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We live in a world where the history of technological innovation and change (and its
organizational equivalent) has been nothing short of remarkable. Indeed, it has long been
recognized that these two forms of innovation sit at the core of capitalism and largely account for
the ‘success’ of capitalist societies over other forms of economic and social relations (Harvey,
2010). Approaching this issue from entirely different ideological perspectives, Karl Marx in the
nineteenth century and Joseph Schumpeter in the mid twentieth century both recognized
technological and organizational innovation as a fundamental feature of the ‘creative-destructive’
tendencies of capitalism, although the extent to which the costs of the destructive aspect of this
phenomenon are considered acceptable is a subject that divides opinion to this day.
What is innovation?
As we noted in the introduction, Joseph Schumpeter, a seminal thinker on innovation and
economics, argued that capitalism is fundamentally a system of change; capitalism is incapable
of remaining static (Schumpeter, 1934). He describes the ‘perennial gales’ of ‘creative
destruction’ unleashed by innovation. In 1912 Schumpeter made an early characterization of
innovation as any of five phenomena:
the introduction of a new good
the introduction of a new method of production
the opening of a new market
access to (‘conquest of’) new sources of raw materials or components
the introduction of new forms of organization. (Godin, 2008)
The term ‘innovation’ has since been extensively debated, and used in a wide range of ways.
One study (Baregheh et al., 2009) identified 60 definitions of innovation in organizations alone.
In part, at least, these differences are a result of the different concerns of different academic
disciplines, the perspectives of different stakeholders in the innovation process and the different
contexts in which innovation is considered. Whereas an economist may be concerned with the
contribution of innovation to the performance of a national economy and so be interested in the
generation of entirely new products or processes, a social scientist interested in how individuals
decide whether or not to adopt an innovation may be concerned simply with whether a product is
new to an individual. Managers may be concerned with how to prepare their organization to
generate innovations that are new to their industries and markets or with how their organization
might most effectively adopt or configure innovations generated elsewhere for use in their own
structures and practices. What the term ‘innovation’ means, then, appears to depend on who is
using the term and the context in which it is used.
Product innovation – a good or service that is new or significantly improved. This is perhaps
what we think of most often when we think of an innovation. Recent examples of product
innovation would be ‘smart’ phones and tablet computers.
Process innovation – a new or significantly improved production or delivery method.
Innovations in the way things are made can critically effect, for example, how widely accessible
they are. A recent, and widespread, example would be the shift in many retail sectors such as
clothing, books and groceries to online sales and associated distribution.
Marketing innovation – a new marketing method involving significant changes in product
design or packaging, product placement, product promotion or pricing. The English football
Premiership might be seen as an example of marketing innovation. The old First Division was
replaced by a new organization that sold broadcast rights via a new television provider, making
the English Premiership perhaps the richest football league in the world. Essentially the same
product was repackaged and made available via paid-for subscription satellite TV.
Organizational innovation – a new organizational method in business practices, workplace
organization or external relations. Open-source software is organized very differently from
conventional software development and has become an important source of software such as the
Linux and Android operating systems and a wide range of applications (including the Firefox
browser and Zotero reference management system).
What is technology?
Technology is the sum of techniques, skills, methods, and processes used in the
production of goods or services or in the accomplishment of objectives, such as scientific
investigation. Technology can be the knowledge of techniques, processes, and the like, or it can
be embedded in machines to allow for operation without detailed knowledge of their workings.
Put briefly, we see technologies not simply as technological artefacts, such as an iPhone
or laptop, but also as knowledge. If you have not thought of technology in this way before, it
may seem odd but you will actually find very few definitions of technology that only refer to
technology as artefacts. An accurate definition will also include reference to a body of
knowledge and practice (often referring to the application of scientific knowledge, although the
emphasis on scientific is, in fact, too narrow). Indeed, we could say that technology as artefact
and knowledge represent two of the components of the ‘bundles’ of assets, such as specific forms
of intellectual property, organizational capabilities, complementary technologies and even
commercial brands that together provide potentially innovative products and services.
A further distinction can be made between technology as mode of enquiry and action.
This refers to the techniques by which technological knowledge is itself created. For example, a
particular approach to continuous improvement that used to get a lot of attention in innovation
management literature in the early 1990s and has endured into the 2000s is the Japanese ‘Kaizen’
model, which, it was argued, was particularly effective for organizations that needed to deal with
high rates of change and complexity in their operations and environment.
