The innovation process is a complex thing. Between the creation of ideas, the development of innovations and its implementation, there is a number of intermediate stages. They are mainly management aspects. Although the importance of innovation management can hardly be overestimated, often those responsible for it tear their hair not knowing what to do. A fundamentally wrong approach! This, of course, is about creating something new, the process by which this creation takes place is known, although not standardized, but is a combination of different approaches. In this article, we will help you figure out how to build a successful innovation management process and what will it cost?
Let's dwell into innovation management step by step
Innovation management refers to the progress of the innovation process - from trend analysis, brainstorming and generating ideas at an early stage of innovation to the successful implementation of a new product or service.
Innovation management is based on the following key points:
- Search for an idea.
- Organization of the innovation process.
- Process of implementing and promoting innovation in the market.
Everything seems to be clear. Let’s move on. In order to organize the process of innovation management at the micro level, it is necessary to:
- adapt the goals of innovation management in accordance with general business goals (for example, to develop a qualitatively new product for capturing a specific market segment);
- identify your competitive advantages (for example, qualified development staff) and weaknesses (weak investment base, etc.; well, you probably know better about your sore spots);
- determine the methods of innovation management (analytical, experimental, forecasting, economic, socio-psychological, administrative, etc);
- build an innovation management mechanism.
The last point is the most important and, therefore, let’s take a closer look at it. So, the innovation management mechanism consists of the following elements:
- forecasting innovation;
- innovation planning;
- analysis of the situation;
- identification of the need for innovation;
- development and coordination of management decisions;
- implementation management;
- verification and evaluation of results.
We hope you are still here. That's how the whole thing works. And yes, we understand that it looks quite complicated, but management is what it is, it should consist of clear, structured and consistent steps that will ultimately lead the entire enterprise to success. Alright, let's move on from theory to practice. We could add some hackneyed tips here how to build a successful innovation management process, but we are convinced that other’s mistakes are the best teachers.
Common mistakes in innovation management process development
Strategic mistakes: the bar is too high, the borders are too narrow
Each leader dreams of an innovative hit - the new iPod or the Toyota production system. And although such successes are rare and unpredictable, companies spend crazy money looking for another miracle. But in the pursuit of sensation, managers sometimes reject ideas that seem at first glance too modest, and employees who are not involved in large projects feel underestimated.
An example of such an error is the situation with Time Incorporated, a magazine division of Time Warner, which did not dare to launch new editions. The management set the bar too high: if you are going to invest, then do it into something like People or Sports Illustrated, the company's legendary successful projects. Until 1992, when Don Logan became in charge, almost no new magazines were published. After Logan proposed a new innovative strategy, the division created (or bought) about 100 magazines, repeatedly increasing its income and profits.
Solution: Expand your searches
Companies can develop an innovative strategy that will provide them with support on the so-called innovation pyramid. At the top, there are several large projects that the company is betting on. They set the direction for future development and receive the great share of funding. Next is a set of promising ideas of medium caliber, they are developed and tested by teams created for this purpose. And finally, a wide range of ideas and innovations are not yet developed, involving the gradual improvement of products.
Organizational mistakes: management is too tight
Another variation of the classic mistakes is related to the management system: companies strive to apply the same leverage to innovative projects as to a mature business - planning, budget, reports - and thus strangle them. Uncertainty is an integral feature of innovation, so deviations and unexpected turns are inevitable here.
In 2000, the engineering and aerospace company Allied Signal (now part of Honeywell) decided to start developing new web applications and Internet services, but at the same time it acted in the old fashion - following the accepted strategic planning and budget approval procedures. The CEO asked units to include their best Internet ideas on the budget agenda of quarterly meetings. Although innovative projects were considered priority, they were calculated in the same way as current ones, and the budgets did not provide for additional funds that could be invested in the development of new products. The managers of new projects had to find money themselves - mainly due to savings or internal redistribution of funds. As a result, innovation activity has been reduced for the most part to the improvement of ideas that have already been exploited in one way or another.
Solution: make planning and control more flexible. One of the ways to ensure that innovation can be actively developed without prejudice to the approved plans and budget is to leave reserve funds for unforeseen expenses. In this case, innovators will not have to put long-term ideas in a long box and wait for the next budget formation procedure or go begging to the "big" leaders.
Structural errors: few in common, lots of differences
Not only can you not impose the rules of the parent company on a barely fledged unit, but in order to avoid a clash of corporate cultures and a conflict of priorities, you need to pursue a policy of peaceful coexistence competently building the relationship between the two structures.
Worst of all, when a company creates a division whose activities are in no way connected with its core business but does not give it free rein. This classic mistake was made by General Motors when it founded Saturn, an autonomous company for the production of low-cost compact cars. Saturn had the right to disobey GM rules for some time. The new team was given full scope for creativity in the areas of development, production, marketing, sales and customer service. This was done in the expectation that GM would then adopt the best ideas of the new company. But instead, Saturn, after its successful launch, was merged with GM, and many innovative solutions remained on paper.
Solution: establish cooperation between the main company and the new division. In order for innovations to develop, companies need not only to weaken official supervision, but also to establish closer contacts between participants in innovation projects and all other employees. It is important that the innovators and leaders of the parent company meet regularly and have fruitful discussions. Maintaining external relations should be one of the responsibilities of innovation groups but the “main” leaders should stimulate cooperation so that there is not only friction and antagonism between them and innovators but, on the contrary, mutual respect is strengthened.
Personnel errors: poor management, poor awareness
Underestimation of the human factor and insufficient attention to it are also from the category of typical errors. Very often, top managers entrust the fate of innovation not to the best managers but to the best technical specialists. Technician bosses mistakenly believe that good ideas speak for themselves and do not consider it necessary to spend time on “conversations”. Or they are sure that the main thing is to set a task for the team, and it is not their business to take care of the team itself and the relationships in it. Thus, they miss the opportunity to rally people psychologically which is necessary to turn raw ideas into useful innovations.
Solution: Choose leaders and encourage collaboration. Those companies that value and develop organizational skills of employees are more likely to create outstanding innovations. Williams-Sonoma quickly succeeded in e-commerce, partly because it paid a lot of attention to people. The new leader understood the importance of good relations and, therefore, invited employees from different departments to join his team so that they could maintain contacts with former colleagues; in addition, he hired people from the outside who knew what they did not know how to do.
We hope you’ve read to this place and now are full of the feeling that the last 5 minutes of your life were not in vain. In the end, let us mention that innovation is a specific management object that requires significant investment, qualified scientific and technical personnel, and large-scale marketing events. Thus, to manage innovation, a systematic approach is needed that defines the interconnections and interdependence between company departments. At the same time, do not forget that it is not necessary to keep all of the above specialists in the state. Outsourcing is always at your service. Read more about why outsourcing is a cool idea here.