain current activities and develop growth. Some changes are positive and lead to increased growth in terms of efficiency, quality, or revenue; other changes are negative and risk stagnation and decline for the organization. The principal mechanism for change in any organization is innovation. Innovation is the process of making changes to something established by introducing something new that adds value to customers. This part describes the main concepts behind innovation and its impact on products, processes, and services. The difference between radical and incremental innovation is discussed, including the special case of disruptive innovation. The relationship between innovation and change is explored. We then look at investment that organizations make in innovation and the goals they endeavor to achieve and also the reasons why many innovations do not achieve these goals. We also examine the organizational cultural factors that can nurture and support the innovation effort. This part concludes by looking at an effective process of applying innovation and describes how the innovation management process can be structured and put to work to help organizations to grow continuously. The concept of the innovation funnel is presented as a powerful metaphor for understanding the application of innovation in any organization.

LEARNING TARGETS

When you have completed this part you will be able to

• Develop an understanding for organizational innovation
• Explain the difference between product, process, and service innovation
• Understand radical and incremental innovation
• Understand the reasons why organizations invest in innovation
• Explain the main causes of failure in innovation
• Understand a process for managing innovation
• Describe the importance of the innovation funnel metaphor

1

Defining Innovation

Innovation is about helping organizations grow. Growth is often measured in terms of turnover and profit, but can also occur in knowledge, in human experience, and in efficiency and quality. Innovation is the process of making changes to something established by introducing something new. As such, it can be radical or incremental, and it can be applied to products, processes, or services and in any organization. It can happen at all levels in an organization, from management teams to departments and even to the level of the individual.

This chapter describes the main concepts behind innovation. We explore the different types of innovation that affect the growth of an organization. The difference between radical and incremental innovation is discussed, as is the special relationship between product and process innovation.

LEARNING TARGETS

When you have completed this chapter you will be able to

• Define innovation and explain the difference with related terms
• Understand the drivers of the need for innovation and change
• Explain product, process, and service innovation
• Describe the difference between radical and incremental innovation
• Define disruptive technology
• Show how product and process innovations are related
• Explain the relationship between innovation and operations

Definition of Innovation

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Innovation has been and continues to be an important topic of study for a number of different disciplines, including economics, business, engineering, science, and sociology. Despite the fact that innovation has been studied in a variety of disciplines, the term is often poorly understood and can be sometimes confused with related terms such as change, invention, design, and creativity. Most people can provide examples of innovative products such as the iPod or the PC, but few can clearly define the innovative aspects of these products. Among academics there is a difference of opinion about what the term innovation really means. One definition of innovation taken from the dictionary that fits the ideas and concepts used in this book is the following (The New Oxford Dictionary of English, 1998, p. 942):

Making changes to something established by introducing something new.

This definition does not suggest that innovation must be radical or that it occurs exclusively to products. Nor does it suggest that innovation is exclusively for large organizations or single entrepreneurs. Nor does it suggest that it is exclusively for profit-making businesses; innovation is as relevant for a hospital or local government as it is for a business. In the organizational context innovation can occur to products, processes, or services. It can be incremental or radical, and it can occur at various levels in an organization, from management groups and departments to project teams and even individuals.

This is the general concept of innovation as discussed in this book. We will see later that the fundamental concepts of innovation as they are derived from this definition are universally relevant for all organizations, from private companies such as Nokia down to public organizations such as hospitals. Innovation is a process that transforms ideas into outputs, which increase customer value. The process can be fed by both good and bad ideas. In management of the innovation process, destroying poor ideas often is as important as nurturing good ones; in this way, scarce resources can be released and good ideas spotlighted. Every good idea usually replaces an older established one. The goal of every organization is the successful development of good ideas. To express this development of good ideas in innovation, we need to add an addendum to our definition:

Innovation is the process of making changes to something established by introducing something new that adds value to customers.

This addendum is important. By describing an innovation as adding value to customers, we assume naturally that customers who experience the added value will continue to use the product, process, or service or at least have an improved experience. This in turn will lead to growth for the organization. Innovation management is the process of managing innovation within an organization. This includes activities such as managing ideas, defining goals, prioritizing projects, improving communications, and motivating teams. As we will see later, innovations have particular life cycles; today’s innovation will become obsolete in the future. For organizations to sustain their mission, they must continuously innovate and replace existing products, processes, and services with more effective ones. Focusing on innovation as a continuous process acknowledges the effect that learning has on knowledge creation within the organization. Learning how to innovate effectively entails managing knowledge within the organization and offers the potential to enhance the way the organization innovates. This element adds a further extension to our definition:

Innovation is the process of making changes to something established by introducing something new that adds value to customers and contributes to the knowledge store of the organization.