Interestingly, mention of process improvement brings up another very important
distinction in the meaning of technology, which is between process and product technologies.
The former is what an organization uses to accomplish its tasks. The latter is delivered to
customers. Product in this context means both goods and services.
Interestingly – but perhaps unsurprisingly – this is similar to Bartol and Martin’s (1998)
definition of change management, which includes technology, human resources, organizational
culture and structure. It is also worth adding that a wide-ranging review of studies of innovation
management discovered that ‘the terms innovation management and technology management are
often used interchangeably, or rolled into one.’ (Igartua et al., 2010, p. 42). Again, this is
unsurprising if we remember that earlier in this course, we noted that technology is almost
always present in one form or another in any example of innovation/innovation process.
Nevertheless, Igartua et al. go on to note that:
On the one hand, innovation management can be defined as the creation of preconditions
to promote human creativity, including strategic commitment and context management.
Innovation management can also be seen as a process to foster the application of knowledge.
Innovation management should not be confused with management innovation. The latter
has been defined as ‘the invention and implementation of a management practice, process,
structure or technique that is new to the state of the art and is intended to further organizational
goals.’ (Birkinshaw et al., 2008 p.826 [original emphasis])
If we combine the discussion of how innovation management has evolved with the
discussion of definitions and the lists of IM features given earlier, what becomes clear is that
because ‘innovation’ is applied to anything from incremental change to radical innovation, the
extent of the applicability or use of these roles, activities, skills and resources will be dependent
on the form of innovation a person or group is involved in, and its context, and will undoubtedly
change over time.
Putting it simply, innovation management is the process of managing innovative ideas. Say a
business leader has an idea to increase revenue or market share. For this idea to have a real
impact, it needs to be turned into something actionable (such as creating a new product).
Therefore, we can define innovation management as the way new ideas are developed and
refined until they become a reality.
While there are several specific ‘types’ of innovation, according to The Merriam-Webster
dictionary:
It’s important to remember that ideas aren’t innovative simply by being new. The idea must
create positive change such as profit or customer satisfaction. Ultimately, innovation has to be
something groundbreaking and exciting that sets your business apart from the competition.
We need to talk about innovation as something tangible and measurable. A great example of
this is process innovation. Say that your employees are tired of relying on an outdated or
cumbersome process. You have an idea that maybe parts of that process can be expedited,
outsourced or improved by new technology. This idea can be considered an example of process
innovation as it not only involves something new, but it has several benefits such as reduced cost
and improved morale.
Innovation can also be a vehicle to attract top talent that is more likely to want to work for a
business successfully driving forward innovation. They then become loyal employees who value
the opportunity to be a part of the innovation process.
The above are just a handful of benefits associated with innovation. Here are some other
common examples:
Resolving recurring problems in the business with creative solutions
Increasing workplace productivity with new processes and procedures
Showcasing business values and highlighting your qualities
Standing out as an innovative business ahead of the competition
Boosting employee morale and improving business performance
All cracking reasons to encourage innovation in your business, but all of this potential can
only be reached with effective innovation management processes in place. The importance of
innovation management, therefore, is that it’s the only way you are going to transform big ideas
into reality and benefit from the positive outcomes.
Understanding the different types of innovation
It’s a common misconception that a business is either innovative or not innovative. A
simplistic perspective that doesn’t account for the different types of innovation that may or may
not be outwardly obvious as ‘innovative’. The nuances of innovation management are very much
linked to the different types of innovation. Here’s a breakdown of those types and their
translation into what they actually mean in a business context, to help you navigate just how
far-reaching your innovation management strategy can go:
These are:
>Ideation
>Collaboration
>Implementation
>Value creation
Our idea management software takes this further by breaking these phases down into
incremental steps. Taking you through each stage of development in a way that is both concise
and manageable but also likely to inspire your next move.
These include: Sharing challenges, strategic business goals and objectives – moving ideas
through the funnel so only the best and most relevant ones come to fruition.
Gaining feedback and sharing learnings – leading you to collate feedback at every step and
sharing gained knowledge with the relevant stakeholders. Enabling a well-defined innovation
management process that doesn’t stagnate and develops in an ever-evolving and innovative way.
