Innovation Management

Second edition

by Keith Goffin and Rick Mitchell

Chapter 2


Management recommendations

  • Measure the actual growth and profitability benefits arising from your innovation investments. Don’t rely on input measures alone to assess your innovativeness.
  • Compare your expenditure on innovation with your immediate competitors, and understand the effects the differences may have on your competitive position.
  • Apply the insights provided by diffusion theory to individual innovation projects.

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Chapter summary

The literature on the impacts of innovation has been reviewed, including the precursors of innovation, and its influence on markets and industries. This chapter has showed that

  • Innovation has a major impact on the economy, it drives business cycles and employment levels.
  • Economic cycles can make business conditions harder, but lead to opportunities for particular innovations.
  • Large or small companies may equally be innovative. For managers in existing organizations, the challenge is to maintain or increase innovation levels. For entrepreneurial managers in start-ups, the challenge is to generate an innovative idea that can dislodge the incumbents.
  • Most studies have focused on the manufacturing sector, and only in recent years has innovation research started to look at the service sector in detail.
  • The way innovations diffuse through a population or market depends strongly on the characteristics of the innovation itself and also on the adopters (customers). Different types of people adopt at different stages of the market and marketing efforts must adapt accordingly.

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Recommended reading

1. Rogers, E.M., Diffusion of Innovations (New York: The Free Press, 1995). [This is one of the classic texts on innovation, with a wealth of fascinating examples of innovations in both the manufacturing and service sectors.]

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Multimedia material

  • The Cochlear Bionic Ear (A) and (B) video reference 593-037-1 has a useful interview with an executive. Can be used with the teaching case to start useful discussions around Diffusion Theory and apply Table 2.4 to the case of an innovative hearing device.

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