Innovation Management. An explanation of the manageability of innovation and a discussion about the organisational characteristics that facilitate innovation

Essay 2019 6 Pages

Economics - Innovation economics



Innovation Management

An explanation of the manageability of innovation and a discussion about the organisational characteristics that facilitate innovation

This essay explains how firms can manage innovation and discusses organisational characteristics that facilitate innovation. In times of extending customer markets and accelerating technological progress, it becomes inevitable for firms to manage innovation. Innovation can be described as a management process consisting of the subprocesses conception, invention and exploitation (Trott, 2017). The execution of these interrelated subprocesses is of high importance for the success of an innovation, because the conversion of an idea into a commercial product is an interactive, non-linear and long-term oriented task (Ahmed, 2012; Trott, 2017). Several organisational characteristics, organisational features that are usually related to their performance, can support this process (Damanpour, 2017).

One of the first models that explained the manageability of innovation is the technology push model (Figure 1). This linear model illustrates how scientific discoveries followed by the technological application, the development of prototypes and promotion lead to innovation (Godin, 2006). However, it seems to assume the market place having a passive role. Consequently, the model can only be used in a few industries, for example the pharmaceutical industry (Petrova, 2014). The German chemical and pharmaceutical company BASF pushed their technology forward to offer high quality chemicals and specialised products due to developments in engineering(BASF, 2018). In contrast, the market pull model focuses on the interaction with customers to develop new ideas (Figure 1). These ideas are used to research and develop new designs and types of engineering and eventually to create new products (Trott, 2017). This model is applied in the fashion and fast-moving consumer goods industries, because customer demands are highly influential (BBC, 2014). To satisfy these demands, Lidl launched a new organic food range (Lidl, 2018).

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Both models are used as strategic tools, however it is controversially discussed whether the opportunity for new products solely arises from developments in technology or customer needs (Ortt & van der Duin, 2008). Instead, a conceptual framework is required (Brem & Voigt, 2008). The Cyclic Innovation Model (CIM) illustrates the cyclic nature of open innovation and combines hard and soft sciences (Figure 2). The four principal nodes, technological research, product creation, market transition and scientific exploitation, are closely intertwined and their synergy leads to successful innovation (Trott, Hartmann, Scholten, van der Duin, & Ortt, 2015). New ideas can start at every point of the cycle (Trott, Berkhout, & Hartmann, 2010). Furthermore, the framework highlights the “cross-disciplinary view of change processes” (Trott, 2017, p. 33). The entrepreneur, in the centre of the model, seizes opportunities evolving of these processes to drive innovation (Trott et al., 2010). The establishment of a dynamic network environment, linking social and behavioural science to engineering and market goals to natural and life sciences, can contribute to an effective innovation management (Berkhout, Hartmann, van der Duin, & Ortt, 2006). That the CIM facilitates innovation management can even be discovered in low technology industries like the packaging industry (Ford, Trott, Simms & Hartmann, 2014).

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The natural and life science cycle combines scientific knowledge with technology to create technical capabilities. It could be argued that this allows companies to offer state-of-the-art technology to stay ahead of the competition. Apple’s engineers have combined the scientific knowledge with technology to create technical capabilities, for example the hardware for the fingerprint scan, Touch ID (Apple, 2018). The differentiated service cycle links the product creation with the market transition to create customer value. It would seem that Apple created customer value, because they effectively combined the product creation with the market transition when responding to the market need to unlock the smartphone faster and safer (Apple, 2017).

Having illustrated how innovation can be managed, this essay discusses organisational characteristics which facilitate innovation (Table 1).

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Regarding the cross-functional cooperation and coordination within the organisational structure, it has been found that an organic company structure (Table 2) encourages the flow of information and decreases departmental conflicts. This approach fosters the sense of unity and empowerment (Dust, Resick, & Mawritz, 2013). Mechanistic organisational structures are often rigid, whereas an organic structure can accelerate market responsiveness (Wei, Samiee, & Lee, 2014). An information and communication technology system can support this cross-functional cooperation (Trott, 2017). The lattice structure of W.L. Gore & Associates is based on collaboration, creativity and open communication instead of hierarchy and traditional structures to thrive for innovation (Gore, 2018). This made it being one of the best companies to work for (Forbes 2017).

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Innovation and risk are inseparable (Beck da Silva Etges & Nogueira Cortimiglia, 2017). Research has shown that firms which focus entirely on risk avoidance are less likely to seize new business ideas (Van der Pijl, Lokitz, & Solomon, 2016). Blockbuster did not accept risk and dismissed the offer to buy Netflix, which share price increased by 350% since then (Chong, 2015; Yahoo! Finance, 2018). However, risk-assessment calculations are inevitable to maintain a balanced project portfolio, albeit the risk perception might be subjective (Trott, 2017; Song, Ming, & Xu, 2013).





Title: Innovation Management. An explanation of the manageability of innovation and a discussion about the organisational characteristics that facilitate innovation