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Innovation management in companies


‘Innovation management’ has become a popular term in recent years. It does however stir up divided opinion amongst commentators due to its implicit assumption that innovation can (and should) be a process that can be managed within a company. To some, this goes against everything that innovation should be in terms of creativity; yet to others, it is a necessity that makes innovation work effectively.

Written by Meirion Thomas

Reviewed by David Walburn

The concept

How to implement it?

Step in the RIS process

What can be expected?

Quotations

References

Experts' comments

 The concept


The concept of innovation management in companies is accompanied by a number of misconceptions. Champions for entrepreneurship argue that a company needs to be creative or have creative individuals within it before it can ‘do’ innovation and that the concept of structuring an innovation process (i.e. managing it) is an oxymoron. This viewpoint however fundamentally confuses the approaches and tools that facilitate the innovation process on one hand, with the process itself on the other.

Stemming from this, the trend has been for companies to spend a great deal of time and resource on expensive creativity tools and exercises that generate hundreds of ideas only to be swamped with too many ideas for them to know what to do with. In reality, unless a process for managing, prioritising, maturing and selecting the best ideas is in place, then the process of innovation can be haphazard, unpredictable and ultimately unsatisfactory for companies.

So, whilst creativity is a crucial element at the front end of innovation, it is equally important if not more so, to ensure that the organisational process and innovation culture elements are in place to ensure that ideas are well managed and innovation thrives. Finally, ensuring that innovation is actively embedded in the strategy of a company will allow the innovation process to be driven and managed in line with the company’s vision and objectives.

 

How to implement it?


In terms of implementing an innovation management approach, three core elements need to be taken into consideration by companies. These are: strategy, organisational process and innovation culture. Like the legs of a tripod, all three are interrelated and require the other to work effectively and efficiently to maximise impact in a company’s innovation process.

Beginning at the top of the triangle, it is vital for a company implementing an innovation management approach to explicitly embed innovation in the company strategy. Ideas are most often generated by those working at their day-to-day jobs e.g. the salesperson’s conversation with a customer that throws up an idea for a new way of approaching a problem; or, the lab technician in the R&D department who tries something new that unlocks the door to a whole new product/process or service line. When these ideas arise they need to be effectively managed, nurtured and allowed the space to develop into something more tangible. Too often ideas are killed by a lack of support (or awareness) from company managers too focused on the day-to-day process of running a company than the future strategic position and vision.

In a company with innovation embedded in its strategy, the top management (whether that’s a management board in a large company or the managing director in an SME) sponsor for ideas arising and encourage the capturing of ideas when they arise. The company may identify an innovation champion to oversee and drive this process at a strategic level within the company (this person should be of sufficient seniority to report directly to the top level of management). Ensuring that innovation is driven and sponsored from the top-down allows ideas that might otherwise be drowned in the daily tasks to be drawn out and given space to flourish.

Underpinning strategy, it is important for a company to develop an organisational process that facilitates innovation. Without a process, idea originators do not know where they can go to capture their idea and turn it from a tacit conversation into something that will be looked at systematically. The generation and capturing of ideas requires processes to facilitate their maturation and to turn them into viable projects just like any other business process. In implementing an innovation management approach, companies need have a defined process in place that will allow ideas to be generated and captured, to be prioritised and subsequently matured on a consistent basis. This could be through the use of proprietary software that is available or through a simple Excel workbook.

When a salesperson brings a customer need or idea back to the office they need to know who to share it with and what the process will be for capturing it. The innovative idea can then be prioritised and developed by the idea originator and others to the stage where it can be launched into the company’s new product development process. Or, alternatively, it can be ‘killed’ having been investigated without too much resource being spent on it. Developing a structured, organisational process allows the strategic management to view the innovation process from a high level. It will allow them to monitor progress against the strategy and ensure that the company is moving in the right direction vis-à-vis the overall vision for innovation.

Finally, bringing both the strategy and organisation together, companies need to develop an innovation culture that will sustain the innovation process and take it from being a one-off exercise to being a way of life for the company and employees.

Building a culture of innovation is often the result of seeing the first two elements of an innovation management approach in action. It can take a while to develop a culture, but for example by sharing positive and real life ‘good news’ stories of innovation results employees can begin to believe that their idea could also result in a similar outcome (Other areas to consider could be bonuses for innovative ideas, annual prizes with financial or in-kind incentives for most innovative idea etc…). Ensuring that each individual team member has innovation embedded in their daily job description and is consistently thinking about how they could do things differently, engage with the process and improve their area of the company will allow the development of ideas in diverse areas of a business. Finally, it is important that no idea is seen as a ‘bad’ idea or simply discarded because ‘it will not work’ in the opinion of one individual in the company. It is important to engender a culture that looks at each idea on its merit, prioritising it and maturing it to allow it to develop.

Without a managed innovation approach embracing strategy, culture and process, even the greatest inventor in the world, with the best game-changing idea is in your company, but with nowhere to develop it, will see the idea die. Innovation space has to be structured into a company and actively managed for it to stand the greatest chance of success. It can then be driven by the strategy, facilitated by the innovation process and embedded by the company’s culture to allow innovation to flow freely in the organisational life day-to-day.

 

Step in the RIS process


Step 5: Definition of coherent policy mix, roadmaps and action plan

 

What can be expected?


