Paradigm Shift in Innovation Management
Rob Dekkers
Last modified: 2007-09-08
Abstract
Purpose of Paper
The increased pressure on innovation forces companies to adopt new practices for successfully keeping up with increased competitive pressures. However, most practices of innovation management still rely on approaches derived from those for monolithic companies, keep up with competitive pressures by incremental innovations in never-changing architectures, still depend on hierarchical managerial practices and have an inward orientation. This paper attempts to outline the spiral in which these companies find themselves and to relate the consequences of that spiral to case studies.
Related Work
That innovation is a keystone in a competitive strategy leaves no doubt. Much research has been done on outlining the importance and impact of innovation management, on identifying factors that determine success, on pinpointing best practices. Internal innovation management has been connected to cultural differences, to strategy and human resource management. Recently, innovation in networks has received attention, also driven by concepts like open innovation and technology valorisation. Yet, most works have ignored the persistence of practices in industry that still view innovation management as a hierarchically manageable process, ignoring the iterative character of innovation processes and the strategic implications.
Design/Methodology/Approach
The approach taken in this paper is to sketch the vicious cycle of innovation management taken from the hierarchical point of view. The hierarchical perspective asserts innovation from control aiming at improved financial-economic performance, which in turn leads to decreased innovative performance, which calls for more control, etc. That this cycle persists in industry will be illustrated by examples taken from different industries and will be related to work of others.
This view is then compared with new insight from literature to break way from the vicious cycle. A number of routes are identified. The purpose of this paper is not to expand on these routes but mainly point to the existing, prevailing practices.
Findings
Short-term decision-making determines innovation management in many industries. Hence, they do not arrive at setting a long-term agenda and internal innovation management is strongly hampered by a lack of an adequate vision. The conversion of that vision into an innovation strategy, for use in external and internal innovation management, requires additional capabilities of management that stretch beyond financial-economic motives.
The reactive aptitude towards market demands results in a greater number of variants, even though customer demands do not vary that much. The internal organisation to address the variety in customer orders poses higher demands on control, resulting in more control and hierarchy, and, finally, decreased performance.
Research Limitations/Implications
This research serves as a starting point to identify and evaluate existing practices in innovation management in industry. However, it is not intended to arrive at new theory in this stage.
All together, this paper points to existing cracks in the industrial approach to innovation management and links them to literature on innovation management.
Practical Implications
Companies have to move away from approaches that make them vulnerable to competitive pressures. Hence, the managerial attention has to focus on the mobilisation of internal resources, the involvement of networks and external stakeholder management. These changes will not guarantee success but only will initiate a greater reach of the innovation strategy.
Originality/Value of Paper
The paper points out that existing practices in industry fall behind on those required by competitive pressures. Especially, the paradigm of hierarchical control together with an inward view does not hold anymore in the contemporary era of speed of innovation.
The increased pressure on innovation forces companies to adopt new practices for successfully keeping up with increased competitive pressures. However, most practices of innovation management still rely on approaches derived from those for monolithic companies, keep up with competitive pressures by incremental innovations in never-changing architectures, still depend on hierarchical managerial practices and have an inward orientation. This paper attempts to outline the spiral in which these companies find themselves and to relate the consequences of that spiral to case studies.
Related Work
That innovation is a keystone in a competitive strategy leaves no doubt. Much research has been done on outlining the importance and impact of innovation management, on identifying factors that determine success, on pinpointing best practices. Internal innovation management has been connected to cultural differences, to strategy and human resource management. Recently, innovation in networks has received attention, also driven by concepts like open innovation and technology valorisation. Yet, most works have ignored the persistence of practices in industry that still view innovation management as a hierarchically manageable process, ignoring the iterative character of innovation processes and the strategic implications.
Design/Methodology/Approach
The approach taken in this paper is to sketch the vicious cycle of innovation management taken from the hierarchical point of view. The hierarchical perspective asserts innovation from control aiming at improved financial-economic performance, which in turn leads to decreased innovative performance, which calls for more control, etc. That this cycle persists in industry will be illustrated by examples taken from different industries and will be related to work of others.
This view is then compared with new insight from literature to break way from the vicious cycle. A number of routes are identified. The purpose of this paper is not to expand on these routes but mainly point to the existing, prevailing practices.
Findings
Short-term decision-making determines innovation management in many industries. Hence, they do not arrive at setting a long-term agenda and internal innovation management is strongly hampered by a lack of an adequate vision. The conversion of that vision into an innovation strategy, for use in external and internal innovation management, requires additional capabilities of management that stretch beyond financial-economic motives.
The reactive aptitude towards market demands results in a greater number of variants, even though customer demands do not vary that much. The internal organisation to address the variety in customer orders poses higher demands on control, resulting in more control and hierarchy, and, finally, decreased performance.
Research Limitations/Implications
This research serves as a starting point to identify and evaluate existing practices in innovation management in industry. However, it is not intended to arrive at new theory in this stage.
All together, this paper points to existing cracks in the industrial approach to innovation management and links them to literature on innovation management.
Practical Implications
Companies have to move away from approaches that make them vulnerable to competitive pressures. Hence, the managerial attention has to focus on the mobilisation of internal resources, the involvement of networks and external stakeholder management. These changes will not guarantee success but only will initiate a greater reach of the innovation strategy.
Originality/Value of Paper
The paper points out that existing practices in industry fall behind on those required by competitive pressures. Especially, the paradigm of hierarchical control together with an inward view does not hold anymore in the contemporary era of speed of innovation.
Full Text: PDF