La Innovacion

Alejandro Márquez
A01227354
Administración e Innovación en Modelos de Negocio
18/10/12

“The Innovation Value Chain” Essay

Nowadays businesses try to gain competitive advantage in any way they can. Innovation is becoming increasingly popular as technology and globalization become essential parts of doing business. In their article, Hansen and Birkinshaw (2007) present the concept of theinnovation value chain which promises customized results to enhance innovation within a company. The innovation value chain works basically by analyzing each part of the company to find weaknesses in the innovative process and creating solutions. They address each problem specifically and create plans to encourage the generation, conversion, and diffusion of ideas.

The generation of ideasrefers to creation or sourcing of ideas, whether it is from an internal or an external source. A company which works with cross-unit collaboration maximizes their internal potential to generate ideas since they combine the different points of views and opinions of people from different areas of the company to create an improved collaborative idea which ultimately will strive to become a new idea orbusiness. Through utilizing the network of customers, users, competitors, scientists and investors among others, a company may search outside their people and find the answers to their questions. The conversion of ideas refers to the handling, processing, and screening of an idea so that the best can thrive into finished products, services, or businesses. The overflow of processed ideas may lead tomajor problems since no idea is given the correct attention or funding and therefore they all fail to stand out. A balance has to be found so that fund-worthy ideas may prosper. Finally the last phase, the diffusion of ideas, can be defined as the support and outreach an idea has once it is fully developed, within a company and in the corresponding customer groups and locations. When new productsare not distributed nor presented correctly, they will fail to yield profits, no matter how good the product may be. (Hansen and Birkinshaw, 2007)

Companies generally struggle with one of these three main phases of the chain, and though they excel in the other phases, their weakness ultimately brings them down to failure. Companies which benchmark innovative processes and techniques from othercompanies may fall into this problem since they are not addressing their own problems but using someone else’s solution to a different one. (Hansen and Birkinshaw, 2007) By implementing the innovation value chain, a company can fix internal issues within their company and gain a valuable competitive advantage over their competition. A company can use this concept to expand their geographichorizons by carefully using innovation to adapt to local and regional markets in other countries.

A company which is struggling with growth, whether it is in profits or sales, may start to question its current practices. Through the innovation value chain, a company can evaluate which part of their business is stagnant and how innovation may help restart their engine to become one of the topcompetitors in their industry. A company which strongly focuses in one area may be causing more damage than it thinks since it weakens the remaining areas. Hansen and Birkinshaw make this clear when they state that

These so-called innovation strengths can actually lead to weaknesses in the process if they’re not complemented by equivalent strengths in other areas. (Hansen and Birkinshaw, 2007:4)Innovation is necessary not only to make a company grow in profits, but also to successfully carry out its processes and in the most efficient way possible. The innovation value chain provides strategies for each weakness in the process of innovation and allows a company to reinvent itself in this aspect. Though some companies may hesitate to invest on innovation because of its high cost, the...