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137 The Role Of Knowledge Management Essay

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The Role of Knowledge Management in Supporting a Radical Innovation Project Bernard Katz1, Nicolaas Du Preez2 Indutech (Pty) Ltd, Pinotage House, Brandwacht Office Park, Trumali Road, Stellenbosch 7600, South Africa [email protected] 2 Global Competitiveness Centre (GCC) in Engineering, Stellenbosch University, South Africa [email protected] Abstract This chapter discusses the role Knowledge Management plays in the management of a radical innovation project. A radical innovation produces a fundamental change in the activities of a company [1]. A company’s capacity to innovate is dependent on its capability to integrate internal processes and to understand the larger market and technological environment [2]. Knowledge Management supports a company’s efforts to understand its internal and external environments. A method for managing a radical innovation project is presented. This method, called the Innovation Implementation Method (IIM) consists of a high-level structure and seven supporting concepts. This chapter highlights the aspects of the IIM which promote Knowledge Management and explains how each aspect supports the successful implementation of a radical innovation. The chapter ends with an overview of a case study in the insurance industry, where the IIM was used to implement a radical innovation project. Keywords: Innovation; Method; Project 1

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Introduction

The French novelist, Alphonse Karr (1808–90) wrote, “The more things change the more they stay the same”. The question is why; if change is happening do things remain the same. This statement is true in many facets of today’s world, especially so in the context of companies. Despite many company’s best efforts successful innovation projects remain elusive and rare [3]. Therefore, the failure of innovation projects, in companies, results in an entrenchment of the status quo, a comfort in the current situation and an increased fear of and resistance to change. The quote could read; the more things fail to change the more they stay the same. This chapter investigates the role of Knowledge Management in supporting the implementation of a successful radical innovation in a company. The chapter A. Bernard, S. Tichkiewitch (eds.), Methods and Tools for Effective Knowledge Life-Cycle-Management, DOI: 10.1007/978-3-540-78431-9_18, © Springer 2008

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presents an innovation implementation model (IIM), which incorporates Knowledge Management. A case study of the use of the model, based on the implementation of a radical innovation project in a financial services company is also presented. While the entire model is explained, the focus of this chapter is on the role Knowledge Management plays in the model and in a radical innovation project and therefore the chapter highlights the role of Knowledge Management, in the model. There are different types of innovation. These include; product, process and strategic innovations. The IIM focuses mainly on process and strategic innovations and therefore the role of Knowledge Management in process and strategic innovations is discussed in this chapter.

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Defining Innovation

The definitions for innovation are almost as varied as the number of researchers that have studied the concept. A possible reason for this is because of the variety of different disciplines that have focused their attention on innovation and based on their particular perspective and experiences a definition was formed. Despite these differences certain themes seem to be repeated throughout the literature. Based on these themes innovation in this chapter is described as the: • successful generation, development and implementation of new and novel ideas, WHICH • introduce new products, processes and/or strategies to a company OR • enhance current products, processes and/or strategies LEADING TO • commercial success and possible market leadership AND • creating value for stakeholders, driving economic growth and improving standards of living. Martensen and Dahlgaard [4] explain that excellence in innovation requires that companies are able to react quickly to changes in their business environment as well as identifying and taking advantage of new possibilities through creative solution development. A range of company characteristics have been identified, which have been shown to improve a company’s ability to react efficiently, effectively and innovatively to change. These characteristics include: • • • • • • • Senior management passion and commitment [5] Managers with staff support and integrity [6] Integrated internal processes [2] Understanding the larger market and technological environment [2] A culture and structure which promotes innovation [7] An open market for capital investment and rewards [7] Managing the risks [7]

The Role of Knowledge Management in Supporting a Radical Innovation Project

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In the last decade there has been a dramatic increase in the popular press and academic literature perpetuating the idea of innovation providing companies with a competitive advantage [8]. Research conducted by Neely et al. indicated that positive outcomes in innovations provide a company with a significantly improved market share, competitive position and a significant increase in customer value. The level of innovation can be measured based on the concept of newness. This measure can range from incremental innovation to radical innovation. Damanpour describes the difference between radical and incremental innovation as follows: “Radical innovations are those that produce fundamental changes in the activities of an organization and large departures from existing practices, and incremental innovations are those that result in a lesser degree of departure from existing practices.” Therefore a radical innovation project has higher levels of uncertainty and risk compared with an incremental innovation project.

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The Innovation Implementation Model (IIM)

Project management processes often fail to manage the complex and uncertain environment of most radical innovation projects [9]. Furthermore the use of project management techniques may restrict the creativity and flexibility required for a successful innovation as well as stifles an innovative culture. Therefore the Innovation Implementation Model (IIM) is focused mainly on supporting the implementation of radical innovation projects. Wycoff [10] explains there is a distinction between a non-innovation and radical innovation projects as, radical innovation projects: • • • • Often start with loose, unclear objectives Require a more experimental approach Require more diverse teams who are not afraid of failure Require higher levels of risk management and a philosophy of, “fail fast and fail smart”

The IIM is designed...

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Keywords

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