The PaCS innovation process builds on previous work in the innovation process area. This section provides some background information on the evolution of innovation processes, and introduces the concept of “lean” innovation as an alternative approach.
THE EVOLUTION OF INNOVATION PROCESSES
Varying attempts have been made to articulate conceptual order with respect to the innovation processes of organizations, in the form of innovation process models. The variety amongst the models is the consequence of a lack of consensus as to what an innovation process should look like, given the unique contexts, environments, and purposes for which they are developed. Innovation models are important because they offer a simplified external representation of a complex system to “…assist innovators and management teams in framing, understanding, and acting on the issues which need managing” (O'Raghallaigh, Sammon, & Murphy, 2011).
Innovation processes illustrate the phases associated with the exploration of opportunities for new and/or improved products, processes and services, stimulated by advancements in technical practice or alternatively changes in market demand, and ideally a combination of both drivers (Pavitt, 2005). In this vein, innovation process depictions commonly adopt a wide-scope view, encompassing the schema, phases and processes from the decision to commence research on an opportunity or problem, to development, commercialization, implementation and diffusion.
An extensive corpus of literature has accumulated documenting the range of end-to-end phases relating to innovation processes. All models start with some form of idea generation or searching stage. Secondly, a selection phase follows to determine which projects are feasible and potentially lucrative enough to be pursued. The third step reflects the development phase where the idea is developed into a tangible product, process or service. This stage can be described differently where terminologies such as development, prototyping, manufacturing and realization are used inter-changeably. The fourth phase represents implementation/launch and typically entails marketing, distribution, logistics and customer facing activities. Sometimes a post launch phase to accommodate re-innovating, scaling and learning dimensions is included.
CLASSICAL INNOVATION PROCESS MODELS
Innovation processes have evolved in recent decades from simple linear and sequential models to increasingly complex models embodying a diverse range of inter and intra stakeholder and process interaction. Distinguishable by their management focus, strategic drivers, accommodation of external actors and levels of integration of internal and external processes and function, Rothwell (Rothwell, Towards the fifth-generation innovation process, 1994) documented five shifts or generations, to which Chesbrough’s open innovation model is often added as a sixth generation model, as depicted in the table below:
Table 1: Six generation shifts in innovation models (Rothwell, Towards the fifth-generation innovation process, 1994)
|Technology push||First||Simple linear sequential process, emphasis on R&D and science. The initial impetus is the progress in technological ability.|
|Market pull||Second||Simple linear sequential process, emphasis on marketing, the market is the source of new ideas for R&D|
|Coupling||Third||Recognizing interaction between different elements and feedback loops between them, emphasis on integrating R&D and marketing|
|Interactive||Fourth||Combination of push and pull models, integration within firm, emphasis on external linkages|
|Network||Fifth||Emphasis on knowledge accumulation and external linkages, systems integration and extensive networking.|
|Open||Sixth||Internal and external ideas as well as internal and external paths to market can be combined to advance the development of new technologies|
Rothwell’s (Rothwell, Towards the fifth-generation innovation process, 1994) classification of innovation models demonstrates that the complexity and integration of the models increases with each subsequent generation as new practices emerge to remedy the shortcomings of earlier generations and to adapt to a changing context. Table 2 illustrates the first five generations by their type and describes each of them using distinguishing characteristics.
Table 2: Distinguishable characteristics of innovation models (O'Raghallaigh, Sammon, & Murphy, 2011)
|Type of model|
|Characteristics||Timeframe||1950s to late 1970s||Mid 1970s to mid 1980s||Mid 1980s to present|
|Generations (Model exemplars)||First Generation (Technology-push); Second Generation (Market-Pull)||Third Generation (Chain-linked)||Fourth Generation (Cooperative R&D); Fifth Generation (Systems Integration and Networking)|
|R&D||An increase in R&D results in more innovation output||Emphasises how R&D interacts with market forces||Emphasises cooperative R&D and the links between independent agents|
|Knowledge source||Internal scientific research is the main knowledge source||Internal scientific research as well as knowledge acquired from other (mainly) internal sources||Knowledge acquired from both internal and external sources|
|Market forces||For the Technology-Push the market forces are largely ignored. For Market-Pull the market forces direct the R&D investment||Market forces interact with R&D decision-making||Horizontal and vertical alliances respond to market changes|
Before examining individual models, it is useful to emphasize the following caveat stressed by Rothwell (Rothwell, Developments Towards the Fifth Generation Model of Innovation, 1992) - the evolving generation of innovation models does not imply any automatic substitution of one model for another; many models exist side-by-side and, in some cases, elements of one model are interweaved with elements of another.
