Innovation management is the management of processes of the creation of inno-vation. This research adapted Tidd and Bessant’s (2013) generic innovation man-agement model. An organization can produce several types of innovation which are commonly based on an organization’s strategy and capabilities. Innovations needs to have customers. Without a customer, innovation is an invention which, however, can lead to innovation in the future (Ortt 2010; Rogers 2003). There-fore, innovation diffusion can be considered to be a part of innovation manage-ment. End users of a product or service can have an active role in innovation management (Shum and Watanabe 2010). However, it is not necessarily possible to define precisely who the customer is and where the markets are. Moreover, organizations commonly wish to have more customers for their products and ser-vices, because this produces higher profit.
Customers, potential customers and other individuals can, for instance, generate advertising which provides new opportunities for an organization (Deighton and Kornfeld 2007; Wang 2010). An organization can employ customer generated advertising with crowdsourcing, for instance, in social networks, blogs and other crowdsourcing platforms. Customer generated advertising is effective practice when utilizing crowdsourcing as part of innovation management.
2.3.1 Innovations
Innovation as a word originates from the Latin word innovare and it stands for making something new (Johansson and Woodilla 2009). Innovation has several definitions based on the field of research. One thing remains the same in all the studies: it is something new or it has an element of newness. Schumpeter was one of the first researchers to draw attention to innovation in his book in 1942.
Schumpeter (2008) defined innovation as creative destruction which occurs when a new product or service enters the markets and leaves some current product or service without customers. Schumpeter (2008) argues that creative destruction leads to an organization’s economic growth. Modern innovation definitions are based on innovation types which makes innovation a more complex phenomenon for research. Trott (2005) defines innovation on a technological basis.
“Innovation is the management of all the activities involved in the process of idea generation, technology development, manufacturing and marketing of a new (or improved) product or manufacturing process or equipment.”
Trott defines innovation as a management process which leads to a new or im-proved product, process or equipment. Innovations can also be existing products or services which are developed at the next stage. Moreover, innovations can be radical, really new (discontinuous) and incremental innovations. Based on Druck-er (1993), innovation means more than just technology and it applies to evDruck-ery existing organization. Drucker (1985) argues that innovation brings the possibility for new business and is the specific instrument of entrepreneurship. Moreover, innovation, especially technological innovation, requires constant monitoring for new opportunities or changes, for example in technologies (Drucker 1993).
2.3.2 Push and pull innovations
Two major categories of innovations are market push and pull innovations. Mar-ket demand does not exist in push innovations, and new products and services come from the research of an organization (Brem and Voigt 2009; Ottosson 2004;
Stefano et al. 2012). Market demand exists in pull innovations which can be more beneficial for an organization (Caetano and Amaral 2011; Drury and Farhoomand 1999; Peters et al. 2012). Therefore, an organization should always locate innova-tion opportunities in its business environment. Push and pull innovainnova-tions have differences in essence as Table 4 illustrates.
Table 4. Differentiation between push and pull innovations (Brem and Voigt 2009 [adapted])
Attribute Push innovation Pull innovation
Technological uncertainty High Low
Research, development and innovation (RDI) expenses
High Low
RDI duration Long Short
Sales market-related uncertainty High Low
Time-to-market Uncertain or
un-known
Certain or known
RDI customer integration Difficult Easy
Kinds of market research
Qualitative-discovering
Quantitative-verifying Need for change of customer behavior Extensive Minimal
Push innovations refer to technology push in a technological context and pull in-novations refer to market pull inin-novations (Ulrich and Eppinger 2012). It can be concluded from Table 4 that pull innovations are profitable for an organization because the needs of the markets are known and demand exists. Walsh et al.
(2002) claim that pull innovations provide substitutes for existing products, while push innovations, provide major improvements to innovations. Therefore, an or-ganization which is developing its products and services can utilize both innova-tion types in its activities. Pull innovainnova-tions can be profitable but both innovainnova-tion categories are required in an organization’s innovation activities.
2.3.3 Scopes for innovations
The literature describes several innovation types. An innovation is radical if a new product or service satisfies a formerly unsatisfied customer need for the first time (Gemünden et al. 2007). A completely new market area will be developed and the organization will benefit economically from the radical innovation. Radi-cal innovation may change customer behavior in the markets. An example of
rad-ical innovation is the mobile phone or the flat screen television (Sivula and Kan-tola 2014b).
