How Does the Oslo Manual's Taxonomy Map Innovation Across Business Functions?

The Oslo Manual’s taxonomy maps innovation across business functions by providing a comprehensive framework that recognizes innovation can occur in various aspects of a business.

Business processes

The manual outlines a taxonomy of business processes where innovation can take place, encompassing six main functions:

Production of goods and services
Distribution and logistics
Marketing and sales
Information and communication technology (ICT)
Administration and management
Product and business process development[2]

This taxonomy differs slightly from previous editions but provides a more solid conceptual and practical basis for understanding innovation across different business areas[2]. By categorizing business functions in this way, the Oslo Manual acknowledges that innovation is not limited to product development or R&D activities, but can occur throughout an organization’s operations.

Innovation Activities

The manual further elaborates on innovation activities that can occur within these business functions:

Research and experimental development (R&D)
Engineering, design, and other creative work
Marketing and brand equity activities
Intellectual property (IP) related activities
Employee training
Software development and database activities
Activities relating to the acquisition or lease of tangible assets[2]

These activities represent potential loci of innovation within the business, highlighting the diverse ways in which companies can innovate across different functional areas.

Measurement and Analysis

To support the measurement and analysis of innovation across these business functions, the Oslo Manual provides guidelines for:

Collecting data on business innovation activities[2]
Measuring business capabilities for innovation, including management capabilities, workforce skills, and technological capabilities[4]
Assessing knowledge flows and innovation diffusion within and between organizations[1]

By providing this comprehensive framework, the Oslo Manual enables a more nuanced understanding of how innovation manifests across various business functions and activities, facilitating more accurate measurement and analysis of innovation in organizations.

Innovation Framework

An innovation is a new or improved product or process (or combination thereof) that differs significantly from previous products or processes and has been introduced on the market or brought into use by the firm.

• Product innovation: A new or improved good or service introduced to the market.
• Business process innovation: A new or improved business process implemented within the firm.

Innovation can and should be measured.

Knowledge is a basis for innovation.

An innovation must be new or significantly improved compared to what was previously available.

An innovation must have potential utility or actual use.

Value creation or preservation are the goal of innovation.

An innovation MUST be implemented, which differentiates it from concepts like invention.

The manual provides a taxonomy of business functions that can be subject to innovation.

All developmental, financial, and commercial activities undertaken by a firm intended to innovate.

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