First generation: Technology push
The first generation models of innovation, so called technology push models, are simple linear models developed in the 1950s (Figure 1), which treated innovation as a sequential process that took place in discrete stages.
Figure 1: First generation technology push model (Rothwell, Towards the fifth-generation innovation process, 1994)
For Hobday (Hobday, 2005), first generation models assume that scientific research and discovery stimulates and ‘pushed’ technological innovation with applied research, engineering, manufacturing and marketing representing the proceeding steps. As Rothwell argues, first generation models were typically deployed to rationalise additional R&D spending to produce greater innovation output. In critiquing the model, Rothwell (Rothwell, Towards the fifth-generation innovation process, 1994) identifies that little attention was paid to the transformation process itself or to the role of the marketplace in the process.
Second generation: Demand/market pull
In this generation (Mid 1960s to early 1970s) a linear model of innovation also applies, this time acknowledging the importance of market demand for products. In the context of growing competition in the marketplace and the pursuit of market share, this model recognized demand side factors (sometimes described as the “need-pull”) (Hobday, 2005).
Figure 2: Second generation market pull model (Rothwell, Towards the fifth-generation innovation process, 1994)
In contrast to the preceding first generation model, this model stresses the role of the marketplace and market research in identifying and responding to customer needs, as well as directing R&D investments towards these needs. Therefore, the role of R&D was to meet market demands as opposed to discovery.
Third generation: Coupling/Interactive
Empirical innovation studies conducted during the 1970s highlighted that linear models reflected atypical and extreme conceptualizations of innovation, as the process is actually characterized by the interaction and coupling of science and technology and the marketplace (Mowery & Rosenberg, 1978). The coupling model presented in Figure 3, adopts a coupling process, overcoming many of the shortcomings of the previous extreme linear models, by building in interaction and feedback loops between drivers and functions within the firm. The emphasis within this model is on the system of relations both within the organization (particularly between R&D activities and the other departments), and beyond the organization (for example, the customer and supplier relations that will inform innovation). Rothwell notes that the process of interaction was not necessarily continuous but could be understood in terms of functionally interacting and interdependent stages, involving intra- and inter-organisational linkages (Hobday, 2005).
Figure 3: Third generation coupling/interactive model (Rothwell, Chair Hydro—Quebec Conference enGestion de al Technologie, 1993)
Figure 3: Third generation coupling/interactive model (Rothwell, Chair Hydro—Quebec Conference enGestion de al Technologie, 1993)
Fourth generation: integrated
While third generation models represent non-linear depictions of the innovation process with feedback loops, their predominant sequential nature surfaced criticism. In response, the fourth generation of innovation modelling (Figure 4) focuses attention on parallel, simultaneous and integrated development approaches influenced by learning from Japanese leadership in such areas as JIT strategies and production efficiencies, and also the recognition of the need for supplier integration, linkages and alliances to cope with shortening product lifecycles.
Figure 4: Fourth generation integrated model (Rothwell, Chair Hydro—Quebec Conference enGestion de al Technologie, 1993)
Fourth Generation Models therefore seek to capture and reflect cross functional integration within firms, and in the external environment incorporating stakeholders ranging from suppliers, customers, universities and government agencies (Hobday, 2005).
Fifth generation: Networking and systems integration
Fifth generation of innovation models are characterised as being based on overall organizational and systems integration and networking (SIN) perspective. The dominant characteristics of this generation of modelling are the influence of external environment and the effective linkage and communication with external stakeholders (du Preez & Louw, 2008). For Hobday, innovation is a distributed networking process and observations during the 1980s and 1990s of increased corporate alliances, partnerships, R&D consortia and joint ventures supported this viewpoint. Accepting that innovation happens within a network of internal and external actors the network model presented in Figure 5 indicates the importance of networking potential across all aspects of innovation.
