Innovation management
The term innovation has attained the status of a “mantra” in many developed nations. The aspects of innovation and creativity are commonly interlinked, yet confused with each other. Creativity is the ability to rethink an issue in a completely new way, backed by the profusion of relevant and diverse knowledge. Creativity calls for the ability to analyze the situation at hand with rationale. Innovation, on the contrary, can be termed as transformation of knowledge into material benefit. Innovation, therefore, creates new growth strategies, new products range, services or business models that can make the difference, thereby generating significant worth for all including consumers, customers and the corporation.
Strategic innovation is a path less traveled by the companies; it challenges the corporations to see beyond contemporary and established business domains. This innovation occurs with the breaking of mental horizons, indulging in the dominion of new possibilities with open minds and creative exploration. The need of innovation for a company emerges out of a highly competitive business atmosphere, ever increasing customer demands and rapid technological evolution coupled with new business guidelines. These aspects present high requirements for development and management of new services and products.
Innovation takes its birth from new ideas, which if implemented in products and services, can find real usage, wide acceptance and penetration in the market. Speedily changing business and technological canvas of the world necessitates the corporations to adapt to them and come up with innovative ideas. These innovative ideas may not be completely new, but are the improved ones and of more utility to the consumers. Innovation in corporate culture is of various forms that include following:
• Production innovation.
• Procedural innovation
• Market innovation.
• Structural innovation
• Cultural innovation.
All these forms of innovation, though different in genre, call for an effective innovation management system in place. Flourishing companies have crystallized their innovative strategies to create value in the market. These companies incorporate customer needs at idea stage, identify and harness their core competencies and build upon a new work plan. The key is to focus upon the core competencies, leveraging them and avoiding or outsourcing the areas where they lack requisite expertise (Eveleens, 2010).
Besides these steps, the practical manifestation of innovation merits an efficient and tested innovation management system. A best innovation management system is composed of a number of features. The foremost is the top-down element. It determines and accords approval of an innovation strategy for the upcoming products or services offered by the company. This element comprises the top hierarchy going down to working staff. The staff in this element finalizes the strategy, allocates the budget and takes all strategic decisions. Before putting in place a new strategy for a product or service, top-down element takes into confidence all stakeholders by well guarding their interests and extending cooperation for successful business agreements. Once a business strategy is decided, this element plays its role to initiate key projects for ensuring right line of action upon the approved strategy (Eveleens, 2010).
The next element in the management system is the innovation management group that is primarily responsible for creation of the strategy that seeks its approval from the top-down element. The innovation management group is the functional body that actually runs the innovation management system. This body organizes the system and leads the work. Its tasks encompass preparation of strategy and its implementation in true spirit. Innovation management group comprises of experienced and senior managers who oversee the work and coordinate efforts of various echelons. This group exercises no authority upon making a project or taking a strategic business decision (Collins, 2009).
While having an approved strategy and management group in place for implementation, the companies hold innovation prioritization meetings. The number and frequency of the meetings would depend upon the company and facets of the strategy being implemented. A unique idea with no precedence may call for more frequent prioritization meetings to obtain the understanding, cooperation and endorsement of all stakeholders. A remodeled strategy of an existing product, on the other hand, may call for only a few such meetings. Such meetings also decide the budgetary allocation to the services and conclude a final plan. The tasks a company undertakes in a fiscal year, with specific budget allocation, are reprioritized in innovation prioritization meetings. The number of such meetings is variable and linked with the business environment and the business model under implementation (Eveleens, 2010).
The last element of the innovative management system is the bottom - up element. This segment plays an important role by generating new ideas and carrying out their evaluation alongside innovation strategy. This element, which includes representatives of both the innovators and the users, executes the projects and analyzes its efficacy.
All the aforementioned elements of an innovative management system are governed by certain processes, which determine the work spheres and the extent of interaction between an old and new business model. Like all other business processes, value – creating innovation is also a process, which merits a deliberate management. This management requires the utilization of practical tools to assist in the innovation process (Collins, 2009).
. The living lab is one such effective tool, which aims at achieving a change in the consumers’ habits while obtaining his satisfaction and benefitting the company at the same time. It is equally important for any management tool to cater for the needs of the customers while benefitting the stakeholders, failing which the tool is rendered useless. The company may resort to the application of known efficiency improving tools like lean manufacturing, Six Sigma and others, or adopt modern tools to suit their needs. Appropriation of value is the core aim of innovation set forth by the corporations. High performers in the field of innovation master the art of judging the time and method of increasing the relevance of their product system or service. They also bear a clear strategy of the time and way to introduce an innovative product or service of the existing business model (Collins, 2009).
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The time to exercise a business model innovation depends upon the current state of the company. When a company is in proactive mode it might be scaling up a new product system, or is entering a market with established competitors. In such markets, an innovative approach might call for an out of the box solution, a strategy that might demand not going above the rules. In a proactive mode, the business innovation model is also applied when the stakeholders can visibly see their company crashing consequent to the existing policies.
When a company is in reactive mode, it generally is in competition with a new entrant product or a business model. The company might respond to the situation in different ways. It might abandon the existing business model and replace it with a new more efficient one. The other option is to continue with the existing model and introduce a new model based on innovation or imitation. Experience reveals that the first option is more prone to devastation whereas the second one has a proven record of success of varying degrees (Palmer & Kaplan, 2013).
Handling of Dual business models is governed by a set of four strategies.
• Separation strategy: This strategy entails separation of both models with minimal interaction between them. As a result the synergy between existing and new business models decreases and the conflict rises. This phenomenon enhances the appropriateness of separation strategy. The new business model is provided with an operational, financial and functional autonomy to effectively exercise the plan. While a close watch is kept on the progress, the new business unit has the advantage of placing their own CEO and managing own budget. This strategy, however, has limited chances of success as compared to others since an all-new set up is raised with complete autonomy. This can result in increased conflicts between the mother organization and the new business model (Collins, 2009).
• Phased integration strategy: In this strategy, the two business units are initially separated for a limited period followed by a progressive and gradual merger. The outcome is an increase in conflict and synergy and correspondingly the appropriateness of the strategy.
• Phased separation strategy: The new business model takes its birth from within the resources of existing organization. The people managing the new model begin with their learning process for an appropriate duration. Upon culmination of learning stage, the business model is separated and is run either autonomously or semi autonomously. In this strategy, the synergies between two models, as well as the conflict, decreases and the efficacy of phased separation strategy increases (Collins, 2009).
• Integration Strategy: This strategy follows the paradigm in which a new model is built through existing infrastructure. Synergy increases and reduces conflicts and the appropriateness of the strategy increases. The efficacy of this strategy is linked with certain conditions:
- New business model should serve as an opportunity for the growth of business.
- The strength of traditional business is harnessed to improve upon the new business.
- A potent strategy should govern the task and pro-active approach should be the hallmark of execution.
- New business should not suffer due to the negative existing policies of traditional business.
Every business model can be unique in its particular business environment. The environment and competitors will dictate the adoption of best strategy to further the business growth (Palmer & Kaplan, 2013)
Bibliography
Palmer, D. & Kaplan, S. (2013). A framework for strategic innovation. Managing Principals, Innovationpoint LLC, pp. 5-23.
Eveleens, C. (2010). Innovation management; a literature review of innovation process models and their implications. Science, 800 p. 900.
Collins, J. (2009). Nine keys to innovation management 2.0. Boston Consulting Group, Innovation, pp. 4-12.
