About the Authors v
Preface to the Seventh Edition vi
How to Use This Book: Key Features viii
1 Innovation – What It Is and Why It Matters 1
1.1 The Importance of Innovation 2
1.2 Innovation Is Not Just High Technology 4
1.3 It’s Not Just Products . . . 7
1.4 Innovation and Entrepreneurship 9
1.5 Strategic Advantage Through Innovation 10
1.6 Old Question, New Context 15
1.7 The Globalization of Innovation 16
1.8 So, What Is Innovation? 19
1.9 A Process View of Innovation 22
1.10 The Scope for Innovation 24
Four Dimensions of Innovation Space 24
Mapping Innovation Space 28
1.11 Key Aspects of Innovation 29
Incremental Innovation – Doing What We Do but Better 30
Component/Architecture Innovation and the Importance of Knowledge 31
Platform Innovation 33
The Innovation Life Cycle – Different Emphasis Over Time 34
Discontinuous Innovation – What Happens When the Game Changes? 37
1.12 Innovation Management 42
Summary 44
Further Reading 45
Other Resources 47
References 48
2 Digital Is Different? 50
2.1 What Is Digital Innovation? 51
2.2 Is It New? 54
2.3 Is It Revolutionary? 55
2.4 What Does It Mean for Innovation? 56
2.5 What Does It Mean for Innovation Management? 59
The New Digital Toolkit 60
New Ways of Thinking About Innovation Management 64
Summary 67
Further Reading 67
Other Resources 68
References 68
3 Innovation as a Core Business Process 70
3.1 The Innovation Journey 70
3.2 Different Circumstances Similar Management Challenges 72
3.3 Variations on a Theme 73
Services and Innovation 73
Service Innovation Emphasizes the Demand Side 77
The Extended Enterprise 79
Innovation in the Non-commercial Arena 79
Not-for-Profit Innovation 80
Social Entrepreneurship 82
3.4 Cross Sector Differences 84
Organizational Size 84
Project-based Organizations 85
Platform Innovation 85
Ecosystems 86
The Influence of Geography 86
Regulatory Context 87
Industry Life Cycle 87
3.5 Do Better/Do Different 88
3.6 A Contingency
Model of the Innovation Process 90
3.7 Evolving Models of the Process 90
3.8 Can We Manage Innovation? 93
3.9 Building and Developing Routines across the Core Process 95
Navigating the Negative Side of Routines 95
3.10 Learning to Manage Innovation 96
Identifying Simple Archetypes 97
Measuring Innovation Success 98
What Do We Know About Successful Innovation Management? 99
Success Routines in Innovation Management 101
Key Contextual Influences 107
3.11 Beyond the Steady State 108
Summary 108
Further Reading 109
Other Resources 109
References 110
4 Developing an Innovation Strategy 115
4.1 ‘Rationalist’ or ‘Incrementalist’ Strategies for Innovation? 116
Rationalist Strategy 117
Incrementalist Strategy 120
Implications for Management 121
4.2 Innovation ‘Leadership’ versus ‘Followership’ 123
4.3 The Dynamic Capabilities of Firms 126
Institutions: Finance, Management and Corporate Governance 126
Learning and Imitating 128
4.4 Appropriating the Benefits from Innovation 130
4.5 Exploiting Technological Trajectories 136
4.6 Developing Firm-specific Competencies 139
Hamel and Prahalad on Competencies 139
Assessment of the Core Competencies Approach 141
Developing and Sustaining Competencies 144
4.7 Globalization of Innovation 149
4.8 Enabling Strategy Making 154
Routines to Help Strategic Analysis 154
Portfolio Management Approaches 155
Summary 157
Further Reading 158
Other Resources 158
References 159
5 Building the Innovative Organization 164
5.1 Shared Vision, Leadership and the Will to Innovate 166
5.2 Appropriate Organizational Structure 172
5.3 Key Individuals 176
5.4 High Involvement in Innovation 179
5.5 A Roadmap for the Journey 183
5.6 Effective Team Working 186
5.7 Creative Climate 192
5.8 Boundary-Spanning 204
Contents xiii
Summary 207
Further Reading 207
Other Resources 208
References 209
6 Sources of Innovation 214
6.1 Where Do Innovations Come From? 215