Managing key stakeholder expectations – while you don’t need everyone to be actively involved
in the process, values and key measures should be communicated from the outset. Idea Drop
keeps everything moving through the funnel with confidence and accuracy. This also means you
can measure the results and report on progress.
Key learnings:
>Innovation isn’t just something new, it’s something different and useful.
>Innovation management is the process of managing innovative ideas.
>Innovation can improve productivity, create new revenue streams, increase employee loyalty,
save costs.
>Successful innovation management will transform big ideas into reality.
The 4 types of innovation are incremental, disruptive, architectural and radical.
The full lifecycle of innovation management includes collaboration, ideation, implementation
and value creation.
Lesson 3
And for an invention to be more than something new and creative, it should have broad
impact. The term stakeholders acknowledges that the beneficiaries of an innovation can vary
widely—consumers, shareholders, employees, and any subset thereof. All of these stakeholders
can potentially benefit from different types of innovations meant to address sustainability.
Responding to an opportunity often requires innovation; for example, finding a new way
to solve a problem or address a concern that is cheaper, faster, or better than the old way of doing
things. The innovation can range from a relatively simple process (way of doing things) change
to a highly complex new technology, such as those introduced by General Electric (GE) in their
ecomagination program (discussed in the previous sidebar titled "Jack Welch at GE: An Industry
Leader as an Intrapreneur").
To help illustrate the concept of innovation, two companies will be discussed. Both
companies are innovators in two entirely different areas at two entirely different price points.
However, both companies are connected to sustainability in that they are providing a product to
help reduce the consumption of fossil fuels for energy.
On the other end of the technological spectrum is SustainX Energy Storage Solutions
(http://www.sustainx.com/), a company started by the former dean of the engineering school at
Dartmouth College. SustainX has invented a new technology to cost-effectively and efficiently
store energy from renewable and other sources. The technology being pioneered by SustainX
compresses and expands gas resulting in seven times the reduction in storage cost as compared to
traditional methods. This could profoundly change the economics of energy generation from both
renewables and conventional sources. The storage systems that SustainX is developing for utility
companies will cost more than $1 million.
Public policy can play a role in encouraging the development and adoption of new
technology, which serves to jump-start market development and demand and reduce start-up
risks for sustainability entrepreneurs. Research and development tax credits can reduce the costs
of innovation and new products and services, offering development for entrepreneurs. And
public programs offering tax advantages and rebates to customers, such as the California Solar
Initiative (http://www.gosolarcalifornia.ca.gov/csi/index.php), can lower the cost and increase
the rate of customer adoption of new products and services.
Also important in the development of new technologies are the industry standards the
government defines and regulates. Examples of public policy initiatives that have pushed
forward technological innovations are energy efficiency standards for appliances and for
buildings.
Innovation in turn can lower the barriers and costs of public policy standards on
emissions and efficiency, and this can also be true for some policies to address social injustices
(e.g., technologies that improve the productivity and output of workers and that can lower the
costs of increasing the minimum wage). So, from a systems perspective, there is feedback going
in both directions between innovation and public policy.
To compete in the sustainability arena, entrepreneurs must frequently go beyond what has
worked in the past and seek new and different perspectives and connections. One important area
of innovation is new associations, networks, and partners that can provide new resources and
information and foster new ways of doing things. Facebook is an example of a social network
that has been innovative in creating new connections and relationships on a global scale that
otherwise would not have existed through applying existing technology.
People from the same circles tend to share the same pools of information and contacts.
Research indicates that the longer the duration of these direct connections, the more similar the
perspectives and resources. Under normal circumstances, this is fine. However, when
entrepreneurs want to take action in an arena outside the familiar terrain—such as launching a
new sustainable enterprise—it is likely that information from existing relationships will not be
enough. Instead, they must search outside of their traditional network of relationships.
For new entrepreneurs, it will be beneficial to seek information and resources from new
relationships and contacts. These new relationships can be formed with a range of individuals
and organizations—including academics, consultants, nonprofit research institutes, government
research organizations, and nongovernmental organizations (NGOs). NGOs have often been
business’s harshest critic on environmental and social issues. It is for this reason that businesses
are increasingly forming relationships to these groups to engage them in thinking strategically
about solutions and new venture opportunities. The most innovative ideas may well come from
those quarters most critical of how business has traditionally been done. An example of this is
McDonald’s benefitting from collaboration with the Environmental Defense Fund, which was
one of the company’s harshest critics before their working together. In consultation with the
Environmental Defense Fund, McDonald’s has reduced their use of materials in packaging,
replacing polystyrene foam sandwich clamshells with paper wraps and lightweight recycled
boxes, replacing bleached with unbleached paper carry-out bags, and making dozens of other
packaging improvements behind the counter in McDonald’s restaurants and throughout the
company’s supply chain.
