Teaching

Resources
and
Instructors’
Guidelines
Chapter 3: Managing innovation as a core business process
 By the end of this
chapter you will
understand:
• Innovation as a process
Learning rather than a single flash of
inspiration;
Objectives • The difficulties in managing
what is an uncertain and
risky process;
• The key themes in thinking
about how to manage this
process effectively.

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 Innovation

• Innovation is a journey, a process of moving step by

step towards the point where we can create and
capture value from that data
• Do we have only one journey?
– Multiple journeys. Some simple and others
complex and involving high levels of uncertainty
• Journey of innovation is not linear
• Most innovation is messy, involving false starts,
recycling between stages, dead ends, jumps out of
sequence and so on

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 Innovation
• Innovations happen through:
– Shocks trigger innovations
– Ideas proliferate
– Setbacks frequently arise, plans are
overoptimistic, commitments escalate,
mistakes accumulate and vicious cycles can
develop
– Restructuring of the innovation unit
– Top management in sponsoring, criticizing
and shaping innovation
– Success criteria shifts over time, differ
between groups and make innovation a
political process
– Innovation involves learning
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Size
Innovation is a
journey, not an
Sector
event
Search
For profit/not for
profit Stages in the Select
Contingency journey
model – it all Implement
Regulatory depends
environment
Capture value

Social innovation
Learn and build
Managing innovation as capability
Geography a core business process

Innovation life Innovation

cycle strategy

Key influences
Innovative
organization

Changing Learning to Pro-active

innovation manage linkages
models innovation

Problem of partial
models
Concept of routines Dynamic capability

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 Innovation as a journey
• Searching for trigger ideas
• Selecting from the possibilities the one we are going to follow through.
• Developing the idea from initial ‘gleam in the eye’ to a fully-developed
reality
• Capturing value from the process. Ensure widespread adoption and
diffusion.
• Learning

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 Innovation needs:
Influences • Strategy;
on the • Innovative organization;

process • Proactive linkages;

• Learning and improvement loop.

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Key • Do we search as well as we could?

questions • How well do we manage the selection and

resource acquisition process?
about how • How well do we implement?
we • Do we capture value? Improve our technical
and market knowledge for next time? Generate
manage and protect the gains so they are sustainable?

innovation • Do we learn from experience? How do we

capture this learning and feed it back into the
next time?

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Different
versions
of the • For a start-up entrepreneur the ‘search’ stage
is often called ‘opportunity recognition’

core •Acquire resources making various pitches to

get backing and buy-in.
process •Develop the venture and finally launch it into

model their chosen marketplace and capture the

rewards and also the learning to allow them to
do it again.

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Different
versions of
the process
• For a new product development team in a
company it is about searching for ideas

model •Secure internal resources

•Manage the development process, bringing the

(continued) product through various stages of prototyping

and simultaneously developing the market and
launch plans.
•Launch and widespread adoption

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Different
versions of •Once again an individual or team has to

the process
convince others and secure resources and the
permission to explore

model •Develop it and then diffuse it as a new method

to an internal market of people in the service
who will adopt the new way.
(continued) •Capture value in terms of efficiency
improvement but also in learning.

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Different
versions of • For the social entrepreneur it is about
finding a trigger need, then developing
the core and sharing a vision around how to
meet that need better.
model •Securing support and buy in is followed
(continued) by development, implementation and
hopefully widespread adoption – and
the value is captured in social
improvements as well as learning.

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 Variations on a theme

• Context affects innovation management

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 Variations on a theme
(continued)

We can use a process model as a framework reminding ourselves the

reality will vary, for example, by the sector, the size of our enterprise, or
the stage in the industry life-cycle.

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Different sectors, different approaches

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 Service Innovation
• Innovation: The successful exploitation of new
ideas
• Innovation involves invention (the creation of
some new or different combination of needs
and means)
• Demand-side knowledge is critical for service
innovation
• Convergence to final report or process involves
an increasing commitment of resources and an
increasing involvement of wider skills and
knowledge sets
• Involves: search, experiment and prototyping,
and a gradual scaling up of commitment and
activity leading to launch; may not have formal
R&D Dept 16
 Innovation types

• Servitization of manufacturing businesses

• Innovation in Non-commercial arena
• Humanitarian innovation process
– Effective cross-boundary working
– Managing across a clearly defined innovation process
– Generating and integrating evidence
– Engaging with end users and gatekeepers
– Availability and creative use of resources
– Effective risk management
– Creating a culture of innovation

