What is innovation management

Strategy also involves resource allocation, and it should inform your innovation management process based on your available resources. This allocation may change over time as you shift more or less resources toward developing new ideas.

There are various types of innovation, each with its unique benefits and disadvantages to your company. These innovation types also require different management styles to enact change effectively. Open innovation is an approach that operates with the philosophy of keeping an open mind to ideas generated externally instead of just those that originate inside the company.

This approach is the opposite of closed innovation, where the focus is only on internal ideas. Source: Samsung. As you can see from the graph above, with open innovation, you are not limited to the ideas of your workforce. Instead, you can collaborate with external business partners, entrepreneurs, and new talent in other industries to contribute to strategic growth.

Intellectual property created between you and your vendors, outsourcing partners, and others in your network can ultimately be shared to benefit both parties. Open innovation can present a sizable competitive advantage because you have access to a larger flow of ideas and also new experts and teams to evaluate and implement these concepts. This approach requires a unique management style that can balance external partnerships with the input from your employees.

At the same time, you must keep strategic outcomes in mind when selecting which concepts to invest your company resources and time in. Incremental innovation provides a lower barrier to change by looking to existing tools, markets, and business processes for opportunities. For this reason, and because it allows greater innovation control, this method is a common way to begin the innovation journey for many companies. Your company may already have an incremental innovation management system without realizing it, as many organizations often lack the systems to monitor, capture, and enhance naturally-occurring innovative ideas.

Therefore, incremental innovation is easy on the surface but requires astute leaders who understand the process and the importance of encouraging innovation. Moreover, these leaders must possess the discipline to put systems in place that evaluate new ideas as they relate to your strategic objectives for that department or the business as a whole. Sustaining innovation seeks to improve current processes and avoid investing too many resources in "reinventing the wheel.

They know what their customers' problems are and how to solve them, the only question being how to do it most efficiently. Source: Wikipedia. Disruptive innovation is a higher risk approach that involves using technologies or creating alternative solutions that are new to your company, and quite often, new to the market at large, as well.

An example of disruptive innovation is the iPhone. The first iPhone created an entirely new category — the touchscreen smartphone. It surprised other companies and the consumer market when released and gave Apple a significant head start.

However, disruptive innovation requires managers who have a high-risk tolerance and the ability to balance investment in innovations while maintaining current operations that are already proven to bring in revenue. For instance, you may have a backend technology that you could repurpose to create additional value for your consumer-facing applications. Since you have already proven that it works in one area, it is relatively low risk.

Typically, this innovation works well with management styles that focus on consumer needs and marketing, as the true challenge lies in getting your market to adopt it. While similar to disruptive innovation, radical innovation goes one step further by creating entirely new industries and consumer habits.

This field is sometimes known as category design. It is high risk because you are performing business "backward" in a sense—creating a desire for something that no one knew they had. Think of the first airplane, phone, or television. Leaders who have huge visions and the ability to manage multiple departments are best suited to oversee this type of innovation. Managers can drive innovation from a number of sources. The best option for your organization depends on your strategic objectives, resources, and organizational DNA core competencies and culture.

Looking internally for innovation can provide a faster feedback loop and less friction to getting started. For instance, you can create a think tank within your organization. The employees in this group will be tasked with ideation and brainstorming.

They can then hand off their ideas to your technical departments, who can perform testing to create a new product or business solution. External innovation is another term for open innovation. As such, this refers to innovation opportunities sourced from outside your company, which may include promotional partners, supply chain partners, and sometimes even competitors. It acts as a channel to obtain an appropriate and effective solution to complex business challenges.

With incorporating innovation management, decentralization is another added advantage. C-level executives might not recognize the precise pain points of specific markets when compared to mid-level managers.

This knowledge facilitates them to produce a stronger innovation strategy than a high-level executive. Failing to recognize the significance of innovation management may result in an organization with outdated offerings.

At times the organization may come to a compromise by failing to deliver top-notch innovative products or solutions that contribute to staying ahead of the competition. Interestingly, CIOs also expressed that these practices were employed the least. Integrating an innovation management platform can help your organization to kick start innovation activities, capture ideas and serve as a discussion platform generating solutions to business challenges or new product launch.

Encourage your employees to participate in innovating ideas more by rewarding the best of their innovative spirits by carving a sustainable innovation pool supporting your business initiatives. To make your innovation culture efficacious, involving every employee remains crucial.

Bringing employees together, in the beginning, may stir a better chance for success. As mentioned above, crowdsourcing can be one of the best techniques to involve employees in innovation and generate a pool of ideas within the organization. The quality of conversation is an important determinant impacting the quality of creativity and innovation.

It provides an interactive platform to bridge the gap between senior management and employees during their ideation sessions. Nurturing the internal side of open innovation amplifies participation. Forcing or mandating involvement may lead to frailties in due course of time.

It is a proven way to encourage the widest range of participants in innovating. Creating awareness by running campaigns is a proven way to generate interest to use the ideation space. This has a direct influence on capturing creative ideas stirring enhanced productivity, cut down operational costs and drive improvements from the bottom up in a short time period. Employees might not have a separate place and time to meet to discuss ideas addressing a common challenge.

Did you know? Incorporating innovation management software or tools like Wave can play a major role in fostering employee engagement and involvement in innovation using techniques like gamification. Transparency boosts the culture of innovation. It is essential that employees should know what the buzz is around the ideas shared, challenges posed by the organization, etc. Often employees are left in the dark having no clue on further steps on the ideas posted.

This may create chaos and trust issues in the entire innovation initiative. In such instances, social collaboration tools can provide a platform to employees where they can collaborate, communicate, engage and share the selection process updates in real time.

The Sustain phase is where most established businesses usually are. At this point, ACME would need to start investing more heavily on transformative initiatives to spark future growth as the lifecycle of this specific innovation has reached its full potential and is now nearing the end of its lifecycle.