KEY TAKEAWAYS
Innovation is a new change in a product offering, service, business model, or operations that
meaningfully improves the experience of a large number of stakeholders.
Innovation can lower the barriers and costs of public policy standards on emissions and
efficiency, and this can also be true for some policies that address social injustices.
Lesson 4
It is important to understand that innovation doesn’t happen overnight and requires time and
endeavor to generate something actually innovative that will make a difference.
Innovation and creativity walk hand-in-hand when it comes to entrepreneurship. Here are six
great ways to look at innovation in order to understand its importance in entrepreneurship.
The world is fraught with issues that are hard to solve, but at the same time will continue to
demand a solution. And going by Albert Einstein, we cannot solve problems with the same
thinking we used when we created them. Far-sighted, creative ideas and innovative solutions are
required to solve them, but at the same time, such solutions will not emerge from simple and
linear planning and problem-solving processes.
However, what one needs to understand is that innovation quintessentially is about seeing,
perceiving and solving problems in creative ways. A deep sense of passionate purpose and
futurist thinking are required to deal with solving stubborn issues and come up with effective
entrepreneurship - based solutions.
Both central and state governments across the country are now realizing that entrepreneurship is
a vehicle of economic success and prosperity that can be instrumental in promoting
entrepreneurial endeavors through different schemes and programs. Finally, the rise of new
impact investors is a big step forward for new enterprises that thrive on innovation.
The Internet of things has already created a big buzz as it has enabled connection and sharing of
data between all digital devices. This is crafting out wholly new business models and revenue
streams, for start-ups as well as large and old organizations that leverage existing assets in
exciting, profitable new ways. It also is altering the foundation of the contest as companies can
now participate as elements of ecosystems.
The growing access to free and low-cost online education is encouraging and enabling a yearning
for learning and building an appetite for knowledge to become subject matter experts in
respective fields. Armed with knowledge innovative entrepreneurs and start-ups are flourishing
through the internet of things.
Millennials now swap jobs at an escalating rate as they look for more gainful engagement,
independence, and egalitarianism. This has deeply impacted the hiring process, which is now
changing as recruiters have started relying on Internet-based routes. ‘Reputation’ is becoming
more important to organizations. Freelancing and flexi-timing are fast emerging as a way of life
and a significant section of the workforce are working from home, taking responsibility for
generating their own income and wealth. The young professionals are also opting for co-working
and collaborative work environments, thus networking and teaming to share and develop
knowledge, skills, and experience.
These trends are propelling organizations to look at innovative approaches for enhancing staff
experience at workplace as well as with the acquisition and retention of the best resources.
Major changes are necessary to understand customer’s need, want and expectation as they are
now empowered by the increasingly connected and digitized world. Customer focus has rapidly
shifted to receiving the value that reveals that companies understand and support their lifestyle
preferences.
Customers now have total control over who they are, what they do, and what, how and where
they purchase and procure products. This growing consumer expectations and choices have made
organizations become more customer-centric through innovative amendments. Adopting
human-centered devices to perk up the experience has provided increased value and created new
ways to invent products and services.
Globalization has opened economies nationally and internationally and as a result, governments
are espousing free-market economy. This is vastly increasing their productive potential and
creating new opportunities for trade and investment internationally. The hurdles to global trade
and negotiations for promoting trade, in goods and services as well as in investments have also
greatly reduced.
This has endorsed proper connectivity and partnership. Today anyone, anyplace at any time can
develop an internet-based business that builds scale through the application of lean
methodologies thus creating more value for customers with fewer resources. This apart, the
increasing availability of private funding and easing of government red-tapes and compliance
factors make it easier for people to kick off low cost, internet-based global businesses.
Lesson 5
When you think about innovation, chances are Apple is one of the first companies that comes to
mind – and with good reason.
Led by the company’s late founding visionary Steve Jobs, Apple has broken every rule in the
book and defied every expectation on its way to the top. In doing so, the tech titan has set trends
in global technology for decades to come.
