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Innovation has become a central concept in the field of business management and entrepreneurship. It has been found to be a source of competitive advantage, and continuous improvement and innovation are believed to be essential for the enterprise’s survival, especially for small and medium-sized businesses (Löfsten 89). Innovation has gained particular relevance in recent years thanks to the developments in the sphere of information technology that have created both an opportunity and a challenge for business innovation (Harmon and Demirkan 14).
Given the significance of this concept, it is not surprising that several researchers and business practitioners have undertaken the task of developing practical guidelines for organizations to enhance and streamline the process of innovation. The purpose of the present report is thus to provide an overview of the existing innovation maturity literature, as well as examine the relevant models that have been developed to guide the companies’ innovation process. Three innovation maturity models are compared, and practical recommendations are provided regarding the selection of a particular framework.
The Concept of Innovation Maturity Models
Maturity models are a commonly used tool in the business literature, and a variety of different models have been developed to describe and analyze such concepts as performance and quality management, business processes, and service integration, to name a few. Given their versatility of application and rapid rate of adoption, maturity models have become increasingly popular across different industries in recent years, and the interest is further fueled by the academic research (Röglinger, Pöppelbuß and Becker 328). Essentially, maturity models represent a sequence of stages that constitute an “anticipated, desired, or logical path from an initial state to maturity” (Röglinger, Pöppelbuß and Becker 329).
The term ‘maturity’ thus refers to the stage of full and complete adoption of a certain practice or process by a company, effectively capturing the moment when an organization becomes ‘fluent’ in this practice or process. Consequently, innovation maturity models are frameworks that describe the company’s capabilities and adopted policies and practices that facilitate and promote innovation. Apart from being purely conceptual creations, such models represent a valuable practical tool as they allow to pinpoint the organization’s maturity level on a diagram, thus highlighting the opportunities and future directions for growth and development.
Given their broad scope of application, innovation maturity models can serve several purposes. First of all, they bear theoretical and conceptual significance as they allow to map of the stages and steps of a process’s maturation path. They provide a description of each stage’s specific characteristics, as well as outline the relationships and links between different steps. Secondly, as mentioned previously, innovation maturity models are an important tool for assessing the company’s capabilities, resources, and practices, and they can guide a company toward better innovation initiatives.
The descriptive dimension of the models’ aim lies in their ability to provide an assessment of as-is situations while their prescriptive aspect pertains to the models’ ability to indicate a direction for future improvement. Finally, innovation maturity models also serve a comparative purpose since they facilitate benchmarking, both internal and external (Röglinger, Pöppelbuß and Becker 330).
Even a brief look at the existing innovation literature reveals that there is no one single approach to understanding and conceptualizing innovation maturity. Consequently, several innovation maturity models have been developed. It is important, first of all, to clarify the concepts that are used in the present report. The term ‘innovation’ refers, quite specifically, to organizational innovation which broadly refers to the “mechanism applied by the organizations to adapt to changing conditions of competition, technological advancement and market expansion by producing newer products, techniques and systems” (Razavi and Attarnezhad 227).
The significance of such a definition is twofold. First, it puts a special emphasis on the external pressure that a company experiences: forces such as the market competition prompt organizations to innovate in order to survive. Secondly, this definition implies that innovation, as a concept, is broader than, for instance, product development alone. Innovation can certainly manifest itself through the creation of new or significantly improved products and services, yet it can also deal with the improvement of processes and systems, both internal and external.
The primary assumption underlying the studies of organizational innovation is that it can – and, in fact, it should – be proactively managed and streamlined. This distinction is important because it shifts the paradigm from creativity to purposeful and goal-oriented innovation. Organizations are no longer assigned a passive role which is precisely the case if innovation and creativity are believed to ‘just happen’ without any efforts on behalf of the company or its employees.
By assuming the central role in innovation, companies also claim responsibility for its management and implementation. The significance of this shift lies in the fact that innovation is essential in the contemporary business world. It is a primary factor in organizational growth and performance improvement. Innovation is also closely linked to the company’s culture and working conditions which means that the management, as the decision-making authority, has a primary role in influencing its development (Razavi and Attarnezhad 226).