6.2 Knowledge Push 216
6.3 Need Pull 218
6.4 Making Processes Better 220
6.5 Crisis-driven Innovation 222
6.6 Whose Needs? The Challenge of Underserved Markets 223
6.7 Emerging Markets 227
6.8 Toward Mass Customization 229
6.9 Users as Innovators 232
6.10 Using the Crowd 235
6.11 Extreme Users 237
6.12 Prototyping 238
6.13 Watching Others – and Learning from Them 239
6.14 Recombinant Innovation 240
6.15 Design-led Innovation 241
6.16 Regulation 243
6.17 Futures and Forecasting 243
6.18 Accidents 244
Summary 245
Further Reading 246
Other Resources 247
References 248
7 Search Strategies for Innovation 251
7.1 The Innovation Opportunity 252
Push or Pull Innovation? 252
Incremental or Radical Innovation? 253
Exploit or Explore? 254
7.2 When to Search 254
7.3 Who Is Involved in Search? 255
7.4 Where to Search – The Innovation Treasure Hunt 257
Ambidexterity in Search 258
Framing Innovation Search Space 258
7.5 A Map of Innovation Search Space 260
Zone 1 261
Zone 2 261
Zone 3 262
Zone 4 262
7.6 How to Search 263
7.7 Absorptive Capacity 266
7.8 Tools and Mechanisms to Enable Search 268
Managing Internal Knowledge Connections 268
Extending External Connections 270
Summary 272
Further Reading 272
Other Resources 273
References 274
8 Innovation Networks 277
8.1 The ‘Spaghetti’ Model of Innovation 279
8.2 Innovation Networks 281
Why Networks? 282
Emergent Properties in Networks 284
Learning Networks 284
Breakthrough Technology Collaborations 286
Regional Networks and Collective Efficiency 286
Mobilizing Networking 287
8.3 Networks at the Start-up 288
8.4 Networks on the Inside . . . 290
8.5 Networks on the Outside 291
8.6 Networks into the Unknown 296
8.7 Managing Innovation Networks 298
Configuring Innovation Networks 298
Facing the Challenges of Innovation Networks 299
Summary 300
Further Reading 301
Other Resources 301
References 302
9 Dealing with Uncertainty 304
9.1 Meeting the Challenge of Uncertainty 305
9.2 The Funnel of Uncertainty 306
9.3 Planning Under Uncertainty 307
9.4 Forecasting Innovation 311
Customer or Market Surveys 313
Internal Analysis, for Example, Brainstorming 314
External Assessment, for Example, Delphi 314
Scenario Development 315
9.5 Estimating the Demand for Innovations 316
9.6 Assessing Risk, Recognizing Uncertainty 318
Risk as Probability 319
Perceptions of Risk 321
9.7 Assessing Opportunities for Innovation 325
Financial Assessment of Projects 325
How to Evaluate Learning? 326
How Practicing Managers Cope 334
9.8 Decision Making at the Edge 336
Selection and Reframing 336
9.9 Mapping the Selection Space 339
Summary 345
Further Reading 345
Other Resources 345
References 346
10 Creating New Products and Services 349
10.1 Processes for New Product Development 350
Concept Generation 353
Project Selection 353
Product Development 354
Product Commercialization and Review 355
Lean and Agile Product Development 355
Lean Start-up 356
10.2 Factors Influencing Product Success or Failure 358
Commitment of Senior Management 362
Clear and Stable Vision 362
Improvisation 363
Information Exchange 363
Collaboration under Pressure 364
10.3 Influence of Technology and Markets on Commercialization 364
10.4 Differentiating Products 368
10.5 Building Architectural Products 371
Segmenting Consumer Markets 372
Segmenting Business Markets 373
10.6 Commercializing Technological Products 378
10.7 Implementing Complex Products 381
The Nature of Complex Products 382
Links Between Developers and Users 382
Adoption of Complex Products 384
10.8 Service Innovation 385
10.9 Diffusion of Innovations 391
Processes of Diffusion 391
Factors Influencing Adoption 393
Characteristics of an Innovation 394
Summary 399
Further Reading 399
Other Resources 400
References 401
11 Exploiting Open Innovation and Collaboration 405
11.1 Joint Ventures and Alliances 406
