Introduction
In the modern society, organisations receive numerous ideas from suppliers, employees, customers, and other corporations. Nonetheless, these organisations often do not realise the innovative potential of these ideas because of inappropriate management of such ideas. Based on this, innovating is no longer an option, but an organisational imperative in pursuit of competitive advantage. According to this obligatory imperative, organisations need to have critical strategic directions for the management of the innovation activities. Innovation is a critical component of the competitiveness of the organisations in the industrial contexts. Business entities such as Coca-Cola, McDonalds’, Walmart, and Costco among others use the concept of innovation to develop desirable new products and services with the intention of winning new customers while strengthening the loyalty of the existing consumers.
Innovation management creates the platform for the evaluation and management of the innovation processes through integration of the qualitative and quantitative theories and tools for the business entities to be more innovative. Notably, innovation management relates to various topics such as entrepreneurship, open innovation, business intelligence, and strategic management, as well as new product development. The objective of this comprehensive essay is to summarize and academically discuss various, but related topics in the course.
Reviewing Innovation Management
Open Innovation
One of the thematic issues in this course is the open innovation. Other researchers have been able to conceptualize open innovation as the external or networked innovation aimed at uncovering new ideas, minimising risks, speeding, and leveraging the scarce resources. Open innovation provides the platform for the extraction of the valuable ideas from inside and outside the company or industry. From this perspective, open innovation creates the chance for the organisation to go to the market from outside or inside the company (Vossen, 1998). From a definitional perspective, open innovation relates to the use of the purposive inflows, as well as outflows of knowledge to facilitate acceleration of the internal innovation. Additionally, open innovation enables the expansion of the markets for the external exploitation of the innovation. The paradigm depends on the perceptions that firms need and should optimise external ideas and internal values about the internal and external paths to reach consumers with the innovative products and services as they advance their technology.
Open innovation has various benefits for the firms in the highly competitive industries. For instance, open innovation contributes to the reduction of the costs of executing research and development by the needs and expectations of the consumers. Moreover, open innovation creates the opportunity for the improvement in the development productivity while incorporating consumers in the development processes in optimising outputs of the innovative products and services in the market and industry of operation (Aalbers & Dolfsma, 2015). Firms also have the opportunity to use open innovation in increasing accuracy for the various market research practices and targeting of the consumer segments. It is also possible to use the essence of open innovation in the exploitation of the viral marketing in the midst of the increased influence of social media platforms.
Alternatively, there are shortcomings or challenges to the concept of open innovation. For example, there are high chances of the organisations revealing information they do not intend to share with the audience. Furthermore, the hosting organisations might lose the desirable competitive advantage as an implication of revealing the intellectual property. There might be numerous complexities in controlling innovation, as well as managing the influence of the contributors to affect the product development processes. There are also challenges in devising the practices for proper identification and incorporation of the external innovation. Finally, firms might find it challenging in the process of realigning the innovation strategies to facilitate optimisation of the return from the external innovation practices.
Collaboration
Another critical theme, which relates to open innovation, is collaboration, especially among organisations to oversee the achievement of the different goals and objectives in highly competitive industries. In the globalised economy, collaboration is becoming a vital approach for the optimisation of the innovative activities and practices. The intriguing question is why organisations collaborate? One of the reasons for collaboration is to aid acquisition as a vital competitive tool in the expansion of the market reach and optimisation of the profit levels at the end of each operational period. Additionally, organisations collaborate to increase the speed at which they offer quality and innovative services, as well as products to the consumers. Firms also collaborate as a way of sharing risks based on the strategies to enter new markets.
Collaboration enables small organisations to acquire others in attempts to increase the level of competition. Besides, collaboration is a specialisation tool enabling firms to engage in the accumulation of knowledge through targeted market research and consumer segmentation. Collaboration is a perfect tool for the organisations to co-opt in attempts to minimise or block intensive competition in the industry of operation. Categorically, collaboration provides the opportunity for the organisations to maximise the complementary resources while enhancing competencies concerning the innovative practices.