This assumption has significant implications for newly established businesses. Given the current popularity of entrepreneurship, it is difficult to understate the role that innovation management plays in the survival of such firms and companies. Mortality rates of small enterprises in Europe have been found to be as high as almost fifty percent over a ten-year period (Löfsten 90). However, innovation management does not always go smoothly.
It is, first of all, difficult to quantify and measure the company’s innovation activities, as well as their impact on the overall company performance. Some of the most commonly used metrics include profitability, time-to-market, and idea generation, and the number of patents is a surprisingly less widely utilized measurement (Löfsten 95). While innovation management is particularly crucial for smaller enterprises, it is not to say that large corporations have it figured out. In fact, some of the world’s largest industries, including the pharmaceutical industry, experience considerable challenges to innovation, especially in the form of the government regulation that hinders the companies’ research and development efforts (Mittra, Tait and Wield 105).
As far as innovation maturity models are concerned, there is a clear trend in their formulation that relates to the specific context in which they have been developed. Thus, for instance, some of the earliest models that appeared in the 1990s and early 2000s have a clear link to such business theories and frameworks as the stakeholder theory and the resource-based view (Jones 107; Lawson and Samson 377).
Even though several additional frameworks have been developed to address the contemporary issues such as sustainability, open innovation, and social responsibility, the model developed by Lawson and Samson has not lost its relevance in the business world, and remains one of the cornerstone innovation maturity models. Building on the resource-based view of business, their framework looks at the organization’s dynamic capabilities and consists of seven primary elements, from strategy and vision to the organization’s corporate culture and its management of technology and ideas (Lawson and Samson 388). Thus, the popularity of the dynamic capabilities model stems from the fact that it is so comprehensive and diverse.
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In fact, most of the existing innovation maturity models tend to be rather inward-oriented, as their primary concern lies with the organization’s resources and competences. For instance, Essmann and Du Preez have developed the Innovation Maturity Capability Model that consists of three main components: organizational support, employees’ knowledge, and the organization’s innovation process (50). While it does encompass such broad categories as knowledge, policies, and practices, the model remains limited to the organization’s internal operations. Similarly, the Business Innovation Maturity Model developed by Gupta, a researcher at the Accelper Consulting Group, focuses primarily on the role of leadership alone, emphasizing a top-down approach to innovation management (146).
The open innovation models, however, expectedly shift the focus from internal processes and practices toward a more outward-oriented framework. Thus, for instance, the model put forward by Habicht, Möslein, and Reichwald considers the innovation competences at both the individual and project levels. It also takes into consideration such factors as appropriation – that is, the ability to restrict the competitors’ access to innovation – and network distances, or those obstacles that may prevent an individual from engaging in open innovation (Habicht, Möslein and Reichwald 92).
A similar approach was adopted by Enkel, Bell, and Hogenkamp, who proposed a five-stage Open Innovation Maturity Framework consisting of three components. While two of them, the climate for innovation and internal processes, are primarily inward-oriented, the third element, partnership capacity, clearly brings external actors into the picture (Enkel, Bell and Hogenkamp 1173).
Finally, more contemporary approaches also deserve a mention. Most notably, the developments in the IT-sphere have played an important role in promoting and facilitating innovation, and a significant body of literature is dedicated to exploring its potential for innovation management (Harmon and Demirkan 14). Specifically, Carcary, Doherty, and Thornley have proposed the IT Capability Maturity Framework, an “action-oriented” model that assesses the organization’s IT capability maturity as a primary contributor to innovation and product development (46).
Apart from that, the impact of the cause of sustainability has been widely researched. Thus, Fonseca and Lima conducted a county-level analysis of the correlation between sustainability, innovation, and competitiveness, and have discovered a strong correlation between these three elements at the societal level (1288-1289). However, a relevant maturity model is lacking. In a similar vein, a large body of research has been dedicated to developing social innovation models that analyze social businesses, CSR-oriented companies, and social entrepreneurs, and emphasize a long-term orientation and an ethical approach to innovation (Saji and Ellingstad 264; Schumacher and Wasieleski 27).
Open Innovation Maturity Model
The Open Innovation Maturity Model (OIMM) proposed by Enkel, Bell and Hogenkamp consists of five stages: initial, repeatable, defined, managed, and optimizing maturity levels. As their labeling suggests, the higher the level, the more the organization is in control of managing open innovation. At the same time, the authors note that it may not always be optimal for a company to strive to achieve the highest level across all of the model’s components (Enkel, Bell and Hogenkamp 1181).
