Yesterday, I posted an item about the Kaufman Foundation's papers on innovation and entrepreneurship data. Today, I want to highlight one of those papers, the proposal for a Innovation Radar 2.0 Survey. This survey would be a follow on to an initial 2005 Web-based questionnaire.
What is especially important about this project is that it takes a broad view of innovation. The proposal paper, in and of itself, is a great argument for why a broad view is important. Let me quote at length:
Innovation is the essential driver of the growth of organizations and countries. However, we lack a robust and systemic approach to defining and measuring business innovation. The literature on innovation has at least three limitations. First, innovation is very narrowly defined and technology-oriented (Howells and Tether, 2007; Sawhney, et al. 2006; Van de Ven, 1986). In this narrow view, innovation and innovation management focus on R&D, new product development, or the product/process dichotomy. One group of scholars defines innovation as the adoption and implementation of a new technology, mostly driven by R&D or invention. For example, Garcia and Calantone (2002) view innovation as an iterative process to explore the market potential of a technology-based invention through adoption and diffusion. Another group of scholars regards innovation narrowly as new product development or product innovation (Hauser et al, 2006). For example, Han, Kim, and Srivastava directly (1998:32) state that "[i]n marketing, the conventional meaning of the term innovation largely refers to new product-related breakthroughs." The third group of scholars brings processes into innovation scope, thus, understanding innovation as product/process dichotomy. For example, Tushman and Nadler (1986:75) define innovation as "the creation of any product, service, and process, which is new to a business unit." In this literature stream, process innovation is a means to create new ways to develop new products and to improve process efficiency. This view emphasizes delivering tangible things to meet customer needs. This dichotomy still is technology-oriented.
However, innovation is not limited to R&D, new product development, and technology innovation. For example, Dell Inc. has become one of the world's leading personal computer manufacturers, not through R&D investments, but by bringing products to market more quickly and innovating on processes, such as direct selling, supply chain management, and manufacturing. Starbucks Corp. is regarded as a highly innovative company, not because of better-tasting coffee, but because the company is able to create an innovative customer experience referred to as "the third place"--a communal meeting place between home and work. Viewing innovation too narrowly blinds companies to opportunities and makes them vulnerable to competitors with broader perspectives (Sawhney, et al. 2006). A broad view of innovation is necessary.
In support of a broader view of innovation, Drucker (1977) states that non-technological innovations "are at least as important as technological innovation." In reality, there are many more dimensions to innovation, including solution innovation, customer experience innovation, organizational innovation, business model innovation, and so on (DOC, 2008; Moore, 2004; OECD, 2005). Considering the limitations of the narrow view, innovation is regarded as the adoption and implementation of any new ideas relative to the organization. For example, Van de Ven (1986) defines innovation as "the development and implementation of new ideas by people, who over time, engage in transactions with others within an institutional order." (p. 590). Recently, nontechnological innovation has caught more attention in the connected world (Djellal and Gallouj, 2001; Moore, 2004). Following this trend, OECD (2005) has broadened the concept of innovation to encompass marketing, internal organizational and external relationship innovation. Although there are different views and perspectives of innovation, a common theme in all definitions of innovation is that it is a new idea that is put into practice while paying special attention to its usefulness-a theme that originated from Schumpeter (1934).
Therefore, we define innovation as an initiative in any dimension(s) of the business system to create substantial new value for customers and the firm (Sawhney, et al. 2006). This innovation definition emphasizes three points: originality (an initiative to create new value), a holistic view (an initiative in any dimension(s) of the business system), and customer outcomes (the value generated by the initiative for customers and the firm). These points are emphasized in the recent definition by the Advisory Committee to Department of Commerce (DOC 2008), where innovation is defined as, "The design, invention, development and/or implementation of new or altered products, services, processes, systems, organizational structures, or business models for the purpose of creating new value for customers and financial returns for the firm."
