In modern conditions, the business should be controlled by professional managers who are able to develop innovative approaches to creating their product. Management has many directions and functions. This may be monitoring financial activities, developing projects, and approving strategies, but in all cases business management should strive to create a plan that would allow the entrepreneur to achieve his goals and expand his business.
The place of innovation management in business
A good manager thinks about how to solve the problems facing the organization most effectively. Here the decision can be made at your discretion, however, the final result will depend on this. The manager must choose which strategy to follow.
At this point, history comes to the rescue.
From the moment the concept of management and its theoretical schools was born in business, the following trend was observed: any successful entrepreneur was successful due to the fact that he produced such a product that no one had offered before. This is an exceptional and unique product that solves human problems and gives a reason to follow. Such factors made the entrepreneur an exceptional monopolist in his field.
The activity on introducing new products was called “innovation management”. In the future, innovations determined the strategic management of the company, as they looked to the future. The most striking historical example of innovation management is the organizational environment under the leadership of Henry Ford, in which it was possible to create the world's first automated car production.
Manager's competencies in developing a strategy
Innovative management requires a competent approach. If you are creating a new product or a new service, then you need to be able to offer it correctly in order to have demand. The latter is formed from factors directly related to the skills required from the manager, which he must show in the process of organizing innovative management.
When forming ideas, a manager must take into account competition, the degree of need for a given product / service in society, the size of the market, the degree of risk, the amount of investment and potential profit. This refers to the so-called process of filtering ideas, in which the company must remove the unnecessary and leave everything you need.
Short story
XX century - the period in which the development of innovative management began. The stages of its formation were not so many, but they all took an incredible step towards progress and in just a century turned into a whole science of how to make society better and business more profitable. These steps include:
- The era of mass production, when the market was still not so saturated with various goods (the first third of the XX century).
- The era of mass marketing, the concept of which was aimed at improving the US economy after the Great Depression (continued until the middle of the 20th century).
- The post-industrial era, which originated with science and information technology (originates in the second half of the 20th century and continues to this day).
In the post-industrial world, the tasks of innovative management, which require novelty and uniqueness, have finally strengthened. As a result, by the beginning of the XXI century, world markets were filled with products that no one could even dream of some 50-70 years ago. Since then, a large number of innovative strategies, which many companies use today, have taken root in the business environment. Since the beginning of the 20th century, many management schools have been created in America, at the origins of which were such famous scientists and thinkers as F. Herzberg, A. Maslow, F. Taylor and other founders of scientific management theories. It was at this time that the importance of the psychological and social factor of society was first noted, which pushed business to create something new.
Innovation Process Functions
Organization management theory identifies several groups of innovative management functions. They also represent certain stages in the development of an innovative product. First comes the prediction of risks and benefits. Then the planning function comes into play, which already directly underlies the plan for the development, implementation and dissemination of the planned innovation. Among the functions there are such important ones as micro and macro environment analysis performed in the course of work, managerial decision making, staff motivation and control over the implementation of innovations. Only when the management process proceeds correctly, companies succeed. The goals of innovation management are no different from its other types, but it is with the innovative approach that they are most attainable, as everyone who supported this theory believed.
R&D Strategies (Research and Development)
A key factor in managing business innovation is the correct prioritization of ideas. The manager’s ideas should correspond to reality, common sense and the principle of profitability. As a result, it is precisely those ideas that are most relevant to these priorities that are selected. In practice, the company has a limited amount of funds that simply cannot be squandered into nowhere.
Strategies are:
- protective, aimed at reducing costs;
- offensive, suggesting an increase in output;
- absorbing, focus on business relationships;
- innovative, related to new products;
- robbery, uncontrollably competing;
- cooperative;
- attracting new specialists.
New Life Cycle
After the new product has been introduced to the market, the company will survive its entire life cycle. We must not forget that nothing lasts forever and any new product released for general use will survive the peak of its popularity and will gradually go out of fashion.
First, a new product is in its infancy when it is just being introduced to the market and no one else knows about it. At this stage, the most important thing is advertising and the quality of the product itself. He must prove himself. Then, subject to success in the previous stage, growth begins, when the innovation comes into fashion and gains popularity. After this comes the stage of maturity. At this point, the product is at the peak of its fame, is popular and brings the company success and good income. At the end of the life cycle, there comes a time when the new product is no longer such and is gradually going out of fashion. In some cases, it may continue to be very popular with customers. However, this happens when the product was really so innovative that it changed the life of society and people got used to it.
In other cases, innovation and revenue from it is in decline, and soon the company needs to develop new strategies.
Financial assessment
Experienced managers calculate the economic benefits of their innovation. There are many ways and formulas. Since innovation management is tightly connected with investment, first you have to calculate interest rates on loans that can be raised to create a project. Before an investor makes an investment in a future project, he calculates its future value using special economic formulas, and then makes a decision on investments.
Risk analysis
The chance of occurrence of technical, financial, design, functional or political risks is rather high. Any methods of innovative management include analysis of potential risks. Anything can happen, from staff irresponsibility to technical breakdowns or legal troubles, which dramatically reduces the likelihood of success.
Managerial talent is a combination of prudence, awareness, and creativity. Innovation management is based on the fact that professionals look to the future and do their job with long-range calculation.
Innovative marketing
A company that follows marketing principles as a philosophy is much less likely to lose in the field of innovation than those companies that introduce a new product to the market in a state of complete uncertainty. Experienced businessmen study the competitive market and, based on the information received, develop tactical and strategic marketing plans.
Anything can be here. Companies are trying to surpass their competitors by softening their pricing policies, increasing the amount of resources, creating unique advertising, etc., etc.
Components of an innovative project
The essence of innovation management is a unique project that can lead the organization into leaders. Its elements are all the most important details of which it consists. The project should have a goal, which, in turn, is divided into a list of pre-compiled tasks that can lead to it. The project has its own life cycle, a set of actions for its implementation, and a list of quantitative indicators that determine its level.
It is also important that the project necessarily has participants. The customer and the contractor appear as necessary. The customer is the main user of the project results, the contractor is a person working under a contract with the customer. The project also has investors providing the novelty with financial means, designers setting forth the product in theory, and suppliers providing resources. Work on innovation is provided by managers, members of the scientific council and external structures that may be interested in creating the product. These structures can be both private and state, they can appear in the form of investors, if necessary. This happens when large organizations require a technology or innovative product. Such a company will be ready to support a new business idea.