What is innovation? We can say it’s about R&D and S&T, but it’s also radical, disruptive, incremental and social innovation, as well as innovation competencies. The ‘Oslo Manual: Guidelines for Collecting and Interpreting Innovation Data’ (3rd Edition, 2005) defines four main types of innovation: Product, Process, Marketing, Organisational. Yet, in practice, innovation management has turned into a set of complex, collective dynamics.
Innovation is, therefore, a shared process of ideation, evaluation, selection, development and implementation of new or improved products, programmes or services. Let’s have a look at some examples to understand what this means today.
R&D – the technology labs
Investment in future capabilities and technology through R&D remains a crucial element in the innovation process. Markets and societies’ fast rhythm of change demands it. Intel and its research labs are a well-known case study. In 2000, the company established six first-rate labs. Following an open collaborative model, its researchers worked closely with top host universities such as Cambridge and Berkeley, sharing intellectual property rights. Together, they developed notable projects.
Yet, by 2011, Intel had closed all its labs. In a time of cutbacks across industries, high costs and low investment/return ratios may have motivated this decision, although the company declined to comment. Intel is still the world leader in computing innovation. In October 2014, Intel’s venture-capital arm announced that it would be investing $28 million in five Chinese technology startups.
Companies that invest more in R&D, over longer periods, indeed do tend to develop the stronger competitive advantages needed, performing better than market average. They also present higher levels of productivity, particularly high-tech firms.
Nonetheless, merely investing in R&D does not necessarily make these organisations more innovative. Innovation ‘goes far beyond the confines of research labs to users, suppliers and consumers everywhere – in government, business and non-profit organisations, across borders, across sectors and across institutions’, according to the OECD.
Disruptive innovation – need a ride?
Clayton Christensen coined disruptive innovation as a ‘process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors’.
Could Uber, the exciting app-based, ride-sharing technology company, be disrupting the taxi market, or even going beyond this sector?
Let’s consider these facts:
// Uber is particularly innovative in the way it prices its services and promotes a culture of merit by ranking drivers (and customers).
// It has been the central cause of protests by taxi drivers and companies (which means that it’s making significant waves in the industry).
// In some countries, it’s even been banned, as in Spain and India (with specific safety and industry regulations under the spotlight).
// The service has been growing exponentially, and several other companies have imitated its model, a trend branded ‘Uberification’ (What are the limits of this growth? To what point can it interfere with the market’s dynamics?).
Though some disagree, Uber may very well serve as an example of what disruptive innovation is. Or, it can at least feed the discussion of disruptive innovation itself: its limits, impacts and potential.
This will surely be an interesting case to follow. Still, remember that exceptional breakthrough innovations may promote one-shot market triumphs, and companies cannot rely on them alone. Companies need to balance their portfolios with various and continuous degrees of innovation.
This brings us to the imperative and possibilites of incremental innovation. We’ll address it next.
Incremental innovation, the ongoing evolution
FROM THE START:
How can you measure innovation management?