All About Innovation Management
In our day-to-day life, we come across different ways of solving various problems. Those solutions which are new and creative form the basis of innovation. Innovation brings new opportunities and scope of development to an organisation. Many organisations welcome new ideas coming from all levels of employees working in it. Innovation management is a big factor in economic growth.
What is Innovation Management?
The term innovation management means managing the process, which includes understanding market trends, brainstorming new ideas, evaluating them, applying them, and reframing them into a final solution. It allows the managers to utilise the various sets of tools for either enhancing the existing products in the market or processes for achieving the organisation's goals. It ensures continuous development of the organisation by utilising the creative capabilities of the employees and its overall growth by introducing new ideas.
The innovation process can be related to product innovation or business process innovation. Various tools can be used for triggering the creative sides of employees, for example brainstorming, virtual prototyping, phase-gate models, product life cycle management, TRIZ, project management, idea management, product line planning, and portfolio management, etc.
Innovation in Business Management refers to the process of managing new ways of executing business processes which will open the ways for new opportunities and help in the overall growth of an organisation.
Innovation in Technology Management refers to the process of managing new advancements in technologies as a result of changing market needs.
Types of innovation management
According to the innovation matrix, there are two dimensions of understanding the types of innovations, the market it operates in and the technology it uses. If a company needs to make a strategy based on these, a multifunctional team is required, which could understand both aspects of it and can work accordingly.
Four types of innovation management systems can be adopted by an organisation:
1. Incremental innovation
This is a method in which extra features are added to modify the existing product or technology, which is then served to the existing market. This is a very easy method since it just includes redesigning the product by modifying or adding certain features, hence this is adopted by a large number of companies. Sometimes, it could be just simplifying the existing products.
As it is done by the feedback received from the customer on the previous version, it is a promising way of customer satisfaction and has a very low risk. The products are already familiar to the customer hence easy to sell as well.
For example, any software update sent to the end-user for updating and reinstalling it with minor bug fixes. Another example could be televisions that are re-launched with extra features like bass, bluetooth, etc.
2. Disruptive innovation
Disrupt means to destroy or break something. This is the type of innovation where traditional companies fail with their existing products as they are engaged in only giving new features to old products and adding some extra cost to that. At this time, new entrants find a gap and launch new products to suit the current market demand. These are more affordable than the existing ones and have a direct solution to the customer issues. Hence, they disrupt the existing market for big companies.
This type of innovation is very risky since only those products which sustain and are readily acceptable by the market can result in a successful business. The giants still cannot take a firm decision on their products and continue with their traditional technology. Once new entrants are set, big companies are left behind in competition and then, even if they try hard, cannot capture the market as earlier.
One good example is Netflix which started with DVD Mailouts, supplied to those people who were fond of movies. Later on, it was pushed out of the market. It disrupted the market in 2003 when it relaunched itself in web series streaming unlimited shows and movies and that’s when it was a success.
3. Architectural innovation
This is also called a 'recombinative' type of innovation. It refers to launching or reframing the utility of some product into a new market for new users. It relies on the fact that innovation does not always need reinvention. Often, the existing product is very useful but just the targeted market has changed and since it is a reliable product, it is most successful for the new set of customers as well. This type of innovation has proven reliability and has a very low risk of failure.
For example, a desktop vacuum cleaner. The vacuum cleaner has always been into cleaning compact house spaces, but launching it with a new purpose not only increased its utility in the world of workspaces but also added several new customers to the list.
4. Radical innovation
Radical innovation is the real form of revolution. It is the birth of new technology or a completely fresh market. It is relatively a rare form of innovation. It happens after a long span; however, it sets a milestone in the industry.
History is full of such examples. One such breakthrough is the invention of computers. It completely changed the face of calculation and other small and big work-related tasks.
One more example is the airplane. There were other modes of transportation also available when it was invented, but it opened new routes to places in such less time that were a revolution in itself.
Every company follows a certain innovation management process to prevent chaos and frustration during the execution of ideas. A structured approach not only saves a lot of time and resources but also helps in finding the loopholes, improving efficiency, and reducing the risk of failure at the completion stage. Innovation managers are responsible for making this decision.
Different processes can be adopted by organisations for product or process innovation in business management.
1. Push or pull process
The push process is the one in which innovation is started internally on an existing technology or a newly developed one and later on it is checked for different ways of its possible applications. This type of process knows the existing challenges in the market, hence it provides feasible results.
The pull process has a different approach. It relies on finding areas of customer dissatisfaction and generating suitable and customised solutions and hence it has an external driving force. It relies on listening to their needs and then designing a solution.
A multifunctional team is required to work on both the process in coordination to give a complete and ideal model.
2. Phase-gate process model
This is also called the waterfall model. In this model, various phases are starting from need analysis, scoping, feasibility, development, validation till launch. There is a gate after each phase. The idea is screened for certain criteria after each phase, by the manager, if passed, then only moves to the next phase.
This model ensures that the project delivers exactly what it is supposed to, at every stage hence it is a very crisp model. On the other hand, it is a bit time-consuming and needs a long time for project completion.
3. Lean start-up model
To meet the rapidly changing market needs, a different model is used, called a lean start-up model. It is designed to address the market risks. It shortens the product development cycles and rapidly tests and validates the assumptions to check its viability rather than launching a complete product.
The basic methodology followed in this is a build-measure-learn feedback loop. Once a problem is solved, it builds a minimum viable product to begin the process of learning. Learning and measuring are done simultaneously to check validity hence changes can be made accordingly.
Even if it is applied by any of the methods and following any model, there are several benefits of innovation management to the organisations:
1. It cultivates a culture of creativity among the employees where they could openly bring up creative solutions to everyday problems and become efficient in facing bigger challenges.
2. It ensures sustainable growth of the organisation by providing ample opportunities from current market trends.
3. It facilitates the continuous development of the company in the rapidly changing market and economic downfalls.
4. It prepares the organisation against the cut-throat competition out there which is not only hampering the giant companies but also disrupting the market for small start-ups.
5. Creativity motivates the employees to contribute their part to the organisational growth and enhances employee engagement.
6. It increases the overall profitability of the business through reduced cost and high revenue generation.
7. It increases the market value and brand image of the products as it focuses on solving customers’ problems and providing better and customised solutions.
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