Innovation management

Innovation management is a combination of the management of innovation processes, and change management. It refers to product, business process, marketing and organizational innovation. Innovation management is the subject of ISO 56000 (formerly 50500) series standards being developed by ISO TC 279.

Innovation management includes a set of tools that allow managers plus workers or users to cooperate with a common understanding of processes and goals. Innovation management allows the organization to respond to external or internal opportunities, and use its creativity to introduce new ideas, processes or products. It is not relegated to R&D; it involves workers or users at every level in contributing creatively to an organization's product or service development and marketing.

By utilizing innovation management tools, management can trigger and deploy the creative capabilities of the work force for the continuous development of an organization. Common tools include brainstorming, prototyping, product lifecycle management, idea management, design thinking, TRIZ, Phase–gate model, project management, product line planning and portfolio management. The process can be viewed as an evolutionary integration of organization, technology and market by iterating series of activities: search, select, implement and capture.

The product lifecycle of products or services is getting shorter because of increased competition and quicker time-to-market, forcing organisations to reduce their time-to-market. Innovation managers must therefore decrease development time, without sacrificing quality or meeting the needs of the market.

Innovation management

Innovation management (IM) is based on some of the ideas put forth by the Austrian economist Joseph Schumpeter, working during the 1930s, who identified innovation as a significant factor in economic growth. His book “Capitalism, Socialism and Democracy” first fully developed the concept of creative destruction.

Innovation management helps an organization grasp an opportunity and use it to create and introduce new ideas, processes, or products industriously. Creativity is the basis of innovation management; the end goal is a change in services or business process. Innovative ideas are the result of two consecutive steps, imitation and invention.

By utilizing innovation management tools, management can trigger and deploy the creative capabilities of the work force for the continuous development of an organization. Common tools include brainstorming, prototyping, product lifecycle management, ideation, TRIZ, Phase–gate model, project management, product line planning and portfolio management. The process can be viewed as an evolutionary integration of organization, technology, and market, by iterating series of activities: search, select, implement and capture.

Innovation processes can either be pushed or pulled through development. A pushed process is based on existing or newly invented technology that the organization has access to. The goal is to find profitable applications for the already-existing technology. A pulled process, by contrast, is based on finding areas where customers' needs are not met and finding solutions to those needs. To succeed with either method, an understanding of both the market and the problems are needed. By creating multi-functional development teams, containing both workers or users plus marketers, both dimensions can be solved.

Innovation, although not sufficient alone, is a necessary prerequisite for the continued survival and development of enterprises. The most direct way of business innovation is through technological innovation, disruptive innovation or social innovation. Management of innovation, however, plays a significant role in promoting technological and institutional innovation.

The goal of innovation management within an organization is to cultivate a suitable environment to encourage innovation. The suitable environment would help the organizations get more cooperation projects, even ‘the take-off platform for business ventures’. Senior management's support is crucial to successful innovation; clear direction, endorsement, and support are essential to innovation pursuits.

Managing complex innovation

Innovation is often a technological change that outperforms a previous practice. To lead or sustain with innovations, managers need to concentrate heavily on the innovation network, which requires deep understanding of the complexity of innovation. Collaboration is an important source of innovation. Innovations are increasingly brought to the market by networks of organizations, selected according to their comparative advantages, and operating in a coordinated manner.

When a technology goes through a major transformation phase and yields a successful innovation, it becomes a great learning experience, not only for the parent industry but other industries as well. Big innovations are generally the outcome of intra- and interdisciplinary networking among technological sectors, along with combination of implicit and explicit knowledge. Networking is required, but network integration is the key to success for complex innovation. Social economic zones, technology corridors, free trade agreements, and technology clusters are some of the ways to encourage organizational networking and cross-functional innovations.

Managing Innovation in Sustainability Transitions

Innovation management plays a crucial role in guiding companies through sustainability transitions, particularly in managing the uncertainties that arise when shifting to more sustainable modes of production and consumption. Business Model Innovation (BMI) is increasingly used as a strategic tool to explore and experiment with new business models that balance efficiency with sustainability goals. For example, the case of Stora Enso, a company in the wood construction industry, demonstrates how a combination of different business model logics—such as value chain, value shop, and value network—enables the organization to address diverse types of uncertainty and engage in systemic change. By fostering collaborations and creating partnerships beyond traditional industry boundaries, companies can drive sustainable innovations, reduce uncertainties, and contribute to broader sustainability goals. This approach highlights the importance of flexibility, open innovation, and cross-sectoral collaboration in the innovation management process, particularly when pursuing sustainability-oriented transformations.

