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IS Issue: Formal and Sustained Management of Incremental Technology InnovationCurrent Knowledge and Background

Submitted by: Saahil GoelInnovation is defined as “The managed effort of an organization to developnew products or services or new uses for existing products or services”. Technology innovation is defined as “A change in appearance or performanceof products or services or the physical processes through which a product orservice passes”. Finally, incremental innovation is defined as “A new product,service, or technology that modifies an existing one”

. From these definitionsand basic derivation, “incremental technology innovation” can be defined as

a managed change in the process technology that an organization uses todeliver its products or services that modifies or builds upon the existent process or technology

.Even though there is ample knowledge and industry best practices availableon how to bring about a culture of innovation and how to manage suchinnovation, there are no agreed upon standards or best practices about howincremental technology innovation can be measured, managed, prioritized,sustained and implemented in all kinds of organizations. Part of the reasonwhy this question is difficult to answer is because of the scope of thetechnologies that currently exist in the world, the changing applications of these technologies by changing business models and because of the varietyof practices around this process. In the current economic landscape it isimperative that business adopt innovative practices if they want to cut costs,gain competitive advantage, be more lean and streamlined and simply, if they want to survive in the market. This paper discusses current information available on this subject in tradepress, in consultant whitepapers, academic coursework at colleges anddescription of the general issue this problem is related to.As is discussed in the article - “Want to Create an Innovative Culture? Here’sHow” to implement innovation at an organization, creating a culture of innovation is the most daunting task

. It is also the most important task inthe process of enabling innovation. Unless a company’s managers andemployees embrace innovation and it becomes a core value for theorganization, it will not be effectively implemented and true value will not bederived from it. The Wall Street Journal also presents Technology InnovationAwards every year to the most innovative companies

iii

. While this goes toprove that innovation is extremely important for competitive success, it alsoalludes to the fact that the most information available in general business

journals is around measuring the

outcome

of innovation and not theimplementation itself.As was the case with Wall Street Journal, Business Week also stresses theimportance of Radical Innovation and a high-level overview of itsimplementation in the article “Radical Service Innovation”

. The articledescribes the importance of innovation for service-delivery companies butstress the importance of “radical innovation” for this industry segment.Company executives acknowledge that there are several innovative ideasavailable within a company but the execution of these ideas is the moredifficult feat. Variables such as “the alignment of the right idea, the rightteam, the right development process, the right leadership, the right level of risk management, the right target, the right time to market” are some of thefactors that need to be considered when making decisions aboutimplementation of innovative practices within a company. This article isgeared more towards using innovation to bring out better products in themarket for the end-consumer and not so much about creating innovativepractices

within

a company to bring about cost savings and competitiveadvantages. Just as WSJ, Business Week also releases ratings of the mostinnovative companies each year in their “The World's Most InnovativeCompanies” release

. This list describes the top innovative companies in theworld along with descriptions about what makes these companies innovative.In tandem with the earlier article about adding value to businesses by usinginnovation to create new product lines, this list too is compiled by evaluatingwhich companies have added most value to the end customer and not to theorganization internally. However, some knowledge about incrementalinnovation may be extracted from this list by averaging out the bestinnovative practices performed by these companies. Nevertheless, there isno direct information available about how incremental technology innovationmay be managed in an enterprise.In more Information Systems related journals, such as in the article “HP CIORandy Mott: Incremental IT 'Just Doesn't Work'” in Information Week, stress isagain laid on the poor outcomes of incremental IT and the value that radicalinnovation can bring to a company

. The article goes on to describe that bypicking and choosing (prioritizing) what needs to be improved (akaincremental innovation), a company is setting itself up for failure. There arealso potential upsides to incremental innovation though. For example,incremental innovation allows smaller companies to focus on what theirpressing concern is at the moment. Also, the risk involved with investmentsin incremental technology innovation is considerably lower as compared toradical innovation.In another article “From Idea to Innovation” in Information Week, DavidGreenfield attacks the innovation management problem head on

vii

. Someways to manage incremental innovation are strikingly interesting as per this

article. For example, GE Research used a unique form on online voting wherethey let 85 of their researches “trade” innovative ideas on a virtual exchangeto see which of the 62 innovative ideas had the highest priority. This is a veryunique way of prioritizing innovative ideas in a company and captures the“collective wisdom” of the actual people that are most knowledgeable aboutit. But this approach worked for GE alone and that too in a specific settingand a specific genre of innovative ideas for

research

. With that level of specificity such a method cannot be deemed a best practice and viewed asan industry-level theorem. As the article also points out – “… is not aneveryday part of its innovation process. The algorithm itself was basicresearch and not a product”. Similarly, Dell and Starbucks also used onlinevoting platforms to get their customers to vote on the ideas that theythought would be most useful for these companies. HP and other companiesuse concepts from “The Wisdom of Crowds” by enabling “voting” techniquesto prioritize the most useful innovative concepts. However, due to theintricacies involved in making sure that predications are accurate, suchmethods are difficult to employ as a cookie-cutter approach. The article doeshighlight the benefit of using the GE methodology of the “stock marketapproach” since voters would give more careful thought to the decisionsthey make since there may be virtual (or real) money involved. The articlethen highlights information around the risks and rewards of the “PredictionMarkets” approach and discusses some vendors that are involved in thismarket. The drawback of this approach is that there is no penalty for a badidea and popularity may not reflect the likelihood of market success. Therefore, voting may not always work. Another instance described in thearticle is of Qualcomm where the company wanted to implement innovativeideas and have the idea generators owns the ideas from inception toimplementation. However, a simple collection of ideas led to anoverwhelming “Craigslist” type list. The company then implemented a votingprocess that would cut ideas into a list of the top 30 or 40 most popularones. These ideas were then “traded” in Consensus Point prediction marketsoftware. The 10 highest-value ideas are presented to the CEO and then thefinal list of implementable ideas is selected. While these may be some waysof prioritizing innovation, there is some discussion on actual implementationof innovation technology in companies as well. For example, at Harrah’sEntertainment, incremental innovation ideas are tested as a separate unit,with different IT and simulated conditions to test the likelihood of successand chances of failure of different ideas generated within the company. As isclear from the above summary of the article, it is extremely difficult to comeup with a proven approach for managing and sustaining incrementaltechnology innovation in a company. Even though there may be successstories and failure reports, it is difficult to come up with the one approachthat works for everyone.In yet another Information Week article, “The ROI Of Innovation”, Rob Prestondescribes the importance of technology innovation and the problems with

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