Organizational Innovation Concepts
In Part 1 of this blog series, we discussed the first concept – innovation strategies – and how it relates to organizational performance, as well as how it relates to the challenges and barriers that an organization may face. Now we will discuss the second concept – innovation management.
Innovation: Management – Models, Resistance, and Competitive Advantage
Innovation is considered to be the primary driving force of progress and prosperity for an organization. Therefore, organizations often put a lot of time, energy, and resources into developing new products and processes. Successful innovation, however, is not just dependent on introducing a slew of new products and ideas, but is also heavily dependent on what has been called management innovation. “Management innovation consists of changing a firm’s organizational form, practices, and processes in a way that is new to the firm and/or industry, and results in leveraging the firm’s technological knowledge base and its performance in terms of innovation, productivity and competitiveness.” [ref]Volberda, H. W., Van Den Bosch, F. A., & Heij, C. V. (2013). Management Innovation: Management as Fertile Ground for Innovation. European Management Review, 10(1), 1-15. doi:10.1111/emre.12007.[/ref]
Because having an innovation nature and/or culture is important for an organization’s growth and competitive advantage, managers must recognize what type of innovation management is necessary for their particular employees and situation. As mentioned in Part 1, the Organization for Economic Cooperation and Development (OECD) identified four types of innovations: product innovations, process innovations, marketing innovations, and organizational innovations.
Another typology classifies innovation into these four types:
(1) Incremental innovation – products with improvements that make use of existing technologies
(2) Modular innovation – similar to radical about the concepts required
(3) Architectural innovation – similar to incremental about the concepts required
(4) Radical innovation – introduction of a new technology
Yet another typology classifies innovation in open and closed terms. “The term open innovation is opposed to the concept of closed innovation, where the innovation process, from conception of the idea to the marketing happens internally in the organization.” [ref]Viveiros Lopes, A. B., Kumiko Oshio, K., Salerno, M. S., de Carvalho, M. M., & Laurindo, F. B. (2016). Innovation Management: A Systematic Literature Analysis of the Innovation Management Evolution. Brazilian Journal of Operations & Production Management, 13(1), 16-30. doi:10.14488/BJOPM.2016.v13.n1.a2.[/ref]
Managers must also decide the degree of innovativeness by which they will divide innovation in their organizations: incremental or radical innovation. “Incremental innovations include progressive, continuous and cumulative innovation that does not include new scientific components to improve the existing technology…[whereas] radical innovations refer to introduction of completely new products, services, new systems of production and distribution that make existing products and services uncompetitive.” [ref]Petkovska, T. (2015). The Role and Importance of Innovation in Business of Small and Medium Enterprises. Economic Development / Ekonomiski Razvoj, 17(1/2), 55-74.[/ref]
Disruptive innovation and incremental innovation are the two most popular innovation management models. Disruptive innovation is deemed to be risky, uncertain, and costly by academics and practitioners. Incremental innovation is characterized as more predictable and corresponding with organizational context. A third and less popular innovation management model is discontinuous innovation. This model is supposed to be conflicting with and threatening for the organizational structure, current achievements, and ongoing procedures.
Eddy Junarsin contends, however, that discontinuous innovation is the change that an organization really needs in order to gain competitive advantage in the turbulent business world. In discontinuous innovation, “something created or done is radically new.” [ref]Junarsin, E. (2009). Managing Discontinuous Innovation. International Management Review, 5(2), 10-18.[/ref]
Instead of just choosing one model, it may be necessary and best for some organizations to balance two different kinds of innovation. “While a company depends on incremental innovations to survive in the short run, it really needs to develop and manage discontinuous innovations in order to maintain its competitive advantage in the future.” An organization has to design and implement different approaches, including strategic actions, industry context, organizational context, technological context, and people context, while also promoting discontinuous innovations in a changing environment while maintaining the survival ability by managing incremental innovations. [ref]Junarsin, E. (2009). Managing Discontinuous Innovation. International Management Review, 5(2), 10-18.[/ref]
Organizations are constantly facing challenges such as frequent cuts and financial fluctuation. Despite these challenges, they are constantly pressured to produce more and perform better, thus the need for management innovation. Just as consumers often reject new products due to their resistance to innovation, employees are often resistant, reluctant, or ambivalent toward new ways of operating. This does not mean it is impossible for managers to create a culture of innovation in their organizations.
Understanding the diffusion process, while exercising relentless leadership, deliberate development of personnel, and enterprise involvement, will help managers successfully pursue and implement management innovation in their organizations. [ref]Douglas, M. A., Overstreet, R. E., & Hazen, B. T. (2016). Art of the Possible or Fool’s Errand? Diffusion of Large-Scale Management Innovation. Business Horizons, 59(4), 379-389. doi:10.1016/j.bushor.2016.03.002.[/ref]
It is important for all organizations to show consistency between its strategic innovation decisions and how it achieves and sustains competitive advantage through innovation. When managers know which approach, type, and process is needed for their organization, they are able to achieve greater innovation potential among employees and be even more competitive.
To keep innovation stimulated and to avoid it becoming stifled, organizations must manage its performance. What was once an asset to innovation in some organizations, can quickly become a liability for further innovation if not regularly and properly managed. [ref]Bennedsen, M., & Foss, N. (2015). Family Assets and Liabilities in the Innovation Process. California Management Review, 58(1), 65-81. doi:10.1525/cmr.2015.58.1.65.[/ref]
Check back for Part 3 of this blog series in which we will discuss the third concept – innovation culture. Click here to read Part 1.