What is Innovation Management?
Innovation management is defined as the process of cultivating, screening, developing and implementing innovative ideas in an organization. It is not just limited to businesses and can be readily used by non-profits, governments and institutions.
An innovation management framework includes creating a culture of innovation, whereby innovative ideation is encouraged as part of the organization’s work culture. This is the first and most important step in the process and requires a cultural shift to enable and incorporate. This also means that organizations need to invest and cultivate innovation as part of their workflows.
Following idea pooling is the phase of screening the collected ideas based on set parameters, such as, whether they meet the organization’s vision and goals, whether they are feasible from an investment standpoint, whether they meet the legal and compliance standards etc.
For example, a software product company may use work management tools to regularly pool in ideas from employees, team leads and executives on customer-centric product related improvements. These ideas are then discussed, debated and screened for whether they truly contribute to customer/ user experience enhancements. Following that are the phases of development and testing, and if they pass user and market tests, they are developed fully for deployment into the mainstream product lines.
Innovation Management Process: Key Phases
An innovation management process is a framework by which an organization chooses to innovate and implement. It is not a rigid process and may vary based on type of organization and their goals. However, there are some key phases that are typically standard and are required for proper management of innovative ideas being generated across the organization. They are also required to meet the multitude of legal and compliance standards already set by laws.
Here are the key phases in a standard innovation management process:
- Phase 1: Idea generation and gathering
Idea generation is the process by which an organization helps its teams generate new innovative ideas for problem solving or improving upon existing frameworks. Such ideas are often generated spontaneously in day-to-day activities, and can also be stimulated through quizzes and hackathons.
Once the ideas are generated, they can be gathered for further screening through a process of submission and review. This can be an online portal, emails, slack channels etc. Just make sure that whichever channel is being used for idea pooling, that it is accessible to everyone in the organization and not siloed off for a few.
- Phase 2: Idea screening
Once the ideas are in, they need to be screened through discussions, debates and internal reviews. It is typically a good idea to have a dedicated and periodic time slot, else they can get ignored and lost.
The more transparency and openness in the screening process the better it is for your culture of innovation. The people who posted the ideas should get to know why their idea was selected or rejected, so that they can keep them in mind while posting again. In either case, a tone of encouragement is a must if the cycle is to successfully be repeated, without which people may get discouraged.
- Phase 3: Prototype development and testing
Once the ideas are selected, they need to be tested. Prototype testing is not just for products, it can be used for any idea testing. The goal is to create a working model with the bare requirements to see if it works with users/ audiences/ customers.
For example, in the case of a product feature idea, it needs to be developed, then tested internally, and then externally with a select group of people. Based on the feedback, the prototype is either updated, rejected or taken forward for final development.
- Phase 5: Final development
Once the prototype testing has yielded satisfactory results, the final development phase begins. Here there may be more rigorous intermediate versions to be tested as now there are more details added. For example, market testing may be done with intermediate versions to see if the direction of the final version is correct.
There is also a big investment gap between prototypes and final versions, as the final version requires a lot of refinements. For example, if the idea is to develop a new web app, then in the final version a lot more design and UI investment may be needed, whereas the prototype may have only tested the basic functionality of the app.
- Phase 6: Release/ launch
Once the innovation is fully developed into a working product, it is time to launch. Depending on what was being developed, the launch may range from quiet to buzzy. If the idea was for internal use, such as a new marketing campaign, sales enablement resource, new HR tools etc, then the announcements are internal and quiet from a customer’s perspective. However, if the innovation was customer facing, then the development may need adequate announcements to ensure customers are aware before and after the launch.
- Phase 7: Monitoring and updates
Once deployed, the innovation needs to be monitored to evaluate if it is yielding the desired results. These days there are tools and software for monitoring pretty much any organizational event in a data-oriented way. Products, services, marketing, HR, sales, accounting, operations, all teams have software to monitor and update activities.
For customer facing innovations, it is absolutely key to ensure that the right tracking tools are available. Even for internal innovations, team leads should ideally use some kind of technical tracking tool to make data-backed decisions.
Innovations are a non-technical process, inspired through creative flow, however, tracking of the innovation’s success needs to be a technical process to ensure transparency and avoid biases.
Key Models for Innovation Management
- 1. Incremental innovation
Incremental innovation is a model by which the final version of the idea is delivered in phases. This may be to preserve investment in bulk or for waiting for the market to respond.
For example, this is a very common practice in the software business, where initially the basic functions are made available, while the team works on refinements and additions of features.
Another example can be seen in how smartphones have evolved, especially in the 2010s decade where each year the software and the hardware was upgraded by significant ranges. This was also because microchips and semiconductor manufacturers needed time to invest and develop them to be used by phone manufacturers, which was in turn based on the demand. If demand for better processing and chipsets reduced, then a bulk investment would go on a loss.
Incremental innovation basically helps organizations to check demand before making further investments.
- 2. Radical innovation
The radical innovation model focuses on creating something completely new, which has no precedence or association with what already exists. Unlike disruptive innovation, which disrupts an existing base, radical innovation carves out its own space.
For example, the innovation of the first digital computer was a radical innovation, as nothing like it or remotely close to it was available.
Similarly, another example will be the innovation of the first telephone or even the first physical mailing system.
- 3. Disruptive innovation
Disruptive innovations are based on significantly upgrading something that already exists. For example, when the first mobile handsets entered the market, it disrupted the landline market. But landlines were the basis for mobile phones to innovate and disrupt.
