Product innovation and entrepreneurship
K. Mark Weaver
Introduction
Attempting to understand innovation can lead us on a search of epic proportions. A 2004 web search on AOL entering the word ‘‘innovation’’ produced 462,000 pages of entries. Innovation, it seems, is truly a topic of interest for non profit, governmental, and business organizations. To bring some order to this information, we examine the following topics: (1) definitional issues, (2) innovation as a process, (3) management of innovation, and (4) innovation from a people perspective. The goal is to provide guidelines and tools to increase organizational success.
Defining the Core Concept
Related concepts must be studied to define in novation. Innovation, creativity, and invention all bring to mind new ideas, change, and opportunity. The common use of these three terms in an almost interchangeable fashion can result in confusion about what is being discussed. Con sider creativity, for example. Creativity can be defined as the search for a new concept, decision, or discovery and is an essential but not sufficient part of a definition of innovation. Invention is the use of the idea to create a new product or process. Heap (1989) suggests innovation can best be distinguished from invention by focusing on the process of implementing a new invention, rather than the creation of the invention. Udell (1990) suggests innovation is a process linked to and dependent upon creativity (the generation of ideas) and invention (the conversion of ideas to a value adding good) that results in a series of activities culminating in a product/process being accepted in the marketplace. This process view of innovation highlights the thesis that defining innovation must consider both creativity and invention as parts of the overall process. As shown in figure 1, ideas lead to invention, to evaluation, to refinement, and finally to implementation. This model leads us to consider alternative ways of defining innovation.
Although innovation has been defined in numerous ways, two approaches are used to high light the core elements of a definition. First, innovation is ‘‘the development of new ideas by people who over time engage in transactions with others in an institutional context’’ (Van de Ven, 1986). This approach uses the ideas to represent products, processes, or services that create value. While useful, it may be slightly cumbersome, adding confusion over how it is different from creativity and invention. A second, more useful definition comes from
Figure 1 Creativity, Invention, and Innovation Model
the Innovation Network website and is ‘‘people creating value though the implementation of new ideas’’ (Wycoff, 2004). This approach focuses on people (often groups), the strategic process of adding value (not just newness), and implementation in a process model of innovation. This definition allows us to consider innovation as a complete system or process that consists of behavioral aspects (people and groups), a screening process, and outcomes. With this approach we consider products/processes where continuums and models can be developed to track and evaluate what is occurring.
To discuss alternative approaches to the in novation process, two key innovation classification schemes must be discussed. In a recent Fast Company article (Wycoff, 2004: 119), Christensen is quoted as using ‘‘disruptive’’ and ‘‘sustaining’’ as innovation categories as a way to capture the essence of innovations. The Boston Consulting Group (Andrews and King, 2003) uses ‘‘incremental’’ and ‘‘radical’’ terminology for essentially the same thing. Joyce Wycoff (2004), founder of the Innovation Network, suggests less loaded words could be useful and pro poses a ‘‘spectrum of innovation’’ idea that includes improving, evolving, and game changing terms to reduce resistance to the existing terminology. These approaches at de fining the concept lead us to look at how in novation is implemented and managed.
Innovation as a Process
Definitions, new typologies, and processes to facilitate innovation must also consider why in novation is so difficult to create and to implement. Tushman and O’Reilly (1997) suggest that success is a potential killer of innovation because of organizational inertia and the constant use of incremental rather than more game changing innovations. They term this a ‘‘tyranny of success’’ and use examples of product class winners who lost ground because of inertia. IBM (personal computers), Goodyear (tires), Zenith (tele visions), Volkswagen (automobiles), Ampex (video recorders), Sears (retailing), and Fuji and Xerox (photocopiers) are examples of firms suffering from a ‘‘tyranny of success.’’ These examples demonstrate that all types of industries are subject to this phenomenon. Tushman and O’Reilly make a strong case that to avoid this fate, innovative organizations must support taking chances and tolerating mistakes. In addition, firms must focus on groups for implementation and encourage a need for speed and a sense of urgency as new norms in the innovative organization.
