Total Innovation Management: A Theoretical Framework and Implications *

ZHENG Gang1 ZHU Jianzhong2 Guo Wen3 1,2School of Management, Zhejiang University, Hangzhou ,P.R.China,310027

3Institute of Policy and Management, China Academy of Sciences, Beijing, P.R.China,100086 Abstract: With the arrival of the era of knowledge-driven economy, more and more enterprises find that, innovation all-round is becoming the source and driving force of enterprise's survival and development. Restricted by conditions at that time, traditional theories of innovation management fail to fit to the current violent changes of competition environment, and so are unable to offer a valid innovation management pattern for enterprise by which to instruct the practices of innovation under the new situation. Based on literature review both native and abroad, this paper introduced a new theoretical pattern of innovation management, namely Total Innovation Management (TIM), which was brought forward by Qingrui Xu and his colleagues in 2002. Firstly, this paper introduced the theoretical framework of TIM, which include the characteristics, dimensions, and so on, and then, by comparing TIM with traditional pattern of managing innovation, some similarities and differences were pointed out accordingly. At last, the author argued that, TIM was the emerging new trend of innovation management, and it would be very valuable for enterprises to facing the increasingly intense competition, and the challenge of individualized customer’s demand. Key word: Total innovation management, Innovation all around,

Innovation by all the employers

I． INTRODUCTION

Since 1990s, with the rapid development of economic globalization and ICTs, great changes have taken place in business environment and manners of enterprises doing business. More turbulent environment, increasing intensity of market competition, customer’s demand on individualization, time to market and uniqueness, have all put forward new challenges to enterprises. Some traditional competition advantages, such as good production efficiency, enough high quality, and even flexibility, which were key factors for the success of enterprises in the past decades, are becoming inadequate to keep the market competition advantage. With the arrival of the era of knowledge-based economy, more and more enterprises find that, innovation is becoming the ultimate source and driver for enterprise’s survival and development (Kumpe and.Bolwijn, 1994)[1]. However, the traditional theories of innovation management were inadequate to fit the

violent and new competition environment. It’s very important and very necessary, to develop a new theoretical pattern of managing innovation, in order to provide the enterprises with new theory and framework of innovation management, which are also crucial to win the sustainable competitive advantages in the future.

II. LITERATURE REVIEW AND METHODOLOGY

This paper mainly tried to introduce a new pattern of innovation management named Total Innovation Management, and the main method was literature research, induction and comparative study.

For many years, a lot of scholars have already realized the importance of thinking innovation in a systematic way, and have carried on some preliminary research. Between 1970s and 1980s, some scholars brought forward the dual-core theory of innovation (Daft, 1978)[2],which embodied the thought of innovation all-around. In the opinion of this theory, there were two kinds of innovation, namely technological innovation and administrative innovation. Correspondingly, there were two cores, namely technological core and management core. The technological innovation included product and process innovation, while the administrative innovation was a broadly-defined concept, which included organizational structure, business process, institutional framework, culture, management system,, control system and mechanism of synergy (Daft ,1978). Scholars who agreed to this theory argued that, the best innovation performance could only be realized in the case of two kinds of innovation work in coordination with each other. Tidd, Bessant and Pavitt (2000)[3] pointed out that, innovation management needed the idea of integration, it was far from enough to only emphasize one dimension of innovation.

In recent years, with the further development of the theory and practice, some new views on innovation become more and more popular.

View of user and supplier as innovator. A lot of scholars probed into customer's function in creating the preliminary new products idea (Christensen, 1997; Leonard-Barton, 1995; Von Hippel,1988, et al. )[4],[5]. Von Hippel (1988) regarded user as the important source of innovation. Shapiro (2002) also argued that, enterprises should invite users to join the

*Funded by Social Sciences Fund of Zhejiang Province (04GL01)

