The importance of innovation management in business
In a constantly changing commercial world, the challenge is to not be left behind. Gaining and sustaining a competitive edge is key to thriving in today’s global marketplace. Innovation management has become an essential component in navigating this increasingly complex and international business environment.
What is innovation management?
Applied to business, innovation is all about generating new ways of solving problems, using different models, theories and frameworks. It is a creative process which uses techniques such as brainstorming and prototyping, and plays a critical role in the design thinking process.
There are as many ways to innovate as there are problems to solve. The goal is either to introduce new or improved products or services to gain competitive advantage. By developing a sustainable and ongoing innovation process, a company’s brand image and advancement is set on an upward trajectory.
How innovation management happens
Coming up with innovative ideas, products and services is directly down to the pool of talent available in the workforce. Traditionally, companies would generate ideas in-house, but many are now turning to open innovation. This refers to companies and organisations working with external agencies such as academic and research institutions, suppliers and clients. It fosters a working model very different from the traditional one, but is advantageous to all parties.
Initiatives are carried out by an organisation, with the aim to identify and create new business openings through:
- generating ideas
- exploring future areas of growth
- modelling products and services
- experimenting and testing new concepts.
Not everything needs to start from scratch. Many existing products or services may already work well, and simply need to be approached differently – for example, through adaptation and modification.
Successful innovation in business relies on certain criteria, including:
- Business models. Your company must be flexible enough to rethink the business and find new revenue streams. Companies may resist looking at new ways of managing existing systems and operations. However, actively challenging current and long-held assumptions is important in order to discover potential opportunities.
- Employee engagement. The human resources element available to businesses is invaluable. By tapping innovative ideas directly from the workforce, and engaging employees in showcasing skills and knowledge, ideation and innovation can be disseminated to everyone’s benefit.
- Use of technology. Most of us have accepted the seamless integration of technological innovation in our professional lives. Although not every innovative idea will involve costly technological input and outlay, in today’s global, fast-moving market many will. Much of the world’s commercial thrust is reliant on the acquisition of data and knowledge. Google, for example, invests heavily in managing the innovation process.
- Marketing. Brand awareness and visibility is a vital part of a company’s profile. There is no point in developing or producing a product or service if people are unaware of it. Marketing is one of the major factors in driving international sales and profitability.
Key aspects of innovation management
Different types of innovation have been identified within the innovation management process:
- Incremental innovation. As its name suggests, in this strategy an existing product or service is subject to continual improvement and updates. Although such changes may be small or large, they still require defined methodologies and strategies to ensure continuous improvement. Starting out with its prototype in the early twentieth-century, Gillette is a high-profile brand which continually upgrades its razors with new features while retaining its core design. Likewise, in the current mobile phone market, innovation is delivered through frequent small updates to software.
- Disruptive innovation. This occurs when product development results in a paradigm shift which has a radical impact on a business market. It can take a long time to get to the creation stage – often months and years in planning and execution. A great deal of project management, research, testing and evaluation is required. A classic example of disruptive innovation is demonstrated by Apple. When the iPhone was introduced in June 2007, it was an instant global success. It wasn’t the first mobile phone, but it overtook the existing competition and effectively launched the smartphone revolution.
- Architectural innovation. Introduced by Professor Rebecca Henderson and Dean Kim Clark of Harvard Business School in 1990, architectural innovation involves reconfiguring components of in-use products or services. Whether seeking a new target audience, or adding value to the existing market, it makes changes without radically altering either technologies or parts. As with the other innovation strategies, alterations must be questioned, evaluated and tested to determine whether clients and customers would value any changes.
- Major innovation. This business process is arguably the ultimate in achievement: it seeks to introduce a brand new sector or industry. Inventions such as the printing press, the telephone and the internal combustion engine have literally changed the world. Forbes has listed some of the top innovation companies in recent times. All are focused on attaining the pinnacle in terms of product and service procurement.
Ways of participating in innovation management
Opportunities in innovation culture are limitless; global trade, marketing and sales continue to grow exponentially. The sector is populated not only with more ‘traditional’ business models – small or large organisations with employees – but also attracts those who are motivated by entrepreneurship and prefer to set up start-ups.
Global commerce both fosters and demands cross-cultural management and organisation. Awareness and servicing of contemporary issues in international business requires professionals with the knowledge and skill set to tackle any and all situations. Areas of interest may include:
- Providing consultancy services
- Sourcing new business and sales
- Forming partnerships with external organisations using open innovation
- Working with stakeholders, including shareholders, customers, suppliers and employees
- Dealing with legal matters such as intellectual property and ethical concerns
- Portfolio management
Choosing the right course for you
Gain the qualifications to help you succeed in the international business sector with the University of York’s online MSc International Business Leadership and Management programme. All practical information regarding the MSc programme – such as modules, topics, entry requirements, tuition fees and English language qualifications – can be found on our course page.