Like Wycoff (2004), Tushman and O’Reilly (1997) support the stream of innovation model for success. They define it as ‘‘those multiple types of innovation through which a firm can simultaneously reap the benefits of periodic incremental changes as well as shape the pace and direction of breakthrough innovations and sub sequent industry standards’’ (1997: 166). These views of innovation as typologies, processes, and streams suggest that some paradoxes (such as a cost versus investment outlook in innovation efforts, results related to tactical or a strategic long term vision, and a balance of incremental and disruptive/radical/game changing innovations) exist in innovative organizations (see Avlonitis, Papastathopoulou, and Gounaris, 2001, for additional reviews of these types of typologies, processes, and streams).
Tushman and O’Reilly (1997: 166) propose ‘‘managing ambidextrously’’ as a solution to these paradoxes. As shown in figure 2, ambidextrous organizations build in the paradoxes and possible contradictions based on time – how they operate today compared to how they operate in the future – by maintaining entrepreneurial units and supporting all types of innovation. Tushman and O’Reilly (1997: 167) use Sony and the Walkman product as an instructive example. From one basic platform, Sony generated 30 incremental versions, then expanded to 4 platforms and over 160 versions that integrated the incremental and more radical changes over a 10 year period that permitted them to extend a mature technology. This suggests that the stream of innovation model has merit. However, innovation must also be effectively managed.
Managing Innovation
Nolan (1989) suggests ‘‘managing innovation’’ is an idea that makes this streaming approach work. He defines managing innovation as ‘‘creating the environment where innovative behavior is encouraged and rewarded.’’ In addition, Heap (1989) and McCormick (2001) use this
Figure 2 Managing Ambidextrously: Multiple Organizational Architectures and Innovation Streams
managed innovation concept to discuss how innovation requires teamwork, communication, problem solving, and implementation as integral parts of the successful innovation. The role of the leader/entrepreneur is particularly evident in the ‘‘anatomy of innovation.’’ Adapted from Nolan (1989: 8), the model of this phenomenon (see figure 3) shows how the innovation process may exist in a typical firm. The figure shows the highs and lows, the questioning of strategic fit and successes that the innovation process creates. The break in the final curve indicates the limits of incremental innovation and the potential rewards of disruptive or game changing innovations.
As innovation becomes increasingly managerial in focus, the embedded nature of innovation needs to be considered. A 2003 Boston Consulting Group Survey (Andrews and King, 2003) reported the growing importance of innovation to executives and identified practices that lead to accelerated growth through innovation. The results showed that ideas are plentiful, but firms do not adequately screen for success and do not know what is really going on through out the organization. Andrews and King proposed a four step plan to improve the flow of innovation:
- Development of a data driven diagnostic to set goals.
- Providing a review process that is ‘‘central, senior, periodic, and decisive’’ and applied impartially.
- Projects evaluated in light of strategic goals.
- Redeploying resources to create value and momentum while avoiding a cost cutting mentality.
These four steps offer an approach that can help organizations develop a mix in their innovation streams that sustains and promotes desired growth. Using any of the terminologies of innovation typologies with such an approach will help reach strategic goals. Hattori and Wyc off (2003: 26) provide a clear look at how innovation has changed from a managerial point of view by focusing on an ‘‘innovation shift,’’ and which includes the following:
|
Old |
New |
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Physical centers |
Resources for all units |
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Focus on ideation |
Focus on creating value |
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Employee orientation |
Customer orientation |
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Passionate change agents |
Teams create new culture |
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Training and facilitation |
Coaching/project teams |
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Individual rewards |
Team recognition |
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Individual/small group tools |
Scalable tools for entire organization |
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Passive support from top |
Active support |
A map of the organizational energy during any major transition program
Figure 3 The Anatomy of Innovation
Source: adapted from Nolan (1989)
This kind of shift can be seen in Thomas Edi son’s work. McCormick (2001) argues that Edison’s innovation work highlights the need for accepting failure, seeking the best talent, attracting resources, and considering customer needs as essential elements of innovation. In addition, Edison’s lessons point to a need to focus on weaknesses to create competitive ad vantages as a way to overcome the incremental inertia discussed previously. Lack of resources can drive entrepreneurs to facilitate their in novation efforts. Edison also demonstrates how ‘‘play is to innovation what rules are to bureau cracy,’’ showing he understood the need to make innovation a sustainable part of the culture.
