Referring to a post on innovatingtowin something came into my mind which was the result of former work I did on how to establish an innovative climate a mid sized firm. I think that this applies to any company. I know the following is a bit long, but it might be worth reading.
It is based on the development of dynanmic capabilities. Most companies try to reach a higher level of efficiency by improving their operational capabilities, which is due to their wish of not cannibalizing their established products and their organizational structure.
Operational capabilities are: “high level routines (or collection of routines) that, together with its implementing input flows confer upon organization’s management a set of decision options for producing significant outputs of a particular type” (Helfat et al., 2003, p. 999). The term “routine” refers to the repetitive pattern of activities used to execute and coordinate tasks for firm specific purposes. So this has not much to do with innovation.
Dynamic capabilities do not involve the production of a good or of products in the sense of “result of economic activity”, but they affect operational capabilities and therefore indirectly contribute to the output of the firm. “Dynamic capabilities emphasize management capabilities and inimitable combinations of resources that cut across all functions, including R&D, product and process development, manufacturing, human resources and organizational learning” (Lawson et al., 2001, p.379).
Innovation capabilities “can be considered as a subset of dynamic organizational capabilities. They present a comprehensive set of characteristics of an organization that facilitate and support innovation strategies (Hadjimanolis, 2000, p.264). Organizations possessing innovation capabilities have the ability to integrate key capabilities and resources of their firm to successfully stimulate innovation” (Lawson,2001, p.380).
Lawson and his colleague argue, that “effective innovation is difficult to achieve where the mainstream and “newstream” are managed separately or in isolation” (Lawson et al., 2001, p.382).
It is argued, that the combination of resources and capabilities lead to competences which help firms to develop the desired competitive advantages by differentiating themselves from competitors. Referring to innovation and the above remarks on capabilities this may help to explain why some firms are more successful than others in generating innovative solutions even though they apparently possess the same or at least similar resources. The lack of knowledge and capabilities seems to decide weather or not an asset is a valuable resource to a firm (Katila, 2005). Research has proved and stated many times, that the success of copying innovation methods and the development of a “best practice” for innovation management are limited. The same has been argued for the attempt of copying certain capabilities and shows, how innovation and the development and use of certain capabilities are interwoven. Often cited examples are the attempt of firms to copy the manufacturing methods of Toyota or the logistics of Wal-Mart and Dell. Even though aspects of their capabilities have been copied, these firms still remain superior (Helfat et al., 2003; Hoopes et al., 2003). If the learning process is ignored, which is necessary to develop the relevant capabilities, success becomes unlikely.