Upon deciding to collaborate, what are the strategies, which organisations can use to achieve this innovative practice? One of the strategies for collaboration is an acquisition in which an organisation decides to procure another organisation in the similar or different line of production with the objective of optimizing revenues or entering new markets, as well as blocking competition (Schilling, 2016). Additionally, organisations might decide to collaborate through a merger, thus, incorporating best practices from each organisation in the development of a highly competitive unit in addressing the needs and expectations of the consumers.
Similarly, business entities might use the joint venture approach, as well as the joint product development mechanism as collaborative tools. Other strategies for collaboration include R&D partnership, license, alliance, information sharing, and market contract. These practices have enormous implications on the performance of the organisations concerning the expertise of the employees and available resources in the achievement of the set goals and targets. Notably, collaboration is one of the innovation management practices enabling knowledge sharing or interactions among the firms to oversee realisation of competitive advantage.
Innovation Strategy
Innovation reflects the outcome of the deliberate use of information, initiative, and imagination. Based on this illustration, it is possible to conceptualize innovation as a process, an outcome, and a capability. For various corporations, innovation is a critical strategy enabling the growth of the market share and profits through innovative products and services. In the process of creating the solution to the organisational issues, it is vital for the innovation strategy to indicate the product improvement, as well as the disruptive or breakthrough innovation approach at its best (Dolfsma, 2004). As a strategy, innovation contributes to the reduction of the wastes and environmental damage through enhanced efficiency in the delivery of quality services and products. Additionally, innovation generates growth, increased productivity, and economic wealth, thus, the opportunity to enable firms to overcome or avoid the issue of stagnation. In certain instances, innovation contributes to the provision of the better products and services at reduced costs while contributing to a higher standard of living. Innovation also makes it fascinating for the employees to engage in the projects in the creation of new products and services about the ever-changing needs and expectations of the consumers.
Innovation strategy provides the platform for the organisations to engage in the selection of the technologies at their disposal in the optimisation of the aspect of specialization. The concept of innovation strategy translates to the state-of-the-art in the selected technologies in the creation of the desired competitive advantage. In the process of using innovation as a strategy, business entities focus on the determination of the extent of developing or sourcing technology internally or externally respectively in pursuit of competitive advantage (Utterback & Abernathy, 1975). Innovation strategy also translates to the level of investment in the R&D as a tool for the maximisation of the revenues through using informed strategies in the development of the quality products and services at the disposal of the consumers.
Organisations tend to consider centralisation or decentralisation of the R&D to enable collaboration or knowledge sharing depending on the needs and perceptions of the consumers in the market and industry of operation (Pisano & Teece, 2007). Notably, innovation strategy calls for the increased focus on the basic research, applied research, and development in satisfying the needs and expectations of the consumers. Innovation strategy also relates to the practices, which organisations use in the integration of the profit from the developed innovations or commercialization.
Types of Innovation
There are various types of innovation, which organisations can use or adopt in the achievement of competitive advantage. One of the perfect illustrations of the types of innovation is the product innovation. This relates to the creation, as well as the introduction of a new product in an existing market. For example, iPad is a reflection of the product innovation by the Apple firm aiming at the optimisation of the available resources in addressing the needs and expectations of the consumers. Secondly, there is the service innovation, which translates to the creation or introduction of the new service into the market. For instance, in the banking industry, integration of the mobile or telephone banking has been a valuable illustration of the service innovation enabling organisations to achieve competitive advantage.
Thirdly, there is the process innovation. Process innovation entails the creation of the new or improved mechanism for the production, as well as delivery. For example, in the case of Ford, the institution focused on the utilisation of the process innovation in its assembly line in the manufacturing of the automobiles. There is also the incremental innovation, which aims at the extension of the prior innovations (Seely Brown & Duguid, 1991). One of the perfect illustrations of this innovation is the approach by Microsoft to adopt Windows Vista in replacing Windows XP.
