DETERMINING THE ROLE OF INNOVATION MANAGEMENT IN
FACILITIES MANAGEMENT
Sonia Goyal1 and Michael Pitt 2
1
School of Built Environment, Liverpool John Moores University, Byrom Street,
Liverpool, L3 3AF, UK
2
School of Built Environment, Liverpool John Moores University, Byrom Street,
Liverpool, L3 3AF,UK
ABSTRACT
Over the past half-century many significant models of innovation have emerged making innovation
management extremely fundamental to corporate success. Modern strategic thinking involves in itself
the role of innovation and change management, which eventually play a meaningful and distinctive role
in the profile formation of any organization. The competency of any worker is now valued more by the
number of new ideas and suggestions envisaged, presented and executed by the person. Innovation can
be viewed as both process and product related. It also brings with it the concepts of leadership, open
communication, customer focus and more access to top management. The importance of understanding
the concept of innovation is beginning to be realised as the flawed logic that innovation is
coincidentally linked to information technology (IT) solutions are exposed. This paper explores the
concept of generic innovation and suggests that these concepts apply equally within the FM role driving
its role as a dynamic business tool. It moves away from the classical view of continuity planning which
looks at damage limitation in everyday and emergency damaging business events and aims towards
defining best practice in supplier contract management to find, maintain and protect the optimum
position rather than simply limiting the damage. This paper concludes that the role of innovation
management in FM is not about producing innovative solutions but about the provision of a creative
environment in which solutions can be conceived, developed and applied.
Keywords: Innovation, Facilities, Management, Strategy
INTRODUCTION
The capacity for strategy innovation is within the capabilities of any organisation
(Bate and Johnston 2005). Deconstructing the innovation process involves
consideration of a chain of common and numerous internal complex processes
providing function and support to sustain organisations and respond to change
(Alexander et al 2004). Over the past half a century a number of different models of
innovation have emerged. The concept of innovation today is fundamental to
corporate success. It is also commonly viewed as being extremely important for
business survival. In today’s rapidly changing business environment a company
cannot long maintain its market share or profits unless it is innovative (Doyle and
Bridgewater 1988). Naughton (2004) supports this view and confirms that the
concepts upon which the modern theory of innovation is based can be attributed
mainly to advances in technology, changing customer needs, shorter product life
cycles and global competition which have transformed the definition of innovation
from one of luxury to practical necessity.
Burgelman (1996) states that since World War II, innovation has been the norm;
technology based innovations coming in rapid sequence, have been seen as the crucial
1
[email protected]
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source of prosperity, fundamental to business success and the remedy of all business
problems. However, the solutions sought are not always and at all times advantageous.
The criteria for success in the past cases should be applied to future outcomes. A lot of
stress is given on the need to identify management criteria which effectively
distinguish between profitable and unprofitable new technologies and that these
criteria have utility in assessing innovation in a wide variety of cases.
Given below is a list of various types of innovation as stated by Trott (2005)(refer
table 1). It is imperative for an organisation to identify the kind of innovation needed
for new product development and continuous improvement. However in many cases
all of these innovations work in conjunction. For example, a new product or changes
are not possible with similar changes in the process that goes with it or new
management thinking and marketing strategies. Innovation thus, is a way of thinking
and action, which is necessary for company survival and gains.
Table 1: Types of Innovation
Type of innovation
Product innovation
Process innovation
Organisational innovation
Management innovation
Production innovation
Commercial / marketing innovation
Service innovation
Example
The development of a new or improved
product
The development of a manufacturing
process
A new venture division; a new internal
communication system; introduction of
new accounting procedure
Total quality management (TQM)
systems, Business process re-engineering
(BPR)
Quality circle; just-in-time (JIT)
manufacturing system; new production
planning software
New financing arrangements; new sales
approach
Internet based financial services
Source: Trott (2005)
Change agents are transforming today’s workplaces, allowing people in innovation
leadership positions to take their seat at the table along with top managers (Naughton
2004). Innovation can therefore also be described as the result of a complex set of
processes, which also depends on the organisation’s marketing ability, its strategy, the
resources, networks and processes it builds, together with the culture and leadership in
the firm (Doyle and Bridgewater 1988)(refer figure 1).
For an organisation which does not innovate or encourage its employees to work
towards new product development, alterations and changes, the lesson is clear and that
is to innovate or fall behind, this is further confirmed by Naughton (2004) who
highlights that time has come to convert the new business challenges into
opportunities. Doyle and Bridgewater (1988) state the importance of continuous
innovation and change by explaining that if a company’s product or services are not
continually improved, competitive pressures invariably lead to falling prices,
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declining margins and the commoditization of its offer. Doyle and Bridgewater (1988)
lay stress that innovation should be regarded as the critical path to achieving growth in
sales and profitability.
