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Submitted by: Saahil Goel Innovation is defined as “The managed effort of an organization to develop new products or services or new uses for existing products or services”. Technology innovation is defined as “A change in appearance or performance of products or services or the physical processes through which a product or service passes”. Finally, incremental innovation is defined as “A new product, service, or technology that modifies an existing one”i. From these definitions and basic derivation, “incremental technology innovation” can be defined as a managed change in the process technology that an organization uses to deliver its products or services that modifies or builds upon the existent process or technology. Even though there is ample knowledge and industry best practices available on how to bring about a culture of innovation and how to manage such innovation, there are no agreed upon standards or best practices about how incremental technology innovation can be measured, managed, prioritized, sustained and implemented in all kinds of organizations. Part of the reason why this question is difficult to answer is because of the scope of the technologies that currently exist in the world, the changing applications of these technologies by changing business models and because of the variety of practices around this process. In the current economic landscape it is imperative 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 trade press, in consultant whitepapers, academic coursework at colleges and description of the general issue this problem is related to. As is discussed in the article - “Want to Create an Innovative Culture? Here’s How” to implement innovation at an organization, creating a culture of innovation is the most daunting taskii. It is also the most important task in the process of enabling innovation. Unless a company’s managers and employees embrace innovation and it becomes a core value for the organization, it will not be effectively implemented and true value will not be derived from it. The Wall Street Journal also presents Technology Innovation Awards every year to the most innovative companiesiii. While this goes to prove that innovation is extremely important for competitive success, it also alludes to the fact that the most information available in general business
journals is around measuring the outcome of innovation and not the implementation itself. As was the case with Wall Street Journal, Business Week also stresses the importance of Radical Innovation and a high-level overview of its implementation in the article “Radical Service Innovation”iv. The article describes the importance of innovation for service-delivery companies but stress the importance of “radical innovation” for this industry segment. Company executives acknowledge that there are several innovative ideas available within a company but the execution of these ideas is the more difficult feat. Variables such as “the alignment of the right idea, the right team, the right development process, the right leadership, the right level of risk management, the right target, the right time to market” are some of the factors that need to be considered when making decisions about implementation of innovative practices within a company. This article is geared more towards using innovation to bring out better products in the market for the end-consumer and not so much about creating innovative practices within a company to bring about cost savings and competitive advantages. Just as WSJ, Business Week also releases ratings of the most innovative companies each year in their “The World's Most Innovative Companies” releasev. This list describes the top innovative companies in the world along with descriptions about what makes these companies innovative. In tandem with the earlier article about adding value to businesses by using innovation to create new product lines, this list too is compiled by evaluating which companies have added most value to the end customer and not to the organization internally. However, some knowledge about incremental innovation may be extracted from this list by averaging out the best innovative practices performed by these companies. Nevertheless, there is no direct information available about how incremental technology innovation may be managed in an enterprise. In more Information Systems related journals, such as in the article “HP CIO Randy Mott: Incremental IT 'Just Doesn't Work'” in Information Week, stress is again laid on the poor outcomes of incremental IT and the value that radical innovation can bring to a companyvi. The article goes on to describe that by picking and choosing (prioritizing) what needs to be improved (aka incremental innovation), a company is setting itself up for failure. There are also potential upsides to incremental innovation though. For example, incremental innovation allows smaller companies to focus on what their pressing concern is at the moment. Also, the risk involved with investments in incremental technology innovation is considerably lower as compared to radical innovation. In another article “From Idea to Innovation” in Information Week, David Greenfield attacks the innovation management problem head on vii. Some ways to manage incremental innovation are strikingly interesting as per this
article. For example, GE Research used a unique form on online voting where they let 85 of their researches “trade” innovative ideas on a virtual exchange to see which of the 62 innovative ideas had the highest priority. This is a very unique way of prioritizing innovative ideas in a company and captures the “collective wisdom” of the actual people that are most knowledgeable about it. But this approach worked for GE alone and that too in a specific setting and a specific genre of innovative ideas for research. With that level of specificity such a method cannot be deemed a best practice and viewed as an industry-level theorem. As the article also points out – “… is not an everyday part of its innovation process. The algorithm itself was basic research and not a product”. Similarly, Dell and Starbucks also used online voting platforms to get their customers to vote on the ideas that they thought would be most useful for these companies. HP and other companies use concepts from “The Wisdom of Crowds” by enabling “voting” techniques to prioritize the most useful innovative concepts. However, due to the intricacies involved in making sure that predications are accurate, such methods are difficult to employ as a cookie-cutter approach. The article does highlight the benefit of using the GE methodology of the “stock market approach” since voters would give more careful thought to the decisions they make since there may be virtual (or real) money involved. The article then highlights information around the risks and rewards of the “Prediction Markets” approach and discusses some vendors that are involved in this market. The drawback of this approach is that there is no penalty for a bad idea and popularity may not reflect the likelihood of market success. Therefore, voting may not always work. Another instance described in the article is of Qualcomm where the company wanted to implement innovative ideas and have the idea generators owns the ideas from inception to implementation. However, a simple collection of ideas led to an overwhelming “Craigslist” type list. The company then implemented a voting process that would cut ideas into a list of the top 30 or 40 most popular ones. These ideas were then “traded” in Consensus Point prediction market software. The 10 highest-value ideas are presented to the CEO and then the final list of implementable ideas is selected. While these may be some ways of prioritizing innovation, there is some discussion on actual implementation of innovation technology in companies as well. For example, at Harrah’s Entertainment, incremental innovation ideas are tested as a separate unit, with different IT and simulated conditions to test the likelihood of success and chances of failure of different ideas generated within the company. As is clear from the above summary of the article, it is extremely difficult to come up with a proven approach for managing and sustaining incremental technology innovation in a company. Even though there may be success stories and failure reports, it is difficult to come up with the one approach that works for everyone. In yet another Information Week article, “The ROI Of Innovation”, Rob Preston describes the importance of technology innovation and the problems with