Innovation management tools

Antonio Hidalgo and Jose Albor proposed the use of typologies as an innovation management tool. The study conducted at a European level used 10 typologies for knowledge-driven Innovation Management Tools. These typologies were found by looking at 32 characteristics that classify Innovation Management Tools. Hidalgo and Albors were able to narrow the list down to 8 criteria (knowledge-driven focus, strategic impact, degree of availability, level of documentation, practical usefulness, age of the IMT, required resources for implementation, measurability), that are especially relevant for IMTs in the knowledge-driven economy (knowledge economy). The advantage of using typologies is the easy integration of new methods and the availability of a broader scope of tools.

Innovation management typologies

IMT typologies	methodologies and tools
Knowledge management tools	knowledge audit, knowledge mapping, document management, intellectual property rights management
Market intelligence techniques	technology watch / search, patent analysis, business intelligence, CRM, geo-marketing
Cooperative and networking tools	groupware, teambuilding, supply chain management, industrial clustering, Agile
Human resources management techniques	remote work, corporate intranet, online recruitment, educational technology, competence management, flat organization
Interface management approaches	research and development - marketing interface management, concurrent engineering
Creativity development techniques	brainstorming, lateral thinking, TRIZ, SCAMPER method, mind mapping
Process improvement techniques	benchmarking, workflow, business process re-engineering, just-in-time manufacturing
Innovation project management techniques	project management, project appraisal, project portfolio management
Design and product development management tools	computer-aided design, rapid prototyping, usability approaches, quality function deployment, value analysis
Business creation tools	business simulation, business plan, spin-off from research to market

Criteria for selection of tools: IMTs that were sufficiently developed and standardized, that aimed to improve the competitiveness of firms by focusing on knowledge and that were freely accessible on the market and not subject to any copyright or licensing agreement.

Economic theory

In economic theory, the management of innovation has been studied by Philippe Aghion and Jean Tirole (1994). Their work is based on the Grossman-Hart-Moore property rights approach to the theory of the firm. According to this theory, the optimal allocation of property rights helps to alleviate the hold-up problem (an underinvestment problem that occurs when investments are non-contractible). In the work of Oliver Hart and his co-authors, the parties agree on the ownership structure that maximizes the parties’ expected total surplus (which they can divide with suitable up-front transfer payments according to their ex ante bargaining power). In contrast, Aghion and Tirole argue that in the relationship between a research unit and a customer the parties might not agree on the optimal ownership structure, since research units are often cash-constrained and thus cannot make up-front payments to customers. The model is also known as “the R&D game” (Tirole, 1999). Laboratory research using the methods of experimental economics has found support for the theory.

AI in Innovation Management

As the current innovation environment becomes more competitive and costly, many corporate innovation managers are thinking about how to apply artificial intelligence to their company's innovation. Because artificial intelligence can provide a lot of instrumental help, it processes information management very quickly, and using artificial intelligence to support the innovation process can reduce risks and costs, bringing more value to the company.

See also

• Collaborative innovation network – a social construct used to describe innovative teams
• Design strategy
• Diffusion of innovations – a theory that seeks to explain how, why, and at what rate new ideas and technology spread through cultures
• Frugal innovation – process of reducing the complexity and cost of a good and its production
• Ideas bank – shared resource, usually a website, where people post, exchange, discuss, and polish new ideas
• Open innovation – a paradigm that assumes that organizations can and should use external ideas as well as internal ideas
• Pro-innovation bias – the belief that an innovation should be adopted by whole society without the need of its alteration
• Technology forecasting – the prediction of future characteristics of useful technological machines, procedures or techniques
• Technology scouting – a method of technology forecasting

