Innovation Management

I declare that the report from this investigation is centered on my work which I conducted in the course of our research under the supervision of my tutor. I further proclaim that the conclusion drawn and statements made are the results of the investigation that I have conducted. More so, I assert that I have given due credit whenever I have used texts, analysis, data, and theory from other sources; the project has not been presented to any other educational organization for any other certificate, degree, or diploma. I also proclaim that, in this project, the work therein has been accomplished by me under the guidelines of my supervisor.

Dedication

The current study is dedicated to my mother who showed me even the most complex assignments can be completed if one does it one step at a time; I also dedicate it to my father who taught me that the best category of knowledge is the one that is trained for its sake.

Acknowledgment

My professor has been very helpful when carrying out this thesis; his patient encouragement, insightful criticism, and sage advice assisted me in accomplishing this thesis in immeasurable ways. The steadfast support of my tutor in the course of this project was also deeply appreciated and much needed.

List of Figures

Figure 1: Redefining innovation as the interrelationship between creativity, technology, and research…………………………………………………………………………………………..22

Figure 2: Research Onion……………………………………......................................................32

Figure 3: Funnel model as adopted by Pierburg………………………………………………....42

Figure 4: Innovation management system based on stakeholder concept……………………….44

List of Tables

Table 1: Spontaneous response scale on Innovation Management………………………………39

Table of Contents

Candidate Declaration. II

Dedication. III

Acknowledgements. IV

Abstract. V

List of Figures. VIII

1 Introduction.. 1

1.1 Overview.. 1

1.1 Research Purpose. 1

1.2 Significance of the Study. 1

1.3 Problem statement ………………………………………………………………………………………………………………………1

1.4 Research Objective. 1

1.5 Significance of the research……………………………………………………………………………………………………………9

1.6 structure of the study…………………………………………………………………………………………………………………10

1.7 chapter summary. 11

2 Literature Review.. 12

2.1 Introduction. 12

2.2Importance of innovation. 13

2.3Innovation types. 13

2.4management of innovation in an organization. 14

2.5Innovation policy in germany. 15

2.6 Critical success factors of innovation management in germany………………………………………………………18

2.7 the process of innovation management in germany…………………………………………………………………………19

2.8 german managers in the process of innovation………………………………………………………………………………23

2.9 Conceptual Framework. 29

2.10 Conclusion. 2

3 Methodology and Research Design.. 29

3.1 Overview.. 29

3.2 Interpretivism Research Philosophy 30

3.3 Inductive Approach. 31

3.4 Research Strategy. 32

3.5 Mono-method Choice: Qualitative.. 32

3.6 Time Horizon. 32

3.7 Methods of Data Collection: Interview.. 33

3.8 Methods of Data Analysis……………………………………………………………………………………………………………..34

3.9 Ethical Issues………………………………………………………………………………………………………………………………..34

3.6 Chapter summary. 34

4 Presentation and Discussion of the Findings. 35

4.1 Overview.. 35

4.2 Findings. 35

4.3 Discussion. 37

4.4 Conclusion. 38

5 Concluding Thoughts on the Contribution of this Research, its Limitations and Suggestions for Further Research. 41

5.1 Implications of Findings for the Research Questions. 41

5.2 Contributions and Limitations of the Research. 41

5.3 Recommendations for Practice. 41

5.4 Recommendations for Future Research. 41

5.5 Final Conclusion and Reflections. 42

References. 43

Appendices. 44

Appendix A –. 44

Abstract

The present study is meant for evaluating the significance of innovation management on the continued development and survival of an organization. More specifically, the research is applied to organizations that gain their competitive advantage by technology lead efforts, in this case, the German automotive sector. In the mentioned industry, the process of innovation management has to focus on technology tracking, implementation and capitalization, and an efficient idea generation. In this regard, the goal of the current analysis is to provide an understanding into the industry-sector-specific characteristic of the process of managing innovation within the sector in question; it recommends a basic innovation management system scheme that aims to advance the existing innovation management process in the automotive industry. The research has adopted a qualitative research method, primarily the interview to collect the primary data. The interviewed German managers have demonstrated that they treat the process of innovation management as an essential component of their development.

