The June issue of Harvard Business Review included several interesting article examining new approaches of understanding and managing the innovation process especially when sources of innovation are located outside of the company`s borders.

The first approach we would like to summarize („The Sophisticated Innovator“), is some kind of a framework to organize and structure the innovation process inspired by Porter`s „Value Chain“. This is how the authors Morter T. Hansen and Julian Birkinshaw are describing their concept:

The innovation value chain view presents innovation as a sequential, three-phase process that involves idea generation, idea development, and the diffusion of developed concepts (…) Each is a link in the chain.
(Hansen/Birkinshaw 2007)

The first of the three phases in the chain is to generate ideas; this can happen inside a unit, across units in a company or outside the firm. The second phase is to convert ideas, or, more specifically select ideas for funding and developing them into products or practices. The third is to diffuse those products and practices. (Hansen/Birkinshaw 2007)

As a result of this model, the innovation manager gets an impression of the strength and weaknesses of the company’s innovation process. On the basis of this information he is enabled to identify the weakest element of the chain and start to optimize the process and therefore increase the efficiency and the output.

Innovation Value Chain (Hansen/Birkinshaw 2007)

The first phase of the “Innovation Value Chain” also includes elements of Open Innovation

Companies also need to assess whether they are sourcing enough good ideas from outside the company and even outside the industry – that is, tapping into the insights and knowledge of customers, end users, competitors, universities, independent entrepreneurs, investors, inventors, scientists, and suppliers. Many companies do this poorly, resulting in missed opportunities and lower innovation productivity (Hansen/Birkinshaw 2007)

Their overall advice to harness the potential of Open Innovation is to establish innovation-networks in- and outside of the company, making different people collaborate in a similar way like the success model “Connect & Develop” of Procter & Gamble. Another mentioned best-practice solution is an enduring business-plan contest, where the best business models get the opportunity to raise seed-money. The oil-company Shell has created such a venture wing in 1996, which is called gamechanger:

The flow of proposals is constant, and the unit has built up a track record of success: forty percent of all development projects in the exploration and production business started out as GameChanger ventures. (Hansen/Birkinshaw 2007)

The June issue of Harvard Business Review included several interesting article examining new approaches of understanding and managing the innovation process especially when sources of innovation are located outside of the company`s borders.

The first approach we would like to summarize („The Sophisticated Innovator“), is some kind of a framework to organize and structure the innovation process inspired by Porter`s „Value Chain“. This is how the authors Morter T. Hansen and Julian Birkinshaw are describing their concept:

The innovation value chain view presents innovation as a sequential, three-phase process that involves idea generation, idea development, and the diffusion of developed concepts (…) Each is a link in the chain.
(Hansen/Birkinshaw 2007)

The first of the three phases in the chain is to generate ideas; this can happen inside a unit, across units in a company or outside the firm. The second phase is to convert ideas, or, more specifically select ideas for funding and developing them into products or practices. The third is to diffuse those products and practices. (Hansen/Birkinshaw 2007)

As a result of this model, the innovation manager gets an impression of the strength and weaknesses of the company’s innovation process. On the basis of this information he is enabled to identify the weakest element of the chain and start to optimize the process and therefore increase the efficiency and the output.

Innovation Value Chain (Hansen/Birkinshaw 2007)

The first phase of the “Innovation Value Chain” also includes elements of Open Innovation

Companies also need to assess whether they are sourcing enough good ideas from outside the company and even outside the industry – that is, tapping into the insights and knowledge of customers, end users, competitors, universities, independent entrepreneurs, investors, inventors, scientists, and suppliers. Many companies do this poorly, resulting in missed opportunities and lower innovation productivity (Hansen/Birkinshaw 2007)

Their overall advice to harness the potential of Open Innovation is to establish innovation-networks in- and outside of the company, making different people collaborate in a similar way like the success model “Connect & Develop” of Procter & Gamble. Another mentioned best-practice solution is an enduring business-plan contest, where the best business models get the opportunity to raise seed-money. The oil-company Shell has created such a venture wing in 1996, which is called gamechanger:

The flow of proposals is constant, and the unit has built up a track record of success: forty percent of all development projects in the exploration and production business started out as GameChanger ventures. (Hansen/Birkinshaw 2007)