Resources
Culture
Strategy
Technology
acquisition
INNOVATION
Leadership
Market
orientation
Systems and
processes
Figure1: Set of processes that result in innovation
Source: Adapted from Doyle and Bridgewater (1988)
Measurement of innovation success
Burgelman (1996) stresses that the determinants of success can be found both in
technology and the business context and enlists various factors that should be taken
into account while assessing innovation success;
•
•
•
There must be an application for the new device, product or system, which is
waiting for it.
Consideration must be given to the operational consequences of the new
technology or system on the manufacturing marketing or distribution.
The extremity of market dynamics is given high importance, which according
to Burgelman (1996) is often highly complex in nature and extremely
important too. Criteria with relation to market dynamics is based upon three
questions which are;
1) Does the product incorporating new technology provide enhanced
effectiveness in the market place serving the final user?
2) Does the operation reduce the cost of delivering the product or
service?
3) Does latent demand expansion or price elasticity expansion
determine the characteristics of new market?
Innovation in supply chain:
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Supply chain can be defined as the sequence of processes and activities that are
involved or performed in an entire manufacturing cycle or in a complete distribution
cycle, this was also known as operations management earlier and most of the
components that form a supply chain were a part of operations management. A new
management speak as put by Frank (2000) reflects the significant changes that have
taken place due to variations in the business environment. Various other factors that
have an affect on the changing business environment as per the findings of Frank
(2000) are as follows:
1 Increase in globalisation
Increase in dependency, Money transfer, Knowledge transfer
1 Savage price competition
2 Increased customer demand of higher and better quality of final good and
services
3 Changes in technology
New forms of working and trading, E-commerce, Increased
outsourcing
According to Desbarats (1999) by examining attitudes along the innovation supply
chain, the required changes can be clearly figured and also know that how each
discipline helps the collective to deliver better consumer experiences. Desbarats
(1999) summarizes the changes in following attitudes:
Marketing: having a core strategic responsibility towards customer supplier
relationship, marketing personnel need to set clear goals for others to understand and
follow willingly in order to achieve well-managed consumer experiences.
Industrial design: specifications created by modern designer add. Frank (2000) further
suggests that innovation can take place at both design level or at the process level.
Designer needs to be proactive in seeking potential barriers to implementation.
Engineering development: engineers need to add more value and develop professional
instincts in order to escape from becoming low value commodity professionals, this
would also require closer collaboration with the designers
Manufacturing: To remain integrated with marketing, manufacturing needs to deliver
strategic advantage that can be easily perceived by the consumers. High flexibility
sometimes works better than high productivity.
Distribution channels: retailers and distributors always have vast knowledge of what
sells, as they are closest to the consumer. To create a balance between the retailers and
the manufacturers is always difficult and the higher margin always goes to player who
dominates the consumer experience.
Investors: Stroeken (2001) insists that in today’s fast changing business environment
it is extremely essential for all organisations to understand the link between IT,
innovation and supply chain structure. In his research of supply chain management,
Stroeken (2001) concludes that the conditions for success in IT, innovation and supply
chain structure concern the extent of vertical and horizontal integration, the
comparative importance of information, the extent of (international) pressure and
innovative regulations.
The business aspect
Alexander et al (2004) accentuate that supply chain management involves long term
strategic planning and is a method of managing the delivery of services effectively
and efficiently to deliver services that are faster, better and cheaper. The advantages
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of supply chain management implementation as summarized by Alexander et al
(2004) are as follows:
1 Better knowledge and understanding of market trends and key customers needs
2 Better understanding of supplier capabilities
3 Enhanced problem solving
4 Faster response times
5 Flexibility and a strategic capability to plan and innovate
6 Improvement in forecast accuracy
7 Improvement in inventory reduction
8 Lower operating costs and reduction in real costs
9 More efficient and effective use of technology
10 Shared risk
11 The development of environmentally sound service
12 Waste reduction and more effective use of resources and skills
13 Free up of working capital realised through supply chain management
efficiencies
14 Maximisation of asset return
15 Increased capacity to innovate within the supply chain as knowledge is shared
along the supply chain
16 Opportunity to refocus on the interface with users
It is suggested by Alexander et al (2004) that not only supply chain management is
highly relevant to facilities management, involving management of network of
suppliers and several supply chains but it also adds value to both client organisation
and also to the service provider as not only costs are reduced whilst improving quality
but also risks are shared and managed through the supply chain, thereby giving an
obvious ‘win –win’ situation.
