Few companies understand how such innovation occurs — and how to encourage it. To foster new management ideas and techniques, companies first need to understand the four typical stages in the management innovation process.
Despite the importance of management innovation, it is poorly understood and usually not systematically fostered. To research the process, the authors first conducted an historical analysis of more than 100 management innovations that took place over 130 years. Then they studied 11 recent cases of management innovation, in most cases interviewing one or more of the key innovators. The research revealed that, compared with the process of technological innovation, management innovation tends to be more diffuse and gradual. It typically follows four stages. The first stage is some type of dissatisfaction with the status quo, such as a crisis or strategic threat. That stage is followed by inspiration from other sources. The third stage is the invention of the management innovation itself. While most innovators identified a precipitating event that preceded the innovation, such as a challenge from a boss or a new assignment, few recalled a distinct “eureka moment”when the innovation occurred. The fourth stage is validation, both internally and through external sources such as academics, consultants, media organizations or industry associations.