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Understanding Innovation: Key to Alliance Success

Summary

An understanding of the fundamentals behind technology driven innovation perhaps policy makers and managers to more effectively deploy resources and make judgments to achieve innovation objectives.

Need: Defining and Understanding Innovation

Innovation is described in the press and business journals as an essential for business success and national economic growth. However, the term is used in so many ways a reader can come away more confused than enlightened. This confusion compounds the problem of dialogue and decision-making, leading to frustration around what mechanisms are right to achieve innovation. Indeed, innovation is used to describe research & development, new marketing channels, new business models, product design, information systems applications, and on some occasions, new models or designs that have been lost in the accelerating pace of organizational life and been rediscovered as “new” and “innovative”.

An understanding of innovation provides leaders and managers the ability to make more effective decisions and judge more accurately potential innovations brought to their attention.

Background: Innovation as Something of “New or Marginal” Value

Innovation is the application of something that generates “new” or “marginal value”, whether a technology, design or organization structure (e.g. business model) to meet a need. This broad concept makes innovation applicable to society, government, social services and economies.

Innovation is not invention. An invention is the crafting or creating of something that can be applied as an innovation.

Situation: Innovation Confusion: New, Renewed, Modified, Renamed

Our challenge is to understand what is “new” and connect that new item to meet a need. In our era, the Internet is new “technology” that facilitated a change in communications. That change cascaded into different commercial forms of marketing, selling and distributing. However, the fundamental concepts of market origination and distribution have not changed. Ordering a book by mail or by Internet is still an impersonal means of ordering a book from a list displayed in front of a buyer. But indeed, the underlying tool is different: more speed, more choices, and more real time exchange!

Situation: Why R&D and Innovation So Closely Linked: New Knowledge

Innovation is often used in discussions linked to research and development, because innovation often begins with new “knowledge”. The fundamental outcome of research and development is the generation of new knowledge leading to its application in a particular form. So, new knowledge generates something new. But what types of forms?

The Source: R&D Leading to Technology

Technology comes from Greek referring to “art, skill or craft”, and evolved in the western culture to describe tools, machines, systems and sometimes methods created to meet a need. The term is applied broadly, in both a single form such as a hammer, but also to fields of skill or craft, such as construction technology or medical technology. In it’s fundamental form, we think of technology as a tool.

Research and development generates new knowledge. And, we like to capture that knowledge in some form of a tool that we refer to as technology. But how does this connection work?

The Capture: Creating New Knowledge, Forms of Capture, New Technology

Creating new knowledge is a tricky process. It basically comes from making observations and drawing deductions. But, we all see the world around us every day. So how do we get new observations for new knowledge?

Research and development are the fundamental steps in creating new knowledge. Research is the activity of defining a field for observation, gathering data about activity in that field, and drawing observations from watching cause-and-effect relationships from the activity.

The collective process therefore yields a “knowledge ladder”. At the lowest level are observations that generate individual sets of “data”, or a single observation. By piecing the data together in the context of a set of observations we generate “information”, or a set of observations that generate a pattern. By analyzing the information and comparing it to our current world knowledge, we generate a new “understanding” of what might cause the pattern of observations captured as information. Finally, we can then re-test the sequence of observations, information and understanding. Once we have retested this process, we can confirm an “insight”. The insight is the understanding of the fundamental cause-effect relationships verified by the data, patterns of data as information, and compared against our current world understanding. The “new understanding” becomes “new knowledge”. But so what? What do we do next?

New knowledge can be captured and applied to meet our needs. New knowledge takes one of four fundamental forms:

· Physical capture of knowledge, such an tool

· Process capture of knowledge, such as a protocol or software

· Competency capture of knowledge, such as a collection of people in a think tank

· Organizational capture of knowledge, such as a business or societal model of activity[1]

The Recipe: Elements of Innovation

Innovation intended for adoption requires some additional elements that go beyond R&D to generate knowledge. Those elements are “actors” in networks that exist in every country and industry. The core elements include:

· End users- The customers are end users that define the need to be satisfied by innovation. End-users can be consumers, wholesale consumers or integrators that combine innovation into products and services for consumers.

· Suppliers- The suppliers are organizations that apply the innovations to improve existing capabilities (products, services) that meet the needs of end-users and other suppliers.

· R&D Sources- The sources of research and development provide the raw material for innovation, whether it is new knowledge or reconfiguration of existing knowledge into a new capability.

· Adoption Groups- These are standards setting and certification guideline bodies that represent the existing or legacy practices. Innovation must either fit into these adoption systems or “disrupt” the system.

· Capital- Small businesses and organizations are an increasing source of American innovation. These organizations require risk capital to pursue innovation, such as angel financing, venture capital or cost-sharing partnerships.

[1] StarNet modified knowledge capture model


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