Innovation Audit

117 views 9 pages ~ 2469 words Print

I hereby certify that this material which I now submit for assessment on the programme of study DT 348 leading to the award of MBA is entirely my own work and has not been submitted for assessment for any academic purpose other than in partial fulfilment for that stated above.

Caroline Bolger, D16128799


Introduction. 3

Outcomes That Are Addressed in Innovation Audit. 3

How to Ensure Rigor of the Audit Process. 4

Opportunities Associated with Innovation Audit Executions. 4

Challenges Associated with Innovation Audit Execution. 7

Critical Analysis of the Internal Organisation.. 8

Opportunities/Challenges Associated with Implementing. 14

References. 17


Through innovation auditing, we can identify those areas that are lagging regarding innovation and thus put in the necessary inputs and efforts that are required to promote changes (Goffin, 2005). Innovation has been cited as one of the critical factors that affect competitiveness. Despite widespread agreement about its benefits, innovation is still poorly understood. Definitions are confused, and the link between innovation and business performance remains to be proven Innovation audit is a technique used to understand how in effect an organization is at managing innovation.

Research in the management of innovation has borne different insights into specific factors of innovation. However, issues that confront general managers especially those of small and medium-sized firms are not considered in the creation of innovation management tools (Hallgren, 2009). Innovation audit reveals what is functioning correctly regarding processes. It also brings out factors that are hindering innovation. Lastly, it provides an action plan with specific recommendations on how to overcome the challenges and make the business or organization to be innovative. The paper will explain the meaning of innovation audit, importance and methods of innovation audit to a firm that deals with consumer products and services.

Synthesis of frameworks and theories and application of knowledge and concepts

Innovation audit is a method of management that deals with all the issues that pertain to the acquisition, handling and ensuring the relevance of information on the progress of the organization in the innovation path. Imperatively, the innovation audit process is used to identify information that is necessary to enable the organizations to be innovative (Hallgren, 2009). The audit function continuously assesses the transient condition of innovation at a specific period in the organization.

How to Ensure Rigor of the Audit Process

Effective innovation audit can be achieved using innovation audit tools. A rigorous audit can be ensured in many ways. First, information on products and services, customers and other stakeholders that are kept by the organization must be identified. Secondly, it is imperative to review all notices leading to marketing activities. In the collection of information to be used in this way consent must be sought (Mann, 2012). The process of innovation audits is rendered effective if the senior executive reviews the outcomes. Corrective actions are then taken to rectify and identify discrepancies.

Opportunities Associated with Innovation Audit Executions.

There are different opportunities which are associated with innovation audit executions. Key among them is the acquisition of new ideas, products, and services. The first opportunity associated with innovation audit executions is identifying the third-party relationships which are mainly the risks linked with the extended enterprise. Supply chain risks are the first type of risks and may involve among others business interruptions and sourcing risks. It is essential for every innovation audit execution to engage and take into consideration the risks associated with the supply chain of any organization. The second third-party risk associated is contract risk and compliance (Knetchel, 2007). Innovation audit executions should put into consideration and analyze the different contracts signed by an organization with others and try to give recommendations on the probability of the contracts to be complied with.

The other opportunity associated with innovation audit execution is the corporate responsibility or compliance of the organization. The execution should focus on the areas that have an impact on the organization’s reputation and image. These may include human resource compliance issues, monitoring requirements, environmental and safety matters, and general corporate governance. Innovation audit executions should involve themselves in analyzing and stating the corporate responsibilities that an organization follows and the ones that it should follow.

The impact of globalization of operations is another opportunity which is associated with innovation audit executions. Information audit executions should consider how an organization’s operations have been affected by globalization. The opportunities which should be considered include the privacy of data across borders, the foreign corrupt practices act, the customs export-import act, and the global mobility act. The globalization of operations may positively or negatively affect the performance of an organization, and therefore, it should be intensively taken into consideration in every innovation audit execution for useful results (Knetchel, 2007).

The analysis of the effectiveness and efficiency of a business process is also another critical opportunity associated with innovation audit executions. Due to an increased focus on the effectiveness and the efficiency of an organization or a business, innovation audit executions should review the processes of an organization beyond their financial matters and compliance to laws. Innovation audit executions should consider capital expenditure monitoring and tracking of organizations to give efficient and reliable audit reports related to the capital of the organization (Gamal, 2011). Innovation audit executions should also consider research and the developments of organizations including their expense analysis and cost savings concepts.