implementation of the sameviii. The article describes the culture around incremental innovation in companies and what makes implementation difficult. “Most executives pay lip service to innovation, but few take the time to really manage and measure it. The metrics that would drive better
performance -- time to market and return on innovation investment -- are used by only 18% and 22% of respondents. The most popular metrics -- customer satisfaction (57%) and overall revenue growth (51%) -- are more after the fact”. This ties in well with the information gathered from general business journals about there being more stress on innovation to bring new products to satisfy customers in the market rather than on improving conditions within the company by enabling a new way of doing things. The article goes on to describe that creating an innovation company requires a complete shift in perception or the rewiring of the company “DNA”. Also, innovation is the surest way to build shareholder value. Further, technology innovation is described as something that needs to be a part of the entire organization and that funding for IT innovation should flow through a single organizational unit which lies outside of IT. There is also discussion about the need for incentivizing innovation to ensure its success, adoption and sustenance.
Quocirca Ltd. agrees that creation of ideas and implementing them for innovation is the right way to maximize the value of intellectual propertyix. The white paper describes that innovation has to be the very part of an organization’s DNA for it to be successfully implemented. The paper concludes by saying that by involving the “crowd” and having THEM come up with innovative ideas as well as implement them is the best way to go forward. However, not much information is offered on what may be the best process to go about this except for taking each organizational vertical at a time and then implementing best practices for that particular branch of the company. The paper brings out an interesting point about there being “no single approach” that will create a well-rounded solution. This comment is consistent with what has been discovered from other sources of information. The DeSai Group in their whitepaper “Mastering Innovation” also argue that the most burning issue around innovation is “how to institutionalize innovation” – i.e. how to build a climate and culture of innovation while maintaining standards and controls necessary for ongoing governancex. Also stressed in the paper is the usefulness of harvesting internal innovation that arises from a company’s own workforce that is intimate with the technology and with the business processes. The DeSai Group provides its clients on a Strategy Driven Innovation (SDI) framework that is tweaked according to how its clients wish to maximize value – Top Line Growth, Shareholder Value or Bottom-Line Optimization. The SDI framework can help DeSai’s clients design a customized roadmap for innovation. The framework is composed of four levers – Venturing for Best, Agility for Speed, Behaviors for Growth and Climate & Culture for Success. Within each of these levers are described the opportunities for innovation, barriers and challenges to overcome and the target outcome.
Even though various vendors offer services and frameworks around management of innovation, to address the scale and breadth of technology innovation possible, to customize innovation management solutions to fit each company’s corporate culture, line of business and vision statement and to prioritize innovative ideas to best fit a company’s needs continue to be puzzles that are yet to be solved by consultants or vendors. However, in one or another form, there is general agreement with information that is available in general and information systems specific trade press and journals. There is academic coursework offered at Katz Graduate School of Business (University of Pittsburgh) that may help understand the problem discussed in this paper better. Courses dealing with organizational culture such as Organizational Behavior and other Human Resources oriented courses can help executives understand how to enforce a culture of innovation within a company. It can also alert executives to potentials barriers to change and educate them about motivational theories. IS courses such as Business Systems Platforms, Impact Analysis and IS Planning can help understand what scale of technologies is available and what some potential points for improvement and incremental innovation could be. More specifically, courses like Impact Analysis can teach important concepts around idea reception, prioritization and implementation – all using some kind of a framework or methodology. Strategic Management can help executives understand the need for innovation and how to gain competitive advantage from it. Process Improvement will impart learning that can be directly applied to the problem being discussed above. Further, courses such as Creativity and Decision Making can actually make managers appreciate the importance of innovation in an organization and can educate people to think laterally. General ideas that are useful for characterizing this problem are organizational culture, innovation management, process improvement, IS measurement and strategic alignment. Most of these topics have been discussed in one or another form through academic coursework offered at Katz. In general, this issue is related to management of innovation and idea generation within a company from the point of reception, prioritization, enablement, implementation, culture and finally outcome. More specifically, the paper deals with technology innovation that is brought about in an incremental fashion. These specifics introduce even more difficulties because of the nature of technology and different applications of it. Further, incremental innovation puts the problems in the hands of the organizational workforce and not a “few enlightened souls”. Therefore, incremental technology innovation management becomes even a harder problem to solve. As per the article “Assessment methodology to prioritize knowledge management related activities to support organizational excellence” by
Manfred Bornemann and Martin Sammer, “So far, a systematic and comprehensive assessment tool to prioritize organizational development activities, especially in the currently intensely discussed domain of knowledge management is not available in the literature”xi. Clearly in academic literature, this is generally accepted as a hard problem to solve. The aforementioned paper also goes on to describe a proposed methodology which is based on utilizing knowledge that is existent within a company. “The methodology stresses four levels of potential intervention, starting with the strategy focused target level, next a knowledge level covering all knowledge workers of an organization, then an action level focusing on operations and processes and finally a data level with the explicitly available stock of (digital) resources”. This paper goes into depth to describe how incremental technology innovation may be managed in corporations using a premade methodology and is obviously the very first step towards this endeavor.
