“Innovation is not simply a random process but rather a sequence of planned experimentation” DISCUSS
Innovation definition:
- “Innovation is not a single action but a total process of interrelated sub processes. It is not just the conception of a new idea, nor the invention of a new device, nor the development of a new market. The process is all these things acting in an integrated fashion” Myers and Marquis (1969)
- “Innovation is the reproduction of creative ideas and inventions on a meaningful scale and within cost effective parameters (Senge 1992)
- “Innovation is the employment of new ideas to promote economic growth, to gain competitive advantage, to sustain commercial interest or for broader social purposes, such as wellbeing of others or the development of social business” (Yunus, 2007).
- “Innovation is the process of creating value from ideas” (Bessant and Tidd, 2014, page 3).
Planned experimentation “a planned experiment is a change made to a system (product or process” in a controlled manner for the purpose of learning” Quality improvement through planned experimentation book PAG 6
Random process is a time-varying function that assigns the outcome of a random experiment to each time instant. https://web.sonoma.edu/users/f/farahman/sonoma/courses/ces540/lectures/Chapter6_Dig_Random_Proc.pdf
Thesis: This essay will support the idea that innovation can be delivered by both random process and planned experimentation, supported by the theory of strategic drift Johnson(1992) and the three levels of innovation the creative individual, the organisational and the environmental that pull/push innovation.
“…not to innovate is to die” Christopher Freeman (1982)
Nowadays competitive advantage, survival and growth come from the ability of organisations of mobilise knowledge, technological skills and expertise to create novelty in their products/services and in the way, they offer and deliver those products/services. Innovation
Innovation is not only creating something new, it is thinking-out-of-the box. It is yield better returns, improve performance (competitiveness in the private sector), being more efficient using resources (value for money in the public sector) and the progression of human well-being (higher standards of living in the third sector).
New ideas come from one person’s problems and the ability of another’s to spot the opportunities and create new ways to exploit them. This is what we know as entrepreneurship.
Innovation is different from invention; historically good inventions/ideas have commercially failed.
In an unpredictable business environment, the need to stand out from the crowd by adding value is central.
An innovation cannot be successful if customers do not value it, therefore organisations have to recognise technical feasibility and demand in order to invest their limited resources and capabilities in those innovations available to them.
Innovation within the organisation requires a favourable context outside.
For Tidd and Bessant (2013) there are different types of innovation recognised by “the 4P’s of innovation”: Position (where), Paradigm (how to frame), Product (what) and process (how to create and deliver) running from incremental to radical change.
Not only innovation but change. There are external and internal drivers of change (Palmer et al…, 2009; Senior and Swailes,2010) . Organisational change as movement from a present to a future state that unfolds in unexpected ways (whether planned or not). (Beckard and Harris,1987).
RISK
…innovation is about creating value through change. But simply changing things in a random direction can be risky. – if we don’t know where we are going we may well end up somewhere else. (Besan Pag21)
“Risk assesments must be built into the business and feasibility studies so they are appropriately addressed with respect to the market and firm capabilities LIBRO PAGE 186
As can be seen innovation and change brings uncertainty in a decision-making process, that try to align the organisation structure to its dynamic market.
Managing uncertainty and risk is a central feature of managing the innovation process.
A strategic analysis is necessary to give a clear sense of direction and reduce the uncertainty.
Organisations should decide either to develop or consolidate the business, or a mix of both.
Depending on the level and type of risk that the organisation is willing to take, an innovation matrix will help to identify which type of innovation is aiming, from incremental, semi-radical and radical or spread them along their portfolio to de-risk.
In the hope that innovation decisions will be commercially successful, organisations’ management have to be fully aware of their environment; externally and internally and select an innovation strategy and portfolio with the resources available to them.
As the drivers of change; innovation have internal factors such as: technical capabilities, organisational capabilities, business model, economic resources and management; and external factors: capabilities in the external network, industry structure, competitor’s quality and speed of innovation, and technological changes (often radical innovation); that will shape the innovation strategy and portfolio.
Core competencies are the most important part of this selection, since “there is a degree of path dependency” Libro page 28 (Reframing the Search Space for Radical Innovation reference). Incremental innovation seems less risky than radical since the organisation starting point is known and radical innovation will change organisation core competencies completely.
In this exploration of options organisations can use market surveys, brainstorming, benchmarking Delphi, scenario development or even open innovation. Not all the firms have the ability to collect and evaluate relevant information to determine the value of an innovation. Internal factors have a big role in this capacity.
Technology life cycle models suggest that a technology usually evolves in a relatively predictable manner. For example, S curve Foster, R. Innovation: The attacker’s advantage. New York: Summit Books, 1986
With this information organisations should analyse their internal and external environment through a PEST analysis a map of the factors and forces in their environment which affect the strategic challenges and opportunities available to innovate. On the other hand, Ansoff’s Matrix will give a sense of direction to determine which product and which market and Porter’s 5 forces linked to innovative opportunities and position within the market.
Known as the “innovation funnel” (REFERENCE THE BOOK) shows how the more resources are allocated to the innovation process less risky it becomes. The more a company knows about technology or the customers wants the better it will be in making decisions, also a favourable market climate (interest rates, political decisions….) will increase the availability of resources towards innovation.
For resources allocation and portfolio creation a Boston Matrix can help to decide.
The biggest resource of innovation is knowledge, people. Be able to combine freedom and discipline to transform creativity into value.
Clear direction from the top, motivation, support to encourage innovation, innovation culture. Communication is a central player for innovation to work.
2019-4-18-1555590790