The concept of an organization’s knowledge store is partially synonymous with the concept of organizational learning. An organization that can continuously learn and adapt its behavior to external stimuli does so by continuously adding to its collective knowledge store. The emerging perspective by specialists in the field of innovation is to define innovation in the broadest context possible. One reason for this is that if it is defined too narrowly, it may limit creativity by excluding certain avenues of investigation. Innovation is linked to the concepts of novelty and originality. However, novelty is highly subjective. What may be a trivial change for one organization may be a significant innovation for another. Based on this perspective, we can further extend the definition of innovation as follows:

Innovation is the process of making changes, large and small, radical and incremental, to products, processes, and services that results in the introduction of something new for the organization that adds value to customers and contributes to the knowledge store of the organization.

This latter definition, although general, is specific enough to illustrate a number of core concepts of innovation as applied in any organization. Applying innovation, which is the main focus of this book, can be defined by adding a number of key words to the preceding definition.

Applying innovation is the application of practical tools and techniques that make changes, large and small, to products, processes, and services that results in the introduction of something new for the organization that adds value to customers and contributes to the knowledge store of the organization.

Related Concepts

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Innovation is often used in conjunction with terms such as creativity, design, invention, and exploitation. It is also closely associated with terms such as growth and change. Let’s explore these relationships in more detail in order to get a deeper understanding of what we mean by innovation. Related concepts include invention, growth, creativity, design, exploitation, change, failure, entrepreneurship, customers, knowledge, and society.

INNOVATION AND INVENTION

Invention is a term often used in the context of innovation. Invention has its own separate entry in the dictionary and is defined as follows (The New Oxford Dictionary of English, 1998, p. 960):

Creating something new that has never existed before.

Invention need not fulfill any useful customer need and need not include the exploitation of the concept in the marketplace. Innovation differs from invention in that it is more than the creation of something novel; it also includes the exploitation for benefit by adding value to customers. Invention is often measured as the ability to patent an idea. If this can be achieved, then it is an invention. The success or failure of an invention depends not only on the ideas chosen by the organization but also on how well their implementation is managed. Invention is often about creating something that has yet to be desired by a customer. Numerous inventions never lead to innovation because they are never brought to the marketplace. If an invention can be exploited and transformed into change that adds value to a customer, then it becomes an innovation. On the other hand, there are many innovations that do not require invention in terms of originality. Process and service innovations often involve applying well-established techniques and technology. Although it can be argued that this does not encompass invention because it already exists, it is still a legitimate form of innovation because it is novel to the organization applying it.

INNOVATION AND GROWTH

Innovation is about developing growth. According to Drucker (1988), innovation can be viewed as a purposeful and focused effort to achieve change in (an organization’s) economic or social potential. Bottom-line growth can occur in a number of ways, such as better service quality and shorter lead times in nonprofit organizations and cost reduction, cost avoidance, and increased turnover in profit-focused organizations.

INNOVATION AND CREATIVITY

Creativity is regarded as a key building block for innovation (Rosenfeld & Servo, 1991) and is an inherent capability in all human beings. Creativity is a mental process that results in the production of novel ideas and concepts that are appropriate, useful, and actionable. The creative process can be said to consist of four distinct phases: preparation, incubation, illumination, and verification (Wallas, 1926). Later revisions of this process have added a final phase, elaboration (Kao, 1989), in which the idea is structured and finalized in a form that can be readily communicated to others. Creativity entails a level of originality and novelty that is essential for innovation. Although creativity is a fundamental part of innovation, it is wrong to interchange the terms. Innovation encourages the further processing of the output of the creative process (the idea) so as to allow the exploitation of its potential value through development.

INNOVATION AND DESIGN

The term design in the context of innovation is defined as “the conscious decision-making process by which information (an idea) is transformed into an outcome be it tangible (product) or intangible (service)” (von Stamm, 2003, p. 11). The design activity draws heavily on creativity to resolve issues such as the aesthetics, form, and functionality of the eventual outcome. In this way, during the exploitation phase of the innovation process, organizations engage in design activities that will produce an output that provides the optimum fit with market requirements. Although design is an integral part of the exploitation phase of an innovation, it is only one aspect. Exploitation can include other elements, such as process development and market preparation.

INNOVATION AND EXPLOITATION

There are numerous alternative definitions of innovation. One popular alternative is to present innovation as an invention that has been exploited commercially (Martin, 1994). In this alternative definition, the ter...

Table of contents

• Cover
• Title Page
• Copyright
• Brief Contents
• Detailed Contents
• Introduction
• Part I: Understanding Innovation
• Part II: Defining Innovation Goals
• Part III: Managing Innovation Actions
• Part IV: Empowering Innovation Teams
• Part V: Sharing Innovation Results
• Appendices
• References
• Index
• About the Authors