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Innovation in the humanitarian world

https://higuide.elrha.org/toolkits/get-started/i
nnovation-process/
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 Innovation types

• Social entrepreneurship: not content just to

give a fish or teach how to fish.
• Challenges in Social Entrepreneurship (SE)
– Recognizing opportunities; SEs need passion and
vision
– Finding resources: need distributed support
– Developing the venture: Working with limited fund
base
– Innovation strategy: Have a clear vision
– Innovative organization / rich networking

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 Size as an influence
“most people think that companies are like cows –
growing a lot when young and then very little
thereafter . . . It turns out we’re mistaken. Companies,
unlike cows, are regularly ‘born again’ – they take on
new management, stumble on a new technology or
benefit from a change in the marketplace. Whatever
the cause, statistics show older companies are more
likely to grow rapidly than even the youngest ones . . .”

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 Innovation types

• Project-based organizations: involved in innovations in

project management and organization
• Platform innovation
• Ecosystems: Innovations managed beyond the
boundaries of an organization
• Geographical influence:
– Constructed advantage: the degree to which such
clustering can be organized and managed,
particularly at the regional level
• Regularly context: certain sectors like food, drink or
pharmaceuticals are controlled by legislation

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 Different models for ‘steady state’ and
discontinuous innovation
• Organizations must have two aspects of innovation
• Steady state: doing what we do but better; innovation
happens only around our “good practice” routines
• Do different: has game shift

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23
Changing models of innovation over time
• Opportunities arise due to: technology push or need pull
• Innovation needs both to be successful

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 Partial Thinking

• Seeing technology as a linear “technology push” process

or a pull
• Focusing on major breakthroughs and ignoring
incremental innovation
• Considering single isolated change rather than as part of
a wider system
• Seeing innovation as product or process only, ignoring
their relationship
• Major failures are due to how the process is managed
• Success in innovation depends on: technical resources
and capabilities in the organization to manage them
• Routines: the way we do things in this organization

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The problem of partial
models

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The problem of partial
models (continued)

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 Successful innovation management

• Not easy to acquire

• Learned over time, through a process of trial
and error, they tend to be very firm-specific
• Core capabilities can become core rigidities
• Recognize when and how to destroy them and
allow new ones to emerge; mainly needed for
discontinuous innovation

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Core abilities in innovation

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 Developing innovation capability
• Some organizations are “unconsciously
ignorant” (they don’t know that they don’t
know)
• Type A: lack the ability to recognize the need
for change; don’t know where or what they
might improve
• Type B: recognizes the challenge but don’t
know how to go about the process; internal
resources are limited and external networks are
poor
• Type C: Recognizes need for change. Compete
within the boundaries of an existing
technology; limited knowledge on where and
how to acquire new knowledge
• Type D: operate at international knowledge 30
Developing innovation
capability

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 Innovation as a journey
• With weak business fundamentals, business
can fail even with innovations
• New ideas + receptive market at the right time
+ repeat the performance consistently
• Search: don’t search in infinite space but in
places where they expect to find something
helpful

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 Key questions in the selection phase
• Good fit between what organization currently
knows about the proposed changes it wants to
manage, is necessary
• Must have a balance and a development
strategy

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Key questions in the implementation phase
• As the innovation develops, a continuing thread
of problem-finding and solving – getting the
bugs out of the original concept – takes place,
gradually building up relevant knowledge
around the innovation
• Acquire knowledge: technological knowledge +
technology transfer
• Market friction: anticipate likely response to
new product concepts and design appropriately

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 • Dynamic capability – need to update
and change our routines in a
changing world.

• Of the ways we do things round here

– our routines – for innovation:

Dynamic • Which should we do more of?

capability • Which should we do less of, or

even stop?

• Which new things do we need to

learn to do to add to our
repertoire?

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 • Innovation doesn’t happen
simply because we hope it will
• It’s an extended process of
picking up on ideas for change
Summary and turning them through into
effective reality. At its heart it
involves stages of searching,
selecting, implementing and
capturing value.

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 • Do we have effective enabling
mechanisms for the core process?
• Do we have strategic direction
and commitment for innovation?
• Do we have an innovative
Summary organisation?
• Do we build rich pro-active links?

• Do we learn and develop our

innovation capability?

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