Bessant, John (2003): Challenges in Innovation Management. In Shavinina, Larisa
V. (ed) The International Handbook on Innovation, Elsevier, Oxford, UK.
1. Introduction
Even the biggest enterprises have no guarantee of survival and the mortality rate for smaller firms is very
high. Even whole industries can be undermined and disappear as a result of radical innovation.
Utterback(1994) states two worrying conclusions: most innovation which destroy the existing order
originate from newcomers and outsiders to a particular industry & a few of the original players survive
such transformations. Managing innovations becomes one of the key strategic tasks facing organizations
of all shapes, sizes and sectors.
2. What has to be managed?
One of the difficulties in managing innovation is that it is something of a ‘Humpty-Dumpty’ word.
Originally, innovation means ‘to make something new’, but it also helps to think of it in terms not only of
invention, but also of its development and take up in practice. The most succinct definition is ‘the
successful exploitation of new ideas’. The skill comes in being able to repeat the trick.
How to obtain a competitive edge through innovation, and through this, survive and grow? Essentially
organizations have to manage four different phases in the process of turning ideas into successful reality:
(1)Scan and search their environments to pick up and process signals about potential innovation.
(2)Strategically select from this set of potential triggers for innovation those things which the
organization will commit resources to doing.
(3)Having chosen an option, organizations need to resource it, providing the resources to exploit it.
(4)Organizations have to implement the innovation, growing it from an idea through various stages of
development to final launch – as a new product or service in the external market or a new process or
method within the organization.
One other phase is optional. Organization need to reflect upon the previous phases and review
experience of success and failure. The innovation puzzle which organizations are trying to solve is
constantly changing and mutating.
3. Challenge 1: Why change?
Innovation is a survival imperative: unless organizations are prepared to change what they offer and how
they create and deliver that offering they may simply not be around in the long term. Innovation may
mean adoption of new technology, or generation of their own. It may involve reconfiguring products,
processes or markets. It always involves learning and unlearning. The firms which demonstrate sustained
competitive advantage exhibit ‘timely responsiveness and rapid product innovation, coupled with the
management capability to effectively co-ordinate and redeploy internal and external competencies’.
4. Challenge 2: What to change?
Even if firms recognize and accept the need for continuous innovation, they may find difficulties in
framing an appropriate innovation agenda. With limited resources, firms may face risk in putting them
into too few or the wrong baskets. The challenge here is for firms to be aware of the extensive space
within which innovation possibilities exist and to try and develop a strategic portfolio which covers this
territory effectively, balancing risks and resources. The innovation agenda exists of:
(1)Product or service offering: Improved versions of existing products(incremental) / Radical new
product or service concepts(radical).
,(2)Process for creating and delivering that offering: Improvements to established processes(incremental)
/ Radical alternative routes to achieving the process goal(radical).
(3)Positioning in market context: Repositioning or relaunching established products or services in
different contexts(incremental) / Radical re-framing of what is being offered(radical).
(4)Paradigm – underlying mental models: New business models(incremental) / New ways of
conceptualizing the problems(radical).
5. Challenge 3: Understanding innovation
Part of the problem in managing innovation is the way people think about it. There is often considerable
confusion between invention and innovation. Other limits to our mental models include the view that
innovation is all about science and technology creating new opportunities – what is sometimes called the
technology push model. It is a weak basis for managing innovation – plenty of great technological
possibilities fail to find markets and never make it as innovations. The challenge to managing the process
well is to ensure a broader and integrated view to underpin the structures and procedures which firms
put in place to make it happen.
6. Challenge 4: Building an innovation culture
Research suggests that the task of managing innovation is about creating firm specific routines –
repeated, reinforced patterns of behavior – which define its particular approach to the problem.
Innovation should become part of the dominant culture of the organization. Routines have to be learned
and practiced over a sustained period of time. Routines can begin by the chance recognition of
something that worked or as the result of trying a new and different approach. But if they work
repeatedly, they gradually get established and eventually formalized into structures and procedures—
until finally they are part of the organization’s personality.
,7. Challenge 5: Continuous learning
The innovation agenda is constantly shifting and firms needs to develop routines to deal with the key
challenges, which emerge from their environment. There is plenty of scope for learning and adapting of
these routines. The distinction is between blind copying and adopting and developing a good practice,
which someone else uses. Making a model work in a particular organization requires taking these ideas
and shaping them to suit a particular and highly firm-specific context.
8. The moving frontier
Innovation is a constantly mutating and shifting set of puzzles, and firms have to try and find their own
particular ways of solving them and continuing to be able to do as the puzzles shift and change. In the
next sections we look at some areas and challenges, which represent the frontier of innovation
management around which there are few proven routines and much room for experiment and learning.
