Chapter 1

The Innovation Imperative

Definition of Innovation

The word ‘innovation’ comes from the Latin, innovare, and is all
about change.

Perhaps a more helpful definition of innovation is ‘the process of

creating value from ideas’.
 Innovation Imperative

• Innovation is a survival imperative. If an organization doesn't change what it

offers the world and the ways in which it creates and delivers those offerings
it could well be in trouble.

• Innovation contributes to competitive success in many different ways – it’s a

strategic resource - helping to get the organization where it is trying to go,
whether it is delivering shareholder value for private sector firms, or
providing better public services, or enabling the Start-up and growth of new
enterprises.
Innovation matters

Who does innovation matter to?

• Entrepreneurs starting up a venture

• Established enterprises trying to grow

• Governments (local and national) .

• Trade and sector bodies

• Supply chain ‘owners’

 Innovation & Entrepreneurship

Innovation doesn’t just happen – it is driven by entrepreneurship. This

powerful mixture of energy, vision, passion, commitment, judgment and risk-
taking – provides the engine behind the innovation process. It’s the same
whether we are talking about a solo start-up venture or a key group within an
established organization trying to renew its products or services.
 Cont.……

• Innovation doesn’t happen simply because we hope it will – it’s a complex process which
carries risks and needs careful and systematic management. Innovation isn’t a single
event. It’s an extended process of picking up on ideas for change and turning them
through into effective reality.
• This core process doesn’t take place in a vacuum. We also know that it is strongly influenced
by many factors. In particular, innovation needs: clear strategic leadership and direction, plus
the commitment of resources to make this happen . It needs an innovative organization in
which the structure and climate enables people to deploy their creativity and share their
knowledge to bring about change proactive links across boundaries inside the organization and
to the many external agencies who can play a part in the innovation process (suppliers,
customers, sources of finance, skilled resources and of knowledge, etc.).
 Cont.……

Building a capability to organize and manage innovation is a great achievement, but we also

need to consider where and how innovation can be used to strategic advantage.

 Putting an innovation strategy together involves three key steps, pulling together ideas

around core themes and inviting discussion and argument to sharpen and shape them. These

are:

• Strategic analysis: what could we do?

• Strategic selection: what are we going to do, and why?

• Strategic implementation: how are we going to make it happen?

 Cont.……
Any organization can get lucky once but the real skill in innovation management is being able
to repeat the trick.

So if we want to manage innovation we ought to ask ourselves the following check questions:

• Do we have effective enabling mechanisms for the core process?

• Do we have strategic direction and commitment for innovation?

• Do we have an innovative organization?

• Do we build rich, proactive links?

• Do we learn and develop our innovation capability?

 Cont.……

• Most of the time innovation takes place within a set of rules of the game which are clearly
understood, and involves players trying to innovate by doing what they do (product, process,
position, etc.) but better.

• But occasionally something happens which changes the rules of the game (e.g. when radical
change takes place along the techno-logical frontier or when completely new markets
emerge). When this happens, we need different approaches to organizing and managing
innovation. If we try to use established models which work under steady-state conditions we
find ourselves increasingly out of our depth and risk being upstaged by new and more agile
players.
 Cont.……

• For this reason, a key skill lies in building ‘dynamic capability’ (the ability to
review and reset the approach which the organization takes to managing
innovation in the face of a constantly shifting environment).

• Developing the ideas and engaging others in a network for change – perhaps in
a region or around a key issue, Spreading the idea widely, diffusing it to other
communities of social entrepreneurs, engaging links with mainstream players
like public sector agencies, Changing the system - and then acting as agent for
next wave of change.
Innovation isn't easy

Barriers to innovation include:

• Seeing innovation as ideas, not managing the whole journey;

• Not recognizing the need for change;

• Mindset and complacency – core competence becomes core rigidity;

• Closed information network, insulated from new.

 Challenges on the innovation horizon

Acceleration of knowledge production

• ‘knowledge workers’ are now much more widely distributed and concentrated in new locations.
The world’s population has just increased fast ,so understanding the needs and constraints of this
‘new’ population represents a significant challenge in terms of market knowledge.

Market fragmentation

• Globalization has massively increased the range of markets and segments so that these are now
widely dispersed and locally varied – putting pressure on innovation search activity to cover
much more territory, often far from ‘traditional’ experiences – such as the ‘bottom of the
pyramid’ conditions in many emerging markets or along the so-called long tail – the large
number of individuals or small target markets with highly differentiated needs.
  Rise of active users

• Although users have long been recognized as a source of innovation there has
been an acceleration in the ways in which this is now taking place. In sectors
like media the line between consumers and creators is increasingly blurred - for
example, You Tube has around 100 million videos viewed each day but also has
over 70,000 new videos uploaded every day from its user base.

Growing concern with sustainability issues

• Major shifts in resource and energy availability prompting search for new
alternatives and reduced consumption. Increasing awareness of impact of
pollution and other negative consequences of high and unsustainable growth.
 Cont.…

• Concern over climate change. Major population growth and worries over ability to sustain

living standards and manage expectations. Increasing regulation on areas like emissions,

carbon footprint.

• Development of technological and social infrastructure, Increasing linkages enabled by

information and communications technologies around the internet and broadband have

enabled and reinforced alternative social networking possibilities. At the same time the

increasing availability of simulation and prototyping tools have reduced the separation

between users and producers.

 Can we manage innovation?

• Innovation as a series of experiments; Building ‘routines’ – behavior patterns which

become embedded; Structures, policies, procedures for making innovation happen;

• Culture – ‘the way we do things around here explore and understand different dimensions of
innovation (ways in which we can change things)

• manage innovation as a process

• create conditions to enable them to repeat the innovation trick (building capability).

• focus this capability to move their organizations forward (innovation strategy) .

• build dynamic capability (the ability to rest and adapt their approaches in the face of a
changing environment.
 Dimension Type of change

‘ Product’

• Changes in the things (products/ services) which an organization offers

‘Process’

• Changes in the ways in which these offerings are created and delivered

‘Position’

• Changes in the context into which the products/services are introduced

‘Paradigm’

• Changes in the underlying mental models which frame what the organization does
A process model of Innovation and Entrepreneurship

4 key steps:

• Recognizing the opportunity

• Finding the resources

• Developing the idea

• Capturing value.
Thank
u!