Innovation Challenges

Constant revolutionizing of production, uninterrupted disturbance of all social conditions, everlasting uncertainty all established national industries have been destroyed or are daily being destroyed. They are dislodged by new industries whose products are consumed not only at home but in every quarter of the globe. In place of old wants satisfied by the production of the country we find new wants the intellectual creativity of individual nations become common property.

( K Marx and F Engels The manifesto of the Communist Party , 1848)

The quote demonstrates that uncertainty globalization and innovation are not new, and that the only certainty about tomorrow’s environment is that it will be just as uncertain as today’s. This flash of the blindingly obvious reminds us of a major difficulty in managing innovation – the fact we are doing so against a constantly shifting back drop. And it is clear that some trends in the current environment are converging to create conditions which many see as rewriting the rules of the competitive game.

Certainly there are big changes taking place in the environment in which we have to try and manage innovation, and in this final section we will look directly at some of the major forces underpinning such charge. Our view is, however, that whilst there is no room from complacency we should also not be in a hurry to throw away the basic principles on which this book is based – they will certainly need adapting and configuring to dramatically new circumstances but underneath the innovation management puzzle is what it always was a challenge to accumulate and deploy knowledge resources in strategically effective fashion.

For example we have already looked at the challenge of discontinuous innovation. History suggests that although the technological and market shifts are dramatic the basic innovation management issues remain. In particular organizations need to search actively and widely developing sensitive antennae and a strong future orientation are important activities.

Similarly it is becoming clear that under current competitive conditions in many sectors protect able competitive advantage comes increasingly from knowledge because what firms know and have is hard to copy and requires others to go through a similar learning process. But in such a turbulent environment it is inevitable that some knowledge assets become redundant and others need to be acquired quickly. This places emphasis on strategic management of the knowledge base, and of developing effective mechanisms for researching technological knowledge. In the latter case it is likely that the generation of relevant knowledge will increasingly take place outside the firm and will need capabilities to ensure that technology transfer can be absorbed and deployed quickly and effectively.

The difficulties of firms like Kodak illustrate the problem . Founded around 100 years ago the basis of the business was the production and processing of film and the sales and service associated with mass market photography. Whilst the latter set of competencies are still highly relevant (even though camera technology has shifted) the move away from wet physical chemistry in the dark (coating emulsions onto film and paper) to digital imaging represents a profound change for the firm it needs across a global operation and a workforce of thousands to let go of old competencies which are unlikely to be needed in the future whilst at the same time to rapidly acquire and absorb cutting edge new technologies in electronics and communication . Although they are making strenuous efforts to shift from being a manufacturer of film to becoming a key player in the digital imaging industry the responses from the stock markets suggests some skepticism as to their ability to do so.

The concept of component and architectural innovation is relevant here – organizations need to develop the ability to see which parts of their activity are affected by technological change and to react accordingly.

Source: Managing Innovation (partly)