Managing Innovation

Citation

Keogh, W. (1999), "Managing Innovation", International Journal of Entrepreneurial Behavior & Research, Vol. 5 No. 6, pp. 313-317. https://doi.org/10.1108/ijebr.1999.5.6.313.1

Overall, this book presents a very interesting approach to “managing innovation”. In order to meet the needs of the target markets, who comprise MBA and MSc students on courses in the management of technology and innovation, the authors bring together innovation theory and real world examples. Added to this, there are sections which appeal to working managers from either manufacturing or service backgrounds in large as well as small organisations. The book aims to equip readers with knowledge at operational and strategic levels in the understanding of the management of innovation and has been designed to incorporate some essential skills for managers seeking to learn more about the workings of innovation. It comes across as a very useful text, which provides the reader with an insight into the complexity of innovation within organisations whilst, at the same time, explaining how this would be achievable.

The authors state that “the book aims to integrate the management of market, technological and organisational change to improve the competitiveness of firms and effectiveness of other organisations”. It is differentiated from competition by three sets of reasons. In the first place, the authors seek to show that technological innovation goes beyond efforts which involve improving the efficiency of R&D and this should also include the effectiveness of the technological development taking place. In other words, the authors are focusing on the translation or transference of technology into successful products and services in the market place. They add to this by explaining that they are using “a competence based approach to technology management” which means that the managers and students have to analyse organisational structures and processes. The second key element of differentiation involves the shift from an emphasis of internal structure and the internal culture to include external linkages and processes. The last key differentiator is that there has been a difference in attitude towards market segmentation in regards to relationship and network marketing and this demands more fine targeting and tuning of product development and closer linkages with suppliers and customers, thus supply chain issues come to the fore in relation to the technological management of innovation.

The overall thrust of their ideas at this stage are that the dimensions of innovation, which involve technology, the markets and organisational change, all react and interact ‐ thus managing research and development and improving the output of productivity or the rate of technological innovation may be one way forward. However, that on its own is not enough and requires elements of the marketing mix and marketing research. The authors make the point that management of innovation is interdisciplinary, as well as being multi‐functional and that most other management texts tend to emphasise single dimensions instead of looking at the multi‐dimensional aspects. The following comments give some insight into the text and what the authors are trying to achieve.

The book is presented in six parts and 13 chapters. The first part is “Managing for innovation” which has two chapters; part two is called “Taking a strategic approach” (four chapters); part three deals with “Establishing effective external linkages” (two chapters); part four is called “Building effective implementation mechanisms” (two chapters); part five focuses on “Creating the innovative organisation” (two chapters); and last, part six comprises one chapter, “Effective innovation management section”. At the end of each chapter further reading and references are given.

Chapter one illustrates key issues in innovation management and relevant examples are used throughout, e.g. Flymo and Sheffield cutlery. Key focal points include innovation and competitive advantage between market performance and new products; the types of innovation; and defining what they mean by innovation. The authors explain what they mean by innovation: “We are talking about change and our focus in this book is particularly upon technological change. Change of this kind can take two forms ‐ in the things (product and services) which an organization offers and changes in the ways in which they are created and delivered. (Traditionally these are termed ‘product’ and ‘process’ innovation although these terms can sometimes be confusing.)”

This part of the book continues by looking at innovation as a management process, and examples are given of different views of what is meant by innovation. Innovation is also investigated as a core business process, explaining how this can operate and investigating different approaches. Discussions include sections on how context and sectors and size of organisations can affect the innovation management process. Explanations of what managers are supposed to do are featured throughout and core abilities have been identified which may help the organisation. A blueprint for success features, with stages that an organisation could go through in determining their own innovation capacity and development.

Part 2 begins by developing the framework for an innovative strategy. Different strategies are investigated, labelled as the rationalist or incrementalist strategies for innovation. The rationalist strategy comprises the following steps:

1. 1

   Describe, understand and analyse the environment.

2. 2

   Determine a course of action in the light of the analysis.

3. 3

   Carry out the decided course of action.

The incrementalist strategy argues that the complete understanding on complexity and change is impossible therefore they should use procedures such as make deliberate steps or changes towards the stated objectives, measure and evaluate the effects of the steps, adjust the objective and decide on the next step. Implications for management are discussed at length and technology in competitive analysis is introduced, including Porter’s Five Forces Model.

Chapter four, on the positioning of the national and competitive environment, features a number of useful tables and statistics including firms and patenting, trends in business funded R&D and factors influencing national demands for innovation. The wider debate on backing for organisations such as the institutions and corporate governments is also included and competitors and competitive position is introduced at this stage. In this chapter a small section on positioning of small firms is also included, showing different approaches to R&D by small firms.

Technological trajectories of core sectors which feature as science‐based or information‐intensive firms are used to illustrate how organisations can exploit innovation strategically. The authors identify the major types of trajectory such as the differences and similarities in industrial sectors, so the size of innovating firms and the types of products made and the objectives of their innovation are looked at. Specific firm competencies using the work of Prahalad and Hamel (1990) and debates on core competencies in firms are included.

