What is Innovation Management?
One of the important issues related to change management is, how we are going to manage innovations?
Because the moment we talk about change it is related to innovation management.
Innovation in products, innovation in services, innovation in processes, etc.. all of these parts of innovation management.
And these innovations in product, process, and services are possible only when we go for some kind of change.
Then we go through all these stages of the change to ensure that, organizations are able to innovate themselves on a continuous basis.
So, they are able to remain competitive in the market.
And that is why we are going to discuss this managing change and how this innovation is linked with the management of the change.
In this article topics to be cover are in the following manner:
What is innovation management?
What is the function or role of change in innovation?
How we are going to link change and innovation?
What is innovation?
Innovation is basically an outcome of certain processes where you try to develop a new idea or new behavior in the organization.
The moment you say that you are going to develop a new idea or new behavior in the organization, you are talking about innovation.
And change and innovation both come from outside forces, because if they are going to be technological innovation and the products.
Then you also need to go for this kind of innovation, in order to compete in the market.
And that is, where you are going to initiate certain changes so, that you can innovate.
Innovation is required for the change and any kind of change includes some innovations in the production process and services so that you can compete.
Sometimes you go for disruptive innovations.
Disruptive innovation is important in innovation management.
Disruptive innovations are a different kind of innovation, where you are going to do something, that is very drastic in terms of products and processes or services.
Which is going to provide you with some kind of advantage in the market and through which you can compete in a globally competitive market.
IBM which was initially a hardware-software company, but now it has moved to a service company especially into consulting.
So, the idea here is that when you are talking about companies.
They also keep on changing their domain, products, or processes.
And they keep on moving and changing these in order to survive and compete in the market.
The example that you have given here of IBM says that,
How it has moved from being a hardware and software company to a consulting a servicing company?
If you do not change successfully or if you do not implement change successfully in organizations.
And for that, if you are not going to innovate, you are not going to survive tomorrow.
So, it is very important to go for innovations which are linked with the change in order to compete and survive with the market.
Some examples here see these examples have been taken from the Forbes 2018 list.
And this example talks about some of the companies which have been considered as most innovative.
The World’s Most Innovative Companies(Forbes, 2018)
TESLA MOTORS INC
ALEXION PHARMACEUTICAL INC.
UNDER ARMOUR INC.
Apparel, Accessories & Luxury Goods
MONSTER BEVERAGE CORP
UNILEVER INDONESIA TBK PT
VERTEX PHARMACEUTICALS INC.
BIOMARIN PHARMACEUTICAL INC.
If you look at these companies some of them belong to say software.
Some of them are ready for manufacturing, biotechnology, accessories soft drinks say household products.
Most of these companies which are in the list of the top 10 companies are related to products that are in the field of biotechnology.
If you look at Tesla motors it is still on the top. This type of company is an example of innovation management.
Now, this another list especially related to different kinds of companies.
Where you will find companies like Amazon, Microsoft, or Google on the list.
So, depending upon the requirement different kinds of lists have been prepared regarding most innovative companies.
If you look at the character of these innovative companies, you will find that the keep on changing, their technology, products, services in order to remain competitive.
The idea is that unless you go for a change it is not possible for you to go for innovations in your product, processes, and services.
And that is where, it is very important for any organization to go for innovations and for that, they have to go for some kind of change.
Managing Change and Innovation:
If you look at how we are going to link change and innovations in innovation management?
What we need to discuss is how we are going to see that the forces which are important or which are basically acting as a trigger or a catalyst to go for a change.
When you are want to go for some kind of innovations it means, that it requires some kind of change internally and externally.
And the moment you are talking about changes it means, that you need to learn what kind of changes you need to bring in.
So, it is very important:
Companies need to invest in learning,
What needs to be changed?
What is to be innovated?
What kind of innovations that they have to bring in their products, processes, and services?
And when we are talking about why companies go for innovating products, processes, or services.
There could be a number of factors related to organizations within the organization.
External Triggers and Internal Trigger are important in innovation management, which are in the following manner:
Customer needs, desires or expectations,
Industry structural changes
Problems in operation
Company growth or decline
Leadership and personnel change
Changes to an inter-organization alliance
If you look at external trigger there could be a change in the customer needs, desires, or expectations.
There could be competition, there could be a change in technology.
Because your competitors might be offering a different kind of technology and new technology.
There would also be a change in the demographic pattern of the population.
Which also requires some kind of adjustments and adaptation to be made by the companies.
Then what kind of economic cycle you are going through whether it is a growth phase, maturation phase.
Then the Geo-political event also forces you to go for some kind of innovations.
For example, if a developing country is not getting to say up to the data state of the technology from a developed country.