While this is just a fictional example and for the sake of simplicity represents a company with a single product, it helps illustrate the lifecycle of an innovation and the practicalities it means for an organization. The different phases of an innovation require not only different skill-sets , but also different viewpoints and approaches to risk. What makes this especially challenging is that approach to risk is often a very personal characteristic that few are willing and able to change.

As a leader, you must either be able to realize where you are in this lifecycle and adapt to the situation or relinquish control to others who are better suited for the demands of that specific phase, both in terms of your capabilities, as well as your willingness to take risk. What might successful innovation management actually look like?

However, successful innovation management is usually a result of all 4 aspects of innovation management aligning with each other. In our experience, companies that are considered to be more innovative, usually have a few things in common:.

They manage the chaos. However, there are a lot of strong opinions related to innovation processes and the discussion often becomes quite polarized with each opposite having firm believers. On one side of the discussion, there are those who very much believe in agile and lean, often pull-based processes , and on the other side of the table, there are those who are stout believers in more rigid and formal, usually push-based processes for managing innovation.

The first question is whether the organizations operates on a more push or pull-oriented manner in their innovation work. Push-based models to innovation are more internally and technologically oriented. Push-oriented organizations know or at least assume to know the challenges of the market, and the users, and are simply looking for the best ways to address these challenges, usually with new technology. Classic examples of push-based organizations are Apple, IKEA and virtually all pharmaceutical companies.

Pull-based models , on the other hand, are more customer and market-oriented. Pull-oriented organizations are looking for ways to adapt to changing markets and customer demand. Thus, they are usually focused more on listening to customers, learning from them and on moving fast.

One of the advantages of being pull-based is that it typically requires much less upfront investment than being push-based due to faster time to market and smaller marketing budgets.

This, naturally, is one of the key reasons for many startups being pull-based organizations. The model is based on the undeniable fact that there are always more ideas than there are resources. The point is that each idea will have to go through certain pre-determined phases in their development.

When the idea reaches a gate, it will be assessed by using certain pre-determined criteria. If the idea is able to pass the assessment, it will receive additional investment and be able to proceed to the next phase. This process helps eliminate obviously bad ideas and is quite effective at allocating resources to ideas that seem to be progressing well. It helps ensure that every innovation matches the goals and standards of the management. The challenge with this approach is that, by definition, standardization of the phases and the metrics easily leads to only approving similar ideas, often the incremental and easily understandable ones.

By carefully considering the phases of the process and the metrics used for the gates, these challenges can, however, be alleviated. Regardless, this approach often works well in situations where the ideas are similar by nature , the operating environment is highly predictable , and the challenges are more technical in nature. While the phase-gate model is typically used with the traditional waterfall approach, for which it was designed, it can also be used in an iterative manner with agile methods.

On the other end of the spectrum from the phase-gate, there are people who believe that the best innovations come from simply equipping smart people with enough time and the right resources to make their ideas happen.

It is much more pull-oriented than the phase-gate and is designed specifically to address market risk more than technology risk. The main idea of the Lean startup model is to rapidly test and validate the assumptions related to the product-market fit between your innovation and your target market in order to learn and adapt as quickly as possible.

This obviously makes the approach well suited for organizations operating in an unpredictable, complex or rapidly changing environment, but is perhaps not ideal for the kind of organizations that the phase-gate approach is well suited for, such as those in highly regulated industries like pharmaceuticals.

The process of figuring out the right innovation management process, or processes, can be a challenging and intimidating effort. As innovation is, by nature, highly unpredictable, the only way to see how a certain process could work for you is to try it out in real life. Just start simple in one area of the organization and adapt as you learn how the process works. In the meanwhile, if you're looking for practical examples on how to structure the way you collect and develop ideas, I recommend taking a look at our guide to idea management processes.

So, when it comes to innovation, you would be wise to also remember another famous quote:. Not everything that can be counted counts, and not everything that counts can be counted. So, while many aspects related to innovation are notoriously difficult to measure , there are a number of metrics, often referred to as KPIs key performance indicators , that are commonly used to measure innovation activities.

In general, there are two types of metrics that we can use for measuring the system: input and output. Input metrics are, as the name says, used for measuring the inputs a system or activity has. For example, by using the three horizons or the models. They, however, also have their challenges. The other end of the spectrum is output metrics. As you can probably guess, they measure the outputs of your system or your activities.

In addition, innovation activities usually take quite a long time to convert to many of the traditional output metrics, such as revenue or profit. We usually like to divide innovation metrics into five different categories, each of which can have both input and output metrics. Four of the five categories represent each of the different aspects of innovation management, with the remaining fifth one being focused on business and product related metrics.

For example, if your innovation unit focuses solely on short-term revenue goals and you hold people accountable for those goals, people will find ways to create more revenue. Innovation is very difficult to get right, and every organization is guaranteed to run into a number of different challenges on their journey to become more innovative. If an organization has a lot of hierarchy, and the management has a very top-down, often micro-managerial, approach to their job, it is likely to lead to employees at the front lines becoming more passive.

When you hear comments like that, you know that those people will, at best, match the expectations set for them, but never exceed them.

And innovation, by definition, is all about exceeding expectations and current limitations. The same goes for an organizational culture. Without any processes, resources or infrastructure in place for implementing ideas, it will be difficult for people to achieve impact, even if they wanted to. When your organization has a clear and compelling vision, you are much more likely to attract people who are passionate about your mission and willing to put in the extra effort to actually come up with innovations.

However, even if you do think you have a great vision for the organization, you still need to be able to communicate it in a manner that everyone understands and is willing to buy into. Without focus, you are likely to spread your resources too thin and to create too much cognitive and physical overhead.