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Innovation management is a combination of the
management Management (or managing) is the administration of organizations, whether businesses, nonprofit organizations, or a Government agency, government bodies through business administration, Nonprofit studies, nonprofit management, or the political s ...
of
innovation Innovation is the practical implementation of ideas that result in the introduction of new goods or service (economics), services or improvement in offering goods or services. ISO TC 279 in the standard ISO 56000:2020 defines innovation as "a n ...
processes, and
change management Change management (CM) is a discipline that focuses on managing changes within an organization. Change management involves implementing approaches to prepare and support individuals, teams, and leaders in making organizational change. Change mana ...
. It refers to product,
business process A business process, business method, or business function is a collection of related, structured activities or tasks performed by people or equipment in which a specific sequence produces a service or product (that serves a particular business g ...
, marketing and
organization An organization or organisation (English in the Commonwealth of Nations, Commonwealth English; American and British English spelling differences#-ise, -ize (-isation, -ization), see spelling differences) is an legal entity, entity—such as ...
al innovation. Innovation management is the subject of ISO 56000 (formerly 50500) series standards being developed by
ISO TC 279 ISO/TC 279 is a technical committee of the International Organization for Standardization (ISO). Its purpose is to develop, maintain and promote standards in the field of innovation management. The first plenary meeting of ISO/TC 279 was hel ...
. Innovation management includes a set of tools that allow managers plus workers or users to cooperate with a common understanding of
process A process is a series or set of activities that interact to produce a result; it may occur once-only or be recurrent or periodic. Things called a process include: Business and management * Business process, activities that produce a specific s ...
es and
goal A goal or objective is an idea of the future or desired result that a person or a group of people envision, plan, and commit to achieve. People endeavour to reach goals within a finite time by setting deadlines. A goal is roughly similar to ...
s. Innovation management allows the organization to respond to external or internal opportunities, and use its creativity to introduce new
idea In philosophy and in common usage, an idea (from the Greek word: ἰδέα (idea), meaning 'a form, or a pattern') is the results of thought. Also in philosophy, ideas can also be mental representational images of some object. Many philosophe ...
s, 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
tool A tool is an Physical object, object that can extend an individual's ability to modify features of the surrounding environment or help them accomplish a particular task. Although many Tool use by animals, animals use simple tools, only human bei ...
s, management can trigger and deploy the creative capabilities of the work force for the continuous development of an organization. Common tools include
brainstorming Brainstorming is a creativity technique in which a group of people interact to divergent thinking, suggest ideas spontaneously in response to a prompt. Stress is typically placed on the volume and variety of ideas, including ideas that may seem o ...
,
prototyping A prototype is an early sample, model, or release of a product built to test a concept or process. It is a term used in a variety of contexts, including semantics, design, electronics, and software programming. A prototype is generally used to ...
,
product lifecycle management In industry, product lifecycle management (PLM) is the process of managing the entire lifecycle of a product from its inception through the engineering, design, and manufacture, as well as the service and disposal of manufactured products. ...
, idea management,
design thinking Design thinking refers to the set of Cognition, cognitive, strategic and practical procedures used by designers in the process of designing, and to the body of knowledge that has been developed about how people reason when engaging with design prob ...
, TRIZ,
Phase–gate model A phase-gate process (also referred to as a waterfall process) is a project management technique in which an initiative or project (e.g., new product development, software development, process improvement, business change) is divided into dist ...
,
project management Project management is the process of supervising the work of a Project team, team to achieve all project goals within the given constraints. This information is usually described in project initiation documentation, project documentation, crea ...
,
product line In marketing jargon, product lining refers to the offering of several related product (business), products for individual sale. Unlike product bundling, where several products are combined into one group, which is then offered for sale as a uni ...
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 In Industry (economics), industry, product lifecycle management (PLM) is the process of managing the entire lifecycle of a product from its inception through the Product engineering, engineering, Product design, design, and Manufacturing, ma ...
of products or services is getting shorter because of increased competition and quicker time-to-market, forcing organisations to reduce their
time-to-market In commerce, time to market (TTM) is the length of time it takes from a product being conceived until its being available for sale. The reason that time to market is so important is that being late erodes the addressable market into which produ ...
. Innovation managers must therefore decrease development time, without sacrificing quality, and while 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 Joseph Alois Schumpeter (; February 8, 1883 – January 8, 1950) was an Austrian political economist. He served briefly as Finance Minister of Austria in 1919. In 1932, he emigrated to the United States to become a professor at Harvard Unive ...
, 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 Creative destruction (German: ''schöpferische Zerstörung'') is a concept in economics that describes a process in which new innovations replace and make obsolete older innovations. The concept is usually identified with the economist Josep ...
. 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 Brainstorming is a creativity technique in which a group of people interact to divergent thinking, suggest ideas spontaneously in response to a prompt. Stress is typically placed on the volume and variety of ideas, including ideas that may seem o ...
,
prototyping A prototype is an early sample, model, or release of a product built to test a concept or process. It is a term used in a variety of contexts, including semantics, design, electronics, and software programming. A prototype is generally used to ...
,
product lifecycle management In industry, product lifecycle management (PLM) is the process of managing the entire lifecycle of a product from its inception through the engineering, design, and manufacture, as well as the service and disposal of manufactured products. ...
, ideation, TRIZ,
Phase–gate model A phase-gate process (also referred to as a waterfall process) is a project management technique in which an initiative or project (e.g., new product development, software development, process improvement, business change) is divided into dist ...
,
project management Project management is the process of supervising the work of a Project team, team to achieve all project goals within the given constraints. This information is usually described in project initiation documentation, project documentation, crea ...
,
product line In marketing jargon, product lining refers to the offering of several related product (business), products for individual sale. Unlike product bundling, where several products are combined into one group, which is then offered for sale as a uni ...
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 Technological innovation is an extended concept of innovation. While innovation is a rather well-defined concept, it has a broad meaning to many people, and especially numerous understanding in the academic and business world. Innovation refers to ...
, 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 Technological change (TC) or technological development is the overall process of invention, innovation and diffusion of innovations, diffusion of technology or business process, processes.From ''The New Palgrave Dictionary otechnical change by S. ...
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 agreement A free trade agreement (FTA) or treaty is an agreement according to international law to form a free-trade area between the cooperating state (polity), states. There are two types of trade agreements: Bilateralism, bilateral and Multilateralism, m ...
s, 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 Sustainability is a social goal for people to co-exist on Earth over a long period of time. Definitions of this term are disputed and have varied with literature, context, and time. Sustainability usually has three dimensions (or pillars): env ...
transitions, particularly in managing the uncertainties that arise when shifting to more sustainable modes of production and consumption.
Business Model A business model describes how a Company, business organization creates, delivers, and captures value creation, value,''Business Model Generation'', Alexander Osterwalder, Yves Pigneur, Alan Smith, and 470 practitioners from 45 countries, self-pub ...
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 Open innovation is a term used to promote an Information Age mindset toward innovation that runs counter to the secrecy and silo mentality of traditional corporate research labs. The benefits and driving forces behind increased openness have b ...
, 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 knowledge economy, or knowledge-based economy, is an economic system in which the production of goods and services is based principally on knowledge-intensive activities that contribute to advancement in technical and scientific innovation. ...
). The advantage of using typologies is the easy integration of new methods and the availability of a broader scope of tools.