By the same logic, when smartphones entered the market, they disrupted the feature mobile phones market (also known as dumb phones today).
Notice that both innovations disrupted existing markets through exponential improvements in use, and did not have to carve out a completely new space, as is the case with radical innovation.
- 4. Open innovation
An open innovation is a collective and collaborative model, whereby multiple organizations or groups of people may come together to create innovations.
For example, Apple’s Appstore and Android’s Playstore are open innovations, where the platforms were developed by the respective parent companies but the apps in them are by and large created by individuals or organizations.
It is important to note that open source and open innovation are not the same. Open source allows for the source of the platform to be used by anyone, not necessarily to be improved or developed upon commonly. For example, Android is an open source OS that can be used by any mobile manufacturer, but any modifications or updates done by these manufacturers do not have to feed back into the core Android version, which is managed by Google.
- 5. Social innovation
Social innovation is any innovation that is done primarily with the goal to benefit people, plants and animal beings. It is also not limited to non-profits or governments, any for-profit company can also innovate in this line.
For example, packaged dog and cat food is a social innovation, even if it was done by for-profit companies, as it helps feed pets and community animals easily where cooking food may be difficult. This is especially true for social workers who cannot prepare dog or cat food en-mass and instead rely on packaged food with longer shelf life.
Another example would be smartphones, which may fall under many categories of innovation, but is also a social innovation for the level of life experience enhancement it brought to people.
- 6. Business innovation
Business innovation is an enterprise and typically for-profit centric model, where the core idea is to improve business results to meet the set goals and objectives. Such innovations typically happen across 4 sub-models:
A. Business model innovation
Business model innovation focuses on the larger business model rather than product, service or process. The goal here is to look at what the business is producing and see if there are better models to sell them. For example, a software company may innovate on price-to-feature packaging to make inwards into new market segments.
Another example would be a retailer who adds online sales as a new model of sales, and an addition to just store-based sales.
B. Product innovation
The product innovation model seeks to innovate on the core product. This could be new features, new products or a completely new line of products.
A simple example here can be when Apple introduced the iPod as a new product innovation, followed by the iPhone.
In fact, additional features with new iOS or Android versions, is also a product innovation, centered around features on an existing product.
C. Service innovation
Service innovation focuses on improving existing services of a business or creating new channels of servicing. Following from the example above, when Apple opened its first physical retail and service center, that was a new service innovation for the company.
Service innovation can also be something as simple as finding ways to reduce call-center wait time for customers or reducing response time to customer emails.
D. Process innovation
Process innovation’s aim is to improve existing company processes or introduce new ones to increase the ability to meet goals. It doesn’t seek to change the product, service or model in any way, instead the objectives are to improve the underlying work structures and flows that are used to deliver them.
It is also not limited to customer facing teams and can be applied to any internal process. For example, if the accounting team innovated with the HR team to find ways to process salaries faster and more on-time, then that is as much of a process innovation as the sales team innovating to reply faster to lead enquiries.
Best Practices for Innovation Management
- The key is the culture
Innovation is a result of workplace culture and not process. It comes from the mind and the mind is open when the work culture is supportive rather than constraining.
A culture of innovation is a result of closely ensuring transparency, ethics and openness at multiple levels across the company. This includes ensuring that team leaders embody this culture and pass it down to employees reporting to them.
Above all, the company’s core leadership team is responsible for implementing and nurturing a work culture that is professional but also always open to new ideas and approaches.
- Innovation is to be encouraged, not forced
Forcing a pipe to flow better only constraints it more and prevents water even more. This metaphor should help one understand the nature of a human personality and mind with respect to idea generation. Innovation cannot be forced out of people, it needs to be allowed to happen. Allowing is the act of less intervention and control and more of a culture that allows ideas to come in without any negative compulsions or consequences.
An organization at large can motivate, provide incentives, create the right culture and then wait.
Many companies, governments and organizations try to innovate, but the reason why some succeed and some don’t can often be seen in the type of culture that they harbor.
- Include social innovation as part of CSR
If an organization is large enough to have a Corporate Social Responsibility program, it can be of great service and good brand name to use some of those resources for social innovation. There are two ways that CSR unfolds, one is donating to charities/ NGOs or even starting your own initiatives. The other is based on finding new ways to help people, animals and the green, such that it brings in more efficiency and effectiveness to meet social goals.
- Expand innovation to all parts of the organization
Many professionals and leaders may have a misconception that innovation is a customer facing ideation. As you may have noticed during this article, that innovation has no departmental limits. A culture of innovation is permissive of innovative ideas across the company, starting from the leadership to the intern.
For example, an HR team can innovate to bring about work culture improvements, a finance team can innovate to save the company’s cost of doing business etc.
- Incremental innovations can create to big breakthroughs
When we think of innovation, most of us imagine big breakthroughs and ground breaking solutions. Whereas the reality is that those ground breaking innovations we refer to, all came from small ideas and implementations that were incrementally culminating into something big at the end.
For example, both the iPod and the iPhone in their first few years of the launch were tiny percentages in overall sales numbers for Apple. Today, the iPhone and its services contribute to the largest share of revenue and profits for the company.
Look around you. The smartphone, the laptop/ desktop, the lighting, the air conditioning, the flooring, the roof etc, were all once small ideas that were incrementally developed and refined over time. That’s how the journey unfolds. Even in nascent forms, good innovations still have a positive impact for the organization, whether or not it has a big impact on your balance sheet.
