Contextual Innovation Management

Adapting Innovation Processes to Different Situations

Patrick van der Duin, Roland Ortt

• Publisher: Routledge
• Year: 2020
• ISBN:
  9781317417224
• Edition: 1
• Topic: Business
• Subtopic: Business generale
• Index: Business

Innovation has a pivotal role for companies in attaining business survival but making an organization innovative is not straightforward. By determining contextual factors, managers can help decide how to employ a portfolio of innovation management processes.

This book explores how contingency influence the management of innovation. Taking the perspective of innovation managers, the authors focus on the decision-making process to demonstrate that different approaches are required depending on the business context. In breaking the process into three levels (culture, industry and company), the book helps choose an optimal innovative approach.

With references to real-world innovation cases and organizations, this book will prove useful reading for students and researchers in the field of innovation studies and management.

1 Generations of Innovation Management

Innovations have changed our society and society has shaped innovations in an evolutionary process. And just as society and innovations have changed each other, the practice of innovation, i.e., the innovation process, has also changed considerably. In a simplification one could recognize four separate generations in innovation management after the Second World War: 1) technology/science push; 2) market pull; 3) combination of science/technology push and market pull; and 4) networked innovation. This change of the innovation process is indeed evolutionary: each generation is both a general improvement of the previous generation and an adaptation to the changing societal and economic context.

The four subsequent generations indicate the vision that a dominant kind of innovation process can be distinguished in each period. But we think that this vision does not hold; different approaches to innovation management have always coexisted. Even if there would be a dominant approach to innovation, innovative organizations or networks of innovative organizations design the innovation process that fits their context. Sometimes an approach to innovation is adopted that resembles the dominant approach in the first generation, sometimes an approach of one of the later generations is adopted. This statement implies that it is of paramount importance to know the relevant factors in the context, and how they relate to the choice to design a particular innovation process.

1.1 Introduction

Human beings have always created new tools, technologies, products, and services. They have designed and implemented new working processes and production processes and envisioned new types of organizations. Innovations have pervaded society and conversely, have been shaped by society. The way we organize or manage innovation processes has also evolved over time. To put it differently: we have innovated the innovation process over time. Indeed, philosopher Alfred Whitehead once said that the greatest invention of 19th century was the invention of the method of invention, to which Burns and Stalker add that the 20th century was “to organize inventiveness” (1961, p. 22). Perhaps the 21st century will be about organizing, managing, or innovating the innovation process. This chapter provides an overview of the changes in innovation management in large companies during the last seventy years. We will distinguish four different generations in innovation management.

Different terms are used to indicate our focus of attention: generations of subsequent innovation processes (e.g., Rothwell, 1994), new product development processes (e.g., Cooper, 1994; Page, 1994; Griffin, 1997), innovation management approaches (e.g., Miller, 2001) and R&D management approaches (e.g., Niosi, 1999; Liyanage et al., 1999). Before moving on, we briefly define the relevant terms to indicate their relationship.

An invention is an idea that can be demonstrated in a prototype or as a working principle and an innovation is defined as a new product, service, or process that can be marketed or implemented (Utterback and Brown, 1972; Weiss and Birnbaum, 1989). An invention can be turned into an innovation when the prototype or working principle is turned into a new product, service or process. Here we consider an innovation as “new-to-the-company” because this type of newness requires an innovation process. The time between the invention and the first introduction of an innovation based on this invention can last long, much longer than the time required for a single innovation process (Ortt, 2010). In practice different organizations tend to develop similar innovations and hence various parallel innovation processes may shape the overall innovation process. Furthermore, it is shown that after an invention, the development of an innovation may be delayed or postponed for various reasons such as a lack of funding or no sense of urgency to develop the innovation (Van de Ven et al., 2008; Markham et al., 2010).

An innovation process describes the various stages in which an innovation is developed and the main activities that are performed at each stage. Invention processes are often different from innovation processes in that inventions can be serendipitous (Halacy, 1967; Van Andel, 1992) and invention processes are therefore less easy to plan than innovation processes. Innovation management refers to the governance and organization of the innovation process. Although the meaning of R&D management and that of innovation management to some extent overlap, that does not mean they are interchangeable. On the one hand, R&D management can be considered a broader term than innovation management, since it contains invention as well as innovation processes. On the other hand, R&D management usually focuses on a specific approach to innovation management in large companies and as such innovation management can be considered the broader of the two terms.

1.2 Finding Generations of Innovation Management

Innovation management has changed over time and it appears that every timeframe has its own notions of what successful or best practices are. We provide a historical account of the development of innovation management after WOII by describing four generations of innovation management and their organizational and societal context, including the advantages and disadvantages of the various generations. These so-called innovation management generations are descriptions “of what constitutes the dominant model of best practice” (Rothwell, 1994, p. 23). We carried out four steps: 1) Finding sources that describe generations of innovation management; 2) comparing the number of generations; 3) comparing the timing of the generations; 4) choosing the aspects that will be described for each generation.

Finding Sources

The main developments in innovation management are discussed in various areas of scientific literature. First, they are discussed in the literature about trends and developments in innovation (e.g. Gupta and Wilemon, 1996; Ortt and Smits, 2006; Smits and Kuhlmann, 2004; Wind and Mahajan, 1997). Second, they are assessed in large-scale empirical research projects focusing on new product development practices (e.g. Page, 1994; Griffin, 1997). Third, they are discussed in the literature about R&D and innovation management generations (e.g. Amidon Rogers, 1996; Cooper, 1994; Liyanage et al., 1999; Miller, 2001; Niosi, 1999; Rothwell, 1994; Roussel et al., 1991).

