In an ambitious, global environment it is important for businesses to achieve competitive advantages that can enable their organization to earn better than average returns. Competitive advantage can be achieved by possession of important assets, control of natural resources, or economies of scale. The pattern, however, is increasingly coming to favor those organizations that can mobilize knowledge, technological skills, and experience to create novelty in their offerings and in the ways in which they create and deliver those offerings. This novelty is the result of Innovation in product, process, position, or paradigm (Godin, 2010).
Innovation, therefore, is driven by the ability to see connections, to spot opportunities and to take advantages of them. In essence, innovation is about bringing something new into the world: an idea, a behavior (or action) or an object. Innovation Management, on the other hand, is the practice of managing new and creative ideas (Godin, 2010) (Chesbrough, 2011). This means firms need to address multiple determinants at distinct levels, from the individual to the organizational, to enhance their open innovation management. For instance, Procter & Gamble improved its innovation management capability by setting up dedicated organizational structures and establishing incentives for employees who initiated innovation efforts (Lichtenthaler, 2011).
One of the key issues in innovation management is mapping their organization’s innovation space. An organization’s marketing space defined their marketing mix that is a set of variables that are to a large extent controllable by the company, and normally referred to as the four Ps of product, price, place and promotion. Similarly, the four Ps of innovation include product, process, position, and paradigm innovation. Each of the 4Ps of innovation can take place along an axis running from incremental through to radical change (Tidd, Bessant, & Pavitt, 2005).
Innovation is a challenge to accumulate and deploy knowledge resources in a strategically effective fashion. The knowledge produced by an organization through its R&D activities is a valuable commodity that could be applied internally to produce new innovations or be sold as an end-product itself. The decision to sell knowledge assets or use it internally largely depends on whether the organization has an open or closed innovation perspective.
An important consideration of innovation management is managing knowledge processes. Most medium-size and large firms simultaneously make-and-buy in knowledge exploration, integrate-and-relate in knowledge retention, and keep-and-sell in knowledge exploitation (Chesbrough, 2011).
Innovation in a global environment presents unique problems and opportunities for post-industrial organizations. Managers that successfully control their firm’s innovation activities recognize that innovation can help give their firm a distinctive competence, enabling it to provide goods and services better than competitors. In addition, successful innovation managers recognize that Innovation is more than simply coming up with new ideas; it is the process of growing them into practical use. But, in order to develop an organization that has a successful innovation perspective, managers need to complete the development and exploitation aspects of new knowledge, not just its invention (Tidd, Bessant, & Pavitt, 2005) (Lam, 2010).
Successful innovation managers will transform their organizations to operate with a process of sustained growth through continuous invention and adaptation thereby enabling the firm to achieve above average rates of return.
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Chesbrough, H. (2011, Winter). Bringing Open Innovation to Services. MIT Sloan Management Review , 52 (2), pp. 85-90.
Godin, B. (2010, July). Innovation Without the Word: William F. Ogburn’s Contribution to the Study of Technological Innovation. Minerva: A Review of Science, Learning & Policy , 48 (3), pp. 277-307.
Lam, Y. Y. (2010). Impact of Globalization on Higher Education. International Education Studies , 3 (4), 73-85.
Lichtenthaler, U. (2011, Feb). Open Innovation: Past Research, Current Debates, and Future Directions. Academy of Management Perspectives , 25 (1), pp. 75-93.
Tidd, J., Bessant, J., & Pavitt, K. (2005). Managing Innovation: Integrating Technological, Market and Organizational Change (3rd. ed.). Chichester, West Sussex, England: John Wiley & Sons Ltd.