Chapter 1 – Innovation management: an introduction
The study of innovation
Innovation has long been argued to be the engine of growth. It is important to note that it can
also provide growth almost regardless of the condition of the larger economy.
The acceleration in economic growth was the result of technological process. The competition
posed by new products was far more important than marginal changes in the prices of existing
products (Schumpeter).
Studies about how science and technology affected the economic system. The studies looked
at:
- The generation of new knowledge
- The application of this knowledge in the development of products and processes
- The commercial exploitation of these products and services in terms of financial
income generation
Neo-classical economics is a theory of economic growth that explains how savings,
investments and growth respond to population growth and technological change. The rate of
technological change influences the rate of economic growth, but economic growth does not
influence technological change. Technological change is determined by chance.
The Schumpeterian view: firms as different – it is the way a firm manages its resources over
time and develops capabilities that influences its innovation performance.
Overview of the innovation process: economic perspective, business management strategy
perspective and organizational behavior
Organizational architecture: the way a firm has constructed itself over time. impact on
innovative performance.
Recent and contemporary studies
Sustaining innovations appealed to existing customers, since they provided improvements to
established products (new computer software).
Disruptive innovations tend to provide improvements greater than those demanded (change of
disk drives).
The need to view innovation in an organizational context
Individuals in the innovation process, key component: they define problems, have ideas and
perform creative linkages and associations that lead to inventions.
Problems of definition and vocabulary
The innovation has to be seen as a process, the innovation process: the process from new
discovery to eventual product
The traditional view of entrepreneurship: entrepreneurs often seem to have innate talents.
Definition (Stevenson and Amabile): the pursuit of opportunity beyond the resources
you currently control
, Design: an applied activity within research and development and to recognize that in certain
industries design is the main component in product development and in other only a small part
of development activity.
Innovation (Myers and Marquis): Innovation is not a single action but a total process of
interrelated sub processes. It is not just the conception of a new idea, nor the invention of a
new device, nor the development of a new market. The process is all these things acting in an
integrated fashion.
Invention: the conception of the idea, whereas innovation is the subsequent translation of the
invention into the economy.
Innovation = theoretical conception + technical invention + commercial exploitation
The conception of new ideas is the starting point for innovation. The process of converting
intellectual thoughts into a tangible new artifact is an invention. After that the exploitation
will take place.
Conclusion: Innovation is the management of all the activities involved in the process of idea
generation, technology development, manufacturing and marketing of a new (or improved)
product or manufacturing process or equipment.
Creativity & innovation:
- Creativity: the thinking of novel and appropriate ideas
- Innovation: the successful implementation of those ideas within an organization
A typology of innovations
Product innovation The development of a new or improved product
Process innovation The development of a new manufacturing process
Organizational innovation A new venture division; a new internal communication
system; introduction of a new accounting procedure
Management innovation TQM etc.
Production innovation Quality circles, JIT, MRP II
Commercial/marketing innovation New financing arrangement, new sales approach
Service innovation Internet-based financial services
Technology: knowledge applied to products or production processes
Models of innovation
Traditional arguments
- Social deterministic school: innovations were the result of a combination of external
social factors and influences (demographic changes, economic influences) when
conditions were right innovations would occur
- Individualistic school : innovations were the result of unique individual talents and
such innovators are born
- Resource based view: focus on resources, capabilities and skills when firms have
resources that are valuable, rare and not easily copied they can achieve a sustainable
competitive advantage in the form of innovative new products
Serendipity: luck, unexpected inventory not common, you need knowledge about the area
The study of innovation
Innovation has long been argued to be the engine of growth. It is important to note that it can
also provide growth almost regardless of the condition of the larger economy.
The acceleration in economic growth was the result of technological process. The competition
posed by new products was far more important than marginal changes in the prices of existing
products (Schumpeter).
Studies about how science and technology affected the economic system. The studies looked
at:
- The generation of new knowledge
- The application of this knowledge in the development of products and processes
- The commercial exploitation of these products and services in terms of financial
income generation
Neo-classical economics is a theory of economic growth that explains how savings,
investments and growth respond to population growth and technological change. The rate of
technological change influences the rate of economic growth, but economic growth does not
influence technological change. Technological change is determined by chance.
The Schumpeterian view: firms as different – it is the way a firm manages its resources over
time and develops capabilities that influences its innovation performance.
Overview of the innovation process: economic perspective, business management strategy
perspective and organizational behavior
Organizational architecture: the way a firm has constructed itself over time. impact on
innovative performance.
Recent and contemporary studies
Sustaining innovations appealed to existing customers, since they provided improvements to
established products (new computer software).
Disruptive innovations tend to provide improvements greater than those demanded (change of
disk drives).
The need to view innovation in an organizational context
Individuals in the innovation process, key component: they define problems, have ideas and
perform creative linkages and associations that lead to inventions.
Problems of definition and vocabulary
The innovation has to be seen as a process, the innovation process: the process from new
discovery to eventual product
The traditional view of entrepreneurship: entrepreneurs often seem to have innate talents.
Definition (Stevenson and Amabile): the pursuit of opportunity beyond the resources
you currently control
, Design: an applied activity within research and development and to recognize that in certain
industries design is the main component in product development and in other only a small part
of development activity.
Innovation (Myers and Marquis): Innovation is not a single action but a total process of
interrelated sub processes. It is not just the conception of a new idea, nor the invention of a
new device, nor the development of a new market. The process is all these things acting in an
integrated fashion.
Invention: the conception of the idea, whereas innovation is the subsequent translation of the
invention into the economy.
Innovation = theoretical conception + technical invention + commercial exploitation
The conception of new ideas is the starting point for innovation. The process of converting
intellectual thoughts into a tangible new artifact is an invention. After that the exploitation
will take place.
Conclusion: Innovation is the management of all the activities involved in the process of idea
generation, technology development, manufacturing and marketing of a new (or improved)
product or manufacturing process or equipment.
Creativity & innovation:
- Creativity: the thinking of novel and appropriate ideas
- Innovation: the successful implementation of those ideas within an organization
A typology of innovations
Product innovation The development of a new or improved product
Process innovation The development of a new manufacturing process
Organizational innovation A new venture division; a new internal communication
system; introduction of a new accounting procedure
Management innovation TQM etc.
Production innovation Quality circles, JIT, MRP II
Commercial/marketing innovation New financing arrangement, new sales approach
Service innovation Internet-based financial services
Technology: knowledge applied to products or production processes
Models of innovation
Traditional arguments
- Social deterministic school: innovations were the result of a combination of external
social factors and influences (demographic changes, economic influences) when
conditions were right innovations would occur
- Individualistic school : innovations were the result of unique individual talents and
such innovators are born
- Resource based view: focus on resources, capabilities and skills when firms have
resources that are valuable, rare and not easily copied they can achieve a sustainable
competitive advantage in the form of innovative new products
Serendipity: luck, unexpected inventory not common, you need knowledge about the area
