Innovation can be managed similar to organizational processes like quality initiatives, safety programs, and mergers. Yet, when organizations desire to become more innovative, they seem to move forward in a haphazard way.
Rita McGrath, in The End of Competitive Advantage, argues that a proficiency in managing every aspect of an innovation system is required as part and parcel of the other aspects of operating a company.
Proficiency in innovation requires a management system for planning, monitoring, and budgeting. It also requires a way to manage the resources to be used and a guide of how the innovations will fit into the larger strategic direction.
Additionally, it is important that roles are identified so that the organization knows who is responsible for vision and resource enablement, specific initiative development, and internal launch or market commercialization. With systems and roles in place, the organization can progress innovation phases of ideation, testing, development, and commercialization.
With a strategic direction as guide, an ideation process must include a pipeline of ideas that are promising. McGrath says that this part of the process “encompasses the processes of analyzing trends, connecting innovations to the corporate strategy, scoping potential market opportunities, and eventually defining arenas in which a company may want to participate”.
With regard to focus, there are two schools of thought: (1) ideation must be directed with a clear focus and (2) ideation springs from organizational support of free thinking.
Google, 3M, and others have practiced the latter by providing people with time to work on what they want without restrictions. McGrath argues for the former, coined as “challenge driven” or “needs driven” innovation, because it supports the direction of the firm, even in its widest strategic sense.
Once ideas have been developed, those with promise are further developed, tested, and defined. It is here where customer needs and use cases are defined and a plan developed to test the assumptions. The primary objective is to test those assumptions as quickly and cheaply as possible.
Moving forward to commercialization is a process of continual testing, prototyping, costing, partnering, planning and launch. Whether this is accomplished in three phases, as McGrath delineates, or in a phase of product commercialization and marketing, the idea is to move the idea to launch in quick, small, inexpensive steps that have been tested and confirmed along the way.
Proficiency in innovation is derived by managing the innovation process as a system, from idea through development to commercialization and integration with the company.
Furthermore, in a continually changing marketplace, innovation is now part of strategic design and operations. It is not simply a separate initiative to be implemented one time.