In order for a company to identify what level it currently is at, the authors provide a description of three elements that they believe to be essential for innovation. The first element is corporate climate, and it is comprised of the management’s involvement, strategy formulation and communication, success sharing, and recognition. The second element is partnership capacity or the extent to which the company engages in mutually beneficial relationships with external actors, including the intensity, diversity, focus, and forms of these relationships.
Finally, the last component encompasses such internal processes as communication, information gathering, knowledge sharing, and others (Enkel, Bell and Hogenkamp 1173). The authors have also developed a comprehensive self-assessment questionnaire that companies can use to determine their level of open innovation maturity (Enkel, Bell and Hogenkamp 1181-1187).
Business Innovation Maturity Model
The main aim of the Business Innovation Maturity Model (BIMM) developed by Gupta is to facilitate the process of innovation institutionalization at an organization. Just like the previous model, it also consists of five maturity stages: sporadic innovation, idea management, and managed, nurtured and sustained innovation (Gupta 146). Clearly, the focus of this model is to make innovation a systemic and regularly occurring practice at the organization. When a company reaches the final stage, it means that it has acquired a mature culture of innovation. Apart from defining the different maturity stages, Gupta also outlines the specific characteristics of each step for a company to be able to determine what maturity level it has reached thus far.
Moreover, the model has a practical dimension as the description of each stage also includes the overview of activities that a company should engage in so as to achieve the next stage. As mentioned previously, Gupta’s model is inward-oriented, and it puts particular emphasis on the organization’s leadership. Thus, it uses a top-down approach to innovation: the company’s management is assigned the central role in empowering and engaging employees with the goal of fostering and encouraging creativity and innovation. Consequently, a major emphasis is placed on training, rewards, and recognition (Gupta 146).
Dynamic Capabilities Innovation Maturity Model
Finally, the last model presented in this report is the Dynamic Capabilities Innovation Maturity Model proposed by Lawson and Samson. The model is closely linked to the resource-based view that posits that firms gain a competitive advantage by strategically applying the tangible and intangible resources available to them (Lawson and Samson 379). Thus, the authors consider innovation to be one of the firm’s dynamic capabilities, in line with the resource-based view. Such framing of the concept is intended to systemize innovation activities within the organization, similar to the framework developed by Gupta (Lawson and Samson 395).
The authors, however, see innovation management as a seven-stage process. At the first stage, the organization engages in the formulation of a strategy that emphasizes innovation, and then it pulls its competences together into a single knowledgebase. During the third step, the organization strives to develop organizational intelligence, or its ability to process and interpret information in a purposeful fashion so as to improve its capacity to adapt. The fourth stage comprises of creativity and idea management, and at the fifth step, the organization establishes structures and systems that facilitate innovation. After that, innovation is virtually embedded in the organizational climate, and at the final stage, technological competence is used to achieve the organization’s strategic objectives (Lawson and Samson 388).
Comparison of the Models
Clearly, all three described models have their merits, especially when one considers the specific purpose for which they have been developed. A major disadvantage of the BIMM and the dynamic capabilities model is that they are heavily inward-oriented while the OIMM also includes an external partnership dimension. At the same time, both BIMM and OIMM are highly practical as they equip organizations with the necessary self-assessment tools that allow them to analyze and improve their performance.
Comparatively, the dynamic capabilities model is not as actionable, and even somewhat descriptive. It does not appear to be a stand-alone model, which is expected given that it was one of the first frameworks to address innovation management. The weakness of the OIMM is that it does not use absolute figures, meaning that it may be difficult to implement the model consistently. Interpretation of the maturity levels largely depends on one’s knowledge of the current open innovation status which also limits its applicability and usefulness.
Given this comparison, it appears that the BIMM is the most valuable tool available to companies. Even though it does not include an external dimension, it provides a comprehensive toolset for internal process optimization and improvement. Moreover, people – both leadership and employees – are at the core of the model, and it is people who drive innovation, rather than policies or processes, even though the latter also play their part. Apart from that, this framework is actionable and practical: it first helps the company assess its current maturity level, and then proposes clear strategies to move to the next one. For these reasons, I would select the BIMM model to assess the innovation maturity for a large organization.
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