The innovation value chain is a concept that replicates the idea of transforming raw materials into finished goods except that it transforms innovative ideas into practice. This article introduces a new concept that we have not covered extensively, and seeks to answer the question of how firms effectively and efficiently implement these new ideas into their corporate strategy. The authors described the three steps of the innovation value chain as idea generation, idea conversion and idea diffusion. This article encourages managers to view the entire process of innovation from end-to-end and to improve the weakest parts of the process. Moreover, the authors’ state: “A company’s capacity to innovate is only as good as the weakest link in its innovation value chain”. Hansen and Birkinshaw give excellent examples to fix the weakest links in the three step chain.
A firm that has trouble generating new ideas is dysfunctional in building external and internal networks, therefore their ideas never prosper. The authors imply that a firm must have external sources either through solution solving or discovery via scouting appropriate sources. The authors describe how Proctor and Gamble and Eli Lily find solutions by asking advice of external sources through their websites and offering sizable rewards for the innovative solution. They also described how internal scouts were able to discover a solution for Siemens through an external source: doctoral student’s ideas. The article also emphasizes the importance of internal networks and the formation of cross functional teams to encourage personal networks. Proctor and Gamble has done this successfully through the development of its Olay Daily Facials. Innovation ...