Then the developing countries also forced to go for innovations.
For example, if you look at India as a space program and that the kind of satellites that India has been sending to so, orbit.
This is the best example where developed countries have not allowed India to have access to the latest technology.
And then Indian scientists have gone for developing their own technology, indigenous technology.
And they have been very very successful to put lot of satellites into their space.
So, Geo-political events are very important and that forces you to go for some kind of innovations.
Then when there is a change in the environment; especially, the external environment, where political, social, cultural technical environment goes for a change.
Then social changes, when the changes in the society in terms of what kind of products.
They are looking forward to and the industry structure changes.
When the changes happen in the structure of the industry itself if you look at any kind of industry the way they have been doing business.
Even if the business model goes for changes and then finally, regulatory changes.
Regulatory changes are mean by the national governments and then you need to follow the regulatory changes.
And accordingly, you bring about certain changes.
For example, most companies now have to comply with regulatory changes related to goods and services tax in the country.
So, there could be a lot of external triggers and these triggers necessitate some kind of innovations and for that, you need to go for some kind of change.
Similarly, if you look at internal triggers are there as the kind of decision-making process.
That you have the problems related to operations.
You are not able to produce effectively in terms of quality and efficiency.
There is a company that is either growing or declining in both cases.
You need to maintain that and if you are declining then you need to see that, what kind of changes to a brought in; in order to ensure that you remain are viable and competitive.
Then you also need to bring about change in the leading people, who are leading the change organizations.
And also how the organizations are going to relate themselves with other organizations in a similar sector or different sectors.
When we are talking about the triggers of the change, the change comes from external and internal forces.
And these changes as or an actual act as a catalyst for some kind of innovations that you need to bring, in order to remain competitive.
So Internal triggers are important in innovation management.
Change in Products and Technologies:
Product change – a change in the organization’s product or service outputs
Technology change – a change in the organization’s production process
Most of the innovations in the area product and technologies and that is where you go for bringing about a change in your product or technology.
In innovative management, product change and technology change plays an important role.
It means, that you are going to talking about changes in the kind of product, that an organization is producing or the services that it is offering to its clients or customers.
If the innovations that are happened and that is how you are able to offer a new different kind of products.
And the new product or a product with added features and similarly also you are going to offer different kinds of services for new services.
Similarly, another kind of change that happens in the organization means, how we are going to produce certain things.
It means you are talking about the changes in technology.
In technology changes, you are talking about what is the nature of the production system.
Whether you are using a mechanical system, automated system or a computer-aided system.
Or computer-aided design manufacturing or you are going for a mass base production system or a tailored base.
And if you are going to use a tailored base production system or used in flexible manufacturing systems or not.
So, these are the two major areas where changes happen which could be related to or linked with the innovation.
Because whenever you are going to bring about a new product or new technology.
It means, some innovation has happened in the product and the technology and that is how you have been able to bring about a change.
So, in order to bring about a change in their product and technology, what kind of strategies are used in terms of innovation.
Types of innovations:
There are in the following manner described types of innovation in innovation management.
There is a change in the appearance or performance of the product, early it was bulky you have it has become slicker now.
Now, if you look at the computer industry, you find that the size of the product keeps on changing.
And there is a change in the of the product, which is more productive more efficient.
So, if this kind of innovation is happening it means, it is related to product innovation.
It means that you have gone for a change in the process through which the product is being conceived, manufactured, or disseminated.
For example, if you look at the assembly line.
So, whether you have gone for a change in the assembly line whether you have gone for automatic processes to come out with a product.
There could be a process related to say supply change, process related to customer relationship management.
So, all these innovations are you can relate to process innovation.
It means that you are going to create products and services and then keep on modifying the existing products.
So, in the first case, when we are talking about product innovation; basically, you are talking about a new product.
A new process between talk about incremental innovation, then it is related to a product, a service, and technology.
Where you are going to have added features or you are going to modify either the product, services of technology to make it more effective and efficient.
What you call the transformational changes and this basically talks about creating new products and services which are going to replace the existing products.
So, these are the four different kinds of innovations.
There are in the following manner three innovation strategies:
All these to what you call a new product, services, and technologies.
Exploration takes place through a creative process then, experimentation, and then idea incubators.
So, exploration strategies basically related to when you try to explore that, what kind of products and services you required to better serve your customers.
Creativity is a process through which you come out with a product.
It is novel ideas that mee perceived needs or offer opportunities.
So, through this creative process the idea that you have:
How it is going to meet the needs of the customers or the organizations?
What kind of opportunities do you going to offer to their organization?
Creative people’s characteristics:
1.)Conceptual fluency Open-mindedness
Undisciplined exploration and
Characteristics of creative organizations or departments:
1.)An open channel of communication.