Keywords: Automotive industry, product development, the process of innovation management, German managers

The Process of Innovation Management

Chapter 1: Introduction

1.1 Overview

Globalization has presented some challenges as well as opportunities for every business. In the present day business setting, organizations are fighting to overcome future problems as they exploit all avenues presented by the dynamic business environment. Thus, within the business environment, the aspect of innovation has turned out to be the necessary condition for sustainable development within a company. According to Nasiri et al. (2016, p. 2), innovation is both an outcome and a process; it involves establishment of new management systems and methods of production; it entails enlargement and renewal of markets, services, and products; it is also the exploitation, adoption, and output of a value-added novelty in social and economic sphere.

Conversely, innovation management concerns more than just technology inventions, or planning of new brand extensions, services, and products, it is about competing, mobilizing, and imagining in new ways (Nasiri et al., 2016, p. 2). The process of innovation management requires organizations to find new techniques for managing their innovation process. However, it is essential for the new methods to encourage new aspects such as frugal invention across an international network, to allow the development of new business models, to increase speed to market, and enable utilization of holistically across the entire organization, and connect much more intimately with consumers.

1.2 Research Purpose

The tenacity of this study is to determine the manner in which the German manufacturing industry promotes and executes its business with the support of innovation management. The reason therein is that Germany is perceived to be a leader in innovation; nonetheless, the managers in the manufacturing industries in the nation are facing competence barriers based on the process of innovation management. Thus, this analysis aims to categorize such obstacles and recommend various solutions of overcoming them to allow the German managers in the sector in question to innovate efficiently. The current research acknowledges the significance of innovation as a growth and survival imperative; thus, there is need to determine the process of change in German manufacturing industries, the responsibility of German managers in the innovation process, and the critical success factors for the procedure. Attaining the objective of this study requires the formulation of questions that will help to determine the challenges that the German managers face when applying innovation management. The findings will help to identify the reasons for the constant decline in innovation development in German industries in the past decade and why the number of German SMEs that conduct innovation activities has drastically decreased (Greve 2014, p. 3).

The drive for this analysis is also to define whether the shortages of qualified personnel and a lack of competence in innovation management are the major obstacles that the German SMEs managers are facing when pursuing innovation. The present study also has the purpose of assessing whether the industry in question has limited resources based on infrastructure, finance, and workforce. The analysis will further determine whether the mentioned factors are limiting the ability of the managers to successfully manage the activities of innovation as well as acquire the necessary support or tools and external competence for innovation activities. The study will also evaluate the urgent need for more qualified managers and skilled personnel for the process of innovation management in the German automotive sector. The findings of this research have highlighted the need to increase stress and pay more significant attention to the provision of training to develop the required expertise for managing and implementing innovation management, which is essential for the success of an organization.

1.3 Problem Statement

Managers are facing a real problem concerning the control of the innovation process in German manufacturing industries. Different factors contribute to its provision, including practical application, model solutions, and theoretical concepts. The most significant or the most significant challenge that is evident is an absence of a complex or unified and at the same time transparent policies based on the management of innovation processes. The doctrine implies broadly to the guidelines under which the managers can apply innovation. Due to the lack of such instructions, the managers in the industry in question are having problems putting innovation management into practice. According to Hogeforster (2014), it is vital for business managers to understand the essence of non-technological as well as technological innovations and their role in generating the value of products in the organization. Nonetheless, due to the lack of appropriate policies, the managers are facing problems, such as a lack of systematic innovation process. For instance, when managing implementation, the managers are often not provided with the tools and means that they require to succeed.

