Innovation Value Chain Analysis
Innovation is often the key to improving the competitive advantage of companies and products in a process of rapid or disruptive technological change. It is often considered a fundamental requirement for an organisation to remain competitive, to remain current, and to find and maintain long-term success. As a result, it is important for organisations to analyse their internal value chain in order to ensure that innovation is properly leveraged in their operations as a competitive advantage.
The innovation value chain analysis (IVCA) is a method for analysing an organisation’s internal innovation-related activities in order to understand the interconnections between different functions, products and activities and to identify ways to increase innovation in terms of value and effectiveness. The chain of events is usually broken down into four distinct activities, which are closely linked and in which different departments are involved. These include:
1. Knowledge Generation: This is the process of collecting, analysing and synthesizing knowledge, ideas, data and information from both internal and external sources. This involves the gathering and analysing of data, information and ideas, in order to develop innovative which will lead to an improvement in the organisation’s operations. This is often done through market research, focus groups, user studies, customer input, and inventing new technologies, products and processes.
2. Innovation Development: This activity involves the actual development and testing of the innovations developed. This includes the testing and prototyping of new products or services, the development of production and marketing plans, and the introduction of the innovation into the market.
3. Marketing and Sales: Once the innovation is introduced into the market, it needs to be marketed and sold to potential customers. This involves all activities related to the marketing and sales process, such as creating promotional materials, advertising campaigns, and sales strategies.
4. Delivery and Customer Support: The final activity involves the delivery of the product or service and the customer support activities. This is the post-sale stage that involves offering after sales support and services, such as technical assistance, training, and helpdesk services.
The innovation value chain is dynamic and ongoing and should be constantly monitored and improved upon. Whilst it is important to ensure that the chain is functioning correctly as a whole, it is equally important to ensure that each of the activities are being carried out correctly. For example, if the Knowledge Generation activities are not producing enough useful information, then the Innovation Development activities may be significantly limited. Similarly, if the Marketing and Sales activities are not effectively communicating the benefits of the innovation to potential customers, then the Delivery and Customer Support activities may not be view constructive or helpful.
Therefore, it is often beneficial for organisations to regularly assess their innovation value chain in order to ensure that each activity is carried out correctly and in the most efficient manner. Furthermore, it is important to review the chain periodically to ensure that any potential changes in the competitive market can be responded to quickly by improving the elements of the chain. Ultimately, the aim of an IVCA is to ensure that an organisation is equip when faced with rapid or disruptive technological changes, and to maintain its competitive advantage.