Innovation management typologies

''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 The theory of the firm consists of a number of economic theories that explain and predict the nature of the firm, company, or corporation, including its existence, behaviour, structure, and relationship to the market. Firms are key drivers in eco ...
. According to this theory, the optimal allocation of property rights helps to alleviate the
hold-up problem In economics, the hold-up problem is central to the theory of incomplete contracts, and shows the difficulty in writing complete contracts. A hold-up problem arises when two factors are present: # Parties to a future transaction must make non ...
(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

With the current innovation environment becoming increasingly competitive and costly, many corporate innovation managers are thinking about how AI can be applied to their companies' innovations. AI can provide a lot of auxiliary help, information management can be handled quickly, using AI to support the innovation process can reduce risk and cost, and bring more value to the company.


See also

* Collaborative innovation networka
social construct A social construct is any category or thing that is made real by convention or collective agreement. Socially constructed realities are contrasted with natural kinds, which exist independently of human behavior or beliefs. Simple examples of s ...
used to describe innovative teams * Design strategy *
Diffusion of innovations Diffusion of innovations is a theory that seeks to explain how, why, and at what rate new ideas and technology spread. The theory was popularized by Everett Rogers in his book ''Diffusion of Innovations'', first published in 1962. Rogers argue ...
a theory that seeks to explain how, why, and at what rate new ideas and technology spread through cultures * Frugal innovationprocess of reducing the complexity and cost of a good and its production * Ideas bankshared resource, usually a website, where people post, exchange, discuss, and polish new ideas *
Open innovation Open innovation is a term used to promote an Information Age mindset toward innovation that runs counter to the secrecy and silo mentality of traditional corporate research labs. The benefits and driving forces behind increased openness have b ...
a paradigm that assumes that organizations can and should use external ideas as well as internal ideas * Pro-innovation biasthe belief that an innovation should be adopted by whole society without the need of its alteration *
Technology forecasting Technology forecasting attempts to predict the future characteristics of useful technological machines, procedures or wikt:technique, techniques. Researchers create technology forecasts based on past experience and current technological developmen ...
the prediction of future characteristics of useful technological machines, procedures or techniques * Technology scoutinga method of technology forecasting


References


Further reading

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