http://college.cengage.com/business/griffin/management/7e/students/glossary/ch13.html “Management” by Ricky W. Griffin (Texas A&M University) “Managing Organization Change and Innovation” - Chapter 13 This is a definition of various innovative organizational management concepts and terminology.
http://blogs.wsj.com/independentstreet/2008/11/20/want-to-create-an-innovative-culture-hereshow/ “Want to Create an Innovative Culture? Here’s How” by Kelly Spors This article describes why it is important for companies to adopt innovation and how they can use innovation to their advantage in these tough economic times. Even though the article stresses on the use of “radical innovation” it does make some salient points about the importance of creating a culture for enabling adoption of innovation in an organization. Even though the article talks about why this is important, it does not go into any detailed descriptions of how this can actually be implemented in organizations.
http://www.dowjones.com/innovation/ “Technology Innovation Awards” This website maintains a list of award recipients for being the most technologically innovative companies. WSJ presents companies with these awards year after year. This is useful for the purpose of this article as it alludes to the fact that while there is knowledge available about how to rate the output of innovation, there is not enough information about how to bring about innovation itself.
http://www.businessweek.com/innovate/content/oct2008/id20081020_368485.htm “Radical Service Innovation: Strategies on the frontiers of service design demand a blend of creativity and discipline. Here are five steps to leverage positive results” This article in Business Week describes the steps one can take to bring about radical service innovation in their companies. However, the information described in this article is very high level and does not talk about the benefits of incremental innovation.
http://www.businessweek.com/magazine/content/06_17/b3981401.htm “The World's Most Innovative Companies: Their creativity goes beyond products to rewiring themselves. BusinessWeek and the Boston Consulting Group rank the best.” This is a release by Business Week and contains a list of the most innovative companies. In addition, it contains descriptions of the things that these companies have done to bring about innovation within the company.
http://www.informationweek.com/blog/main/archives/2008/01/hp_cio_randy_mo.html “HP CIO Randy Mott: Incremental IT 'Just Doesn't Work'” By John Soat This article describes how HP is transforming its internal IT practices by using radical innovation. The article also takes a strong stand against incremental technology innovation by terming it as a “recipe for failure”. The article also talks about some benefits of incremental innovation – such as low risk and improvement in existing infrastructure. It is useful from for this paper as it shows that the knowledge that is available in such journals is more geared towards only a certain point of view.
Information Week – November 10, 2008 – “From Inkling to Innovation” “From Idea to Innovation” by David Greenfield This article is very useful for the context of this paper as it discusses experiments and methods by which large corporations have tried to tame innovation management. It also discusses an impact assessment of managed incremental innovation and lays stress on the different methods employed by different companies – thus lending direct support to the chief premise of this research paper (that incremental innovation is difficult to manage and sustain due to lack of standards and proven best practices).
“The ROI of Innovation” by Rob Preston This article is a description of the fact that though there is awareness amongst top management about the usefulness of innovation, not much is being done to support it because of lack of knowledge around implementation of innovation and because of the difficulty in predicting the outcome of implementation of innovation.
http://www.innovationtools.com/PDF/idea-mgmt-and-culture.pdf “From Problems to Ideas through to Innovation” This is a consultant white paper from Quocirca that describes how idea generation can be managed and what value it can add for an organization. Further, the whitepaper also describes HOW idea management can take place effectively in an organization. There is an underlying theme of creating a culture of idea generation in a company.
http://www.innovationtools.com/PDF/innovation-roadmap.pdf “Mastering Innovation” – The DeSai Group This whitepaper describes that the burning issue around innovation is institutionalizing it and fitting it in a corporate framework. Also discussed is the usefulness of harvesting internal innovation that arises from a company’s own workforce.
“Assessment methodology to prioritize knowledge management related activities to support organizational excellence” http://www.emeraldinsight.com/Insight/viewContentItem.do?contentType=Article&hdAction=lnkht ml&contentId=843744 By Manfred Bornemann and Martin Sammer “So far, a systematic and comprehensive assessment tool to prioritize organizational development activities, especially in the currently intensely discussed domain of knowledge management is not available in the literature”. This article also describes a potential methodology which will address the aforementioned problem.
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