Management Innovations for the Future of Innovation
Those who study innovation often can be overwhelmed by the variety and speed at which clever new products and services come into the market. But it is helpful to take a step back from these myriad innovations to reflect on the evolution not only of the technologies themselves but also the processes used to create, develop and manage them. While the latest technologies of the recent past (think of Facebook, Twitter, Android, iPod/iTunes/iPhone/iPad, just to name a few) get most of our attention, it is often the processes that led to the creation of these technologies that may prove more enduring. These also are being innovated.
Let’s look back in time at previous management innovations to gain some perspective. In the 1960s, a significant management innovation that fostered the development of many technologies of that era was the concept of Systems Analysis that Robert McNamara and his colleagues brought into the U.S. government, particularly in the defense sector. This was a comprehensive way to assign priorities and allocate resources to competing projects, based on their total costs and benefits.
In the 1970s, the success of the Apollo missions to the moon spurred a management innovation in project management. Program Evaluation Research Techniques (PERT) were developed to map sequences and dependencies in complex projects, so that the critical path that determined the date at which a project could be completed could be identified. PERT charts also helped companies assess trade-offs when activities on the critical path began to fall behind schedule.
The 1980s saw the rise of Total Quality Management in the U.S., as the principles of Deming and Juran, which had been so influential in Japan in the 1970s, finally found acceptance in their home country. Related processes like Six Sigma became widespread, as the U.S. struggled to compete with higher quality products from Japan in many technology-based industries, as well as autos.
The 1990s witnessed the spread of supply chain management, as companies invested in sophisticated software and other tools to link themselves more and more closely with their key suppliers. Data were shared extensively with suppliers, as companies streamlined inventories and took more costs out of their supply chains. The rise of the Internet allowed companies to link their supply chains closely to customer demand, as companies like Dell and Amazon took orders first, then organized the fulfillment of the customer’s order through their network of suppliers. This greatly facilitated the globalization of these supply chains.
What about the most recent decade just ended? While there hasn’t been much time yet to assess the many possible management innovations over the past decade, one plausible suggestion is that this past decade has been the decade of Open Innovation. In this decade, companies started to open up their research and development processes, involving customers, suppliers, universities, third parties and individuals in the innovation process. The old “Not Invented Here” syndrome that restricted the use of external ideas has been largely rejected now in most industries. We also see more companies allowing their unused internal ideas and technologies to go outside for others to use in their business. With Open Innovation, companies are innovating more with fewer internal resources, saving time, reducing risk, and identifying new markets.
Click here to continue reading this column on the Ivey Business Journal website.