Contact with backyard sources.
Overlapping territories; the cross-pollination of thoughts across disciplines.
Suggestions systems, brainstorming, freewheeling discussion.
2.) Assigning nonspecialists to problems.
Hiring outside your relief zone.
3.)Decentralization, loosely defined positions, loose control.
Acceptance of mistakes; rewarding risk-taking.
People encouraged to challenge their bosses.
4.) Freedom to select and pursue problems.
Not a tight ship, culture, doing the impractical.
Freedom to discuss ideas, long time horizon.
5.) Resources allocated to innovative personnel and initiatives without straight away payoff.
A Reward system encourages innovation.
Absolution of pertinent responsibility.
So, when we are talking about exploration, creativity is very important whether it is related to the individual or the organization.
Because creativity is a process through which innovation comes out.
So, it is very important to ensure encourage creativity at the individual and the group level in the organization.
Idea incubator is a person basically, where he is going to come out with a new idea.
And is going to experiment with this new idea with the support of the companies.
Without any interference from either the companies hierarchy or the politics that are involved.
Idea incubator is in Yahoo, they called it brick house and they get the support of the top management.
They do not get the support of the top management if there is an inference from the bureaucracy if the politics.
Yahoo will not be able to come out with new ideas or able to develop and experiment with new ideas.
So that they can come out with a new product or services and it is an example of effective innovation management.
It means that you need to develop a mechanism based on your structure.
That how vertically and horizontally people coordinate with each other, in order to come out with a new product or services.
Then, it is also related to customers and your partners, business partners, and then you also go for innovation, open innovations, new products, and services.
Moving to this the next part which is related to cooperation, both internally and externally it is very important.
For an effective innovation management Internal and External Coordination must be there, which are in the following manner:
You need to ensure that, how horizontally you can link with each other.
So that everybody can contribute together, then you also talk about the co-ordination mechanism that, how people are going to relate their activities with each other.
For example Marketing, Research, R and D people, and manufacturing.
So, how can these three departments coordinate their activities with each other?
Because the marketing department can identify, the kind of products that is required.
R and D are going to develop the prototype of the product based on the input from the marketing research.
Then the manufacturing department is supposed to come out with a new product.
It is going to develop the new product in their say manufacturing facilities and for that, you need to plan.
Plan well so, that you are able to come out with a new product or service.
So, this internal coordination is very much required.
You also require external coordination that includes your customers, suppliers, partners.
And see whether you are able to go for commercialization of ideas, beyond the organization because it is very important.
For example, if look at Procter and Gamble; they have gone for patenting their ideas.
So that they can commercialize it at a later stage.
Then like LEGO or Hollywood studios, they also coordinate their activities with customers, partners, suppliers and they go for open source innovation.
So that they can commercialize the ideas beyond the organization.
And an example that is given here is like crowdsourcing.
It is distinct from crowdfunding.
Where Crowdfunding is where you get funding from different sources.
And Crowdsourcing where you are going to source ideas from anywhere and everywhere.
So, the idea is coming from a different type of person having a different kind of knowledge, skill, and different kind of backgrounds.
For example, one thing that is developed is known as Threadless 2.0.
It is an example of crowd-sourcing and that is the best example, a for external coordination like web 2.0
Where you are open share participation without any intervention from others.
So, that you can source these ideas from people and then you can make use of this for being innovative in terms of product and services.
We are talking about the new technology are their partners, innovation partners, then you have customers’ market needs and also the innovation mechanism.
It is a manufacturing department, R and D department, and the marketing department.
They need to coordinate their activities and the input is coming from different sources from the innovation mechanism.
From the new technologies, from the formal innovation partners are the customer requirements.
Based on these inputs at different levels, the organizations going to coordinate and create some kind of linkages among the departments.
So, the organizations going to be innovative.
Entrepreneurship is also related to new products or innovation in innovation management.
So, in entrepreneurship you have in organizations who come out with new ideas, they are called idea champions, then you have new venture teams.
Teams who are responsible for new products and services then, skunkworks those who are responsible for coming out with products and services.
Then their new venture funds basically, new venture funds who are going to sponsor your idea to come out with a new product and services.
We will talk about this kind of strategy and how they could be related to new products and services.
What kind of roles in the managers and others have in the process?
The idea here is that the managers should support entrepreneurial activities and foster idea champions.
So that anybody who coming about with a new idea, it is your job to support him.
And that is why you require energy and efforts so, that you can promote new ideas.
If a person is coming out with a new idea is called an idea champion.
Now, this person needs to be supported in terms of sponsorship.
You need to a sponsor so the role of the sponsors which approve and protect ideas while others are going to challenge the concept.