Moreover, the modern integration of the small mobile phones to replace the larger mobile phones highlights the incremental innovation. Finally, there is the radical innovation. Radical innovation highlights the presence of new or different innovations from the ones that are in place. For example, the adoption of the first mobile phone is a reflection of the radical innovation. Business entities have the opportunity to select the most appropriate innovation approach depending on their expectations, goals, and needs of the consumers following the outcome of the market research.
Firm Size vs. Innovation
Researchers have been able to ascertain that innovative input, especially R&D investment, tends to increase with scale. Nonetheless, in relation to the innovative outcomes, small firms tend to be more productive in comparison to the large or big firms in the industrial contexts. Large firms tend to prefer various strategies for innovation. For instance, in different contexts, large organisations prefer the optimisation of the incremental R&D innovation in the achievement of the desired goals and targets. On the other hand, there are large firms focusing on the use of the process R&D with the objective of increasing the existing output. The approach also enables such large firms to engage in the optimisation of the product innovation depending on the sales to the new customers. Large firms invest in the basic research with the intention of broadening the technological base, as well as widening the range of the products.
For the small firms, innovation is more efficient because of the little bureaucracy, as well as an opportunity for the rapid decision-making in relation to the needs and expectations of the consumers in the highly competitive industries. Additionally, management of such small firms are always motivated and committed to initiate and oversee innovation in the midst of the motivated labour. From this perspective, such organisations tend to optimise the rapid and effective internal communication as evident in the shorter decision chains in spite of the numerous risks (Clark & Wheelwright, 1992). Alternatively, in the case of large firms, innovation associates with the formal management skills to oversee substantive control of the complex institutions. Large organisations also have the opportunity to oversee spreading of the risks across the portfolio of the products. This is evident in the approach by the large institutions to optimise the economies of scale and scope as evident in the R&D to learn about the needs and expectations of the consumers.
Theme of Choice: Innovation Stage-Gate Model
There are various innovation models, which organisations use in the optimisation of their resources and management commitment. One of the critical models is the innovation stage-gate model, which will form the basis of this discussion about the two research articles on the topic. The objective of this model is to oversee selection and transformation of the organisation’s best new ideas into the new winning products. Notably, the stage-gate approach or model is essential in enabling the systematic screening, monitoring, and progression of the NPD process.
The Stage-Gate from Robert Cooper is an innovation model, which is essential in the enhancing effectiveness of the product development process. The model incorporates five critical phases. The model is preceded by the discovery stage, which tends to appear in the later version of the model. The model incorporates pre-work aspects designed to oversee the discovery of the opportunities in the generation of the new ideas in the innovation process.
In the first phase, there is scoping. Scoping refers to the integration of the quick, as well as preliminary assessment or investigation of the potential projects. The approach uses this phase in the provision of inexpensive information through desk research in enabling narrowing of the number of projects for effectiveness and efficiency in the execution of the innovation practices.
In the second phase, there is the building of the business case. The phase contributes to the creation of the opportunity for the detailed investigation or research. In the achievement of this detailed investigation, the research must focus on the optimisation of the primary marketing and technical research. It is obligatory for the business case to include the product definition, justification of the product, and the project plan.
In the third phase, the model highlights the essence of development. This relates to the detailed design and development of the new product aimed at addressing the needs and expectations of the consumers in the market and industry of operation. The phase also incorporates the production plan, as well as the market launch plan with the objective of enhancing effectiveness and efficiency in the innovation practices.
In the fourth phase, there is the testing and validation of the practices towards the development of the new products by the demands and expectations of the consumers. In this phase, the organisations need to engage in the extensive product tests both in the marketplace, lab, and plant or factory in relation to the production of the new products in accordance with the needs and expectations of the consumers.
