Thomas Edison created the "innovation factory"1 in the 1890s, and so laid the foundation for the dis­cipline of innovation management (TM) and the new product development (NPD) process. The NPD process organizations use today has the same stages and steps that Edison perfected over 100 years ago. One may wonder, therefore, if IM in the knowledge economy has changed in any way other than through the use of technological solutions that speed up the process and cut both testing time and complexity. Though the NPD process has remained substantially the same, the crux of IM has been revolutionized by the IC concept. Like knowledge becoming the main raw resource in every­thing produced today, innovation has become the main organizational process that adds, and hence extracts, value. This is true whether the innovative capacity of the organization is turned inward, in search of excellence and better ways of doing business, or turned outward to make new products.

Innovation management is the stage at which value created at the knowledge management (KM) stage is extracted by transforming knowledge into a product or a work process. Innovation in the knowledge economy is not a mere process for making new products, but is the main pro­duction process at a time when organizations innovate or perish. The need to manage innovation as the core production process has overbearing implications on business management as a whole. Under the IC concept, innovation expanded beyond the confines of the research and development (R&D)/NPD department to the whole organization, and beyond the organizational boundaries to external partners. The need for a high turnover of ideas drove top management to solicit ideas from a wider base of people, covering almost everyone in the organization and overflowing to networks of outside partners. Innovation thus progressed from being department based to organ­ization based and eventually to network based, where innovation is managed over a number interorganizational and external networks.

Before proceeding with the concepts and methods of IM under a comprehensive intellectual capital management (CICM) approach, we will first explore Edison's style of IM.