Strategic Management of Innovation
Tuesday, April 7, 2009 at 1:21PM Why is innovation so confusing? Maybe because there is much debate on what innovation actually means, and herein lies the problem. To some it means ideas, to others change and to others huge paradigm shifting disruption. There is a way through this confusion however. First many confuse definitions of innovation with the sole generation of ideas, innovation is not just the capturing of ideas it is about the commercial implementation of those ideas - ideas + commercially viable execution = innovation. An organisation wishing to become more 'innovative' needs to manage the innovation process required to get those ideas into some variant of product, processes, position or paradigm advantage in order for an innovation to be deemed successful. Ideas don’t make money, commercial implementations of them do.
Tidd, Beasant and Pavitt in 2005 came up with the four P’s model. It is a simple way of categorising innovations into one of four categories, products, processes, position and paradigm. So why is it important to categorise innovation? Depending on a number of factors including your sector, size and product/service lifecycle, Pavitt highlights an initial organisational focus for innovation. For example large capital intensive organisations that protect their market space through size and scale, according to Pavitt, should focus on process innovation. Why? Common sense, the product is often commodity and therefore price is critical. A small niche design house should focus on product innovation, as its selling point is its uniqueness of product and not the sheer scale of output it can create, often limited by the size of the market they are addressing.
These are very broad rules, but taken at their highest level they at least give an initial focus point when beginning to examine innovation and that is important as it is the first step to understanding innovation.
Reader Comments (2)
I'd be keen to know more about Tidd, Beasant and Pavitt 's thoughts on Paradigmn innovation - i.e. changing the rules...Possibly the hardest, but most exciting...
Pardigm shiift reffered to by Tidd, Beasant and Pavitt is where change takes place at a system level "the underlying mental model shifts", involving major technology or market shift. A recent example they give are the low-cost airline business model. They note that paridigm shifts tend to be created by the convergence of a number of trends where a critical point is reached and the old order is replaced. Existing organisations tend to reinforce their commitment to the old market, reinforced by "sailing ship" effects. One interesting quote is that helps to be lucky quoting Gary Player "the more I practice the luckier I get" they advocate a known innovation process overtime will help organisations get lucky. In summary though the book is lent more towards process and product innovation but well research and gives a good structure to start an innovation process.