,9. Challenge 6: High involvement innovation
Traditionally innovation has been the province of the specialist who often works apart from the
mainstream of the organization’s operations. Mass production models place emphasis on a belief on
‘one best way’ and any interference with the designs produced by innovation specialists was seen as
disruptive. The limitations of such an exclusive model of innovation quickly became clear. Innovation is
fundamentally about creative problem-solving and as environments become more turbulent and
uncertain, so the requirement for this capability increases. Organizations need to increase their
innovative capacity, and one powerful mechanism for doing so is to extend participation in the process
to a much wider population.
For example, lean manufacturing places emphasis on team working and participation in innovation.
Another example, learning curves only work when there is the commitment and enabling structure for
participative problem-solving. Learning organizations see knowledge as the basis for competition in the
21st century. Mobilizing and managing knowledge becomes a primary task. Lines of responsibility for the
innovation process are blurring, moving away from specialists and towards higher levels of participation
by others in incremental innovation as a complement to specialist activity.
The difficulty comes in the implementation. Mobilizing high levels of participation in the innovation
process is unfamiliar and, for many organizations, relatively untested and apparently risky. The challenge
is thus one of building routines – establishing and reinforcing behavior patterns. Whilst the generic
routines can be specified in terms of particular new behaviors which must be learned and reinforced, the
particular ways in which different organizations actually achieve this will vary widely. See table 6 on page
768-769(8-9).
10. Challenge 7: Dealing with discontinuity
Much innovation is of course about change, but it takes place within a relatively consistent framework.
Most change happens as incremental developments- doing what we do better. Innovation called
‘punctuated equilibrium’ means borrowing a term from the field of evolutionary biology which explores
how species emerge and develop. Its implication is that the way in which we organize for innovation will
be around keeping up a steady stream of incremental developments within an envelope established by
the original product or process concept.
But there are points at which the rules change. It may well be as a result of scientific progress creating
new possibilities, or it may be a result of dramatic shifts in the demand side for innovation. At such
points old rules may no longer apply. This kind of transition poses very big management challenges. Old
incumbents do usually not very well and new entrants become key players. In part this is because of the
high level of investment committed to the older generation of technology which established players
have but there is also much to suggest that organizational barriers are also a problem. Established
players are not always quick to pick up on the signals about change or to make sense of them, they may
react too slowly and in the wrong directions—or they may simply try to deny the importance or
magnitude of the change affecting their business.
There is an inherent conflict underpinning this pattern. The routines which well-managed firms build
up to sustain and develop their innovations in product and process within a particular ‘envelope’ are not
the same as those they will need to create innovations outside that space. Radical, ‘out of the box’
thinking and the high-risk project management approaches which accompany completely new directions
in innovation do not sit well within existing and relatively highly structured frameworks.
, For this reason many firms set up ‘skunk works’ or other mechanisms to create more and different space
within which people can work. It is also here that the role of innovation champions and promoters
becomes significant. The challenge here is to develop what some writers have called ‘the ambidextrous
organization’. That is, to manage under one roof to operate routines for ‘doing what we do better’
innovation (within the envelope) and simultaneously to allow space for another set of routines for ‘doing
differently’—moving beyond the envelope into new and uncharted territory. The risk, if they cannot
develop these two sets of routines, is that people will migrate out of the organization to set up their own
operation.
11. Challenge 8: Managing connections
Characteristic of the routines developed and shared around ‘good practice’ in innovation management is
the focus on the individual firm. But increasingly the challenge to business organizations is to operate
not in ‘splendid isolation’ but in relationships with others. This calls for a whole new set of routines. The
prescriptions for cooperative relationships are easy to write, the difficulty is in implementing them
successfully. Innovation networks offer significant advantages in terms of assembling different
knowledge sets and reducing the time and costs of development— but are again often difficult to
implement.
In all of these cases it appears that networks form for particular purposes but then offer the possibility of
additional activity based on the core cooperative framework. Having established a core framework,
which allowed for resource sharing and collective efficiency, networks began to grow, adding a
dimension of technological learning to them. In essence, what we are seeing is a process of learning and
experimentation around routines for interfirm working. Whilst these are not yet clearly established it is
possible to see a pattern in which the whole—the network—can perform at a level which is greater than
the sum of its parts. It appears that firms need to explore and develop routines in at least eight critical
areas which are shown in Table 7.
Building and operating networks can be facilitated by a variety of enabling inputs, for example advanced
information and communications technologies.
12. Conclusions
In dealing with the challenges the key management task lies in creating and reinforcing patterns of
behavior—building ‘the way we do things around here’—through identifying and establishing innovation
routines. Some routines are a basic prerequisite—if the organization has no mechanisms for picking up
signals about the need for change in its environment it may not survive for long.