Finally, there is the launch phase. This phase provides the platform for the beginning of the full production, marketing, and selling of the products. The phase also associates with the market launch, production/operations, quality assurance, and distribution. It is also essential for the organisations to engage in the execution of the post-launch reviews in the achievement of the desired competitiveness and efficiency in the highly competitive industries. In reality, it is valuable for the organisations to engage in the necessary drilling down further into various sub-activities in the provision of the detailed, as well as operational instructions for the innovation team and practices.
Researchers have been able to document the benefits and weaknesses of the Stage-Gate model in relation to innovation. One of the benefits of this model is the essence of being a well-organised mechanism for the innovation, thus, the platform for the organisations to optimise the resources in the realisation of the competitive advantage. Additionally, the model plays a critical role in accelerating the product development, which is necessary for the shortening product life cycles. Moreover, the model creates the opportunity for the increased success chance regarding the new products at the disposal of the consumers.
In this context, the approach is essential in the prevention of the poor projects early while redirecting the innovation team to address the gaps identified through the market research. Similarly, the model is ideal for breaking down the complexities of the innovation process, particularly in the large corporations into smaller pieces for easier conceptualization. Besides, the model is critical as an integrated market-orientation enabling the firm to generate overview for the prioritization and focus in relation to the needs of the consumers. It is possible for the organisations to use the model in the presence of other performance metrics.
Nonetheless, there are various shortcomings of the model for the innovation practices. Certain researchers believe that the model is sequential in relation to the stage activities, which can be conducted in parallel (Stosic & Milutinovic, 2014). Some of the experts believe that the product development should be organized in the parallel using the loops. In their article, Stosic & Milutinovic (2014) focused on the exploration of the potentialities or possibilities of opening up the Stage-Gate model based on the opening up of the new product development process. The article clearly identifies the tendency of the authors and leaders of various companies to talk about the improvement of the innovation performance with the objective of delivering sustainable growth and significant competitive differentiation.
However, it is essential to note that gaining or realisation of the competitive advantage through the provision of new product/service is not easy based on the volume of investment business entities and corporations have to deal with in their operations. The article identifies innovation as a critical driver for strengthening competitiveness (Stosic & Milutinovic, 2014). From this perspective, fostering innovation has been one of the critical priorities for every company striving to be the leader in the highly competitive industries. In the globalised economy, innovation is a central aspect of the knowledge-driven economy in the midst of the increased use of ICT in addressing the needs and expectations of the consumers.
Organisations tend to use the innovation processes in relation to the commercialisation of the products and services. The article highlights the influence of the Cooper’s Stage-Gate model to divide the product innovation process into various stages or parallel activities and gates (decision-points between the identified stages). The model incorporates the desired flexibility, fuzzy, facilitation, fluidity, focus, and forever green. These aspects are essential in making the model less rigid, thus, enabling scaling of the various size projects while providing the opportunity to the stages to overlap and undergo conditional approval (Stosic & Milutinovic, 2014).
The Stage-Gate model provides the platform for the organisations to optimise the business processes in the creation of value. The model is designed for the quick, as well as the profitable transformation of the organisational best ideas into the new products and services in accordance with the expectations of the consumers in the market and industry of operation (Stosic & Milutinovic, 2014). Moreover, the model is ideal for the creation of the operational and conceptual roadmap for the driving of the new product development from the ideas to launch. The approach decomposes innovation process in the various phases comprising of the planned, multifunctional, and parallel activities.
Conclusion
Conclusively, innovation management is one of the critical issues, which organisations must invest in to acquire competitive advantage in the highly competitive industries. In this essay, the focus was on reviewing various, but, related topics in this course. The essay focused on the innovation strategy, collaboration, open innovation, firm size/innovation, and types of innovation as related themes in the topics discussed in this course. Additionally, the essay seeks to explore innovation model with an enhanced focus on the Stage-Gate model as one of the common approaches enabling organisations to create value in pursuit of competitive advantage. Based on the findings of this essay, innovation management is no longer an option, but an imperative for the organisations seeking to optimise revenues and profit levels at the end of each operational period.