The management of innovation often requires the managers to match technical skills in areas such as finance, project management, and technology. The expertise needed for the control of technology is linked closely to physical sciences and technology, whereas investment is covered in business education, and the soft skills are closer to the social science. Few managers have been educated in the mentioned areas. More so, developing new processes, services, and products is inherently tentative, and the managers are required, in this case, to be aware of techniques for dealing with risk. Based on the mentioned complexities, innovation management involves a mix of skills, which makes the process a fascinating challenge. Furthermore, the management of innovation is in its infancy in many ways. Therefore, although there are approaches, theories, and tools, that lack a transparent methodology to assist the managers to improve the performance of innovation. There are also strategic-related barriers to advancement. For example, implementing and managing an innovation strategy requires the executives to focus on various issues (Crane and Meyer 2011, p. 197). Evaluating the trends in the market and determining the manner in which these drive the requirement for innovation in the chosen industry of a company is the first step. The management is required to consider how to gain expertise in the relevant technologies, the opportunities it can open, and the role of technology.

1.4 Aims and Objectives of the research

1.4.1 Aims

The purpose of the current analysis is to determine how the German manufacturing industry promotes and executes its business with the support of innovation management

1.4.2 Objectives

The objectives guiding this analysis are as follows:

To identify the process of innovation in German industries and how the method is applied to an organization.

To determine the responsibility of German managers in the innovation method and how they implement the process of innovation.

To describe the critical success factors in German industries.

1.4.3 Research Questions

The following two research questions have been formulated to help attain the objective of this analysis:

What are the challenges that German managers face when implementing innovation management in manufacturing industries?

What are the innovation management characteristics in manufacturing industries?

1.5 Significance of the Research

The management of the innovation process is a strategic variable that impacts the manufacturing industry and all the operations it conducts. In this regard, the present study is essential in the sense that it will better connect open innovation research, policies, and practices to inform policy-makers, managers, and scholars about the current trends as well as future directions concerning the process of innovation management. The study will achieve this by highlighting the state of open research on innovation as evident from relevant academic work in that field; the current research will also do this by presenting an overview of some policy recommendations and considerations. Since the management of innovation is an inherently dynamic and social process, the current study is significant because it aims at providing tremendous value in linking theory and practice. In essence, an effective policy will require the policymakers to have a comprehensive knowledge of what is working in practice and what might work in theory, which is an aspect that this investigation aims to deliver. There is a continuous evolution of the innovation management process; thus, the policies in that field must also be prepared to adjust.

1.6 Structure of the Dissertation

In the first chapter, the current analysis will present a brief highlight of the background of the research, which is to categorize the process of innovation administration and the manner in which it is applied to a company. The second section will rationally assess the perception of other scholars concerning the subject under analysis; the objective herein will be achieved through evaluating the theoretical framework that other scholars have used in the past on the topic being discussed. The third chapter addresses the issue of the study philosophy and highlights the methodology process of the study. The fourth chapter presents the analysis and discussion to realize the objectives and aims of the study. Lastly, the conclusion section summarizes the report by evaluating the accomplishment of the purpose of the research and provides implication for future work.

1.7 Chapter Summary

In the case of German manufacturing industry, this chapter has introduced the concept of innovation management in the sector, and it has highlighted the aims and goals regarding the responsibility of managers in the process of innovation. The section has further determined the manner in which the management of innovation aids organizations from the manufacturing industry to improve their competitive capabilities as well as production. The chapter has looked at the concept that would help in gaining a better understanding of the issue under investigation through a sampled analysis of German SMEs private enterprise.

Chapter 2: Literature Review

2.1 Overview

The review of the literature will illuminate every concept of the study problem, including describing its current status and providing a historical background of it (Lunenburg and Irby 2008, p. 137). This chapter will identify and assess the relevant studies that have been conducted in the field of innovation management. The analysis illuminated what the present state of thinking is and what is emerging on the topic, what is generally accepted, what has been done, and how the knowledge has evolved within the field. More so, the works discussed will offer a comprehensive understanding of the existing evidence, which will eventually guide in future intervention and research in the area of innovation process management through an indication of the scope of work evaluated in this chapter and explanation of its specific objective. Furthermore, this section will refer to the related theory and analysis of the topic in question. The study has adopted an up-to-date and comprehensive literature review because it would provide the current knowledge and insights that will ultimately offer the basis for a study that is better designed; it has also enhanced the likelihood of achieving significant results.

