The Basics of Innovation Management
Innovation teams often debate whether innovation should be primarily planned for the creation of a new product or service or planned for the development of something new for the market. Many innovation teams view innovation as a matter of chance and leave the planning to chance. In their view, innovation means spending money and taking risks. However, innovation teams would probably argue that innovation should be primarily planned for the creation of a new product or service and less about the development of something new for the market.
Three Key Components
There are three key components included in an innovation management approach: risk management, creative problem solving, and innovation testing. The risk management component of an innovation plan deals with minimizing the risks inherent in an innovative idea. Examples of risk management could include the risk of investing in new technologies, inventions, or innovations that are highly risky and could cause financial loss. It could also involve the risk of creating a product or service that consumers won’t need or want right away. Finally, it could involve the risk of introducing a revolutionary or risky business concept to the marketplace.
Creative problem solving is another important element of innovation management, which seeks to find answers to questions that confront the innovation process. This part of the innovation plan focuses on the creation of problems that can be addressed by innovative technology. These problems could range from finding new applications for existing products, to coming up with new ways to deliver services or information. In some cases, the focus of this step may be more on solving problems that can be addressed by existing technological systems, while in other instances it may seek to identify new ways to make something better. Finally, this step could include addressing concerns about the environmental impact of an innovation, as well as other concerns that consumers may have.
The other type of innovation management tool that managers can use is business process innovation (BPI). BPI identifies innovative processes, products, or services, which are based on research conducted in the past and have the potential to add value to the organization. Examples of such tools might be novel manufacturing processes, creative strategies, or new methods of delivering services. As a manager, you would first need to determine what types of innovations are needed to meet organizational goals, and then draw up a plan for their implementation. Business process innovation management is used to monitor, record, and track the progress of such innovations.
Many companies believe that they already have an innovation strategy in place. While this is often true, it is always advisable to periodically evaluate this strategy, to ensure that it is still relevant and useful. The primary purpose of innovation management is to generate new ideas and strategies, and these can all be applied to your company. While the initial implementation of an innovation strategy might prove to be successful, it might not necessarily continue to be so. When it comes to innovation, good things always seem to happen when we least expect them.
The objective of Innovation Management
The objective of innovation management is to ensure that the resources expended on innovation are well-directed. It thus aims at minimizing the resources consumed while ensuring the quality of the output. Several measures are involved in the formulation of an innovation portfolio, which must be taken into consideration to achieve the best ideas. The best ideas create the least amount of cost, greatest value, and fastest time to market. The innovation portfolio must include both risky and not risky ventures.
Long-term planning is involved in the innovation management process. Businesses must develop a long-term plan with a definite time frame for its execution. There must be a system that can monitor the innovation portfolio and advise when it is time to execute the plans. When executed carefully, it can lead to long-term benefits for the organization.
The system should have the capacity to predict key aspects of innovation management needs. This would include future market conditions, demand, industry trends, competing technologies, and other important factors. It should have the capability of integrating across functional units for maximum effectiveness. The system should also be able to forecast key opportunities and threats. Innovation activities should be strategically analyzed for identifying the most appropriate actions. Such analysis is required for making effective use of innovation management resources.
There are various ways of developing effective innovation management processes. These include collecting information, educating people, and understanding the different types of innovation. They should develop new ways of thinking about, planning, and executing innovative strategies. A business needs to consider a variety of factors to ensure that its innovation strategies are successful.
In innovation management, the incremental approach, technology, or idea is implemented one step at a time. It proceeds in a series of trial and error methods, where the steps are tested until the innovation is found. It is generally used for small businesses where execution has to be constant, and a series of repeated tests are often needed.
On the other hand, the incremental innovation approach concentrates on implementing the innovation in stages rather than testing all the steps simultaneously. The focus is more on testing innovative methods and strategies in isolated segments where innovation risk is minimal. In this method, the rate of innovation is determined by the existing demand for the service or product.
However, two major benefits of innovation management can be considered as key aspects. One is increasing competitive advantage, while the second is innovation spillover effects. This refers to the innovations which are created as a result of innovations already implemented. Both are extremely important and should be included as key aspects of innovation management. Managing innovation risk is also a vital part of innovation management, and therefore innovation projects should be executed carefully.
When planning an innovation project, managers should look into three major factors. First, what kind of innovation is required? Second, what kind of market can the new technology or idea have a reasonable chance to serve? And third, how much money will be required to implement the innovation? These three questions need to be addressed carefully for a manager to answer the last question.
For instance, if the idea is to create new hybrid or energy vehicles, it is better to implement that innovation in small-scale research facilities before trying it out on the larger scales. If the focus is on medical devices or the manufacturing industry, then large-scale innovation is not required. Instead, innovation management focuses on applying different types of innovation in smaller segments first. The key benefit from this approach is that innovation projects become successful only when the market situation or demand is right. It can be considered a more “incremental” form of innovation management.
A great innovation management process begins with clearly identifying what kind of market there is and what kind of potential service or product. It becomes much easier to select the best ideas for pursuing and bringing into existence based upon that information. It takes a lot of imagination and commitment to do good work in innovation management. However, once done correctly, it can bring great ideas and products to reality.