Innovation Management for Business Survival
Managing Innovation Requires a Specific Organizational Culture
Nov 1, 2009
All successful new products will be imitated sooner or later in a competitive market. On the other hand, a steady flow of small innovations on the factory floor, customer service and other operational areas is likely to remain invisible. Though invisible, they will be reducing costs and/or enhancing customer satisfaction and improving the bottom line.
What is Innovation Management?
Innovation is not synonymous with invention. The term innovation has come to mean not only bringing in something new but also creating additional value while doing it. Inventions, on the other hand can result in completely useless products.
Innovations can involve small or radical changes. A completely new product that succeeds in the market is an example of a radical innovation. A new way of making a product can sometimes involve only a small change and yet produce great cost savings.
Basically, we can see innovation as something that people had not thought of before. It can involve both products and processes. It can also involve a new way of organizing the business. Often it is an incremental process, with small changes leading to a very different scenario. It is here that organizational culture becomes critical, as a conducive environment can motivate employees to come up with such small, incremental innovations. Innovation management involves developing such an organizational culture.
Innovation and Management
If a business focuses simply on optimizing products and processes along standard lines, it might not be able to gain any noticeable advantage in an intensely competitive market. It is innovations going beyond the ordinary that can produce such an advantage. Such innovations can occur in very different areas, involving for example:
- Tapping new markets for an existing product, say by finding a new use for the product
- Changes in production processes that reduce labor, material or energy requirements and lowers production costs
- Using new, lower cost, materials that deliver the same or better results in the finished product
- Minimizing the adverse environmental impact of production processes and using this as a major selling point
- Finding a better substitute for an existing product
- Developing a new product that can meet a widely felt need in the market
- Finding lower cost ways of complying with regulatory requirements
- Supplementing the product range by exploiting existing facilities or know-how to provide cost advantages
It will be evident from the listed benefits that innovation is a key function of management because it facilitates achievement of the very goals that business management seeks, such as higher market share, increased revenue, reduced costs and environment-friendly operations.
Management of Innovation
Innovation involves creativity, i.e. thinking of new possibilities. Identifying such new possibilities is easier for people who are dealing day in day out with the product or process. It is in such a context that innovation and management come to be linked.
Create an organizational culture where employees are encouraged to come up with ideas for doing things better and can also get involved in implementing the ideas and seeing the consequent improvements. The result can be dramatic over a period of time with the organization quite likely to benefit from increasingly lower cost of operations and probably higher value products.
Formal innovation management usually takes the form of R&D that involves searching for new ideas and developing them into marketable products and services. Value engineering is another formal technique that can come up with innovative ways to provide equal or greater value in a cost effective manner.
The innovation process can be aided by such practices as knowledge management that makes insights from accumulated experience available across the organization.
Innovation has become a critical requirement for continued success and survival of business in the intensely competitive environment of today. Innovation management involves motivating employees to come up with new ideas, as well as formal practices like R&D and value engineering.
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