TOWARDS INTEGRATIVE INNOVATION MODELS

Biljana Stošić and Sonja Išljamović

Dept. of Operations Management, Faculty of Organizational Sciences, University of Belgrade

154 Jove Ilića Street, Belgrade, Serbia

Keywords: Innovation management, Innovation models, Integration, Networks.

Abstract: Innovation and innovative competences have long been recognized to be one of the basic competitiveness

and long-term profitability factors, from the firm level up to national and global economy level. Having in

mind that innovation, generally, represents the process from idea to realization, the paper is concerned with

the key elements of innovation process models in today’s knowledge-driven economy. Contemporary,

network and integrative innovation models should be based on the relation between the firm, strategy and

environment i.e. the firm should be linked with the environment by means of strategy, which represents a

mediating force - the firm is responding to market requests driven by its strategic concept. Integrative

models for 21

century should overcome basic weaknesses of conventional linear technology-push and

market-pull approach, taking into account the possibilities of proactive innovation strategy, networking and

external linkages of the firm.

1 INTRODUCTION

The increasing importance of knowledge as an

economic driver implies a growing influence of

innovation and innovativeness, which are proven to

be the key determinants of competitiveness and

profitability on different economy levels (from

enterprise to national economy, and globally).

Innovation appears to be the central element of this

new economy, with domination of information-

communication technologies - ICT, as a key

strategic dimension bringing completely new

methods of communication and business - especially

e-business and Internet, (Day, Shoemaker, Gunter,

2004). In other words, today’s most developed and

technologically advanced economies are actually

knowledge-based, with innovation as the key

success factor. As for the company level, for

innovation leaders (like Apple, Google, Toyota,

being ranked as the top three in BCG Innovation

Reports since 2007), innovation is the tool that

redirects the competitive course of an entire

industry. In line with the standard guidelines for

collecting and interpreting innovation data, well-

known in innovation field as the Oslo Manual

(OECD, Eurostat, 2005), innovation represents the

implementation of a new or significantly improved

product (good or service), or process, or a new

marketing or organizational method The knowledge

accumulated by the firm is the most significant

innovation capability, meaning intellectual capital

gained from learning processes and disposed in

human resources, procedures, routines (OECD,

Eurostat, 2005), and other characteristics of the firm

which enables implementation of innovation process

from idea to realization.

On the global level, while defining a roadmap to

the European Union’s innovation policy at the

beginning of this century, the European Council

emphasized the importance of innovation as the

main source of competitiveness and economic

growth, and its key role in the European Research

Area. In European Commission’s Green Paper on

Innovation (1995), innovation is defined as the

renewal and enlargement of the range of products

and services and the associated markets; the

establishment of new methods of production, supply

and distribution; the introduction of changes in

management, work organization, and the working

conditions and skills of the workforce. At the

enterprise level, successful innovation management

includes some basic elements (Stošić, 2007):

o Defining innovation strategy and coordination

with other strategies - business, technology,

marketing, intellectual property;

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c B. and I

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TOWARDS INTEGRATIVE INNOVATION MODELS.

In Proceedings of the Multi-Conference on Innovative Developments in ICT, pages 219-222

 SciTePress

o And development of innovation models from

idea to market;

o Management of innovation portfolio (innovation

projects);

o Innovation incentives and measurement of

innovation performance.

2 INNOVATION TYPOLOGY

There can be found an extensive number of

innovation definitions and classifications, having in

mind that this concept has evolved significantly over

the last decades. In its wider context, it is the process

of turning the possibilities into new ideas and

putting them into practical use. As a specific form of

change, innovation can be defined in various fields,

as J. Schumpeter has defined it thus establishing

serious innovation theory - basic element of

technological progress, and, much later, P. Drucker,

as the key element of entrepreneurship, specific tool

of entrepreneurs, the means which enables them to

use the change as an opportunity for different

business or service (Drucker, 1985). The same

author considers innovativeness not only as the

feature of high technology enterprise, but, also, of

the lower technology level firms. Innovation that

contains new value frequently requests systematic

and rational work, well organized and result

oriented.

The Republic of Serbia Law on Innovation

(2005) defines innovation as a new product, process,

technology or service with unique features, produced

by application of internal or external research and

development results, discoveries and knowledge,

throughout own concept, idea or method for its

implementation, and placed on the market with an

adequate value. According to criterion of novelty

degree, innovation can be incremental (small

improvements) and radical (completely new

product/services etc.); while there also can be found

the concept of semi-radical innovation.

In this context, innovation presents both the

process of transformation the idea into new

product/service/process etc., and the output of that

process, which is highly connected with three

functions: research and development (R&D),

production and marketing. One of the basic

innovation management relations is that of

connecting invention, innovation, performances and

business success (neither all of inventions lead to

successful innovations, nor all of innovations

provide business success). Innovation is successful if

it results with company’s potential to contribute

continuously (time aspect) to growth, through

stability and adaptation. The key is in using the

results of innovations evaluation that will enable

company to be ready for responding to challenges of

changes. In addition, innovation is the application of

knowledge, meaning that technological innovation

can be accompanied by additional managerial and

organizational changes, often referred to as

innovations.

According to Oslo Manual basic document,

which has provided an expanded measurement

framework (above all, recognizing the role of

linkages between firms in the innovation process and

giving more relevance to the service sector - less

R&D intensive industries), all these different

typologies can be considered as one of four main

types, mentioned earlier:

 Product/Service Innovation;

 Process Innovation;

 Marketing Innovation;

 Organizational Innovation.