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process of new product development (NPD) and marketing, and try to make co-innovation with them[6]. Some scholars developed the ICT-based distributed innovation model, such as the virtual customer communities (VCCs), which could involve the customer in the process of NPD (Holmstrom,2001; Kambil, Friesen & Sundaram,1999; Prahalad & Ramaswamy, 2000).In a word, the relationship between user and enterprise was transformed from “developing user knowledge by enterprise” to the view of "creating knowledge together by the enterprise and customer" due to the adoption of new technology (Sawhney & Prandlli ,2000)

View of Innovation all the time. More and more scholars argued that, the fierce market competition and the increasing demand for time to market raised the requirement for innovation. Innovation must be done continuously and never stop, enterprises must make every effort to realize 24/7 innovation, namely innovating in 24 hours every day, and every day of every week (Shapiro,2002;Pehrson et al, 2002 ,etc.)[6]. In the opinion of Gemünden(2002), it was mainly because of the pressure of time-based competition raised the need of innovation all the time.

View of innovation during the whole business process. The theory of Business Process Reengineering (BPR) have become popular since early 1990s, whose main purpose was to improve the organizational efficiency, flexibility and time to market by reengineering the traditional hierarchy-based structure (Hammer and Champy, 1993; Davenport,1994,et

al)[7],[8]. Many scholars thought that innovation should occur in every part of the whole business process.

View of innovation by all the employers. In recent years, more and more people realized that, Innovation was no longer the function for R&D personnel alone, but all the employees’ common behavior. Employees from sales, manufacture, R&D, to customer service, administration, and financial department, etc., all could be outstanding innovation source (Tucker, 2002; Shapiro, 2002; Wheatley, 2001; Dundon, 2002 et al)[9]-[11].

View of innovation all over the world. With the rapid development of economic globalization, E-commerce, the border of enterprises is becoming hazier and hazier. The rising of new organizational forms, such as outsourcing, strategic alliance, and virtual organization, make the border of enterprises break the restrictions of the region, industry and even country, and has promoted the globalization of R&D, manufacture, and marketing (Chiesa,1996; Zander,1999; Wang Yi, et al,1999; Chen Jin et al,2002;Gerybadze & Reger,1999)[12]-[14]. A lot of multinational enterprises have set up R&D centers or the base throughout the world and carry on innovation in order to combine global scientific and technological resources. For instance, Nokia Company has set up 55 R&D organizations in 14 countries, including over 19, 000 R&D personnel.. Chiesa (1996) made a research on how to manage the globalized R&D, which included design of structure, assignment of resources and labors, and the integration of R&D labs in different locations.

Fig.1 The Pentagon Model of TIM[19]

Organization innovation

Value create/

Value added

Culture innovation

Managenment Innovation Institution innovation

Strategy innovation

Market innovation

Core competency

Synergy

Synergy

Whole value chain

All time

All employee All place

Whole process

Technology innovation

Core competency

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View of Integrated innovation. Iansiti (1997) proposed the concept of technology integration[15]. Afterward, many Chinese scholars also found that, integration of all the key elements was essential to ensure innovation effect (Jiang, & Chen, 2000)[16]. A dynamic innovation model of team integration was developed by Ou & Hu(2002),which included four layers, namely the technical integration, knowledge integration, organization integration, and management integration[17].

View of innovation all around. Based on the analysis of environment change and the best practice of leading innovative enterprises in the world, Tucker (2002) summarized five principles of innovation management, which embodied the thought of innovation in a systematical way and innovation all around. Some scholars pointed out that, in order to realize the all-around innovation, enterprise must view innovation as the essential capability owned by every employee, and should not only regard it as the occasional activity or passive process (Shapiro, 2002,etc.).

View of Total Innovation Management (TIM). Based on vast literature review and empirical research in a number of Chinese enterprises during the past 20 years, Xu Qingrui et al(2002) brought forward the theory of Total Innovation Management in the 3rd International Symposium on Management of Technology(ISMOT’02), which caused increasingly extensive concern[18],[19].