The structure of the literature is as follows:

The literature appraisal will be based on research by Lunenburg and Irby (2008, p. 137) whereby different works will be reviewed to support the theoretical argument in the sector of innovation administration. More so, the works discussed will offer a comprehensive understanding of the existing evidence, which will eventually guide in future intervention and examination in the process of innovation management. The subsections are as follows:

1. The importance of innovation management

2. Innovation types

3. The process of Innovation in German

4. How the method of innovation is applied to an organization

5. German managers in the process of the invention

6. Management of change in Germany

7. Innovation policy in Germany

8. Conceptual framework

9. Critical success factors of innovation in German industries

10. Chapter summary

2.2 Importance of Innovation

The survey by Petkovska (2015, p. 1) has acknowledged that the role of innovation is central to enhancing productivity and growth. The reason is that the concept is perceived to be the instrument by which an entrepreneur augments the current products and creates new ones. Autio et al. (2014, p. 1097) argue that entrepreneurial innovation is the actual source of an organization’s competitive advantage. For this reason, most of the firms are adopting policies to stimulate innovation with the objective of facilitating economic growth. The findings by Autio et al. add to the validity of the research by Mobbs (2010, p. 2013) that innovation is vital in driving total shareholder returns, raising profitability and margins, attracting extra funding, providing stability for the workforce, and reducing the influence of competitors. However, it was the research by Ionescu and Dumitru (2015, p. 14), which established that innovation is crucial for a company in surviving adverse changes in operating circumstances. Innovation is also critical because it transforms the internal capabilities of an organization making it more adaptive to change (Zemplinerová and Hromádková 2012, p. 493).

Ajimati (2012, p. 11) claims that one of the motives for merchandise innovation is the consumer’s tendency to benefit from new technologies, which offer new functions and features. In the recent developments in the market, products whose change and formation are generated by combining consumer perspective and technology are bound to have the newest technology; consequently, such organizations tend to introduce further advantages and quality to meet the desires of the clients (Ajimati 2012, p. 11). In this context, Reguia (2014, p. 140) has argued that innovation is a success element in the commercial companies, and it is perceived to be the fundamental feature to reach customer satisfaction as well as to realize their desires.

2.3 Innovation Types

As described by Rao (2011, p. 3), there are two categories of innovation; they are the radical and incremental ones. The former refers to the generation of something new while the latter involves extending, expanding, or improving the existing services, products, processes, and business models. The radical innovation are discontinuous changes that aim at replacing entire systems or existing components to create new networks that would add value (Carrillo-Hermosilla et al. 2010, p. 1076; Van Dijken 2012, p. 27) that radical innovation is discontinuous events based on new categories of products, new materials, and new processes. The incremental changes, on the other hand, are rather small but there are constant developments in the existing arrays of the system of production, organizations, procedures, and products. Thus, the innovations are narrowly connected to the experience of the users and the development of market demands (Van Dijken, 2012, p. 27).

2.4 Management of Innovation

Nasiri et al. (2016) have argued that in the management of innovation, the managers are required to take a comprehensive analysis of their efforts in the process to classify any apparent weaknesses and adapt to best innovation practices to address the deficiencies. The findings by Nasiri et al. (2016) have been supported by that of Parjanen (2012, p. 105) who brings forward an interactive process of knowledge application and generation, stating that in the course of innovation management, companies often apply facts to ease the sharing of the experience. Earlier works by Anderson et al. (2014) suggested that four environmental factors facilitate the application of a change in a company in the sense that there is a need to a whole new shift in the structure and style of management to innovate. The first aspect that enhances the use of innovation is where team members perceive the support of invention; the second one concerns initiating stimulating discussions and debates about different likely within the team. The third aspect is where the team members distinguish that they can recommend new solutions as well as ideas without being criticized or judged; this third aspect is essential because it is facilitative of innovation through team members stimulating discussion and debate of different possible solutions. In this case, collective passion had a positive impact on team member orientation on personal creativity. The last element of enhancing the application of innovation according to Anderson et al. (2014) is that the vision needs to be accepted, valued, and understandable by the team members. Therefore, the point by Anderson (2014) suggests that rather than facilitating the implementation of ideas, the high degree of creativity of an idea in the absence of various mitigating concepts would not make it possible that the factor proceeds to the stage of practice (Bartochowska and Szumigaj 2015; Baer 2012, p. 1105).