A second limitation of the literature is the lack of a rich typology for innovation, with a few exceptions. (e.g. Damanpour, 1991; Djellal and Gallouj, 2001; Moore 2004) Past research has argued that distinguishing types of innovation is necessary for understanding organizations' adaptation behaviors (Damanpour, 1991; Downs and Mohr, 1976). Although researchers have suggested numerous innovation typologies, such as incremental versus radical (Dewar and Dutton, 1986), continuous versus discontinuous (Tushman and Anderson, 1986), sustaining versus disruptive (Christensen, 1997), exploitative versus evolutionary innovation (Jansen, et al. 2006), most innovation typologies focus on the degrees or types of technological innovation in a dichotomized form limited to the narrow view (Garcia and Calantone, 2002; Gatignon, et al. 2002). We contend that innovation is multifaceted and goes beyond technology. A new innovation typology is needed.
In recognizing the importance of non-technological innovation, Drucker (1977) argues, "The best way to organize for systematic, purposeful innovation is as a business activity rather than as functional work. At the same time, every managerial unit of a business unit should have responsibility for innovation and define innovation goals." (p. 57) Following this line of thinking, we believe that types of innovation should be related to business activity because by definition, innovation is an initiative in one or more dimensions (aspects) of the business system. Although the broad view of innovation originates from Schumpeter, this view rarely has found its way into typologies for innovation. Abell (1980) argues that a firm's offering, customer, and operations are related to three primitive dimensions along which any business unit's scope may be defined. Also, presence (how a firm takes its offerings to market) also is regarded as a key dimension in defining the core business (Zook and Allen, 2001). Therefore, we contend that a firm's offering, customer, operation, and presence are the four key dimensions for defining business innovation. These dimensions broadly are consistent with the typologies proposed by some scholars and authors (Djellal and Gallouj, 2001; Moore, 2004; OECD, 2005).
A third limitation of the literature is a practical and robust measurement approach for business innovation, despite a long history of innovation research (Boston Consulting Group, 2006; DOC, 2008). There are two broad streams of research on measurement of innovation. One stream seeks to measure innovation through innovation inputs, such as R&D intensity, as well as through innovation outputs, such as patents and patent-related index (Cordero, 1990; Lanjouw and Schankerman, 2004; Qian, 2007). These measures capture a narrow subset of all possible innovation activities. However, the linkage between such measures and organizational innovativeness and economic growth are unclear. For example, empirical evidence suggests that R&D spending has no significant relationship with nearly all measures of business success, based on an analysis of the top 1,000 global innovation spenders (Booz, 2005). More recently, Bessen and Meuer (2008) show that patents are not only insufficient, but also unnecessary to explain cross-national innovation and growth rates according to the macro level evidence. Gittleman (2008) also strongly argues that the value of using patents as indictors of innovation is very limited at the micro level. The other stream on innovation measurement takes a macro level view. For instance, efforts in the European Union have been made to measure country innovation capabilities through objective economic measures, such as Oslo Manual (2005), European Community Innovation Survey (CIS-4), and the European Innovation Scoreboard (EIS 2007). Recognizing the limitations of current innovation measurement, the U.S. Department of Commerce established in 2006 an advisory committee to improve the measurement of innovation. The committee outlined its recommendation calling for actions to develop innovation measurement in the 21st century economy (DOC, 2008). A holistic and comprehensive measurement framework for business innovation still has to be developed and validated.
That is, in my view, a good summary of the literature (in case you are interested, the references are available in the original document).
The proposal goes on to outline a survey based on a general manager's view of innovation. This framework would look at three strategies:
1) offering innovation strategy that provides functional value, 2) experience innovation strategy that creates emotional value, and 3) operational innovation strategy that delivers economic value. Each innovation strategy includes four types of innovation. Offering innovation strategy consists of technology, product, platform, and solution innovation. Experience innovation strategy includes customer, interaction, design, and presence innovation. Operational innovation strategy encompasses process, organization, supply chain, and ecosystem innovation.
There are a few places that I would take issue with their framework. For example, they equate "design innovation" with aesthetics. I would stress functionality.
However, for the most part, this is both an excellent introduction/overview of why we need to look at innovation broadly and a workable proposal for data collection using that broad view.
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