  •  Development of a pipeline of ideas for new products, process and services
  • Structured approach to innovation and managing innovation in companies
  • Development of an innovation culture in companies
  • Better choice of prioritised ideas
  • Consistent development of innovative products, processes and services from companies

 

Quotations


“Innovation isn’t just about ideas; it’s about getting the right ones and realizing these ideas in practice.” - Gijs van Wulfen, Founder – Forth Innovation

“Organizations that successfully promote ideas have found that the performance of their idea systems is directly related to important aspects of their cultures -- such as trust, respect, morale, involvement and teamwork. They discovered that when employees see that their thinking is valued, attitudes change, and the corporate culture improves. This has a profound effect on performance and the quality of the lives of everyone in the organization.” - Alan Robinson and Dean Schroeder, Authors of ‘Ideas Are Free’

 

References


Looking at the following websites would be good places to start for the most up to date and relevant thinking from leading authors and speakers on innovation:

 

Mr Meirion Thomas


 

Meirion Thomas

Meirion Thomas has over 30 years experience in economic development and SMEs where his expertise covers a range of interests including innovation, knowledge transfer, social enterprise, venture capital, and sustainable development. After holding senior positions in the Welsh Development Agency and Cardiff University, Meirion also established and became a director and partner in CM International Group, a strategic innovation and management consultancy with offices in Paris, Lille and Cardiff.

Since 1990 Meirion has led a wide range of innovation and economic development assignments and projects across Europe, North America and Southern Africa and in recent years he has also acted as a Director of Finance Wales plc and Chairman of the Cardiff-based specialist advisory group, the Cultural Enterprise Service Ltd.

m.thomas@cm-intl.com

 

Experts' comments


Innovation has become an unchallenged process of virtue in economic development policy in recent years. The Lisbon Agenda was introduced as a response to a perceived lack of innovation in the economy of the European Union as compared with the USA, which had achieved a higher rate of economic growth over a long period. Those concerns continue. Without a high level of innovation, the assumption is that economies will lose competitiveness.

The same assumption is applied here to companies, hence the need to consider innovation management within businesses to maximize the potential benefit.  A number of issues arise from the excellent exposition of the topic in the accompanying paper.

The first is to consider the extent to which public policy can have a beneficial effect on what happens within companies in terms of their innovation management. Making this happen in practice is always difficult. Commercial businesses often have no working interface with economic development organisations, and may well be hostile to any suggestion of interference from public sector people. Incentives to influence corporate behaviour such as tax breaks, grants and subsidies may have their part to play in specific areas, though “innovation” covers a very broad area of management. Indeed some would argue that it should be one of the core functions of management. There is no easy solution. Where a development agency has close links with regional stakeholders it may be possible to mount and maintain a programme of communication and support for its business community – particularly smaller business. The involvement of a partner such as the Chamber of Commerce might be particularly useful here.

We should consider more fully the part which competition between companies plays in driving innovation. Too often in policy statements, innovation is described more like an end in itself – something no company should be without, and where systems should ensure innovation pops up everywhere the whole time. However, innovation needs direction and competition is perhaps the most important driver for any business. Keeping ahead of the competition is vital for both success and survival. The issue should perhaps be “competition management” rather than “innovation management”. This would mean company being run so that issues of competitiveness were not ignored or stifled, but prioritised and addressed. It cannot be assumed that all things which may be described as “innovation” contribute to a company’s competitiveness. Innovation for its own sake may take management’s eye off the ball. This is something to consider in any public policy programmes to promote innovation.

It should also be remembered that innovation is not always a good thing for companies. Innovation will often involve additional costs. Outcomes are uncertain and risky. A failed or unnecessary innovation may leave a company weakened. It is not always the company which takes the risk of pioneering a technical or procedural innovation which reaps the most commercial benefit. There is the familiar concern about technical innovations being made in Europe only for companies in the US to reap the benefit because of their greater competitive edge, funding availability and access to a truly single market.[1] Public policy therefore needs to be clear in its understanding of the risks in trying to foster Innovation in companies.

It should also be remembered that public policy often fosters innovation through commercial companies directly by entering into research and development contracts, funded by government, which effectively takes the risk out of the process for the firms involved. This is a major source of innovation in the US economy.

 

Mr David Walburn


 

After a career in business David Walburn joined Greater London Enterprise in 1986 where he was responsible for venture capital and other small business support, before becoming Chief Executive of the organisation. He was the Chair of the London Business Angels Network and played a key role in the setting up of the European Business Angels Network. He has worked with the UK government and the European Commission on developing public policy initiatives to improve the financing of small and medium-sized enterprises. He was the Chair of Capital Enterprise, the umbrella body for organisations supporting micro business development in London, until 2012.

For the last ten years he has been a Visiting Professor at London South Bank University where he headed the Local Economy Policy Unit and was the managing editor of the journal Local Economy.

He has served as President of EURADA, and been a member of a number of advisory bodies of the European Commission.  He has been an active member of the International Economic Development Council in Washington DC and has a wide range of international contacts with economic development organisations.

He continues to write and lecture on small business finance and regional economic development.

davidwalburn@london.com



[1] It is not only innovation in companies which is subject to this risk. US venture capital funds operate globally looking for the best deals.

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