When dealing with I.T. matters, innovation audit executions should also evaluate the data privacy of an organization and its possibility of being subject to cyber-crimes (Gamal, 2011). Innovation audit executions are also required to perform cloud computing to identify how organizations purchase and support I.T. services. They should review the cloud computing strategies used and the assess vendors together with the cloud providers.

Challenges Associated with Innovation Audit Execution

There are several challenges associated with innovation audit execution. One of these challenges is managing many compliance audits. Changing rules and policies for organizations have forced many IT departments to adhere to several compliance standards hence making the execution of audit difficult (Darnall, 2009). Another challenge in innovation audit execution is the internal policies set by administrators. There are specific internal procedures which are administered on particular IT department by the organization managers ranging from the executive to the HR down to departmental heads. These policies complicate the process of innovation auditing by the IT departments and hence interfering with the efficiency and effectiveness in the role of innovation audit execution.

Lack of budget for innovation audit execution is also a challenge. You find that most organization would want to cut budgets in their bids for cost minimization. When there are few resources and costs, continue to go up most organizations resort to cut the budgets and, in most cases, the budget set for funding innovation audit is usually reduced (Hull, 2000). Consequently, this makes it difficult for most organizations to focus on the execution of innovation audit of the firm.

Critical Analysis of the Internal Organisation

Corvil use AHA

a. Organizational Structure-

The organization does not encourage innovation and ideas submissions. Most innovative ideas come from the owner/CEO and VP of Marketing. Ideas are presented to R & D.

b. Strategy – Strategic planning, process and implementation are not clearly defined or communicated. Some Key personnel are usually not a part of the discussion or brought in at the end.

c. Learning

– Minimal training is provided. Some positions may be provided training on a need basis. Learning from success and failure is high because of the industry competitiveness; new product innovation is a necessity, so prototypes are used regularly for the design through roll out of new products.

d. Linkages

– We have external relationships with Doctors and universities which we utilize as resources for information, data and market analysis, etc.

e. Processes

– Internal processes need to be restructured to maximize multi -department relationships and maximize and improve on customer needs and demands.

60% Differentiation 20% Revolutionary 15% Evolutionary 5% Fast Fail

a. Differentiation – to stand out our products are designed to be competitive in price that deliver the same or better customer benefits. Use a range of different comparable materials to manufacture products.

b. Revolutionary

– Being 4th generation owned and the founder being a leader in breakthrough technology and processes this innovativeness has carried on through the generations. Always looking for new creative ideas to maximize on customers comfort, cost, time and need.

c. Evolutionary – we do consider customer feedback and redesign existing products to give the customer “what they want”. We have many products that have been redesigned over the years. Being in business for 75 years warrants some Upgrades.

d. Fast Fail – the expense to use the market for test runs is high.

30% Differentiation 45% Revolutionary 15% Evolutionary 10% Fast Fail

a. Differentiation

– Shift some of the focus to new offerings that will make the difference in our products stand out.

b. Revolutionary

– The company was built on innovative ground-breaking technology and processes. Increase the creativity for fresh new ideas by involving the R & D and Marketing teams and encouraging submissions from other team members that deal with or make the products.

c. Evolutionary – Continue to listen to existing customers and deliver what they want

d. Fast Fail

– though it is expensive increase the experimentation and possibly offer some incentives to customers to purchase with refined products.

Proposed Innovative changes:

e. Differentiation

– Market Specialized products and technology used.

f. Revolutionary – Include R&D and marketing departments and other production team members to be a part of the creative process.

g. Evolutionary – Refine older products to bring them up to date with customer needs.

h. Fast Fail – provide incentives for the customers that experiment to purchase new products that have been refined based on feedback.

Opportunities/Challenges Associated with Implementing

There are a number of challenges that are associated with innovation audit recommendations. One of the challenges is financial constraints. These are factors that may make it difficult for a firm to fund the investments that are desired by the firm. Such factors may include the firm’s inability to get a loan, limited borrowing limit, reliance on loans from banks and possession of assets that cannot be liquidized ( Glover, 2009) Financial constraints lead to delays in the process by which audit recommendations are implemented more so where there is a requirement for a new investment.

Another challenge facing the implementation of innovation audit recommendation is staffing issues. Lack of proper training of employees and mentoring programs that are systematically set makes it difficult to fully implement the recommendations of the auditor. Also, failure to attract, motivate and retain employees of high quality may make difficult to implement audit recommendations (Searcy, 2012). Complex issues may also make it difficult to implement the recommendations of the auditor. Complex issues are matters that need negotiations and consultations and also approvals whereby different stakeholders are involved. For example, in an organization where there is a managerial vacuum, the will be delays in the implementation of audit recommendations before a new manager is appointed to fill the vacant position. Also, changes of employees resulting from the organizational restructuring may delay efforts to implement audit recommendations.

