Dr. Andrea Bencsik, a professor of Szechenyi Istvan University in Hungary shows, what the secret of success is in a corporate innovation and how the management should prepare oneself consciously to reach success in this paper. In a knowledge-based economy those organizations are capable to live which have up-to-date knowledge and which can exploit this knowledge as well. Corporates in the 21th century have to take the fact into consideration that knowledge acquired with difficulties can be lost easily if they do not exhaust it in time. That is why a continuous innovation of companies is a question of vital importance.
These ideas are verified by the facts that to develop a new car model took 6 years in 1990, but today only 2 years are enough to do it, or the biggest proportion of income of the Hewlett-Packard rises from such products which did not exist a year earlier.
These conceptions stress the reasons of existence of knowledge management (as a relatively new business strategy). This new model is inseparable from the necessity of integration of new knowledge into companies and inseparable from the utilization of the results of development as well.
In a survey of literature on innovation, Edison et al. have found over 40 definitions. According to the most popular approach: ‘Innovation is a new technology, a new method of management, a new market, a new raw material, a new product or a new organization of a production system. Innovation stresses the interactions of human-human relationships and evaluation of their results above the human-machine relationships’ (Bucsy, 1976).
During the development of innovation models 5 generations can be separated. The fifth generation is a newest one, it seems a different one compared with the previous integrated models, because in this model IT tools play a significant role on behalf of the quality and speed of planning. The requirements of production should be taken into consideration during planning to save more money and time.
This model is featured by complexity, by system oriented approach. It is knowledge-driven which includes strategy and business management as well. It pays stressed attention to the strategic partnerships with the suppliers, regularly calls advisory-experts’ aid. The model keeps a close connection with consumers, tunes in R+D simulation models, it builds horizontal connections in research, collaborates with developer teams and it prefers quality.
Nowadays, the very quickly changing environmental conditions, the continuously changing demands of the market require new accomplishment, continuous adaptation and development of companies. Each company has to face the fact that R+D is the most of all cost-consuming process where there permanent questions are: if it is worth investing into the development, what its outcomes will be from the viewpoint of the future, what risk factors are, if R+D results in the same success on the market as it is expected by the management, etc.
In the background of the questions there is a demand that innovation potential of companies should be calculable or valuable in advance.
Countless researches have come to light – aimed SMEs and big companies as well -, to identify characteristics of innovation. These researches want to contribute to the decisions about investigation into developments.
The isolated researches can bring certain results at a local level, but generally accepted models which form the future and which can operate at an international level, are only a few. The currently applied models can qualify the conditions of companies from the viewpoint of their innovation practice and they give comparable data as benchmark.
There is only one model which gives the above-mentioned benchmark information as an internationally accepted standard. It was born on the basis of IMP3rove™ method. It was worked out by the word famous advisory company, A. T. Kearny and the German Fraunhofer Institute supporting of EU.
From 2007 this model has been the European standard to measure the innovation potential of SMEs. (It has to be noticed that this model aims SMEs and it is suitable to measure the potential only but it is not suitable to appraise the innovation potential in advance.) On the basis of the results of a survey, experts can determine the strengths of a company and its development potential on the area of innovation-management.
The model builds up according to the following logic.
Pyramid of innovation management http://www.innoguide.hu/index.php/diagnosztika/imp3rove-felmeres
The pyramid represents facts which influence and direct the innovation processes, conditions, features, abilities/skills and competencies.
Inclusion and evaluation of international innovation management questions is realized by the EU standard IMP3rove™ system. The answers are comparable objectively with the answers of companies of the EU which filled in the same questionnaire. Not only certain questions but the averages of groups of questions can be compared with the results of the investigated company. On the basis of the answers two groups can be separated. One of them is the so-called ‘developmental champions’ and the other one is the ‘average’. http://www.innoguide.hu/index.php/diagnosztika/imp3rove-felmeres
This method is worked out on the basis of requirements of SMEs. It contains advising, suggestions about the possibilities of development but it is not suitable to give an estimation in advance which based on a multi-factorial comparison. The results of comparison should support a real successful operation of innovation and should protect a lot of companies from failure and unnecessary costs.
What can a solution be to estimate a successful innovation in advance?
There is a so-called cognitive theory which is a special approach of organizational innovation. It says that the innovation ability of organizations depends on their absorptive ability. The absorptive ability shows that how organizations can use inside and outside knowledge (Cohen – Levinthal 1990).
From the viewpoint of innovation there is a serious significance of organizational abilities with which they can use outside knowledge. (Besides the effect of inventiveness is neglectable.) To use these abilities a relevant, preliminary knowledge is necessary which enables an organization to recognize the value of new information, enables an organization to use it and to fit it into its economic activity.
There is a model in the Cedefop report (2012) which confirms a close connection between knowledge management, – as a business model – and innovation processes. It stresses that the employees’ knowledge, abilities and competencies characterize the potential of organizational learning which is named as intellectual capital. It means accumulated organizational knowledge wealth. It contains employees’ knowledge and competencies, R+D investigations, values of software, marketing methods, organizational structure, etc. The absorptive capacity of an organization depends on its intellectual capital.
According to the most of all accepted division the intellectual capital consists of three components:
- Human capital
- Structural capital (or organizational capital)
- Relational (customer) capital
The idea of intellectual capital is used in economics and in accounting as well as experts make efforts to work out possibilities to show its numerical value in order to write it into the financial accounts.
Majority of innovation surveys above technological developments and R+D activities stress the importance of human capital, but the other two components remain in the background and an investigation of the relationship among them is almost totally missing.
A lot of researches and survey models are worked out at an international level as well to determine innovation potential of companies. In our opinion a mensuration system model which based on understanding of secrets of successful innovation is keeping us waiting. This model can give a special solution to companies which offers them real help thinking about the future. It should contain additional possibilities of innovation solutions, as open innovation, crowdsourcing and frugal innovation, because they contribute to the successful corporate innovation as well.
Bucsy, (1976): Az innovációk rendszere és a vállalati fejlődés, Közgazdasági és Jogi Könyvkiadó, Budapest
Cedefop (2012): Learning and innovation in enterprises. Research Paper No 27, Luxembourg: Publications Office of the European Union, p. 173.
Cohen, W.M – Levinthal, D. A. (1990): Absorptive Capacity: A New Perspective on Learning and Innovation. Administrative Science Quarterly, 35:123-138. http://dx.doi.org/10.2307/2393553