Fundamentals of Innovation Management

Fundamentals of Innovation Management

Innovation management is the systematic approach to creating, developing, and delivering new ideas that generate value for an organization and its stakeholders. This course unpacks the core concepts tested in a recent quiz, providing a deep dive into the stages of innovation, key frameworks, and strategic tools that professionals use to drive sustainable growth.

1. The Usher Innovation Process – From Observation to Review

Usher’s model breaks the innovation journey into four distinct phases. Understanding each phase helps managers structure their activities and allocate resources effectively.

• Phase 1 – Perception of the problem: Identify pain points and unmet needs.
• Phase 2 – Setting the stage: Gather elements and data through observation and thought. This is the research‑intensive stage where teams collect market insights, user feedback, and technological trends.
• Phase 3 – Eureka, the act of discovery: Generate breakthrough ideas and prototypes.
• Phase 4 – Critical review: Test, refine, and decide on commercialisation pathways.

By recognising that Phase 2 – Setting the stage is the data‑gathering hub, managers can prioritise activities such as ethnographic studies, competitive analysis, and technology scouting.

2. Pillars of Innovation According to the Oslo Manual

The Oslo Manual is the internationally accepted standard for measuring innovation. It identifies three core pillars that support innovative activity:

• Creativity – The generation of novel ideas.
• Organisation – Structures, processes, and cultures that enable idea conversion.
• Knowledge – The acquisition, sharing, and application of expertise.

Notice that Market share is not listed as a pillar; it is an outcome metric, not a driver of innovation.

3. Doblin’s Ten Types of Innovation

Doblin’s framework categorises innovation into ten distinct types, grouped into four broader categories. The type that focuses on how a firm captures value through revenue streams is the Profit model. This innovation reshapes the way a company makes money, for example by shifting from product sales to subscription‑based services.

• Product performance – Enhancing the core attributes of a product.
• Network – Leveraging external partners to create value.
• Customer engagement – Deepening relationships with end‑users.
• Profit model – Redefining revenue generation.

Understanding the profit model is crucial for businesses seeking sustainable competitive advantage, especially in digital economies where recurring revenue is prized.

4. Types of Innovation: Marketing vs. Process vs. Organisational vs. Product

Innovation can be classified by the domain it impacts. When a firm introduces a new marketing method that includes significant changes in product packaging and pricing, it is engaging in Marketing innovation. This type of innovation targets the way a product is presented, promoted, and priced to create new demand.

• Process innovation – Improves internal workflows or production methods.
• Organisational innovation – Alters structures, governance, or culture.
• Product innovation – Introduces new or substantially improved goods.
• Marketing innovation – Changes in branding, packaging, pricing, or distribution.

Effective marketing innovation often leverages insights from consumer behaviour research and can be a catalyst for market expansion.

5. Readiness Levels – Beyond Technology

Readiness levels help organisations assess the maturity of various aspects of an innovation. While the Technology Readiness Level (TRL) focuses on technical maturity, the Investment Readiness Level (IRL) evaluates the business model’s market potential and financial attractiveness.

• Manufacturing Readiness Level (MRL) – Production capability.
• Regulatory Readiness Level (RRL) – Compliance and certification status.
• Investment Readiness Level (IRL) – Market fit, revenue projections, and investor appeal.

Using IRL enables investors and managers to prioritise projects that are not only technically feasible but also commercially viable.

6. Managing Knowledge Diffusion in Innovation Ecosystems

Innovation ecosystems consist of firms, research institutions, and support organisations that exchange knowledge. When an ecosystem exhibits high knowledge diffusion but low absorption capacity, firms struggle to transform shared knowledge into actionable value.

The most appropriate strategic response is to launch technology projects that package knowledge and make it usable for firms. By translating raw research outputs into ready‑to‑use tools, standards, or platforms, the ecosystem enhances firms’ absorptive capacity.

• Pull‑driven research – Firms request specific knowledge.
• Technology packaging – Converts abstract research into practical solutions.
• Exchange – Direct knowledge transfer without transformation.
• Early‑stage ecosystem building – Strengthens foundational capabilities.

Investing in technology packaging accelerates the time‑to‑market for innovations emerging from the ecosystem.

7. Radical vs. Incremental Innovation

Distinguishing between radical and incremental innovation is essential for strategic planning.

Radical innovation creates entirely new markets, often disrupting existing value chains and requiring substantial investment. In contrast, incremental innovation improves existing offerings over time, delivering steady performance gains.

• Radical – New market creation, high risk, high reward.
• Incremental – Continuous improvement, lower risk, sustained growth.

Companies typically maintain a portfolio that balances both types to ensure short‑term profitability while pursuing long‑term transformation.

8. University‑Based Spin‑offs

Start‑ups that originate from university research and aim to commercialise that research are known as spin‑offs. These ventures embody a knowledge‑push approach, where academic discoveries are transferred to the market through dedicated companies.

• Knowledge‑push venture – Directly leverages academic output.
• Spin‑off – Formal entity created to commercialise university IP.
• Open‑innovation partner – Collaborative external partner.
• Closed‑innovation unit – Internal R&D silo.

Spin‑offs benefit from access to cutting‑edge research, intellectual property, and often receive support from technology transfer offices.

9. Integrating the Concepts – A Practical Framework

To apply the knowledge covered, managers can follow a three‑step framework:

1. Diagnose the innovation landscape: Map the ecosystem’s knowledge diffusion and absorption capacity. Identify whether the focus should be on technology packaging, pull‑driven research, or ecosystem building.
2. Choose the appropriate innovation type: Align the innovation with the firm’s strategic goals—whether it is a profit‑model redesign (Doblin), a marketing innovation, or a radical market‑creating venture.
3. Assess readiness: Use IRL for business‑model maturity, TRL for technical maturity, and complement with MRL/RRL as needed.

This structured approach ensures that resources are directed toward innovations with the highest potential for commercial impact.

10. Key Takeaways for Innovation Leaders

• Phase 2 of Usher’s process is the data‑gathering stage—invest in observation and research.
• The Oslo Manual’s pillars are creativity, organisation, and knowledge; market share is an outcome, not a pillar.
• Profit model innovation reshapes revenue streams and is a core element of Doblin’s framework.
• Marketing innovation focuses on packaging, pricing, and promotion changes.
• Investment Readiness Level evaluates market potential, complementing technology‑centric TRL.
• When knowledge diffusion outpaces absorption, package technology to boost usability.
• Radical innovation opens new markets; incremental innovation refines existing ones.
• University spin‑offs translate academic research into commercial ventures.

By mastering these concepts, innovation managers can design robust strategies that drive growth, enhance competitiveness, and create lasting value.