Bartochowska and Szumigaj (2015, p. 30) have also recommended that the application of innovation management should focus on the determination of an organization’s primary objectives, in which the process is to be implemented to lesser or greater extent in all sectors of the organization. Lendel et al. (2015, p. 416) have recommended that the effective implementation of the innovation management process should recognize weaknesses and afterward take measures to eradicate them. More so, the process should be skilled in conveying the essential data linked to innovation to individuals in charge. Organizations should further be ready in the innovation process administration to tackle various threats that may transpire and lead to failure of the adopted invention ventures. The findings by Lendel et al. (2015) is useful for the current study in the sense that the argument will help to guide in building essential recommendations for workplace creativity and management of innovation process.

Thus, an organization can considerably increase the success of applying the innovation process by identifying likely risks as soon as possible (Lendel et al., 2015, p. 416). Aas et al. (2015, p. 15) have concluded that culture and strategy dimension is essential in establishing clear objectives for eliminating the risks as identified by Lendel et al. (2015) in the course of the implementation program of innovation management as a whole in organizations. Aas et al. (2015, p. 15) have also suggested that when implementing the innovation management process, the best-performing companies adopt a formal development process with well-documented and predefined decision gates and stages.

2.5 Innovation Policy in Germany

In Germany, organizations are supported in numerous ways to strengthen innovation and R&D (Eickelpasch 2013, p. 5). The country comprises a broad spectrum of the support system of research policy and state-led innovation; it consists of networking and cluster formation, support of cooperation, and financial aid. The method also comprises the following concepts: knowledge transfer facilities, institutional support for research organizations, funding of technology-oriented startups, and innovation activities in research institutions and firms. In essence, these findings have been supported by the work of Hommes et al. (2011, p. 27) that German research and innovation policy has for a long time been primarily characterized by a variety and multitude of individual programs and singular policies. For example, in 2006, the country developed a “High-tech Strategy” (HTS), and it signified the first cross-departmental framework for Germany’s overall innovation policy, technology, and science; consequently, it improves the nation’s competitive advantage. In this respect, Eickelpasch (2013, p. 5) has further demonstrated that in Germany, the European Union and the federal government are the main actors in innovation policy. Thus, there are several studies concerning innovation policies and R&D at the national level, which either offers an overview of the guiding principle method.

Another point of view concerning innovation policy has been discussed by Heidenreich et al. (2011) arguing that Germany is a nation with distinct tradition in innovation policies that are created both on the sub-national and national level. Nonetheless, although the designed strategies for innovation mostly target SMEs, the policymakers also consider MNEs as increasingly crucial (Heidenreich et al. 2011). Likewise, MNEs appreciate the policies on change due to the following reasons: for knowledge generation, development of networks, development of international, national and regional research capacities. According to the World Bank (2017, p. 221), the main instruments used by the developed countries, such as Germany include research programs; they are used in implementing research and innovation policies. The nation may fund more applied or basic research in a specific or general sectoral context, with or without commercial objectives. In this regard, the investigation by Loughlin et al. (2013, p. 38) has revealed that in Germany, the transformations in innovation policies and regional development seem to have increased the occurrence of and need for coordination between local, regional, and federal agencies of the government. In OECD nations, including Germany, different stages are involved in innovation policy, and occasionally the level of sub-national can have significant spending on innovation (OECD 2011, p. 154).

