Innovations: the new unit of analysis in the knowledge era. The quest and context for innovation efficiency and management of IC
| DOI | https://doi.org/10.1108/14691930410512914 |
| Pages | 40-58 |
| Date | 01 March 2004 |
| Published date | 01 March 2004 |
| Author | Leif Edvinsson,Ron Dvir,Norman Roth,Edna Pasher |
| Subject Matter | Accounting & finance,HR & organizational behaviour,Information & knowledge management |
Innovations: the new unit of
analysis in the knowledge era
The quest and context for innovation
efficiency and management of IC
Leif Edvinsson
University of Lund, Lund, Sweden
Ron Dvir
Innovation Ecology, Pardesiya, Israel
Norman Roth
Cranfield University, Cranfield, UK, and
Edna Pasher
Edna Pasher PhD Management Consultants, Herzliya, Israel
Keywords Knowledge management, Intellectual capital, Innovation, Performance monitoring
Abstract For quite a while the issues of knowledge management, innovation and performance
measurement have been on the agenda of researchers and practitioners alike throughout the world.
Not too long ago it was recognised that there are direct cause and effect relations between
knowledge reuse and invention. The present paper therefore discusses the constituent elements of
innovation from a knowledge perspective which have been identified in the context of a European
Union co-sponsored research project. The six facts of the “innovation cube” are: reuse of existing
knowledge; invention of new knowledge; exploitation (i.e. turning knowledge into value);
stakeholders’ contributions (to the innovation life cycle); the enabling ecology or operating context
in which the innovation occurs; and the performance facet, i.e. the bottom line. A toolkit based on
performance measurement thinking and implementation process for better management of the
balance between reuse and invention in development environments is proposed and results from
their deployment in three real-life case studies are discussed.
Introduction
The current market and economics development is at an inflexion point on its
life cycle curve. As stated long ago by Jay Forrester, at MIT, USA in his research
of world dynamics, most industries, as well as nations are going through a life
cycle curve (Forrester, 1973). On this curve there are turning points called
inflexion points. Amidon (1996) in her research and development work also
states a number of phases in the process of knowledge innovation (Figure 1):
.the product as an asset;
.the project as an asset;
.the company as an asset;
The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at
www.emeraldinsight.com/researchregister www.emeraldinsight.com/1469-1930.htm
Figures 2-5, 9,10 were illustrated by Arye Dvir.
JIC
5,1
40
Journal of Intellectual Capital
Vol. 5 No. 1, 2004
pp. 40-58
qEmerald Group Publishing Limited
1469-1930
DOI 10.1108/14691930410512914
.the client as an asset; and
.knowledge as an asset.
In this life cycle perspective we have added on top of the curve, “the future as
an asset” in collaboration with her, i.e. the potential value of innovation
investment. Where you are today, i.e. your present position, can be assessed,
appreciated but not changed. It is, in other words, a given asset, shaped by
historical activities. The value is in the perspective ahead, i.e. the time line and
your management of the space from the next few seconds to eternity. However,
in most economical dimensions the future is accounted for as an expense and
then turns up as a liability, not as an asset, in most balance sheets,
consequently eroding equity. A paradox is emerging then; the more spent on
the future the more poor or less equity in the balance sheet. Consequently we
need a better management and measurement approach for these new value
spaces. That is what, among others, Leif Edvisson started, prototyped and
headed in the Skandia Future Center during his time as corporate
vice-president at Skandia.
During the 1990s the research by Professor Paul Romer at Stanford
University highlighted the exponential values of multiplying knowledge
recipes as an exponential value curve, called the Law of Increasing Marginal
Utility (Romer, 1991). In other words the more connections, relationships and
Figure 1.
Life cycle curve of assets
Innovations:
the new unit of
analysis
41
To continue reading
Request your trial