Why Collaborate? 406
11.2 Forms of Collaboration 410
11.3 Patterns of Collaboration 413
11.4 Influence of Technology and Organization 415
Competitive Significance 416
Complexity of the Technology 417
Codifiability of the Technology 418
Credibility Potential 418
Corporate Strategy 419
Firm Competencies 419
Company Culture 419
Management Comfort 420
Managing Alliances for Learning 420
11.5 Collaborating with Suppliers to Innovate 427
11.6 User-led Innovation 431
11.7 Extreme Users 434
Co-development 435
Democratic Innovation and Crowdsourcing 436
11.8 Benefits and Limits of Open Innovation 438
Summary 441
Further Reading 442
Other Resources 442
References 443
12 Promoting Entrepreneurship and New Ventures 448
12.1 Ventures, Defined 449
Profile of a Venture Champion 450
Venture Business Plan 453
Funding 453
Crowd-funding 456
Corporate Venture Funding 456
Venture Capital 458
12.2 Internal Corporate Venturing 460
To Grow the Business 463
To Exploit Underutilized Resources in New Ways 463
To Introduce Pressure on Internal Suppliers 463
To Divest Noncore Activities 463
To Satisfy Managers’ Ambitions 464
To Spread the Risk and Cost of Product Development 464
To Combat Cyclical Demands of Mainstream Activities 464
To Learn About the Process of Venturing 464
To Diversify the Business 465
To Develop New Competencies 465
12.3 Managing Corporate Ventures 467
12.4 Assessing New Ventures 470
Structures for Corporate Ventures 472
Direct Integration 474
Integrated Business Teams 474
New Ventures Department 474
New Venture Division 474
Special Business Units 475
Independent Business Units 475
Nurtured Divestment 476
Complete Spin-off 476
Learning Through Internal Ventures 477
12.5 Spin-outs and New Ventures 479
12.6 University Incubators 482
12.7 Growth and Performance of Innovative Small Firms 489
Summary 499
Further Reading 499
Other Resources 500
References 501
13 Capturing the Business Value of Innovation 505
13.1 Creating Value through Innovation 506
13.2 Innovation and Firm Performance 510
13.3 Exploiting Knowledge and Intellectual Property 514
Generating and Acquiring Knowledge 514
Identifying and Codifying Knowledge 515
Storing and Retrieving Knowledge 518
13.4 Sharing and Distributing Knowledge 520
Converting Knowledge into Innovation 522
13.5 Exploiting Intellectual Property 525
Patents 525
Copyright 529
Design Rights 529
Licensing IPR 529
13.6 Business Models and Value Capture 532
Summary 540
Further Reading 540
Other Resources 541
References 542
14 Creating Social Value 545
14.1 Innovation and Social Change 546
14.2 The Social Innovation Process 548
Social Innovation as a Learning Laboratory 552
Public Sector Innovation 552
Supporting and Enabling Social Innovation 552
Challenges in Social Innovation 553
14.3 Inclusive Innovation 554
14.4 Humanitarian Innovation 556
14.5 The Challenge of Sustainability-led Innovation 557
14.6 A Framework Model for Sustainability-led Innovation 559
14.7 Responsible Innovation 567
Summary 568
Further Reading 569
Other Resources 569
References 570
15 Capturing Learning from Innovation 571
15.1 What We Have Learned About Managing Innovation 572
15.2 How to Build Dynamic Capability 573
15.3 How to Manage Innovation 575
15.4 The Importance of Failure 576
15.5 Tools to Help Capture Learning 577
Postproject Reviews (PPRs) 577
Proceduralizing Learning 578
Agile Innovation Methods 578
Benchmarking 579
Capability Maturity Models 579
15.6 Innovation Auditing 580
15.7 Measuring Innovation Performance 581
15.8 Measuring Innovation Management Capability 581
15.9 Reflection Questions for Innovation Auditing 583
Search 583
Select 584
Implement 584
Proactive Links 586
Learning 587
15.10 Developing Innovation Capability 588
15.11 Final Thoughts 590
Summary 591
Further Reading 591
Other Resources 591
References 592
Index I-1
