Innovation is a challenge for top managers. Innovations are risky, with the likelihood of failures which will be noticed by one and all. But new products and services are to be developed and introduced to create winners which will allow the company to grow and survive in a competitive market wherein new entrepreneurs continually enter with new ideas and products. A company cannot engage itself totally in exploiting the existing products neglecting invention, development and new product introduction. Hence innovation management is a challenge for top managers.
Excerpts from
44th Sir Mokshagundam Visvesvaraya Memorial Lecture. 2001
Industry,Academia and Innovation
Dr Amit Chatterjee
Chief Technology Officer, TATA STEEL, Jamshedpur
Innovation is the outcome of two distinct steps - firstly, the generation of an idea or invention; and secondly, the conversion of that invention into business. It is possible to represent innovation as Innovation = Invention + Exploitation.
Invention encompasses all steps aimed at creating new ideas and getting them to work. Exploitation
includes all stages of commercial development, including focusing of the ideas generated towards specific objectives, followed by evaluation of those objectives. Thus, while Invention through extremely difficult is the outcome of a brief moment of inspiration and magic, exploitation is more involved and needs time. The overall management of technological innovation is a science by itself. It includes the organisation and direction of human and capital resources towards effectively: (i) creating new knowledge; (ii) generating technical ideas aimed at new and enhanced products, manufacturing processes, as well as services; (iii) developing those ideas into working prototypes; and finally (iv) transferring them into manufacturing, distribution, and use by mankind at large.
Technologically innovative outcomes take many forms - incremental or radical in degree; modification of existing entities or the creation of entirely new entities; embodied in products, processes or services; oriented towards consumer, industrial, or governmental use; and based on various single or multiple technologies. Whereas invention is marked by the discovery of a state of new existence, usually in a laboratory or at best at a bench-scale level, innovation is characterised by first use (in manufacturing or in a market). Most organised scientific and engineering activities, certainly within any given manufacturing segment, stretch beyond the idea-generating stage. This may not always produce radical breakthroughs, but result in a broad base of incremental technological advances, sometimes leading to major technical changes.
Research conducted so far in the area of technology management has focused primarily on incremental product innovations oriented toward industrial markets. Neither the less frequently arising areas of radical innovation nor process innovation has received much attention.
The right balance of what organisation theorist James March has termed exploitation of proven knowledge versus exploration of new possibilities varies from industry to industry. But, even in companies that are taken as role models for encouraging innovation, only a small percentage of effort is usually devoted to generating and testing new products and services. This comparative rarity helps explain why practices that support innovation may seem odd and provoke discomfort and why managers hesitate to use them even when they should.
Traditional thinking about the management of innovation focuses almost exclusively on internal factors - the capabilities and processes within companies for creating and commercialising technology. Although the criticality of these factors is undeniable, the external environment for innovation is at least as important. For example, the striking innovative output of Israeli firms is due not simply to more effective technology management, but also, to Israel's favourable environment for innovation, including strong universityindustry linkages and a large pool of highly trained scientists and engineers. The most fertile location for innovation also varies markedly across fields. The United States was an especially attractive environment for innovation in pharmaceuticals in the Nineties, while Sweden and Finland have seen extraordinary rates of innovation in wireless technology (Ericsson and Nokia).
While the innovation infrastructure sets the basic conditions for innovation. it is ultimately companies that introduce and commercialise innovations. Innovation and the commercialisation of new technologies take place disproportionately in clusters - geographic concentrations of interconnected companies and institutions in a particular field.
44th Sir Mokshagundam Visvesvaraya Memorial Lecture. 2001
Industry,Academia and Innovation
Dr Amit Chatterjee
Chief Technology Officer, TATA STEEL, Jamshedpur
Top Management Challenges
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