Innovation has evolved from a concern with invention and ideas to a view that sustainable models, tools, and processes can be developed to increase the return and value adding role of innovation. The embedding of these tools in developing the innovation stream concept in the organization appears to be an essential element of survival and growth. Tushman and O’Reilly (1997: 218) provide a way to help summarize this discussion by looking at their ‘‘lessons for winning through innovation,’’ which are based on research reported in their book. A synthesis of key ideas includes the following:
- Competitive vision, strategy, and objectives are the bedrock of managing innovation.
- Innovation is a result of creative ideas successfully implemented.
- Identifying performance gaps in the firm is essential to overcoming inertia that kills.
- Ambidextrous organizations can manage multiple innovation streams to create success.
- Innovation demands people, competencies, and processes to deal with conflicting demands.
These approaches all suggest the necessity of managing innovation and developing people who are innovative.
Where are the People in these Innovation Approaches?
A recent interdisciplinary ‘‘boot camp’’ held at a northeastern university asked non business faculty to describe ‘‘innovators.’’ This group was not well acquainted with the processes discussed here and yet its ideas were consistent with the generally understood characteristics of innovators. The group’s list included:
- Action oriented
- Agile
- Commercial
- Despises boredom and repetition
- Flexible
- Free thinker
- Highly motivated
- Inspired by obstacles
- Intuitive
- Networkers
- Opportunistic
- Risk tolerance
- Status quo is unacceptable
- Visionary
These terms describe the types of people that need to be developed to create an innovative organization.
A second key area included in all the approaches discussed here is the use of a team or group environment. Thompson (1992) suggested an ‘‘innovation team’’ consists of multiple roles that must be filled and which include idea generators, idea promoters, idea designers, idea implementers, and idea evaluators (for a full list of the tasks for each role, see Thompson, 1992: 193). These roles require actions similar to the orientation expressed in the list generated by the boot camp participants: innovators are opportunistic in focus, but they must think of commercialization and implementation. This in dividual–group–organizational innovation shift clearly places innovation at the heart of the organization.
Conclusion
To meet the demands of the next 50 years, firms will have to incorporate a model of innovation that makes use of the concepts discussed herein. Entrepreneurs and leaders hoping to emulate the innovation of early entrepreneurs need to in corporate a new vocabulary that includes the innovation streams, disruptive innovation, game changing innovation, and other ideas presented here. Christensen (Wycoff 2004: 119) states: ‘‘There isn’t anything more invigorating . . . than to hear an entrepreneur using the term ‘‘disruptive technology’’ that make no reference to me . . . When it’s clear they got the idea and use it in everyday parlance, that’s the ultimate triumph.’’ It is this everyday usage and understanding of innovation processes that is the goal for innovation theorists, teachers, and practitioners.
To study innovation, several websites can be used. First, www.innovation.com network has tools, articles, and links that will make your search easier. Second, www.innovationtools .com provides a jumping off point for the novice and the experienced person interested in innovation. Third, www.debonogroup.com is the ultimate guide to the work of Edward De Bono (1991), the father of lateral thinking and the innovation search process. These sources will facilitate efforts to understand innovation as a process and tool for organizational development.
Bibliography
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De Bono, E. (1991). Opportunities. London: Penguin Books.
Hattori, R. A. and Wycoff, J. (2003). Innovation DNA. Training and Development Magazine (January): 25 50.
Heap, J. P. (1989). The Management of Innovation and Design. London: Cassel.
La Barre, P. (2003). The industrialized revolution. Fast Company (November): 115 20.
McCormick, B. (2001). At Work with Thomas Edison: 10 Business Lessons from America’s Greatest Innovator. Canada: Entrepreneur Press.
Nolan, V. (1989). The Innovator’s Handbook. London: Penguin Books.
Thompson, C. (1992). What a Great Idea: The Key Steps Creative People Take. New York: Harper Perennial.
Tushman, M. L. and O’Reilly, C. A., III (1997). Winning Through Innovation: A Practical Guide to Leading Organizational Change and Renewal. Boston, MA: Harvard Business School Press.
Udell, G. (1990). Exploring the Innovation Process. Springfield, MO: WIN Innovation Center.
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Wycoff, J. (2004). Enterprise innovation. Cited at InnovationTools.com.