Innovation management: essence, organization, development, methods, goals and objectives

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

In modern conditions, business must be controlled by professional managers who are able to develop innovative approaches to creating their product. Management has many directions and functions. This may be the control of financial activities, and the development of projects, and the approval of strategies, but in all cases, business management should strive to create a plan that would allow the entrepreneur to achieve his goals and expand his business.

The place of innovation management in business

A good manager thinks about how to solve the problems facing the organization most effectively. Here the decision can be made at your own discretion, but the final result will depend on it. The manager must choose which strategy to follow.

At this moment comes to the rescuehistory.

Since the birth of the concept of management and its theoretical schools in business, the following trend has been observed: any successful entrepreneur has achieved success by releasing such a product that no one has offered before him. It is an exceptional and unique product that solves human problems and provides a reason for emulation. Such factors made the entrepreneur an exclusive monopolist in his business.

The activity of introducing new products is called "innovation management". In the future, innovation determined the strategic management of the company, as they looked to the future. The most striking historical example of innovation management is the organizational environment under the leadership of Henry Ford, which managed to create the world's first automated production of cars.

Competencies of a manager when developing a strategy

Innovation management requires a competent approach. If a new product or a new service is being created, then you need to be able to offer it correctly in order to have demand. The latter is formed from factors directly related to the skills required from the manager, which he must demonstrate in the process of organizing innovative management.

When forming ideas, a manager must take into account competition, the degree of need for this product / service in society, the size of the market, the degree of risk, the amount of investment and potential profit. This refers to the so-called idea filtering process, in which the company must remove the unnecessary and leave the mostneeded.

A Brief History

XX century is the period in which the development of innovation management began. There were not so many stages of its formation, but all of them took an incredible step towards progress and in just a century turned into a whole science of how to make society better and business more profitable. These steps include:

• The era of mass production, when the market was not yet so saturated with various goods (the first third of the 20th century).
• The era of mass marketing, the concept of which was aimed at recovering the US economy after the Great Depression (lasted until the middle of the 20th century).
• The post-industrial era that originated with science and information technology (begins in the second half of the 20th century and continues to this day).

In the post-industrial world, the tasks of innovation management that require novelty and uniqueness have finally become stronger. As a result, by the beginning of the 21st century, world markets were filled with products that no one could even dream of some 50-70 years ago. Since then, a large number of innovative strategies have taken root in the business environment and are used by many companies today. Since the beginning of the 20th century, many management schools have been created in America, the origins of which were such famous scientists and thinkers as F. Herzberg, A. Maslow, F. Taylor and other founders of scientific management theories. It was at this time that the importance of the psychological and social factor in the life of society was first noted, which prompted business to create something new.

Functions of the innovation development process

The theory of organization management identifies several groups of innovative management functions. They also represent certain stages in the development of an innovative product. The first step is to predict the risks and benefits. Then the planning function comes into play, which already directly underlies the plan for the development, implementation and dissemination of the planned innovation. Among the functions there are such important ones as the analysis of the micro- and macro-environment performed in the course of work, the adoption of managerial decisions, the motivation of personnel and the control over the progress of the introduction of innovations. Only when the management process proceeds correctly can companies succeed. The goals of innovation management are no different from its other types, but it is with an innovative approach that they are most achievable, as everyone who supported this theory believed.

R&D (Research and Development) Strategies

A key factor in managing innovation in a business is to properly prioritize ideas. Manager's ideas must correspond to reality, common sense and the principle of profitability. As a result, exactly those ideas are selected that best meet these priorities. In practice, the company has a limited amount of funds that simply cannot be wasted.

There are strategies:

• protective, aimed at reducingcosts;
• offensive, involving an increase in output;
• absorbing, focus on business relationships;
• innovative related to novelties;
• rogue, out of control competing;
• cooperative;
• attracting new specialists.

New Life Cycle

Once a new product has been introduced to the market, the company will survive its entire life cycle. We must not forget that nothing lasts forever and any new product released for general use will survive the peak of its popularity and gradually go out of fashion.

At first, a new product goes through a nascent stage, when it is just being introduced to the market and no one knows about it yet. At this stage, first of all, advertising and the quality of the product itself are important. He must prove himself. Then, subject to success in the previous stage, the time of growth begins, when the innovation becomes fashionable and gains popularity. After that comes the stage of maturity. At this point, the product is at the peak of its glory, is popular and brings success and good income to the company. At the end of the life cycle, there comes a moment when the novelty is no longer such and gradually goes out of fashion. In some cases, it may continue to be highly popular with customers. However, this happens when the product was really so innovative that it changed the life of society and people got used to it.

Otherwise, innovation and revenue decline, and soon the company needs to developnew strategies.

Financial valuation

Experienced managers calculate the economic benefits of their innovation. There are many ways and formulas. Since innovation management is closely related to investment management, it is first necessary to calculate the interest rates on loans that can be attracted to create a project. Before an investor makes an investment in a future project, he calculates its future value using special economic formulas, and then makes a decision on investments.

Risk Analysis

The chance of technical, financial, project, functional or political risks is quite high. Any methods of innovation management include an analysis of potential risks. Anything can happen, from irresponsible personnel to technical breakdowns or legal troubles, which drastically reduces the likelihood of success.

The talent of a manager is a combination of prudence, awareness and creativity. Innovation management is based on the fact that professionals look to the future and do their job with a long-range calculation.

Innovative marketing

A company that follows marketing principles as a philosophy is much less likely to lose out in innovation than those firms that launch a new product on the market in a state of complete uncertainty. Experienced businessmen study the competitive market and, based on the information received, develop tactical and strategic marketing plans.

Everything can be hereanything. Companies are trying to outperform their competitors by softening their pricing policy, increasing the amount of resources, creating unique advertising, etc., etc.

Components of an innovative project

The essence of innovation management is a unique project that can bring an organization to the forefront. Its elements are all the most important details of which it consists. The project should have a goal, which, in turn, is divided into a list of predefined tasks that can lead to it. The project has its own life cycle, a set of actions for its implementation and a list of quantitative indicators that determine its level.

It is also important that the project must have participants. The customer and the performer appear as necessary. The customer is the main user of the project results, while the contractor is the person working under the contract with the customer. The project also has investors providing funding, designers theorizing the product, and vendors providing resources. Work on innovation is provided by managers, members of the scientific council and external structures that may be interested in creating a product. These structures can be both private and public, they can appear as investors, if necessary. This happens when large organizations need some kind of technology or innovative product. Such a company will be ready to support a new business idea.