Donetsk National University of Economics and Trade named after M.
Tugan-Baranovsky
POSSIBLE TECHNOLOGICAL INNOVATION AUDIT METHODOLOGIES
The
financial audit methodology introduced some basic terms for inclusion into the
innovation audit. These terms were identified over many years of auditing and
empirical testing. The discipline of innovation does not have such a history,
and neither have success factors been identified with complete certainty.
Although
literature on management of technology and management of innovation often
contains informal proposed innovation audits, they are seldom tested in
practice.
The
following paragraphs highlight three possible viewpoints on innovation
auditing. They include auditing the competencies, processes or performance of
the innovation process.
1. The
Competence Innovation Audit
Human
competencies may or may not form the basis for innovation. However, little
research on human innovation competencies has been done. Research on culture
and other social aspects have made some progress, yet the core of human
innovation competencies has yet to be defined conclusively. Not only do the
human competencies influence the innovation process, but also the
organization’s competencies. Structures and resources provided by the
organization may go a long way in improving the innovation process.
The
nature of technology is that of relentless change and transformation.
Organizations active within the high technology environment are often acutely
aware of this, yet often find itself trapped when unforeseen technological
changes occur. To cope with these changes, organizations have to have a base to
fail back on which has little to do with their disciplinary knowledge.
Innovation competencies may be such a base.
If an
organization encouraged its employees to specialize further and further into
their fields of expertise, they might easily become redundant when a technology
paradigm shift occurred. These employees would not have any generic knowledge
or tools that would work in the new environment. This would severely impair
these employees in times of change.
However,
if an organization were to educate its employees in the discipline of
innovation, they would be better at innovation as well as better prepared for
change. A technology paradigm shift might be just such a change they would have
to be prepared for. In the event of a paradigm shift disciplinary knowledge
easily becomes obsolete forcing employees and organizations to change. By
educating its employees in the discipline of innovation the organization is
able to give them some generic tools useful in many different paradigms. These
employees would therefore be better equipped to deal with change and might even
welcome it due to the many new possibilities associated with it
By
building competencies in innovation, organizations might build a knowledge base
applicable to new opportunities, changes or threats, resulting in a highly
valuable generic competency that cannot be destroyed by change.
The
competence innovation audit focuses on the innovation competencies of the
organization, its resources, structures, leadership, management and employees.
By determining the ideal competencies embodied in these elements, the
competence innovation audit may find its application.
Examining
technology, market and networking competencies, organization and its
procedures, and individual employees of the organization may obtain a clear
measure of innovation competence. A competence audit could therefore identify
strengths and weaknesses in the innovation environment, inside the
organization.
2. The Process Innovation Audit
Where
the competence audit focuses on the environment created for fostering
innovation, the process audit focuses on the step-by-step actions necessary to
develop and implement an individual innovation. Systems engineering and new
product development processes both find its application in this discipline.
Detailed measures of these processes have been developed as part of the new
product development processes. They are therefore more accessible and
quantifiable than the competence measurements. This facilitates auditing and
the identification of clear strengths and weaknesses. Methodology for auditing
focuses on dual aspects of the innovation process. The two sides are described
as performance and process. Process can be understood as the outputs or results
obtained when innovating and by looking at these, strengths and weaknesses can
be identified. The process audit is a general auditing method, and addresses
the holistic attributes such as culture, creativity, structures, implementation
and others forming part of innovation. When auditing in such a way, all
employees can offer significant value in completing the audit questionnaire.
These responses can, however, be emotional and not always reflect the true
state in the organization.
3. The Performance
Innovation Audit
Different
to the process audit the performance audit moves away from all the 'soft'
emotionally driven innovation attributes, cutting directly toward the factual
process of new product or process development. The performance audit requires
the identification of metrics (units of measurement) whereby processes, methods
and involvement is measured and equated with another measurable entity, usually
money or time.
The
process audit may be quite difficult to implement, since few if any clear
metrics exist in the innovation process. Long discussions as to good or poor
metrics may lead to unacceptably high implementation time for the audit. The
process audit has the added drawback of a high level implementation, often
excluding lower level employees from participation. This audit is sometimes
regarded as too difficult to implement, resulting in a shift of emphasis
towards finding the best metric.
Although
the performance audit has its niche of implementation, it tries to measure a
qualitative process by applying a quantitative measure. In the world of
financial auditing this is possible, for there quantitative data is compared
with quantitative measures, resulting in a quantitative outcome. When trying to
compare qualitative and quantitative data with each other difficulties may be
expected, and since innovation is by enlarge a qualitative process this may
often occur. This makes the performance audit a difficult audit methodology to
implement.
The
three proposed audit methodologies are not an exhaustive list, and should not
be interpreted as a total representation of the field of auditing. However,
since innovation auditing is new, few explicit methodologies have been defined
and the above mentioned is therefore only a beginning.
Competencies
are from this audits perspective valid measuring aspects in the innovation
process. Competencies of organizations represent the skills, processes,
procedures and perceptions of an organization, and by measuring these the audit
methodology is able to hit at the core of organizational practices.