Conclusions
The vast amount of literature that addresses the increasing significance of innovation
as an important entrepreneurship tool has till date not been able to yield a widely held
consensus regarding how to define innovation. The wishful thinking of having
immediate results and no failures hamper the want to innovate and change. It is
essential for the managers wanting to improve innovation performance to not just
blindly apply the first technique that they encounter or think to be as a
change/innovation, or methods, which have been successfully adopted by their
competitors. Important is to determine whether those innovative techniques or
methods are appropriate for their own company/organisation/product or not.
In respect to above the conclusions are based on the author’s ongoing study
innovation management and to suggest a strategy for obtaining and protecting
optimum multiple contract management and performance.
Need of study
The author believes that the study would not only help Facilities Managers to
exemplify their knowledge and skill, by apprehending the role of innovation
management in Facilities management at operational and strategic levels, but also it
would help in concluding the factors that led to the growth and development of
innovation as a field and an important part of the facilities management world,
including relationship with suppliers and multiple contract management. The focus of
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the study is mainly on the prominence of communication, awareness required within
business environment to ensure effective innovation, hence determining the various
factors that would guide innovation in multiple contracts in the future and maintain its
role in the ever-changing business patterns and customer demands. With this as the
main aim the objectives under, which the author is currently researching, are:
• To explore and understand generic innovation and innovation in multiple
contract management
• To propose an innovation strategy, defining best practice in supplier contract
management
Purpose of Research
The following parameters form the focus for the programme of work
1
Demonstration of value added through innovation
2
Innovation under multiple contract management and with various suppliers
3
Difficulties with innovation under cost pressure
4
Innovation as part of performance from day 1of a contract
5
Learning from the experience of industry, companies that have already
followed such concepts
6
Strategic importance of supplied item, affecting innovation
7
Innovation value during supplier selection process
1. Achieve sustainable value, partner and innovators.
2. Track record of service providers indicates the ability to deliver
continuous cost reduction
3. The size of the supplier and its business ethics, history and
management style.
Questionnaire Findings
The following questionnaire was prepared and distributed amongst various personnel
belonging to the business industry as well as the Facilities Management field. This
was done in order to test the academic study with management experiences, thereby
gaining more knowledge about the innovation management field and its continuous
expansions within facilities management. The responses received were thoroughly
studied and analysed after which the following conclusions and diagrammatic
representations were drawn. The histograms reflect the responses received. Out of 50
questionnaires given out, 38 responses were received thereby giving a response rate of
76 percent.
1) Which best describes your level of responsibility?
Out of the 38 responses, maximum number came from those involved in the
management team, making a total of 34.2%. Large number of response also came
from those who belonged to the senior management level constituting to about
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28.94% of the total figure. The figure shows that not many people at the level of board
of directors and the Director are involved in the process. The purpose of this question
was to determine who are the key personnel involved in the innovation management
and planning process. The results highlighted the fact that the top management, in
general remains away from the initial process making and decisions (Refer figure
below).
RESPONSE
Q. Which best describes your level of responsibility?
20
11
0
Response
13
6
10
5
1
1
1
BOD
DIR
EXEC. LVL
SNR. MNGT.
MNGT.
MOS
OTHER
1
1
6
11
13
5
1
Response
LEVEL OF RESPONSIBILITY
Figure: Level of responsibility
Source: Self survey
2) Which market sector best describes your organisation’s FM structure?
From a sample size of 38, 18 responses were received from the In-House Service
providers, giving a 47.36% response rate. This was significantly higher when
compared to those received from Total Facilities Management personnel, where only
11 returns were received, equating to a return rate of 28.94%. The purpose of the
question was to determine the structure within which most organisations work and
operate (Refer figure below).
RESPONSE
Q. Which market sector best describes your organisation's FM
structure?
18
20
11
2
0
Response
2
5
Pr op. Maint .
Tot . FM
In- House
Cont r act or
Ot her
2
11
18
2
5
Response
DESCRIPTION
Figure: Organisation’s FM structure
Source: Self survey
3) Do you agree that innovation management process should be the FM’s remit?
