If you’re not innovating, you’re stagnating. That’s the reality that businesses of all sectors are confronting daily. And while many decision-makers recognize the importance of innovation, many fail to create the structured framework needed to ensure long-term business success. That’s where innovation management comes in.

Innovation Management Defined and Explained

As the term implies, innovation management involves managing innovative ideas. While the formal definition varies, the most reliable is written by Henry Chesbrough. Chesbrough, who is known for coining the term ‘open innovation,’ argues that innovation management is not merely supply chain management, but rather a key element in making open innovation a success in the workplace. Put simply, innovation management is the process of introducing something brand new to an organization—be it a product, service, or event.

It’s best to picture innovation management like you would a flow chart. It begins with how the flow of ideas will be arranged. It then progresses into the process of capturing, refining, and selecting the best ideas for implementation. The best innovation management programs have a method for capturing and maintaining a database of ideas that will become the company’s innovation portfolio.

The Innovation Management Process

So what does the innovation management process entail? For one, the entire company typically participates in the identification and development of new ideas. These ideas can be born out of existing products or generated out of the unmet needs of your customers. The innovation management process also involves a myriad of tools that promote creativity and innovation within a collaborative workplace.

Contrary to popular belief, innovation management is not new to the discussion of business and economics. In fact, the innovation management process was first brought to light by the Austrian economist Joseph Schumpeter, who described a process in which “the opening of new markets, foreign or domestic, and the organizational development […] illustrate the same process of industrial mutation, that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one” in his book Capitalism, Socialism, and Democracy.

After analyzing the capitalist model, Schumpeter wanted to understand which companies were in the best position to innovate. He theorized that a company’s ability to innovate was mainly linked to its size as smaller organizations tend to have more flexibility than larger ones that are bogged down by bureaucratic structures.

Some years later, however, we know that finding the right innovation management methodology for your business is more complicated. Gail Martino and John Bartolone note in A Guide to Open Innovation and Crowdsourcing that “In a typical competition, participants prepare a business plan for an idea that they feel passionately about, which is evaluated by a steering committee. The steering committee evaluates the proposals using a set of predetermined evaluation criteria and identifies and rewards winners.”

At IdeaScale, we’ve introduced stages that map exactly to this process—allowing companies to build steering committee teams around great ideas who then evaluate the ideas in the refine stage against set criteria. Finally, in the review stage, the best ideas are selected for implementation and are handed off to the relevant business unit for development. 

To learn more about the IdeaScale innovation management process, download the innovation starter kit here.

Why Innovation Management is Important

Now that we have a clearer idea of the definition of innovation management, let’s explore why innovation management is important.

One of the main reasons why innovation culture is key to ongoing business success is because it’s not enough to just have employees with great ideas. Those employees will have little impact on your company unless they’re encouraged and incentivized to contribute ideas to reach larger company goals.

Plus, innovation management can ensure high and repeatable ROI. As the old adage goes, “you can’t manage what you can’t measure.” Generating great ideas is just as critical as monitoring how these ideas progress and the type of impact they’ll have on your bottom line.

With innovation being the lifeblood of any successful business, effective innovation management should be a constant priority, no matter your industry.