Meganli1010

Profile

MEI-GEN,LI

Student ID: 0924817

Eduction

MSc in Innovations and Entrepreneurship at BI Norwegian Business School

Article

The Challenge of Managing Innovation

Summary

Innovation shapes new business model that generate major changes in the marketplace to keep a company competitive advantage and produce new performance outcomes. However, firms may encounter several key challenges while controlling innovation procedure. The paper divides innovation processes into three different periods: Initiation, Development and Implementation. Each phase has a different focus on a set of innovation barriers and concludes by discussing the gaps, uncertainty, failure and a case study for further research.

Initiation Period: The Innovation Gap

CHALLENGE ONE: Lack of consciousness to recognize innovation

Most managers in traditional industries tend to ineffective and conservative in exploiting breakthrough revolution and are rarely aware of the innovative opportunity. There are gaps in the creation of knowledge and in common understanding of what innovation is and how it happens. Moreover, they lack of learning experience to be a creative thinker and have less capability of inspiring a shared team to communicate the “new” solutions throughout the organization.

CHALLENGE TWO: Lack of enabling organizational cultures to strengthen innovation

Many organizations do not actively encourage innovation through their organizational practices. In addition, many companies have cultures to avoid long-term risks and acquire short-term benefits. Generally, firms seem to favor repetition because it maintains business stability, however, innovation is all about unexpected and uncontrollable process. Thus, managers often face the cultural challenge of innovation gap to create organization’s climate for innovation implementation.

Development Period: The Innovation Uncertainty

CHALLENGE THREE: Uncertain setbacks and Measurement Tool Issues

Innovation is a leap into unknown. The innovation process is inherently uncertain with nothing clearly measurable, given the difficulties to quantify and to predict accurately the performance outcomes because it is the creation of something qualitatively new and can only become known through the process itself. Although measurement practices that help organizations to leverage knowledge effectively and highly important for a company’s competitiveness, however, so far the traditional analytical indicators are not fully account for the new knowledge economy. Moreover, when an initial shock that stimulates to develop an innovative idea, the initial innovative process soon “proliferates” into multiple divergent progression of development. Setbacks and errors are frequently encountered because unanticipated environmental factors alter innovation process. “As setbacks occur, resource and development time lines diverge. With time, unattended problems often become chaos into vicious cycles”. ( Van de Ven et al. 1999, Figure 1)

CHALLENGE FOUR: The Dilemma of “knowing– doing” gap

Innovation involves a venture into the uncertain situation and differs in many aspects according to technological revolution, economic sector and field of knowledge. Generally, the decision to trigger an innovation development is made by those top managers or executives. Employees, however, often have great suspicions regarding the innovation policies and have great comfort in the status quo. Even when organizational members realize that a precise change would be beneficial, they often still fall to the ‘‘knowing– doing gap’’ (Pfeffer & Sutton, 2000). That is, participants often get bogged down with information, divergent issues and confront stressful to acquire new technical knowledge about how to improve performance into actions. Organizational members may fear bold changes, rely rigidly on the prior working experience and are likely to conclude that the innovation is an unpractical concept and think “Ignore it and it will go away”. The result, unfortunately, is a failure to manage a potential and beneficial innovation process.

Implementation Period: The Innovation Failure

CHALLENGE FIVE: The availability of financial resources

The financial-resource availability plays a critical role in the overall effectiveness of an organization’s implementation practices and processes. In most cases, implementation is an expensive and time-consuming process. Effective innovation implementation is frequently supported by external sources and hefty investments in technology start-up, extensive-training, user support, monitoring performance, evaluation and launching communications meeting to explain the core values of the innovation. External investor and sponsors, however, may suffer greater pressure and confidence crisis to invest in the long-term, uncertain innovation implementation than to maintain existing levels of performance. Thus, innovations terminate when the conflict occurs between innovation entrepreneurs and external investors that cause less availability of financial-resources.

CHALLENGE SIX: Innovation Outsourcing’s Risks and Security Issues

In the face of increasing technological complexity of new products, and the concern on growing demand for R&D expenses, leading organizations tend to use “innovation outsourcing strategy” rather than develop everything in-house to keep competitive advantage in today’s global market. Although executing innovation outsourcing can save cost and share workload with outsourcing vendors, this business approach may cause higher risks and security issues to corporate innovation processes. For example, company may face challenge to control the quality of R&D progress or outsourcing partners may breach the contract, steal intellectual property , violate patent right and sell developed products to other competitors.