A really new innovation (discontinuous) is in between a radical and incremental innovation. A really new innovation is a moderately innovative product or service (Garcia and Calantone 2002). A really new innovation upgrades a product or ser-vice by a great stride and it can evolve into a new product line or create new mar-kets with existing technology. An incremental innovation presents a minor degree of departure from existing practices (Camisón-Zornoza et al. 2004). It enhances the capacities already present in the organization and develops them. Improve-ments can be minor or major for products or services. Incremental innovation makes an existing product or service more tempting to customers. Incremental innovation is the most common innovation type.
A technological innovation is a process which generates new or improves on cur-rent technology (Nieto 2004). Technological innovation requires research, devel-opment and learning-by-doing activities in an organization (Sagar and Zwaan 2006). Learning can lead to better results and changes in an organization. The development of new technology can require a significant amount of resources and capital.
A product innovation is a process which includes the technical design, RDI, man-ufacturing, management and commercial activities involved in the marketing of a new or improved product (Alegre et al. 2006). Product innovation can include technological and service solutions. Product innovation can include significant improvements in technical components or materials. A service innovation is a new, better or more effective service. Service innovations require creative activi-ties like other innovations (Schwarz et al. 2012). A service innovation can be a new or improved service concept which adds value for the customer.
Process innovations are changes in the ways an organization acts (Tidd and Bes-sant 2013). Process innovation generates a new or significantly improved way to produce products or services or way to deliver them to customers. Process inno-vations can reduce production or delivery costs or significantly increase product or service quality. Drucker (1993) highlights the importance of social innovations.
Social innovations are changes in economic and social environments and they have bigger role than, for instance, technological innovations (Drucker 1993).
Moreover, Drucker (1993) argues that social innovations are opportunities for businesses and business managers. Thus, social innovations may create opportu-nities other innovations, because demand might appear from the social innova-tions.
2.3.4 Management of innovations
This study utilized Tidd and Bessant’s (2013) generic innovation management model. Innovation processes generally vary in organizations but the same main phases exist (Sivula and Kantola 2016a). Tidd and Bessant (2013) highlight that the innovation process has four phases which are search, select, implement and capture. Tidd and Bessant’s innovation management model can be considered a generic approach to innovation management. Figure 6 illustrates innovation man-agement as a process.
Figure 6. Innovation management as a process (Tidd and Bessant 2013 [adapted])
Search, select, implement and capture are the main phases. Figure 6 includes rel-evant questions for an organization’s managers to analyze specific innovation management phases. The search phase includes the scanning of an organization’s internal and external environment and the processing of signals which are rele-vant and may be developed into new products or services. The signals can be, for example, new market opportunities or new product ideas.
An organization makes decisions as to which signal it will respond to in the select phase. This phase may include analysis of a new idea which is based on, for ex-ample, the organization’s vision, strategy or values. The development process of an innovation can take a long period of time and demand a lot of the organiza-tional resources. It is important, therefore, to analyze which innovation ideas will precede to the implement phase. The front end of innovation includes search and select phases. The front end innovation activities come before the formal product
development which includes opportunity identification, evaluation, idea genera-tion, selection of ideas and new concept development (Peltomaa 2014).
The implement phase develops, for example, the new product, service or process.
The idea will be translated into innovation and launched to the organization’s internal and external markets. Implementation of an innovation requires knowledge to develop an innovation and to execute the development project. The implement phase requires knowledge about internal or external markets and knowledge of the market area where the innovation will be launched.
The capture phase is the final stage of the innovation management process. Cap-turing value from innovation includes sustaining the innovation’s adoption and diffusion. Organizations have a possibility to learn from innovations and innova-tion management. This leads to the development of innovainnova-tion management. All experiences in innovation management should be processed and carefully ana-lyzed. The result of future products or services is more inclusive if learning hap-pens from former innovations and development processes.
Tidd and Bessant’s innovation management model highlights important areas for an innovative organization and the strategies it uses. Blue oceans strategy is one form of innovation strategy. Blue oceans express potential markets which do not currently exist and can be created (Kim and Mauborge 2005). The company’s organizational culture plays an important role in an innovative organization. In-novation culture can, however, be hard to manage. Organizations such as Google Inc. and P&G combine openness to new ideas with a healthy respect for the opin-ions of customers to generate an innovation positive culture (Jaruzelski and Kat-zenbach 2012).