What is Innovation? ‘…innovation as the invention and implementation of a management practice, process, structure, or technique that is new to the state of the art and is intended to further organizational goals.’ – Birkshaw, Hammel & Mol (2001.)
‘Innovation is a specific function of entrepreneurship, whether in an existing business, a public service institution, or a new venture started by a lone individual in the family kitchen. It is the means by which the entrepreneur either creates new wealth-producing resources with enhanced potential for creating wealth.’ – Peter Drucker (1985).
‘innovation—often defined as something that is new from the perspective of the party under consideration’- Jonathan D. Linton (2009.)
‘A fundamental innovation is an enabler for many other minor innovations and these minor innovations either improve upon the fundamental innovation or the innovations are a derivative of the fundamental innovation’ - Kondratieff (1984).
As highlighted above, innovation means many things from various disciplinarians, of which most if not all share the central theme that innovation is a process that renews something that exists and/or is commonly an introduction of something new,(Birkinshaw, Hamel, Gary & Mol, Michael J. 2008, Drucker (2002)).
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Figure 1: Depiction of effect of electronics -Phase IV. |
Therefore, to provide a structure to the study of innovation, the paper will identify two key main areas of innovation: technology innovation and social innovation, (Linton 2009). By using the unit and level analysis approach, (Linton 2009), both areas can be further divided as follows: technology innovation à product innovation, an approach introduced to automobile industry by Japanese firms, (Linton 2009); service innovation introduced by the telecommunication industry, (Mansell 1994) and supply-chain innovation in manufacturing processes, (Linton 2009). Social innovation can be broken-down into the following sub-areas à marketing innovation brought about by demonstration packages, for example, ‘demo’ software, trial periods of use within the Retail sector, (Miles 1994); management innovation that looks at the aspect of organizational change, (Birkinshaw, Hamel, Gary & Mol, Michael J. 2008), and operations innovation, (Graves 1994). Though, Linton, (Linton 2009) uses different terms to describe innovation and examples of their usage, the summary, will be limited to discussing technology innovation from the perspective of product, services and process’ innovation; and social innovation from the perspective of the industry. Thus, the automobile industry case study will be used as an example and illustration, (Graves 1994) from the perspective of - social innovation,(Linton 2009) and as a new product design implemented - technology innovation, (Linton 2009).
When studying innovation it is important to clearly define the perspective to which we analyze what innovation is and the positive impact it has/will have on society, (Linton 2009). For example, the development of infrastructure such as telecommunications would have been difficult to build and implement without the development of research scientists, (Mansell 1994). Therefore, Linton proposes a graph, (Linton 2009), to describe the social impact that innovation has, see Figure 1 above. In a nutshell, the graph aims to explain that depending on which quadrant the innovative solution falls under, innovation can be both positive and negative if viewed from different lenses, (Linton 2009), in addition, the degree to which the innovation is adopted and the degree to which it yields ROI, (Martin 1981) and social returns, (Linton 2009) affects its level of positioning on the graph. Therefore, it becomes critical to highlight the importance of the organizational structure, as it has a strong correlation, on the implementation success, Burns & Stalker (1961); (Morgan 2006). Having said that, let’s consider innovation with the automobile industry as an example and illustration of innovation in a globalizing industry, (Graves 1994).
When we look at automobiles as a product or the automobile industry, (Linton 2009), innovation has discontinued i.e., transformed the industry in 3 distinct phases, (Graves 1994); refer to Table 1: Industrial transformation below, phase I – standardization of product, mass production systems; phase II – product differentiation, emphasis on product technology; and phase III – lean production, JIT high quality and management groups as a new system of production in organizations, (Graves 1994); however, we also now see a phase IV – of the introduction of electronic components and fuel efficiency regulations – social innovation, (Linton 2009) over the last decade. This form of continuous innovation is driven by the external environment – customers and markets, (Graves 1994). When we look at this timeline the adoption, (Kotler, Armstrong 2001)of these innovations, from the perspective of the automotive firms in the countries that have adopted the innovations, it has been reported that the overall effect of the industry has been an increase in product quality and a decline in overall production costs, (Linton 2009). However, it’s important to highlight that there have been challenges in phase III and IV in the industry as European producers work to close the productivity and quality gap with the Japanese JIT/lean production system; whilst Japanese producers appear to be driving the industry further forward through radical technological innovation, and further management innovation, (Graves 1994). Phase IV innovation can been seen as building on current skills – the innovation has contributed both positively and negatively in technology innovation, (Linton 2009) as this change has resulted in shifts in the supply-chain as it both encourages opportunities in electronics production who were in the business already and radical change to members in the supply-chain who did not have the electronics background. However, there is a positive social innovation associated with this change as the change shifts customer preferences in the form of performance, style, fuel efficiency, government policies on safety and environmental emissions, (Graves 1994). This is highlighted in Figure 1: Depiction of effect of Phase IV, (Linton 2009).
Table 1: Industrial Discontinuous & Continuous innovation in Automotive Industry History[1]
Discontinuous Innovation,(Graves 1994) | Date | Production or product innovation | Geographic area of rapid market growth | National & Regional industry responsible for shaping |
I | 1902 – 1920s | Standardized product, mass production systems | US | US |
II | 1950s – 1960s | Product differentiation | Europe | Europe |
III | Late 1960s | Lean production JIT and SPC[2] | Japan | Japan |
Continuous Innovation,(Linton 2009) | ||||
IV | 2000s | Electronic components and fuel efficiency regulations (CAFE´). | Japan | Japan |
In conclusion, it is important to have a perspective when discussing innovation. In addition, identifying the unit and level of analysis, is essential when looking at innovation, as it provides a specific framework from which to identify, analyze and implement.
[1] Source: Graves, A. 1994, "Innovation in a Globalizing Industry: The Case of Automobiles" in The handbook of Industrial Innovation, eds. M. Dodgson & R. Rothwell, First Ed; edn, Edward Elgar Publishing Limited, England, pp. pp.213 - 228
[2] JIT – Just-in-Time; SPC – Statistical Process Control
Copyright @ 1 March 2011. Re-posted on 27 October 2011, BlogSpot by Tambudzai Ndoro, Non-Executive Director of Global Business Assignments Inc,
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