3 INNOVATION MODELS

- FROM LINEAR

TO INTEGRATIVE CONCEPT

For a long time, in the area of building innovation

models the linear-sequential approach dominated,

considering innovation as a series of sequentially

established phases without any feedback (so-called

waterfall processes). That is evident in one of the

well-known innovation model classification, given

by Rothwell, with five generations of models

developing from linear to integrative - network,

Table 1

Table 1: The chronological development of models of

innovation (Bessant, Tidd, 2007, based on Rothwell).

Date

Model

Characteristics

1950/60s

Technology-

push

Simple linear

process; emphasis on

R&D

1970s

Market pull

Simple linear

process; emphasis on

marketing;

1980s

Coupling model

Integrating R&D and

marketing

1980/90s

Interactive

model

Combination of push

and pull

2000s

Network model

External linkages

The achievement of strategic competitiveness and

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Figure 3: Stage-Gate process (Cooper, 2001).

the importance of a strategic company performance

are formally demonstrated with an Interactive

model, which, in a certain manner, integrates the

positive characteristics of the earlier Technology -

push and the Market - pull models - Figure 1.

Figure 1: Interactive model of innovation (Trott, 2009).

New innovation management models should

start from one of the basic innovation management

relations, as in the Kline and Rosenberg Chain-link

model (Kline, S.J. & Rosenberg, N., 1986), which

represents an interaction between a firm’s

capabilities and market opportunities by mains of

strategy as a mediating force, in order to achieve

goals of competitiveness and effectiveness.

Integrative models of innovation processes are based

on this relation between the firm, strategy and

environment – Figure 2.

Figure 2: Strategy as a mediating force (Stošić, 2007).

When it comes to product innovation - new

product development (NPD) and introducing it to the

marketplace, the most widely-used is the Stage-Gate

approach, which brings the roadmap for moving a

new product-project from idea to launch.

The actions are taking place in different stages

(from evaluation and selection of ideas to

profitability analysis at the time of trial production),

while the intermediate phases include concept

design and specification analysis, system-level

design, detailed design, and testing or prototyping

(Cooper, 2001). The gates are points of decision-

making, so that the project proceeds to the next

phase if reviewed positively. Otherwise, it continues

or iterates within given phase until it successfully

passes the gate - Figure 3.

The road of upgrading the Stage-Gate model is

going towards networking and integration. The first

step ahead can be noticed in spiral product

development process, which differs from the Stage-

Gate due to its emphasis on comprehensive iteration,

including a series of planned iterations that span

several phases of development. On the other side,

spiral model keeps the same way of defining regular

steps as the Stage-Gate, including concept

development, system level design, detailed design,

and integration and testing, but also requires

managers to evaluate risk early in the project, when

costs are still relatively low (Unger, 2008).

Contemporary models start from different

perspectives of innovation networks that can bring in

new concept and new types of companies such as

entrepreneur-based networks, sector networks, spiral

clusters and technology development consortiums. A

network can be defined as a complex, interconnected

group or system designed to accomplish innovation

project particular tasks; in today’s global

environment, innovation networks are more than just

a way of assembling and deploying knowledge in

the complex world. In global business it would be

nearly impossible to bring idea successfully to

market without network support (Bessant, Tidd,

2008). The network model is more dynamic

comparing to conventional ones, including much

more interaction between knowledge assets outside

the company, reducing risks and making innovation

process more successful.

In this context it should be interesting to mention

P&G Company as one of frequently offered

examples whose innovation strategy was focused on

TOWARDS INTEGRATIVE INNOVATION MODELS

221

its internal capabilities and using traditional Stage-

Gate model. Using Innovation Diamond and open

network innovation model, during the last ten years

allowed P&G to increase its pace of innovation

reduce costs and to satisfy more consumer demands.

(Cooper, Heimberg, 2008).

Figure 4: Development of network innovation models

(Unger, 2003).

Finally, in a new model of open innovation, a

company commercializes both its own ideas and

innovations from other firms seeking a way to bring

its in-house ideas to market by deploying pathways

outside its current businesses (Chesbrough, 2007).

Traditional business strategy has guided firms to

develop defensible positions against the forces of

competition and power in the value chain, implying

the importance of constructing barriers to

competition, rather than promoting openness. This

new concept promotes the principle that the

organization should not restrict the knowledge that it

uncovers in its research to its internal market

pathways, nor should those internal pathways

necessarily be constrained to bringing only the

company's internal knowledge to market.

4 CONCLUSIONS

This paper gives an overall review of selected

innovation models, having in mind that one of the

most important questions is that of understanding

innovation and its nature. At the company level,

innovation should have treatment like many business

functions, meaning management process that

requires specific tools and principles, which can be

used to redefine an industry by employing

combination of business model innovation (what is

delivered to market, how it is created and to whom is

it delivered) as well as technology innovation. At the

global level, successful innovation management in

the knowledge-driven economy can be considered as

a strategic development factor, where innovativeness

of the enterprise should provide strategic advantage

at all levels - from the company to the national

economy as a whole. Selected innovation models

which are presented in the paper can be said to mark

different periods in managing innovation, with the

aim to emphasize the importance of modern network

and integrative models that overcome shortcomings

of traditionally innovation process views as

sequence of separable stages or activities.

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