Further reading

• Abrahamson, E. (1996). "Management fashion". Academy of Management Review. 21 (1): 254–285. doi:10.2307/258636. JSTOR 258636.
• Amabile, T. (1996). Creativity in context. Boulder, CO: Westview Press. ISBN 9780813328270.
• Brown, K.; Osborne, Stephen P. (2005). Managing Change and Innovation in Public Service Organizations. New York: Routledge.
• Brown, Terrence; Ulijn, Johannes (2004). Innovation, entrepreneurship and culture: the interaction between technology, progress and economic growth. Cheltenham: Edward Elgar. ISBN 9781843763468.
• Burgelman, R. A. (1991). "Intraorganizational ecology of strategy making and organizational adaptation: Theory and field research". Organization Science. 2 (3): 239–262. doi:10.1287/orsc.2.3.239.
• Cappellin, R.; Wink, R. (2009). International Knowledge and Innovation Networks Knowledge Creation and Innovation in Medium-technology Clusters. Cheltenham: Edward Elgar. ISBN 9781848449084.
• Chen, J.; Xu, Qingrui (2012). Leverage Innovation Capability Application of Total Innovation Management in China's SME's Study. Singapore: Zhejiang University Press.
• Damanpour, F. (2014). "Footnotes to research on management innovation". Organization Studies. 35 (9): 1265–1285. doi:10.1177/0170840614539312.
• Damanpour, F. (1996). "Organizational complexity and innovation: developing and testing multiple contingency models". Management Science. 42 (5): 693–716. doi:10.1287/mnsc.42.5.693.
• Damanpour, F.; Aravind, D. (2012). "Managerial innovation: Conceptions, processes, and antecedents". Management and Organization Review. 8 (2): 423–454. doi:10.1111/j.1740-8784.2011.00233.x.
• Edison, H.; Ali, N. B.; Torkar, R. (2013). "Towards innovation measurement in the software industry" (PDF). Journal of Systems and Software. 86 (5): 1390–1407. doi:10.1016/j.jss.2013.01.013. Archived from the original (PDF) on 2017-10-18.
• Eveleens, C. (2010). "Innovation management; a literature review of innovation process models and their implications". Working Paper. HAN University of Applied Sciences.
• Farago, Jason (2013-08-23). "Our 'Kodak moments' – and creativity – are gone". Opinion. The Guardian. Retrieved 2014-04-26.
• Fonseca, Jose (2002). Complexity and innovation in organizations. New York: Routledge. ISBN 9780415250290.
• Freeman, C. (1995). "The national system of innovation in historical perspective". Cambridge Journal of Economics. 19 (1): 5–24.
• Fuglsang, Lars (2008). Innovation and the creative process: towards innovation with care. Cheltenham: Edward Elgar.
• Griffin, Ricky (2011). Fundamentals of management. New York: Cengage Learning.
• Huizenga, Edward (2014). The Knowledge Enterprise Innovation Lessons from Industry Leaders. Series on Technology Management. Vol. 24 (2nd ed.). doi:10.1142/p964. ISBN 978-1-78326-542-8.
• Kelly, P.; Kranzburg, M. (1978). Technological Innovation: A Critical Review of Current Knowledge. San Francisco: San Francisco Press.
• Levine, Arthur (1980). Why innovation fails. Albany: State University of New York Press.
• Maier, D.; Verjel, A.; Bercovici, A.; Maier, A. (2017). "Innovation Management System - a Necessity for Business Performance". Proceedings of 29th International-Business-Information-Management-Association Conference, Vienna, Austria, May 3–4, 2017.
• Maier, D.; Sven-Joachim, I.; Fortmuller, A.; Maier, A. (2017). "Development and operationalization of a model of innovation management system as part of an integrated quality-environment-safety system". Amfiteatru Economic. 19 (44): 302–314.
• Malerba, F. (2008). Innovation Networks in Industries. Edward Elgar.
• O'Connell, Donal (2011). Harvesting External Innovation: Managing External Relationships and Intellectual Property. Gower Publishing.
• Oslo manual: guidelines for collecting and interpreting innovation data. The measurement of scientific and technological activities (3rd ed.). Paris: OECD. 2005. ISBN 978-92-64-01308-7.
• Paul, B. (2007). "Entrepreneurship and Innovation Opportunity, Innovation and Entrepreneurship". In Paul, B. (ed.). Entrepreneurship and Small Business. New York: Palgrave Macmillan. pp. 55–76.
• Rothwell, R. (1994). "Towards the Fifth-generation Innovation Process". International Marketing Review. 11 (1): 7–31. doi:10.1108/02651339410057491.
• Siltala, R.; Taatila, V.; Alajääski, J. (2014). "Finnish teachers' views on innovative teaching". In Virkajärvi, M. (ed.). Työn tulevaisuus. Tampere: University of Tampere. pp. 280–297.
• Silverstein, David; DeCarlo, Neil; Slocum, Michael (2007-12-17). Insourcing Innovation: How to Achieve Competitive Excellence Using TRIZ. Auerbach Publications. doi:10.1201/9781420062298. ISBN 978-0-429-24915-0.
• Schumpeter, J. A. (1934). The Theory of Economic Development: An Inquiry into Profits, Capital, Credit, Interest and the Business Cycle. Cambridge, MA: Harvard University Press.
• Shavinina, Larisa (2003). The international handbook on innovation. Oxford: Pergamon.
• Thompson, V. A. (1965). "Bureaucracy and innovation". Administrative Science Quarterly. 10 (1): 1–20. doi:10.2307/2391646. JSTOR 2391646.
• van Zyl, Jay (2011). Built to Thrive: using innovation to make your mark in a connected world. ISBN 978-1-4467-9440-1.
• Verloop, J. (2004). Insight in Innovation: Managing Innovation by Understanding the Laws of Innovation. Elsevier.
• Wagner, Stephen (2008). Managing innovation: the new competitive edge for logistics service-providers. Vienna: Haupt.
• Wherrett, R. (2018). 101 Executive Uses for a Square Camel: and other lightbulb moments in problem solving. Glasgow: Reroq Publishing. ISBN 978-0-9561305-2-5.
• Zbaracki, M. J. (1998). "The rhetoric and reality of total quality management". Administrative Science Quarterly. 43 (3): 602–638. doi:10.2307/2393677. JSTOR 2393677.