2.6 Critical success factors of innovation management in German

According to the IFO Institute for Economic Research (IFO) (2012, p. 454), among the primary success factors in German industries based on innovation is specialization. The organizations in the country focus on engineering sciences as well as a strong global position in areas of specific processes. The German universities supply a sufficient number of engineers who are well-educated, and the country also has highly reputable organizations for the execution of basic research and development (R&D). The work by Boeve (2010, p. 2) has offered empirical evidence that a broader economic capital accompanies a higher level of specialization. Another success factor of innovation in German industries is the R&D efforts in the sense that various organizations in the country are know-how driven, and most of them are focusing on areas in which they have a leading edge in technology (IFO 2012, p. 455). In this regard, Berger (2013) stated that the German system has no tax credit linked to R&D; however, organizations collaborate in R&D consortia, which can be given some funding from the government; individual businesses can also receive some funding to apply various projects. Therefore, Germany is on the right truck in its efforts to further increase investment in R&D because the nation owes in no small degree its prosperity to knowledge-intensive and R&D-intensive services linked to production.

Another point of view concerning crucial success factors of innovation in Germany has been discussed by Breznitz (2014) highlighting that Germany performs well in a change in diverse sectors. The examples of such areas are as follows: innovative software engineering, sustainable energy systems, lasers, and little biotech. What is perceived to be more crucial is that Germany performs well in adapting inventions to industry; the country is also better at spreading such devices throughout the business sector. Much of the innovation in the nation entails instilling old processes and products with new capabilities and ideas or recombining aspects of past, stagnant areas into new, vibrant ones. Breznitz (2014) has further argued that the manufacturing prowess in Germany is evident from the country’s style of innovation. For instance, German-made machinery is used to produce most of the Chinese products, and the organizations that manufacture them are thriving. The country is also better at supporting productivity and employment growth while intensifying the real income of the citizens. As an illustration, in 2010, manufacturing in Germany contributed 21% of GDP and hired 22% of the workforce despite the benefits and wages that are higher than those in the USA (Breznitz 2014).

According to Narayanan and Oconnor (2010), being appreciative of the critical success factors that underpin successful innovation be it business model or technology is essential to sustaining and gaining a competitive advantage. One of the factors that have led to success in Germany is that the workforce in the country is continuously trained; consequently, the staff can use the most radical innovations in ways that creative and diverse to improve and produce services and products (Breznitz 2014). Central to the study by (De Felice and Petrillo 2013, p. 1), achieving success requires firms to develop their strategic measurements to improve their competitive advantage and their organizational performance. In the case of Germany, the country has a network of public organizations that help enterprises to develop and recombine ideas (Breznitz 2014). More so, the nation recognizes that innovation must lead to gains in efficiency that is extensive instead of focusing on the high-tech industry of the moment. For this reason, the state does not only seek to develop new sectors, but it also instills its new segments with innovative machinery as well as ideas.

2.7 Conceptual Framework

The current study aimed to demonstrate that innovation is primarily an operation of creativity, research, and technology. Based on these concepts, change is perceived to be an interrelationship between creativity (as non-linearity), tech (as human understanding), and research (as strategic scientific awareness). This perspective incorporates the (in planned scientific research and human experience) into the innovation mindset.

Figure 1: Redefining innovation as the interrelationship between creativity, technology, and research

Source: Pellissier (2008, p. 71)

As illustrated in figure 1 above, it can be argued that the connection between technologies (R&D), research, and innovation are crucial ones. Nonetheless, the relationship is only valuable in the presence of some system, which can use technology and research to tap into the knowledge created. In this regard, there is a need to develop some technology-based method that can offer the proper expertise for the novelty to transpire and be instigated.

Furthermore, the connection between technology, research, and change is a crucial one. For this reason, the objective of the current study entailed providing valuable techniques that are linked to a particular structure that can tap into understanding fashioned through technology and research. In essence, this