Innovation

Introduction

In reviewing global circumstances that currently confront individuals and organizations, the Editors of Strategic Direction (Editors, 2011a, p. 12) express themselves as follows: “Banks collapsing and being shored up by public money; sky-rocketing higher education costs; wars and rumors of war; environmental disasters and humanitarian crises: at no other time since the industrial revolution has the future seemed so uncertain. The settled post war decades of continual economic growth, jobs for life, a degree providing a ticket to well paid employment, and a generous pension to look forward to have disappeared, seemingly for good. What does this mean for companies trying to develop and market industrial products and consumer goods? The simple answer is innovation.” In a later issue of Strategic Direction (Editors, 2011b, p. 18), based on work by Brousell (2010), these Editors go on to state that to fashion competitive advantage, organizations might have to agonize over any number of near-term issues such as lay-offs, cost reduction, and improve operational efficiency, but eventually innovation becomes a necessity. These researchers emphasize that in a harsh financial climate, companies routinely adopt a pragmatic and cautious approach, and innovation is postponed until better times return; however, as Brousell (2010) reports, a growing number of US manufacturing firms now adopt a more proactive view, believing that that innovation will shield them from the worst of a recession’s impact.

Andreeva and Kianto (2011) define innovation simply as the process of generating novel practical ideas and then implementing them to produce value. These authors cite Romer (2004) in support of their contention “… that innovation has become the quintessential challenge for all types of organizations” (ibid, p. 1016). In this regard, Smith (2006) asserts that under today’s fierce competition, companies are compelled to innovate in order to be successful or even to survive in the global market. Denning (2011, p. 16) notes that “… adapting to rapidly changing market conditions and technology shifts and generating continuous innovation, both of offering and operations, have increasingly become requirements of business survival”, and Christensen and Raynor (2003) also emphasize that innovation is widely accepted as a key driver to sustain business growth. Smith (2006) claims that successful companies produce 75 percent of revenues from new products or services that did not exist five years before they took them to market, and Boston Consulting Group (2009d) argue that now is the time to invest aggressively in innovation, and that now is also the time to emphasize that innovation is proven to substantially enhance returns to shareholders.