Even more amazingly, Apple still continues to churn out world-defining products on a regular
basis, with most other tech outfits simply trying to keep up.
However, Apple is not all turtlenecks and keystone addresses. Beneath its shiny exterior, a strong
culture of innovation and creativity help to drive Apple’s incredible performance.
The success of the iPhone series is undeniable. What some organizations fail to recognize,
however, is that its success is largely due to its existence as a series itself. Instead of developing
independent products, Apple Inc. regularly improves upon the existing model of the iPhone and
releases its improvements in a stylized manner, generating excitement and increasing sales with
every new model to be announced.
Consistently since 2006, Fortune surveys have ranked Apple number one in innovation and the
company is also frequently mentioned as the most admired company in the United States. In
August 2011, Apple also became the world’s most valuable company at $349 billion based on
stock market valuation. Apple’s innovations have revolutionized the way we use computers and
phones and play music and movies. One innovation in particular, the iPod was the start of a trend
of products with broad consumer market appeal. The iPod combined technical knowledge with a
new online music concept to become the most influential new product in decades. That was
followed by Apple’s introduction of the iPhone and iPad. All these products combine
technological innovation with attention to design, usability, and content delivery in new and
innovate ways to transform the way billions of consumers use music, use their phones, use their
computers, and access the Internet.
Nokia: What Goes Wrong?
When the mantra “innovate or die” is invoked, two companies who are often mentioned as
examples are Nokia and Kodak. But in what ways, exactly, did these two companies fail to
innovate? and what lessons can we learn from their failures?
Nokia is the first brand that was in the market when we heard of the early mobile phones. For a
decade, Nokia remained in the market and introduced new models of the phone every now and
then. It catered all segments of society by providing the phone with different price ranges.
Millennial would be able to relate with me better. With a glorifying history of the company, it
gets hard to realize that Nokia is no more relevant in the mobile phone industry. But why Nokia
failed?
In the year 2013, the same Nokia Company that was enjoying a 50% share in the market dropped
to less than 5% share of the total market. This was the time when the management, shareholders,
and the customers of the company feared Nokia’s bankruptcy. The bankruptcy was nearly
certain, but the intervention of Microsoft in the market helped the company in getting back to a
better position. This was done by Microsoft in order to save the Windows platform on the
smartphone, but in reality, it gave a new life to the company.
Apart from revamping the smartphones of the company, it also started diversification of the
business. Now, Nokia supplies network infrastructure as a significant part of the overall business.
In order to highlight the factors that resulted in the plight of the company have been widely
studied in Nokia’s case study. Business graduates and even the practical trainees give examples
of the things that the company did wrong to teach the students and trainees of how to do the right
things.
The technological advancement in the mobile phone industry was rapid. The traditional phones
changed to smartphones, but Nokia did not change accordingly. Although, it was the initiator of
the early smartphones. Symbian smartphones were introduced in the year 2002, but the company
could not manage with the pace of the changing technology. That is why Nokia failed.
It kept on producing the old version of the phone, whereas the competitors started to pour in the
highly advanced smartphones. These smartphones got affordable for the users, and ultimately,
the entire cult of society shifted to them. Even then, Nokia did not realize what was going on and
did not transform its strategies. Thus, over time, with the shifting of all its target market to a
newer and better version of the phone took place, leaving Nokia far behind the new entrants of
the market.
Despite knowing that there was more demand for software than hardware, Nokia stuck to their
old ways and didn’t adapt to the changing environment. When Nokia eventually did realize their
mistake, it was a little too late, because people moved on to Android and Apple’s phone
2. Failed to Innovate
Nokia was the first company to introduce 3G phones, camera phones, and many more innovative
technologies. In the early 2000s, it knew that innovation is the key to stay relevant and push the
boundaries of technology. But as demand for their phones grew, their focus shifted to
manufacturing, to fulfill those demands. It focused less on innovation and more on mass
production and as a result, companies like Samsung, Apple, HTC, etc., started to gain some
market with their innovative & simple OSs.
KEY TAKEAWAYS
As we compare these two companies, one who has successfully innovated its products and one
who failed to innovate their products, we can clearly evaluate the importance of innovation in a
business. Apple who is continually innovating its products is still existing and became the
number 1 company with regards to innovation while Nokia who wasn’t able to see the
importance of innovation also failed in its business enterprise.