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The involvement of FM (Facilities Management) in the formulation of an innovation
management process and the amount of responsibility FM should undertake has been
a topic large enough to debate on. This is very clear from the response received. Two
options of ‘Yes’ or ‘No’ were given this question, in addition to which respondents
were also given the option to define any other department which they think should
have the responsibility of the formulation of a comprehensive and an integrated
innovation management Plan. Where 14 respondents concluded that innovation is the
responsibility of FM, 17respondents stated that it does not and about 7 of them chose
to give different answers implying that innovation is more to do with the company
strategy as a whole and should be dealt by the senior management while deciding
company policies and strategies (Refer figure below)
The purpose was to determine the relation between innovation management and
Facilities Management. During the course of literature survey, the author concluded
that Facilities management is first and foremost about organisational effectiveness.
The decisions taken about facilities are business decisions. However, from the results
it is evident that where 36.84% of the respondents feel that the process of innovation
planning should be the FM’s remit, approximately 45% conclude the opposite, making
the debate further complicated. Out of those respondents who said ‘No’ also specified
that Facilities Management must be involved in a joint ownership with business areas
of the organisation (Refer figure below)
RESPONSE
Q. Is Innovation management FM's responsibility?
20
14
17
7
10
0
Response
Yes
No
Others
14
17
7
Response
DESCRIPTION
Figure: Is innovation management FM’s responsibility?
Source: Self survey
4) Does your organisation have a specific innovation management policy that
applies to Facilities Management?
The histogram presented in figure shows that 73.68%, that is 28 out of 38 respondents
answered ‘Yes’ to this question implying that most of the organisations are realising
the significance and momentousness, of implementing an innovation management
plan for uninterrupted continued gains and preservation of their Business. Out of those
respondents who answered a ‘No’ or ‘Other’, constituting the rest approximately 27%,
few confirmed that though no specific innovation management plan has been
implemented, however in some cases there were outlines rather than detailing of the
plan. This question was considered to be appropriate, as it would provide with data,
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which could reflect on the growth and progress of innovation planning within
Facilities management and also its implementation in the business environment (Refer
figure below).
Q. Does Innovation Management Policy apply to FM?
RESPONSE
40
28
20
0
6
4
Yes
No
Other
28
6
4
Response
Response
CATEGORY
Figure: Does innovation management policy apply to FM?
Source: Self survey
5) Is there much scope for innovation in Facilities Management?
Facilities management is not only about reducing the running costs of buildings or
maintaining them but forms an important part of the business as a whole. Efficiency,
management of space and other related assets for people and processes also form an
important part such that the missions and goals of the organisation may be achieved.
Innovation in FM can occur in an in-house or outsourced operational context. The
most likely environment where innovative FM solutions will thrive is one of
competition. This is one of the principal advantages of the outsourced FM solution. It
is essential for the established supplier companies to prepare themselves for a future
that brings with it immense competition. It is an era of new opportunities and
regeneration especially for executives who realise the importance of change and
innovation, for mature companies, which acknowledge that the time for slow change
is over and it is important to accept changes in their own best interest. The research
supports the above stated as approximately 79% of the respondents believe that there
is definitely much scope for innovation in Facilities Management.
RESPONSE
Q. Is there much scope for innovation in facilities
management?
40
30
20
0
Response
5
3
Yes
No
Other
30
5
3
Response
CATEGORY
Figure: Scope for innovation in Facilities Management
Source: Self survey
9
6) Do In-House and outsourced FM teams have same approach towards
innovation management?
The histogram below answers it all. 92.1% of respondents believe that the innovation
approach differs between outsourced and in-house FM teams, which according to
some them comes naturally as those who form part of the organisation will have the
strategic organisational boundaries to remain within. A large number of respondents
also indicated that outsourced teams should be selected on basis of their approach
towards new product development that should also match with the strategic goals of
the organisation hiring their services (refer figure below).
RESPONSE
Q. Do In-house and outsourced FM teams have same approach
toward innovation management?
35
50
3
0
Response
Yes
No
3
35
Response
CATEGORY
Figure: Difference between In-House and outsourced FM teams
Source: Self survey
7) Which of the following innovations receive most widespread attention in
Facilities Management?
Technical
Product
Process
Business
Commercial
Production
Managerial
Organisational
Amongst the above mentioned, it was noticed that Business and Process innovation
receive most attention within the Facilities Management field. Facilities Management
is evolving from an operational non-core business support services function to a
strategic FM position, which supports and enhances both the core and non-core
activities of the organisation (Pitt and Goyal, 2004). The results seen in which
approximately 37% of respondents feel that business and process innovation gain
most importance further enhances the fact that Facilities management is first and
foremost about organisational effectiveness. The business case for developing
facilities depends on an understanding of the potential of facilities for creating qualityworking conditions to support key activities. Effectively planned facilities and quality
support services can create significant business returns. As competition intensifies,
and as change accelerates, many leading organisations are re-valuating the
contribution that facilities make to business success, recognising the business
consequences of poorly managed facilities and searching for value that can be added
through effective planning and management (Alexander, 1996).