So any new idea is there, you know that lot of people start resisting that.
It is not going to work but let there be some people who can think that whether the idea is good or not.
You do not evaluate it, let us see whether this idea is going to work it or not.
So, through brainstorming at a later stage you can evaluate the idea and see:
Whether it has some viability whether it could be used, whether it can be worked on a experimented on or not.
So both the managers and sponsors must play a very significant role.
So for innovations coming otherwise, it is very difficult to buy innovative and productive.
Then you also have new venture teams.
And this team is responsible to ensure that any idea champion, who is coming out with the new idea goes through the creative process.
All the support which is required is provided to them it is very important.
Skunkworks is basically the group that focused on the breakthrough idea.
And that is why they are known as skunkworks.
They are informal, autonomous, secretive corporations that center of attention on step forward ideas, new ideas.
And then you have new venture funds, you have people who are going to resources for the new idea.
It could come from within the organization, it could come from outside also.
Four Roles in Organization Change:
When you are talking about these different roles especially in case of change management.
There are in the following manner the four different roles that have been identified for the managers.
Especially when it comes to linking innovation and change in innovative management.
So, these four roles are very important when it comes to change organizational change especially.
Inventor someone who has the idea of something new and he develops and looks into the technical aspects of it.
But it is not known what to do further, because he need support and that is where you require idea champions.
These are the people who believed in the ideas and you can see the benefits of these ideas.
And they are able to visualize whether this is going to work or not.
They look at the cost, resources, and everything which is required to implement the ideas.
They also look at support from the top management, financial support and see that if there is an that could be removed.
So, an inventor with the help of a champion would be able to experiment with this new idea.
Without this, it is not possible for the inventors to go further.
Because he has an idea, he knows what is to be done, but he needs support from the management.
And the support from the management comes from the idea champions.
Because they are going to support the idea, they are going to provide the resources.
They are going to ensure that any obstacles which are there on the way to implement or experiment with this new idea are removed.
They are going to sponsor the idea, they are going to see that this idea is going to work within their organizations.
They are going to provide some kind of reality test, to see whether it is really working or not.
They identify the problems or the shortcomings, they also see that whether this idea is going to fit into your system or not.
Whether it is going to work and so they identify certain parameters, hardnosed criteria.
And see whether this idea is going to pass those through these criteria to ensure that it is going to work.
So when we are talking about these roles all these roles are equally important and we need to ensure, that all these roles are taken care of.
So, the organization is able to go for some kind of change to bring innovation to the organization.
Linking Innovation and Change:
And that is where we are going to link innovation and the change.
So, what kind of change is related to, what kind of innovation.
Organization change which comes to innovation basically, because change happens.
Only if there is an innovation, in terms of increasing productivity, sales anything like that.
Then cultural changes it also leads to innovation, if you have a good corporate culture.
Then it is going to provide you with a powerful advantage over your competitors.
Because in a competitive market it is very important, that you have a strong culture because this strong culture is related to performance and productivity.
Then technical changes definitely to innovation, we are talking about product and process innovations.
When you are going to implement new products and processes.
Knowledge Assets change:
We talk about knowledge assets changes we are going to tangible assets that have been created or solid assets that are created.
So, both asset and explicit assets, that is created within the organizations.
And these tangible assets could be in the form of intellectual property patents, trademarks, goodwill’s, positioning.
Because all this is an example of what you call the knowledge assets.
So, this knowledge assets basically is an outcome of innovation which can bring a lot of changes in the organization.
Business process reengineering is also led to innovation.
Because it talks about radical changes or a new structure or new format.
And that is where we are going to link innovation and change together.
And there could be a lot of challenges when you go for this kind of innovation to bring about certain changes.
Then management has to ensure that the challenges are overcome.
It could be related to bureaucratic controls, unwillingness to expose customers to failed ideas, risk aversion opportunities.
Because it is very important that employees are able to take risks.
Then you need to ensure that you are able to implement any kind of change which leads to innovation properly following all the processes and their stages.
And then you have to focus on processes as well as results both.
Then you need to ensure there is support for research, R and D activities, marketing intelligence acting as an input for innovation.
And then how this is executed and whether it is going to be sustainable or not.
And then you also require support from the top management.
Then you also need to ensure internally that HR policy, structure, team, compensation is aligned with that one and then how we are going to measure it.
So, profitability, return on investments, dividends because this is going to show whether your innovation is really bringing out profit for the organization or not.
And then what kind of tangible assets you have created in terms of knowledge management.
Your tacit and explicit knowledge, trade secrets, patents intellectual property that is created.
So, what we have discussed here is that we are trying to link basically, how innovation and change are related to each other in innovation management.