There are different approaches to innovation that produce different organizational concepts at many companies. I initiated my career in an important research center. This have introduced in my habitual thoughts the concept of invention related to innovation. Other people that have not remarkable research experience can see innovation nearer the marketing activity. Both focuses (invention and market novelty) should be the basement of innovation management.
Innovation management professionals usually distinguish between research or invention and innovation. Invention provides novelty at the technology world, and innovation provides novelty at a certain market. Many great innovations have been provided moving a known technology from a market to another different one. For instance, the medical scanner is a device based on a technology developed for the astrophysical research. Nobody is conscious about the number of lives that astrophysical research has saved from then.
If this is true, why invention is so important to manage innovation? There is a logic answer to this question. Innovation and innovation management are different concepts and tasks. Innovation is an activity related to the development of product, services and processes; however, innovation management is related to the search for an optimal, or at least proper, use of a set of limited resources to maximize some function of utility or benefit.
Technology is the basement of the productive processes and products of a company. A more advanced technology implies competitive advantages, and taking advantage of new competitive advantages is one of the roles of any management activity.
There are two ways to introduce new technology, acquired or developed. The reason why invention is so important in the field of innovation management is that the competitive advantages obtained through developed technology usually are stronger than those ones obtained through acquired technology.
The developed technology can be protected through secret or legal protection; however, the acquired one could be easily implemented by our competence.
Any innovation system of a large organization should include both sides of the innovation process. It is necessary to have a good knowledge about the market and client needs, and a way to implement new solutions. Sometimes, new solutions can be easy developments under an incorporated technology, but, many other ones it will be necessary to incorporate new technology. This activity of incorporating new technology is under the umbrella of the research concept, the search for a technology that can be applied and its analysis is the classic research task of study of the state of the art. If we stop here, we will not be providing any invention, but our organization will have acquired knowledge about technologies not incorporated yet. The implementation of a full research and development process will depend on the result of the study of the state of the art and our competences to develop a new technology.
Research and development is a very complex process. It requires a very organized and structured work in order to get results with a high level of uncertainty. The introduction of a complex process in any organization must be well understood by the senior directorate, in order that the uncertainty cannot affect other processes of the company. Classic innovation models considered R & D as an activity in parallel and isolated from the main activity of the company. If you consider R & D a fixed expense, it will affect never the normal productive activity of the company; however, new models impulsed by people from marketing area trying to put innovation nearer markets join the uncertainty of the research process to the normal activity of the company increasing its complexity and the risk of the company.
I have been working and implementing that kind of models, and the key point is to make a portfolio of innovation projects with a controlled level of risk, balancing the number of research projects with other innovation projects based on incorporated technology.
So far all is known, but what many people do not know is that the route of the uncertainty displacement is working in both directions. Although the innovation manager is doing a good work limiting the complexity of his portfolio of projects, the complexity of the organization affects the development tasks too. For instance, financial problems can move fast from the main activity to the innovation process as production is always considered priority. A complex productive process can drain resources continuously from the innovation activity if both processes are very linked.
The innovation manager must know very well the company and he must understand where the complexity of the organization resides, in order that he can make investment decisions to be more effective. In a complex organization, the “best ideas” are not always the most valuable. Making investment decisions thinking only on the NPV or the IRR is a good alternative in a classic innovation structure but it could be a great error in a complex innovation system. Joining innovation management to complexity management can be more effective is we decide to implement innovation structures near the markets.