Having learned innovation auditing I will be able in a future position to analyse how different links between organizational structures, cultures and processes provide innovation opportunities. Moreover, after learning innovation auditing, I will also be in a position to develop innovation strategy for my firm. This will be achieved by having innovation director who will be in charge of innovations. I will also ensure that ensure that the innovation strategy is in line with the corporate strategy and also ensure that the innovation goals are in line with the organizational objectives. Through innovation auditing, I will also promote an organizational culture that promotes innovation. This can be achieved by allocating some hours to innovation and by funding any new ideas that could lead to innovations (Cormican, 2004). I will also ensure that the top management is committed to continuous innovations.


Cormican, K., & O’Sullivan, D. (2004). Auditing best practice for effective product innovation management. Technovation, 24(10), 819-829.

Darnall, N., Seol, I., & Sarkis, J. (2009). Perceived stakeholder influences and organizations’ use of environmental audits. Accounting, Organizations and Society, 34(2), 170-187.

Gamal, Dalia, E. T. Salah, and E. N. Elrayyes. "How to measure organization innovativeness? An overview of innovation measurement frameworks and innovation audit/management tools." Egypt: Technology Innovation and Entrepreneurship Center (2011).

Glover, S. M., Prawitt, D. F., & Taylor, M. H. (2009). Audit standard setting and inspection for US public companies: A critical assessment and recommendations for fundamental change. Accounting Horizons, 23(2), 221-237.

Goffin, K., & Mitchell, R. (2005). Innovation management: Strategy and implementation using the pentathlon framework (Vol. 2). Basingstoke: Palgrave Macmillan.

Hallgren, Erik W. "How to use an innovation audit as a learning tool: a case study of enhancing high‐involvement innovation." Creativity and innovation management 18.1 (2009): 48-58..

Hull, Richard, Rod Coombs, and Malcolm Peltu. "Knowledge management practices for innovation: an audit tool for improvement." International Journal of Technology Management 20.5-8 (2000): 633-656.

Knechel, W. R. (2007). The business risk audit: Origins, obstacles and opportunities. Accounting, Organizations and Society, 32(4-5), 383-408.

Mann, Darrell, Paul Howarth, and U. K. Akumen. "Innolytics: Measuring What’s Important Rather Than What’s Easy." (2012)

Monrose, F., Wyckoff, P., & Rubin, A. D. (1999, February). Distributed Execution with Remote Audit. In Ndss (Vol. 99, pp. 3-5).

Searcy, C., Morali, O., Karapetrovic, S., Wichuk, K., McCartney, D., McLeod, S., & Fraser, D. (2012). Challenges in implementing a functional ISO 14001 environmental management system. International Journal of Quality & Reliability Management, 29(7), 779-796.


Innovation Audit Outline.

Aspects Considered In Innovation Audit.

Innovation audit is a management theory that enable firms to gauge how their firms or organizations are generating new ideas, products and services. The process involves a number of considerations. These are innovation strategy, idea generation, prioritization, implementation, the society and output. This innovation audit is for a firm that deals with consumer goods. The firm wants to track its innovativeness in generating ideas and new products that are compliant with the consumer needs.

1. Innovation strategy: is there a sound, operational and communicated innovation strategy?

2. Idea generation: is there a progressive, cooperative approach to producing customer focused ideas?

3. Prioritization: to what extent are the most suitable ideas selected for execution?

4. Implementation: to what extent are ideas speedily and successfully implemented?

5. People and organization: to what extent is there a culture of innovation?

6. Output: to what extent are the number of new products and services developed sufficient?

Sample Interview for Innovation Audit.

1. How many new products and services were offered last year?

2. How long do our ideas take from approval to full implementation?

3. What percentage of our organization’s income is as a result of new products or services?

4. Is the idea generation program of our organization powerful?

5. Are our new products competitive?

6. How many ideas does each employee submit? Are they approved?

7. Are we allocating adequate resources in terms of people, time and money to innovation?

January 19, 2024


Number of pages


Number of words




Use this essay example as a template for assignments, a source of information, and to borrow arguments and ideas for your paper. Remember, it is publicly available to other students and search engines, so direct copying may result in plagiarism.

Eliminate the stress of research and writing!

Hire one of our experts to create a completely original paper even in 3 hours!

Hire a Pro