Figure 5: Network model of innovation (Trott, 2005)
In essence, the fifth-generation models acknowledge the best practice notions from previous generation models of pursuit of strategic networking, and surmounting the importance of the speed of development and speed-to-market. For Rothwell, fifth generation process rely on the use of information technology systems and tools to expedite the speed and efficiency of innovation development across the entire network of innovation, spanning internal functions and external collaborators. Galanakis’s creative factory concept, using a systems thinking approach represents a model of networked systems perspective (Figure 6). At the center of this model is the enterprise which is the generator of innovations and this is surrounded by three core innovation processes: (1) the knowledge creations process from research, (2) the transformational development process and (3) product success in the market. Moreover, reflecting the systems perspective, the innovation process is affected by internal factors of the firm and equally so external factors in the National Innovation Environment.
Figure 6: Systems innovation model (Galanakis, 2006)
Sixth generation: open innovation
Extending the networking perspective introduced in the previous model structure, the sixth generation of innovation models represent open innovation. The model whereby enterprises invest exclusively in research and development departments to drive innovation is eroding with the advent of open innovation. In contrast to closed innovation, where innovation activities take place entirely within one firm, open innovation (Figure7) processes are characterized as spanning firm boundaries presenting opportunities to commercialize both external ideas and internal ideas externally.
(Chebrough, 2003) describes open innovation as paradigm shift whereby competitive advantage can result from leveraging discoveries beyond the confines of a single internal R&D unit (inbound open innovation) and can equally benefit from relying exclusively on their own internal paths to market through engaging with external organisations that may be better positioned to commercialise a given technology (outbound open innovation). In a similar vein, (Enkel, et al., 2009) identifies three core processes can be differentiated in open innovation:
Figure 7 Open Innovation Model
Source: (Chesbrough, 2004)
As the IPACSO core innovation process leans toward the open innovation model, it is important to provide the reader with a brief description of this type of process. Chesbrough (Chesbrough, Open innovation: the new imperative for creating and profiting from technology, 2003) describes open innovation as a paradigm shift whereby an organization can benefit from leveraging discoveries beyond the confines of a single internal R&D unit (inbound open innovation) and can equally benefit from engaging with external organizations that may be better positioned to commercialize a given technology (outbound open innovation). Three core processes can be identified in open innovation:
- The outside-in process: this process involves enhancing and extending an enterprise’s own knowledge base through the integration of suppliers, customers, and external knowledge sourcing. Crowdsourcing is an example of an outside-in process.
- The inside-out process refers to securing commercial/revenue benefits by bringing ideas to market faster than internal development via licensing IP and/or multiplying technology, joint ventures, and spin-offs. Corporate venturing activities are an example of an inside-out process.
- The coupled process refers to co-creation with partners through alliances, cooperation, and reciprocal joint ventures to combine the outside-in process (to gain external knowledge) with the inside-out process (to bring ideas to market). Co-creation is widely studied in the open innovation literature.
Synthesis of innovation frameworks
The degree of inclusiveness of innovation models have been refined throughout the years (Cagnazzo & Taticchi, 2008), with each generation of model capturing academic and best practice knowledge of the time thereby serving as a foundation for the development of more sophisticated models (Hobday, 2005). As synthesised in Table 3 below, Caggnazzo et al. delineate the strengths and weaknesses of Rothwell’s five first innovation generations.
Table 3: Strengths and weaknesses of innovation generations (Cagnazzo & Taticchi, 2008)
The linear first and second generation models have been widely criticized for their overly simplistic linear, discrete and sequential nature of the innovation process (Forrest, 1991). In response, the third generation of models demonstrate how the various business functions interact during the innovation process in addition to marrying the importance of technology push and market pull dimensions. Nonetheless, the main criticism of third generation models for (Hobday, 2005) is that they do not detail sufficiently mechanisms for interacting with environmental factors. Regarding the fourth and fifth generation models there is a paucity of evidence to demonstrate the impact of these models yet.
IPACSO was presented as a process model, based upon the models described previously. The basis of this model is the Open Innovation Model, largely because that model itself is an evolution of the previous models, and thus entails all aspects of those previous models. With regard to the open nature, the IPACSO core innovation process takes into account the sensitive nature of innovations in the PaCS space, which sometimes precludes the sharing of information with external entities.