In the Global Innovation Index 2022 of the World Intellectual Property Organization (WIPO), Mexico ranks third in innovation in Latin America, behind only Chile and Brazil. This places the country in a relevant place to address this issue, and its consequent management, which aims to make the company’s processes more efficient, fast and strategic.

In this article we will talk about innovation management, and we will explain what it is, as well as how and why to apply it in companies.

The concept of innovation

Before we start, what is meant by innovation? Innovation refers to the creation, development and use of new products, processes, methods or concepts, which bring about significant changes in the business and social sector.

In other words, the implementation of change is its focus, and this is brought into the business sphere. For example, as the introduction of new ideas, products, services, or processes within an organisation. But it does not only refer to “the new” but also to improvements of the existing and, in general, all of the above are linked to technology. Thus, innovation management in companies helps to add value to the organisation and improve its processes.

What is innovation management?

Now in a more specific way, innovation management consists of planning, coordinating and controlling the efforts, in this case of a company, to develop new ideas, products, services or processes – or their improvements – that generate value and competitive advantage. And, of course, its correct implementation, because if it only remains at the level of ideas, it is not innovation management.

This means that managing innovation in the company requires the work and collaboration of various departments, being able to allocate resources, assess risks and adapt to a changing business environment.

Importance of innovation management for organisations

Innovation management generates a great impact by bringing about change in organisations, either by something new or by an improvement of what already exists. It can be implemented in a variety of ways, for example, through the development of new products, optimised production methods or revolutionary technologies.

It can also lead to increased productivity and profitability for a company, which will ultimately help its competitive advantage.

For its importance to have the greatest impact, it is crucial that the organisational culture is geared towards innovation management as well as the leadership exercised. This helps to increase the likelihood of successful implementation.

Types of business innovation

Regarding how to promote innovation management in a company, there are different types that we can mention. Here we highlight some of the main ones, according to their application:

• Product innovation. This is innovation that introduces new products or services to the market.
• Process innovation. This is the improvement of the company’s internal processes, such as production, distribution or customer service.
• Marketing innovation. Incorporation of new marketing strategies to reach new customers or market segments.
• Organisational innovation. It considers the improvement of the structure and functioning of the company.

Benefits of innovation management

Innovation management leads to various benefits for organisations for multiple reasons, such as: 

• Competitive advantage. One of the strengths of innovation management is that it enables companies to develop products, services or processes that differentiate them from their competitors, generating a competitive advantage.
• Growth and expansion. When innovation is continuously implemented and new products or services are introduced, and hand in hand with innovation management, it enables companies to explore new opportunities, enter new sectors and expand their reach.
• Adapting to change. It helps organisations to adapt to external changes, and thus anticipate and respond to market movements, industry trends and new challenges. By being proactive and innovative, they can navigate uncertainties and remain relevant.
• It improves efficiency and productivity. It also has a focus on improving internal processes and operations. Innovation management encourages workers to find innovative solutions to streamline workflows, optimise resource allocation and improve productivity. All of this enables cost savings, increased operational efficiency and improved overall performance.
• Employee engagement and retention. A fundamental pillar of a company is its employees, so engaging and retaining talent is key. Innovation management gives employees the opportunity to contribute their ideas, be creative and have a significant impact on the organisation, while generating a culture of innovation, continuous learning and training. And innovation management targets these aspects.
• Customer satisfaction. By developing innovative solutions, organisations can not only deliver more convenient products or services, but also offer better customer experiences and greater customer satisfaction.
• Long-term sustainability. By constantly innovating and evolving, organisations adapt to market changes, while remaining relevant and avoiding stagnation in order to be resilient and thrive in the long term.

Key components of innovation management

An innovation management strategy has to consider and possess key elements to implement it effectively, such as:

• Identifying opportunities. Identifying and exploring opportunities is important for innovation management. Rather than just planning the space in which you want to innovate, it is appropriate to assess what are the best opportunities to innovate. In addition, it is a good idea to explore through focus groups and interviews with users and customers, for example, to obtain information that will enable you to make good decisions.
• Prioritising opportunities. One key is to be able to see and spot opportunities when it comes to innovation management for today’s organisations. In this context, it is key to take advantage of new trends as they emerge and to be alert to them so as not to miss them.
• Building good teams. Innovation teams are of paramount importance to an organisation, as they work collaboratively to leverage the collective knowledge of the team and drive successful outcomes. In this sense, innovation team leaders must be able to create a culture that supports collaborative spaces, creativity and productivity. And, above all, give team members the opportunity to share ideas as this practice fosters innovation.
• External partners. Partnerships with external actors provide a degree of flexibility, skills and networks that are not available in-house.
• Be able to adapt to change.  Companies that manage innovation must be permeable to change and not stagnate, as they must pursue advances in technology, developments in marketing and leadership development, for example.

What is an innovation management process and what are its key steps?

An innovation management process has phases or steps in order to become a reality, among which are the following:

1. Ideation. This is about coming up with relevant and useful ideas, and in this it is important to consider several elements such as customer needs, new business opportunities and new techniques that could increase the efficiency of the organisation. Some tools that stimulate creativity are often used at this stage, such as Design Thinking or brainstorming. And it is here that the team is stimulated to contribute without fear, because the objective is to trigger creativity and make use of the imagination.
2. Concept. In the second point, it is important to evaluate the most interesting ideas in order to check their commercial viability. A market study can be carried out at this stage to help find out if the idea that was born in the ideation is viable, i.e. has a market niche or is aligned with the needs of customers, for example.
3. Solution. If there is already certainty about the viability of the idea, it is time to make it a reality. This implies a development project that must be accompanied by a process of research and testing, so that the idea is properly worked on so that its appearance on the market is successful and at the best time.
4. Market. The last phase refers to the market launch. It is precisely when all the previous steps become concrete, supported by a marketing strategy and the launch of a product or service, for example.

Best practices in innovation management

There are several strategies or practices for implementing an innovation management process that you can choose from. We have made it easy for you and selected some of the best ones:

• Foster an organisational culture of innovation, which fairly encourages and rewards innovation.
• Embrace emerging technologies by incorporating the latest technological advances and exploring how they can be harnessed to drive innovation within the organisation.
• Establish strategic partnerships with external partners such as startups, universities, research institutions and industry experts.
• Implement agile methodologies, such as Scrum or Kanban, which can improve innovation management by promoting iterative and flexible approaches to product development.
• Encourage cross-functional collaboration, i.e. collaboration between different departments and teams.
• Invest in continuous learning for the organisation’s employees, encouraging them to undertake further training and continuing education.
• Develop an idea management system to capture, evaluate and prioritise ideas from employees, customers and other stakeholders.
• Allocate specific resources to innovation activities.
• Adopt design thinking to identify unmet customer needs and develop innovative solutions.
• Measure, recognise and reward employees who contribute to the innovation process.

Examples of business innovation

More and more organisations are joining innovation management, many of them with successful results. These are the cases of brands such as the private transport giant, Uber; the Mexican company Nuvocargo, which has redefined international logistics; or the world’s most popular streaming service, Netflix.

Kilpatrick can help your company with the innovation management process thanks to its team of human resources experts hire the right talent, and who have a wealth of experience in the field to help you succeed.