3.0 What is the “business process” of innovation?

How does an enterprise organise innovation? How does the organization make sure that business model and technology innovation happen systematically, as part of the “business as usual”? The answer is delivered through the right business process and the appropriate management around it: the management of innovation within an enterprise is a business process in and of itself. This process must be defined, implemented, executed, and controlled just like any other business process. It goes through the same process life cycle and can be managed using the discipline of value-driven BPM. The “innovation process” is a key process to be managed by BPM.

A generic example of one such innovation process is shown in Fig. 3. The process develops from the preparation of an innovation initiative, to the “idea finding” activities, and finally to the execution of the innovation idea. The innovation manager identifies relevant mega trends and, on the basis of those, the relevant innovation fields. These innovation fields guide the definition of the company-specific innovation focus. This focus directs the “idea finding,” using internal and external resources. The innovation ideas are evaluated, and the most interesting ones become innovation projects. These projects develop prototypes and business cases on the basis of the innovation idea. Then, the innovation team can decide which innovation ideas will be brought to market, or the ideas that will actually become innovations.

Figure 3: Example of an innovation process

During the idea-finding process, it is key to anticipate the customers’ future interests and needs. It is about planning the customer journey. Fingar claims that you should even know customer interests and needs before the customers themselves are aware of them [1] just like Steve Jobs at Apple did [22]. It generally makes sense to include external partners in the innovation process to broaden the input. Examples of such partners include:

  • Key customers
  • Important suppliers
  • Additional market partners (e.g., banks)
  • Research institutions
  • Academic institutions

Generally, the sub process resulting from idea finding is an emergent process, which cannot initially be defined right away from start to finish. There exist special process management approaches for such emergent business processes [29].

In most cases, however, the step from the idea to the innovation itself is the most challenging. Therefore, the management of innovation projects and their evaluation is a key task in the innovation process. An organization can truly achieve competitive advantage by organizing that task carefully, considering the specific company and market context.

Because of the importance of business model innovation and specifically process innovation, the innovation process must support this form of innovation effectively. For many traditional companies, this will require a large shift because they formerly thought of innovation in terms of technology innovation, especially product innovation. This shift can be supported by selecting a specific approach for process innovation, for example based on design thinking [23][24][25]. The structured design of business models and customer value propositions, as suggested by Osterwald, can play a key role here [24][25].

Davila, Epstein, and Shelton suggest some rules to support and manage the innovation process [3]:

  • Implement strong leadership regarding innovation strategy and innovation portfolio
  • Align amount and type of innovation with the specific business situation
  • Manage tension between creativity and daily business requirements (“achieve numbers, etc.”)
  • Control the resistance to innovation and change
  • Form an innovation network consisting of internal and external members
  • Define and manage the appropriate metrics and rewards

When implementing and improving an innovation process, it is in most cases of highest importance to accelerate the time until the innovation can be introduced into the market. This reduces innovation cost and increases the probability of significant revenue effects [7, 8]. Hence, time efficiency is a typical goal the optimization of an innovation process. BPM provides many methods to achieve that.

Hammer, the renowned BPM thought leader, recognised that operational innovation, or business process innovation, is not easy to achieve. For a successful innovation process, he recommends six key factors [9]:

  • Business process focus, from the beginning of an innovation initiative
  • Definition of process owners, including a senior executive who can make change happen
  • Full-time design team
  • Managerial engagement, ensuring the implementation of the innovation
  • Building buy-in
  • Bias for action

Once a process innovation has been implemented, it is important to realise that the interrelationship with other processes may require additional changes. Therefore, one process innovation initiative may trigger and require the additional process change projects.

The innovation process, hence the innovation capability, can be centralised in an organization or carried out in decentralised units. The more effective approach has to be defined on the basis of a specific company context.

Now that we know how business processes and innovation are closely interrelated, other questions come up: How can an enterprise provide an environment to support this innovation? How can BPM facilitate the innovation process?

 

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