III． A THEORETICAL FRAMEWORK AND DISCUSSIONS

According to our studies, the main characteristics of Total Management Innovation are as follows:

1) Aiming at winning the sustainable competitive advantage (value added);

2) Focusing on accumulating and improving the core competency (as core competency not limited to technological ones);

3) The systemic portfolio innovation of all kinds of innovative elements as main bases;

4) To realize the effect of “three all and one synergy” by the proper management mechanism and tools, , which means innovation by all the employer, all the key elements, and all the time and pace, as well as the total synergy among theses factors. A pentagon conceptual model of TIM was also be developed (Fig.1)[19]. In general, the main characteristic of TIM could be

summarized as “three all and one synergy”, namely innovation by all the employer, all the key elements, and innovation all the time/space, as well as the total synergy among theses factors.（Fig.2）.

Fig.2 Characteristics of TIM

A remarkable difference between TIM and traditional pattern of innovation management was that, TIM broken through the past view of only depending on R&D employees as innovator, stressed the ecological view of People-First, and extended the range of key elements and time -space of innovation greatly .

In general, TIM can be divided into the following eight dimensions: 1) Time: Innovation all the time; 2) Space: Innovation all through the world;

3) Key elements: Strategy, culture, organization, institution, market, etc;

4) Innovation type dimension: Product (service) innovation and process innovation;

5) Innovation degree: incremental Innovation, radical innovation, and breakthrough innovation;

6) Source of innovation: Indigenous innovation, cooperative innovation;

7) Innovator: innovation by R&D personnel and by all the employees, which including users, suppliers and even all the stakeholders;

8) All the above-mentioned dimensions were worked in synergy to ensure the good innovation performance.

TIM was the evolution result of traditional pattern of innovation management. There were some similarities and differences between TIM and traditional innovation management (Table 1).

IV． CONCLUSIONS

This paper introduced the theoretical framework of Total Innovation Management (TIM), and analyzed the characteristic and dimensions of TIM. The author argued that, it’s the inevitable choice for enterprises to transform from traditional innovation management to TIM, by which to face fierce market competition and diversified user's demands in the era of knowledge-driven economy. Realizing the key role of TIM in improving core competitiveness, a few of domestic leading enterprises have already begun the exploration of implementing TIM. In general, however, TIM was still an emerging new pattern both in the view of theory and practice, and the framework of TIM was still preliminary, which need

All key elem

ents

All the tim

e/space

All the em

p loy ee

Synergy

Synergy

Total Innovation Management

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to be further improved. Regarding the fact that Chinese enterprises are generally weak in innovation ability, we believe that grasping the marrow of TIM and putting it into practice is one of the crucial approaches at present for

Chinese enterprises to reduce the gap with international advanced enterprises as soon as possible.

TABLE.1

SIMILARITIES AND DIFFERENCES BETWEEN TIM AND TRADITIONAL INNOVATION MANAGEMENT

Traditional innovation management Total Innovation Management

Focus & Elements of Innovation

• Focus on individual innovation • Emphasizing technological innovation while ignore non-technological aspects.

• Focus on systemic synergy of all the innovative key elements • Emphasizing innovation as a holistic system

Coordination of product/process innovation

• Emphasizing the importance of product innovation alone

• Emphasizing the coordination of products innovation and process innovation

Benefit evaluation • Confined to apparent benefit • Leverage apparent and potential innovation benefit

Innovation strategy • Not clear • Guided by business strategy, but not rigid

• Interaction of innovation strategy and enterprise strategy

The scope of innovation • Internal, self-dependence, • Co-innovation insufficient

• Emphasizing integrating global resource to innovate

Relation with core competency

• Be unaware • Focus on fostering core competence and creating value

Innovator • R&D department and R&D personnel alone • All the employees, which including users, suppliers and even

all the stakeholders Innovation speed • Low time to market • Require faster time o market

Organization structure • Hierarchical and functional • Horizontal, networked and process-based

Innovation source • single (internal R&D) • Diversified

• the whole value chain

Communication with other departments

• inadequate • Very frequent and tightly

Ways of managing project

• Team inside R&D department • Across-functional team and across-organizational team • Virtual team, heavyweight team, etc

Innovation goal • To fulfill the assigned tasks • Passive

• Value added(Business performance) • Market and customer-oriented, • Initiative

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