Innovation management according to ISO 56002
How companies use the new standard for innovation management to continuously improve their innovation capabilities and performance and create sustainable value
ISO standards such as ISO 9001 and ISO 14001 are among the most popular management systems for companies worldwide. With the ISO 56000 family, the International Organization of Standards is currently introducing a new series for innovation management. This article explains the components of the standard, the benefits for companies, and the innovation management systems guide ISO 56002, which is at the heart of this series.
A Google search for the topic “innovation management” returns over one billion hits. Various studies underline the great importance of innovations for achieving growth targets and securing the existence of companies. On the other hand, numerous studies highlight the difficulties companies face in implementing innovations. For example, only 21% of executives have confidence in their company’s ability to implement new growth opportunities and believe the company has the expertise, resources and commitment to do so [1]. Only 6% of executives are satisfied with their company’s innovation performance [2]. In addition, more than half of companies find it difficult to align their innovation strategy with their business strategy [3].
In light of this mismatch between the importance and success of innovation, this paper discusses the contribution that the ISO 56000 series created by the International Organization for Standardization (ISO) can make to establishing an innovation management system.
Index
Why is the ISO 56000 series relevant for companies?
A company’s ability to innovate represents a major factor in its sustainable growth and long-term survival:
- A study by PwC shows that above-average innovative companies grow 16% faster than other companies [4]. Among other things, particularly innovative companies show higher growth in terms of sales, profits and market capitalization [5].
- The life expectancy of companies has shortened significantly in recent years. For example, the “2021 Corporate Longevity Forecast” projects that the life expectancy of a Standard & Poor’s 500 company will roughly halve from 30-35 years in the 1970s to 15-20 years this decade [6]. A similar life expectancy is evidenced by a Creditreform survey for companies in Germany. According to this study, companies deleted from the commercial register in 2018 had an average age of 16 years [7]. Against this background, a study by Zhexembayeva highlights the need for companies to reinvent themselves every three years [8].
- In the face of a recession expected by many economists, various studies show that it is not sufficient for the long-term development of a company to focus on cost reductions and other short-term measures to secure its existence. Rather, it is necessary to take a long-term perspective and make targeted investments in the future. This includes, in particular, investments in research & development and innovation [9]. This is also underlined by a study of particularly innovative companies, which performed even significantly better than less innovative companies during the financial crisis of 2007 – 2009 and in the first years thereafter than in other periods [10].
Innovation and standard may intuitively be seen as a contradiction. While innovation is often associated with concepts such as creativity and flexibility, a standard stands for rules, order and routines. However, bringing both together makes sense for companies, since great ideas are only one building block for successful innovations. Much more important is the implementation of these ideas. This is demonstrated not least by the fact that the selection of the right ideas, inadequate coordination and excessively long development times are among the greatest obstacles to successful innovations [11].
What topics does the ISO series on innovation management cover?
The ISO 56000 family is a ten-part series of standards and guidance documents designed to help organizations successfully implement, maintain, and continuously improve an innovation management system by creating a general framework. Unlike other ISO standards that have been established for many years – such as the ISO 9000 series for quality management and the ISO 14000 series for environmental management – the 56000 series is still in its early stages and has only been partially published. To date, the ISO series on innovation management includes the following six published documents and guides:
- ISO 56000: Fundamentals and terms
- ISO 56002: Innovation management system – Guidance
- ISO 56003: Tools and methods for innovation partnerships
- ISO/TR 56004: Innovation management assessment
- ISO 56005: Tools and methods for IP management
- ISO 56006: Tools and methods for strategic information management
In addition, the following four documents are currently under development:
- ISO 56001: Innovation management system – Requirements
- ISO 56007: Tools and methods for idea management
- ISO 56008: Tools and methods for measuring innovation processes
- ISO/DTS 56010: Illustrative examples for ISO 56000
What does an ISO 56002 innovation management system include?
The core of the ISO 56000 family is ISO 56002, the guideline for establishing, maintaining and continuously improving an innovation management system. This standard is based on the framework for management systems developed by ISO. Therefore, it can be easily implemented together with other management system standards (e.g. ISO 9001). However, the use of other ISO standards is not a prerequisite for implementing ISO 56002, so it can also be adopted as a stand-alone guide.
ISO 56002 is aimed primarily at established companies, regardless of their type, industry or size. However, since the standard is a framework that does not prescribe detailed activities, requirements, specific tools or procedures for innovation activities, it can also be applied by startups and other new businesses. In addition, ISO 56002 is suitable for all innovation approaches (e.g., internal or open innovation) and for all types of innovations regardless of their novelty level (e.g., products, processes).
According to ISO, an innovation management system is understood to be a set of interrelated or interacting elements that aim to create value. These elements do not all have to be implemented simultaneously; the standard also allows for phased implementation. However, to realize the full potential of the standard, implementation of all elements of the system is required.
The innovation management system described in ISO 56002 consists of the following four areas (1) context of the organization, (2) leadership, (3) support, and (4) PDCA cycle.
