DEVELOPING INNOVATION CAPABILITY IN ORGANISATIONS: A DYNAMIC CAPABILITIES APPROACH

TLDR

Excellent companies invest in and nurture innovation capability, enabling effective innovation processes that produce new products, services, and processes and drive superior business performance. The paper proposes that innovation management is an organisational capability and that substantial investment in this capability is the primary engine for wealth creation, rather than physical assets. Through a literature review and a Cisco Systems case study, the authors develop a conceptual model of the firm as an innovation engine and propose an innovation capability construct comprising seven elements: vision and strategy, competence base, organisational intelligence, creativity and idea management, structures and systems, culture and climate, and technology management.

Abstract

This paper draws together knowledge from a variety of fields to propose that innovation management can be viewed as a form of organisational capability. Excellent companies invest and nurture this capability, from which they execute effective innovation processes, leading to innovations in new product, services and processes, and superior business performance results. An extensive review of the literature on innovation management, along with a case study of Cisco Systems, develops a conceptual model of the firm as an innovation engine. This new operating model sees substantial investment in innovation capability as the primary engine for wealth creation, rather than the possession of physical assets. Building on the dynamic capabilities literature, an "innovation capability" construct is proposed with seven elements. These are vision and strategy, harnessing the competence base, organisational intelligence, creativity and idea management, organisational structures and systems, culture and climate, and management of technology.