Comparing the Number of Generations

In the literature on generations, different authors have identified different numbers of generations. Both Rothwell (1994) and Amidon Rogers (1996) distinguish five generations, Yakhlef (2005) six generations, whereas Miller (2001), Liyanage et al. (1999), and Niosi (1999) identify four generations, and Cooper (1994) three. In this chapter, we use a framework of four generations, because we believe that the alleged “fifth and sixth generations” are merely an implementation of the fourth generation, a view that Rothwell (1994), one of the authors distinguishing a fifth generation, shares: “The development of 5G is essentially a development of the 4G (parallel, integrated) process” (Rothwell, 1994).

Comparing the Timing of Generations

There is also variation with regard to the timing of the various generations, in some cases more than a decade. Miller (2001), for example, places the second generation between 1950 and 1985, whereas Niosi (1999) places the same generation between the early 1960s and the early 1970s. Although it is not always clear how the various authors arrived at their verdict, the main idea is to indicate when a specific innovation management approach was considered to be the dominant (i.e., most commonly applied) best practice model. We adopt a different procedure by using hallmarks in the societal context to establish when a specific generation prevailed. Thus, we place the first generation between the end of the Second World War and the mid-1960s (see also: Godin, 2006). In the mid-1960s, a broad awareness emerged about the potentially negative societal effects of technology (Hughes, 1975). We place the second generation between the mid-1960s and the late 1970s. The late 1970s saw a recession that had a major impact on the resources that were allocated by companies and governmental organizations to innovation. We place the third generation between the late 1970s and the early 1990s, at which point the Internet made its commercial presence felt. The Internet has played a crucial role in people’s and organizations’ ability to cooperate at a distance and it has further stimulated the emergence of a truly global economy. The fourth generation started in the early 1990s and it was the dominant approach for more than a decade. However, nowadays we think different approaches are adopted next to each other, depending on the requirements of the context. We believe that the emergence of ever-newer generations of dominant innovation management approaches has come to an end.

Choosing the Aspects to Describe Generations

For each of the generations we focus on different aspects. We look at the structure and organization of the innovation process as a project, we track the structure of the typical organization within which the process was organized, and we summarize some of the main market and societal developments with an impact on companies in general and their innovation process in particular.

1.3 The Generations of Innovation Management

With the emergence of the first R&D departments in the late 19th century, innovation in large companies changed. These departments were based on the notion that scientific research was an important prerequisite for successful innovation. As a result, some of the large companies integrated basic research, applied research, and development efforts (Bassala, 2001; Niosi, 1999; Chiesa, 2001). Later many companies outsourced their basic research activities to universities or specialized research companies. Although the applied research activities and development efforts have remained an important element in innovation, they have become more separated in many companies. Research usually has remained a central corporate activity and development is re-allocated to different business units (Chiesa, 2001). But, that division is based on a separation between deliberate research and invention activities on the one hand and development and innovation activities on the other hand, a division that does not take inventions into account that appear while working on development of innovation or while solving practical issues. Rosenberg (1982), for example, shows how many fundamental inventions and basic research notions appeared while solving practical issues.

Niosi (1999, p. 117) provides a concise description of the successive generations reflecting the evolution of innovation management from the 1950s:

The first generation brought the corporate R&D laboratory. The second generation adapted project management methods to R&D. The third brought internal collaboration between different functions in the firm. The fourth adds routines designed to make more flexible the conduct of the R&D function through the incorporation of the knowledge of users and competitors.

The First Generation

From the late 19th century up to the mid-1960s, social attitudes toward scientific advance and technological innovation were generally favorable. Achievements in science and technology were thought to reflect the power of the countries and were displayed from the 19th century on, at World Exhibitions.

Inventors were worshipped like heroes (Noble, 1980). Technological developments were primarily driven by scientific progress, and they were expected to solve society’s main problems (Rothwell, 1994; Roussel et al., 1991). After the Second World War, governments stimulated technological innovation, very much inspired by Vannevar Bush’s publication Science: The endless frontier (1945) (Godin, 2006). From the Second World War until 1985, the US government, for example, spent more money on R&D than the complete US industrial sector (Chesbrough, 2003). Governments did so for a number of reasons. First, technological innovation was needed for military purposes. The Cold War demanded technological leadership. Second, technological innovation formed the heart of new and renewed industries (Ortt and Smits, 2006). Partly as a result of technological progress, economic conditions flourished after the Second World War. Consumer demand exceeded supply. These social developments were reflected in the strategy and structure of organizations. Companies were often technology oriented; they focused on innovation and growth and they usually adopted a functional structure.

The societal and organizational context had a direct effect on the ideas about innovation management. Innovation was primarily seen as science and technology driven. In fact, the corporate R&D-labs were based on the notion that invention and innovation processes had to be integrated. These labs were organized like traditional universities, in mono-disciplinary departments (Roussel et al., 1991). They were regarded as large staff departments tied to and funded by the headquarters of organizations to grant them the freedom that was thought to be necessary to develop breakthrough technologies. In general, the structure of innovation processes was linear-sequential and of a technology push nature. In the course of the innovation process, an innovation was managed by various departments that ...