(1) Context of the organization
The first area of the ISO 56002 innovation management system outlines the framework for establishing and maintaining the system. These include regular scanning and analysis of external and internal issues relevant to the organization and the success of the innovation management system, and opportunities to create value. In addition, the requirements and expectations of internal and external stakeholders as well as the scope of the innovation management system must be determined. When setting up the ISO 56002 system, the focus is on creating a corporate culture that promotes innovation activities and on defining framework conditions for internal and external collaboration. The latter aims, among other things, to facilitate access to and exchange of knowledge and competencies.
(2) Leadership
The commitment of the company’s management and the competent promotion of the system by the company’s executives are crucial to the success of the innovation management system. This is addressed in the ISO standard by, firstly, setting out clear roles and responsibilities of senior management in relation to the innovation management system. On the other hand, the importance of innovation vision, strategy and policy are underlined by a detailed presentation of the existing requirements in this respect.
(3) Support
In the “Support” section, a broad spectrum of necessary framework conditions for a functioning innovation management system is listed. This includes the provision of the necessary resources (e.g., people, time and finances) and competencies. In addition, requirements for internal and external communication as well as documentation of information are described. Finally, innovation management tools and procedures as well as the management of strategic knowledge and intellectual property are the subject of this area of the standard.
(4) PDCA cycle
The largest component of ISO 56002 is the PDCA cycle, which is already the focus of ISO 9001. PDCA stands for Plan-Do-Check-Act and describes a four-stage control cycle of a continuous improvement process.
- “Plan“: The planning of innovations and the innovation management system is initially devoted to dealing with the uncertainty associated with innovation activities and the resulting opportunities and risks. In addition, this section addresses innovation goals and planning to achieve them, building relevant and adaptable organizational structures, and managing innovation portfolios.
- “Do“: Implementing innovation is addressed under the heading of “Operations.” The focus is on the presentation of a general innovation process with the phases “identify opportunities”, “develop concepts”, “validate concepts”, “develop solutions” and “provide solutions”.
- “Check“: Performance evaluation focuses on innovation initiatives and activities as well as the effectiveness and efficiency of the innovation management system. Among other things, it is necessary to define what is assessed on the basis of which performance indicators, which tools are used for this purpose, and the time periods and responsibilities for the assessment. In addition, ISO 56002 provides for regular internal audits and management assessments of the innovation management system.
- “Act“: Based on the previous performance assessment, actions are to be taken to maintain the strengths of the innovation management system, to eliminate weaknesses and to correct deviations from the standard.
Conclusion on ISO 56002
Although the introduction and implementation of a standard related to innovation may initially seem contradictory and irritating, the ISO 56000 series offers significant opportunities for building a successful innovation management system. The creation of a structured and holistic framework helps companies develop a unified understanding of innovation and thus simplifies internal and external communication and collaboration. In addition, the standard clarifies the multitude of building blocks and conditions required to establish a sustainably successful innovation management system. At the same time, by refraining from concrete and detailed specifications of tools, activities, etc., companies are not unnecessarily restricted in their innovation activities. Finally, the measurement and evaluation of innovation activities and the innovation management system emphasized in the PDCA cycle creates the basis for continuous improvement of the company’s innovation capabilities and performance.
Sources
[1] Jordan Bar Am / Laura Furstenthal / Felicitas Jorge / Erik Roth, Innovation in a crisis: Why it is more critical than ever, https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/innovation-in-a-crisis-why-it-is-more-critical-than-ever, June 17, 2020.
[2] McKinsey, Growth and Innovation, https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/how-we-help-clients/growth-and-innovation.
[3] Volker Staack / Branton Cole, Reinventing innovation: Five findings to guide strategy through execution, Key insights from PwC’s Innovation Benchmark, https://www.pwc.com/us/en/advisory-services/business-innovation/assets/2017-innovation-benchmark-findings.pdf, 2017.
[4] PwC, Innovation – Deutsche Wege zum Erfolg, 2015.
[5] strategy&, 2018 Global Innovation 1000: What the Top Innovators Get Right, https://www.strategyand.pwc.com/gx/en/insights/innovation1000/2018-global-innovation-1000-fact-pack.pdf, October 2018.
[6] S. Patrick Viguerie / Ned Calder / Brian Hindo, 2021 Corporate Longevity Forecast, https://www.innosight.com/insight/creative-destruction, 2021.
[7] Creditreform, Spiel mir das Lied vom Tod der Unternehmen, https://www.creditreform.de/aktuelles-wissen/pressemeldungen-fachbeitraege/news-details/show/spiel-mir-das-lied-vom-tod-der-unternehmen, 23.08.2019.
[8] Nadya Zhexembayeva, The Chief Reinvention Officer Handbook: How to Thrive in Chaos, 2020.
[9] Marcus Liehr, How companies invest properly in times of crisis, https://morethandigital.info/en/how-companies-invest-well-in-times-of-crisis/, 08.08.2022.
[10] strategy&, 2018 Global Innovation 1000: What the Top Innovators Get Right, https://www.strategyand.pwc.com/gx/en/insights/innovation1000/2018-global-innovation-1000-fact-pack.pdf, October 2018.
[11] Michael Ringel / Andrew Taylor / Hadi Zablit, The Most Innovative Companies 2015: Four Factors that Differentiate Leaders, https://web-assets.bcg.com/img-src/BCG-Most-Innovative-Companies-2015-Dec-2015_tcm9-88794.pdf, December 2015.
Comments are closed.