The management of innovation has provided a large and diverse body of literature. It recognises that while there is much complexity and uncertainty in managing innovation and new product development, much is known.
There is considerable agreement on many of the factors that contribute to success and the activities and processes that need to be undertaken if innovation is to occur and a firm‘s performance is to improve. Table 4.2 presents some of the key studies that have influenced our understanding over the past fifty years.
This innovation management literature informs us that the capacity to absorb new knowledge, to transfer and diffuse knowledge and the ability to learn through interaction are crucial success factors in innovation as typified by Cohen and Levinthal (1989) Zahra and George (2002). New and commercially useful knowledge is not only the result of the conscious action of creative individuals. It is also the outcome of the interaction and learning processes among various actors in innovation systems. The need for connectivity, and the complexity of the interactions it entails, therefore emerges as a major factor influencing the management of innovation.
Furthermore, Chesbrough (2003; 2003b; 2003c; 2006) argued recently that the process of innovation has shifted even further from one of closed systems internal to the firm to a new mode of open systems-involving a range of players distributed up and down the supply chain. This seems to be supported by the increasing application of network theory into more and more areas of business management (Parkhe et al., 2006).
Table 4.2 lists the major sources of secondary literature that were initially considered important to reflect upon innovation. It was not an intention to confine the study to these sources. However, the sources provide a historical account and detailed overview of innovation over the period 1957 – 2003.
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TABLE 4.2
KEY STUDIES OF INNOVATION MANAGEMENT
Sources: Van der Panne et al. (2003) and Trott (2005)
The key studies in innovation management are presented in Table 4.2. It is the belief of the author that successful innovators encourage creative thinking and turn ideas into commercially viable products or services. Innovation can therefore be managed just like any other business discipline. Table 4.1 shows a historical discourse of innovation studies and this was initially adopted as a literature base for this chapter. The literature survey suggests that a firm‘s ability to successfully develop innovative new products is not only the result of public and private investments in tangibles and intangibles by individual elements in the economy, but that it is also strongly influenced by the character and intensity of the interactions between the elements of the system (see Figure 1.1, Chapter 1: Innovation systems and firm performance model).
STUDY DATE FOCUS
1 Carter and Williams 1957 Industry and technical progress
2 Project Hindsight- TRACES, (Isensen) 1968 Historical reviews of US government funded defence industry
3 Wealth from knowledge (Langrish et al.) 1972 Queen‘s Awards for technical innovation 4 Project Sappho (Rothwell, 1974) 1974 Success and failure factors in chemical industry 5 Von Hippel, E. (1976) 1976 The dominant role of users in the scientific instrument
innovation process.
6 Stanford study (Madidique and Zirger) 1984 Success factors in US electronics industry 7 Minnesota Studies (Van de Ven) 1989 14 case studies of innovations
8 Rothwell 1992 25 yr review of studies
9 Sources of innovation (Wheelwright and Clark) 1992 Different levels of user involvement 10 MIT studies (Utterback) 1994 5 major industry-level cases
11 Project NEWPROD (Cooper) 1999 Longitudinal survey of success and failure in new products 12 Radical innovation (Leifer) 2000 Review of mature businesses
13 Christensen C M 2000
The innovator's dilemma
14 T.U.Delft study (Van der Panne et al.) 2003 A major literature review of success and failure factors.
15 Chesbrough 2003 Open innovation systems along the supply chain
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This position is strongly advocated in the literature on ―National Innovation Systems‖ by Freeman (1982), Lundvall (1992) and Nelson (1993). With this view, innovation and technological development in particular, depend increasingly on the ability to utilise new knowledge produced elsewhere and to combine this with knowledge already available in the economy and its actors. The capacity to absorb new knowledge, to transfer and diffuse knowledge, and the ability to learn through interaction are crucial success factors in innovation according to Cohen and Levinthal (1989) and Chesbrough (2003). New and commercially useful knowledge is not only the result of the conscious action of creative individuals; it is also the outcome of the interaction and learning processes among various actors in innovation systems, (i.e. producers, users, suppliers, public authorities, and scientific institutions), which David and Foray (1995) describe as the
―knowledge distribution power‖ of the innovation system. The need for connectivity and the complexity of the interactions this entails therefore emerges as a major factor influencing the management of innovation. The development of network theory and network models of innovation have helped to illustrate further the prominence now given to internal and external networks within the innovation process (Dhanaraj and Parkhe, 2006; Parkhe et al., 2006). All these knowledge flows contribute to the wealth of knowledge held by the organisation (Woolgar et al., 1998; Rothwell, 1992;
Major and Cordey-Hayes, 2002).
More recently, Chesbrough (2003) adopting a business strategy perspective, presents a persuasive argument that the process of innovation has shifted from one of closed systems (internal to the firm), to a new mode of open systems (involving a range of players distributed up and down the supply chain). Critics may argue that network models of innovation that emphasise external linkages have been around for many years (Taguchi and Nonaka, 1995; Trott, 1995; 2005). Significantly however, it is Chesbrough‘ emphasis on the new knowledge-based economy that informs the concept ―open innovation‖. In particular it is the use of cheap and
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instant information flows which places even more emphasis on the linkages, and relationships of firms. It is from these linkages and the supply chain in particular, that firms have to ensure that they have the capability to fully capture and utilise ideas. Furthermore, the product innovation literature, in applying the open innovation paradigm, has recently been debating the strengths and limitations of so called ‗user toolkits‘ which seem to ratchet up further this drive to externalise the firm‘s capabilities to capture innovation opportunities (von Hippel, 2001).