Part 2 concludes with an examination of processes and the integration of strategic learning. The location and importance of R&D activities are discussed and figures are given about output. The debate includes looking at whether R&D should be global or local. Allocating resources for innovation and the involvement of people along with other resources such as funds and facilities are highlighted. A major part of this of course is how to evaluate learning that goes on and how practicing managers cope with this. Knowledge building is seen as a key element in succeeding with strategic planning.

The authors then begin to focus on the area of marketing. A sub‐heading of the text book is “integrating technological, market and organisational change”. Thus in the part “Learning from markets”, they begin by examining three issues. First, how do the characteristics of an innovation constrain the options for development and marketing. Second, in what ways do the characteristics of potential users effect the development and adoption of innovation. Thirdly, which marketing or diffusion processes are most effective in promoting the awareness and use of new products and services. They then analyse “how do technology and markets affect marketing?”, including aspects of differentiation, identification and evaluation of product characteristics. The notion of the market targeted is also introduced. Discussions also include differentiation of products and they introduce quality function deployment (QFD) as one way of determining the characteristics. Market segmentation is discussed at length and the characteristics of technological products are debated. The forecasting of division of innovations are also included and the characteristics of innovations which affect diffusion are highlighted.

Chapter eight is titled “Learning through alliances” and the authors seek to address a number of key issues in alliances. Initially they look at why firms collaborate and what they bring to the collaboration partnership. Models and reasons for collaboration are given from studies and the forms of collaboration are highlighted, including technology licensing and research consortia. The competitive significance of collaboration in relation to the complexity of the technology features in regard to corporate strategy. Managing suppliers for alliances for learning is an interesting subset which gives the effect of product development as samples and factors which affect outcomes of collaboration. The determinants of learning through alliances features from Hamel’s study (1991).

Implementation includes learning about new ventures and begins by identifying what is meant by a new venture and what the impact and role of the new venture would be. There is also an explanation and discussion on the reasons for corporate venturing and what an organisation would attempt to achieve through this route. The management of corporate ventures, stages and various strategies include how to assess the venture. Corporate ventures and the organisational structure also feature, e.g. integration of different sections, such as business teams or departments. Learning from industrial ventures is discussed in some depth to determine what can be learned from working within the organisation and to move forward from this.

The penultimate part of the book is all about creating the innovative organisation. This includes issues such as building an appropriate organisation, leadership and vision. Along with this there is a description of appropriate organisational structure for innovation. A discussion of the role of key individuals, including aspects of training and development for the staff ‐ and their involvement in innovation ‐ is discussed at length. Effective teamworking and what it means is a key element of chapter 11. The next chapter covers small innovative firms and looks at the creation of new technology based firms as a subset of small to medium enterprises. The discussion also includes aspects of technical entrepreneurs and what these companies are trying to do and achieve. Funding for these companies provides a major aspect of their development and this is discussed in the light of Drucker’s writing on innovation and entrepreneurship (1985). The growth performance of innovative small firms is discussed and further reading directs readers to look at other aspects of entrepreneurship.

The final chapter links this integrated approach to innovation management and it summarises what the reader should have learned in the text. The authors give a list of key themes surrounding innovation management, including that learning and adaptation are essential in an inherently uncertain future, thus innovation is an imperative and different firms use different routes with greater or lesser degrees of success. They also explain that they have taken the stance that “innovation management is not a matter of doing one or two things well, but of good all‐round performance”, that successful innovation is strategy based and successful innovation depends on effective internal/external links. Innovation requires enabling mechanisms for making change happen. The authors highlight the three essential ingredients in innovation strategy ‐ the position of the firm, the technological paths and the organisational processes. Within the context of the innovation learning cycle, success and the measurement of success is important in organisations and they look at more specific measures of innovation, e.g. the number of new products introduced over a time period, the failure rates in development process and the quality versus the sector trends of innovation. A section deals with the auditing of innovation and an extremely useful table is given which can be used to identify what the organisation is looking for in the way of innovation. The framework allows an assessment of innovation management undertaken in the organisation and although not exhaustive it indicates eight key areas for management to explore.

Throughout the text, relevant examples are used to reinforce the authors’ objectives. Selected literature for each chapter is very useful to the reader. It is not just targeted at a large firm approach. For example, the chosen material for chapter 12 (dealing with SMEs) is a good place to begin for readers new to the subject area. The role of small firms features throughout. For example, examples of small firms who turned into large firms since 1950 (including Microsoft, Compaq, Texas Instruments and Sony) are used to illustrate the technological paths that organisations may follow. There is a lot in this book and the experience of the authors comes through from the approach they adopted to communicate their message and there is a feeling of depth in the subject area. It is pitched at a fairly high level and the authors have positioned it in an important niche. The concept of “change” pervades the text at the individual, organisational and sector levels and the reader is made aware of the need and nature of this change in order to maximise benefits from the process of innovation. The main criticism may be that they have tried to do too much. However, the text provides more than just an overview, it has a very good structure and could be used as a stand‐alone course book or complementary to a number of key texts, for example, Utterback (1994) or Twiss (1992).