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Q. Which of the following innovations receives most widespread
attention in Facilities Management?
RESPONSE
20
14
10
4
0
12
2
1
2
1
2
Technic Product Process Busines Organis Manage Comme Producti
4
Response
1
14
12
2
2
1
Response
2
LEVEL
Figure: Most popular innovation amongst Facilities Management
Source: Self survey
8) Do you think that the primary objective should be innovation in vital business
functions?
This question sole forms part conclusion of the research. As stated earlier, the
meaning of innovation planning is continuity and gains within the core business
functions. This is further confirmed by approximately 76% of respondents who agreed
that innovation is imperative in the fast changing business environment of today.
Respondents who said ‘Yes’ also commented that innovation management should be
made a part of all business discussions and should be top most priority in
decision/strategy formation. The main purpose of this question was to establish the
current state of innovation planning in terms of what the organisations understand it to
be, and also highlight the importance of innovation management as a means to ensure
the continuity of core business functions (Refer figure below).
RESPONSE
Q. Should Business Innovation be primary objective?
40
29
20
0
Response
8
2
Yes
No
Other
29
8
2
Response
CATEGORY
Figure: Should Business innovation be primary objective?
Source: Self survey
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9) Are suppliers / Partnerships/ Subcontractors chosen for their ability to
demonstrate an innovative approach?
The purpose was to determine the role-played by contractors and sub contractors in
the formulation and implementation of an innovation management plan especially
during multiple contracts and to understand the way in which multiple contracts are
handled. 29 out of a sample size of 38 replied ’Yes’, to above, highlighting that to
formulate a comprehensive innovation plan its imperative that each member of the
business holds a critical position. Of the 28.94% who chose ‘No’ or ‘Other as their
answer, also stated that there are a few instances in which the contractors or the
partnerships are chosen for their ability to demonstrate innovative approach, and
should be at least critical suppliers (Refer figure below). As regards reviewing the
innovation processes of the partners and sub contractors as part of the pre qualification
process, majority, that is 25 out of 38 respondents replied that this is done only when
such kind of services are required as part of the tender.
RESPONSE
Q. Are Suppliers/Partners/Subcontractors innovative processes
reviewed as part of pre-qualification tenders ?
40
25
20
0
Response
9
4
Yes
No
Ot her
25
9
4
Response
CATEGORY
Figure: Should Business innovation be primary objective?
Source: Self survey
It is essential for the established supplier companies to prepare themselves for a future
that brings with it immense competition, globalisation, new product development and
generation of an environment that insists business innovation. They should respond by
adopting a new approach to strategy—one that combines speed, openness, flexibility,
and forward-focused thinking. It is an era of new opportunities and regeneration
especially for executives who realise the importance of change and innovation, for
mature companies, which acknowledge that the time for slow change is over and it is
important to accept changes in their own best interest. To survive it is essential that
companies must be able to adapt and evolve. Businesses operate with the knowledge
that their competitors will inevitably come to the market with a product that changes
the basis of competition, the ability to change and adapt is fundamental to survival
(Trott 2005). Christiansen (2000) states that specific innovation management systems
such as idea generation methods, funding systems and project management methods
also have a profound impact on the performance of innovation and innovative ideas
and not to forget the final intervention of the senior management in specific projects.
Required are flexible companies and mindsets, which can accept failures before they
look out for results and a clear definition for innovation. To innovate is a mindset, as
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earlier stated its not a one-time event, innovation should be incorporated as a daily
schedule of each employee.
Further research must be put in innovations that will not only change customer
demands and wants but also create new ones by extinguishing old demands and wants.
Since businesses today are experiencing tremendous change in customers’ concept of
value, new ways of satisfying these demands should be researched upon so that it is
also possible to offer them even greater value satisfaction.
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innovative growth. Strategy & Leadership, 33 (1), 12-18.
Burgelman, R A (1996) Strategic management of technology and innovation. 2ed.
Irwin.
Christiansen, J A (2000) Competitive Innovation Management, techniques to improve
innovation management. Macmillan Business.
Desbarats, G (1999) Insight from industry: The Innovation supply chain, Facilities,
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Doyle, P and Bridgewater, S (1988) Innovation in Marketing. The Charted Institute of
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