INNOVATIONS

CONCEPT OF INNOVATION

Innovation can be simply defined as a "new idea, creative thoughts, and new imaginations
in form of device or method". However, innovation is often also viewed as the application of
better solutions that meet new requirements, silent needs, or existing market needs. Such
innovation takes place through the provision of more- effective
products, processes, services, technologies, or business models that are made available to
markets, governments and society. The term "innovation" can be defined as something original
and more effective that "breaks into" the market or society. Innovation is related to, but not
the same as, invention, as innovation is more apt to involve the practical implementation of an
invention (i.e. new/improved ability) to make a meaningful impact in the market or society.
All organizations can innovate, including hospitals, universities, and local governments.
Innovation processes usually involve: identifying customer needs, macro and micro trends,
developing competences, and finding financial support for new inventions and at last practically
applying those inventions for better solutions.

Innovation is:

• New stuff
• That adds value
• For various stakeholders
• Can be monetized
• Creates a competitive advantage
• And is sustainable
• Until the advantage deteriorate
Innovation is the process of turning opportunity into new ideas and of putting these into
widely used practice. It is the management of the entire activities involved in the process of
idea generation, technology development, manufacturing and marketing of a new (or improved)
product. The process of translating an idea or invention into a good or service that creates value
or for which customers will pay. In business, innovation often results when ideas are applied by
the company in order to further satisfy the needs and expectations of the customers.

For example, Godin (2008) defines 12 concepts of innovation which can be described as
follows: A: innovation as process of doing of something new

• innovation as imitation;
• innovation as invention;
• innovation as discovery;

B: innovation as human abilities to creative activity:

 • innovation as imagination;
• innovation as ingenuity;
• innovation as creativity;

C: innovation as change in all spheres of life:

• innovation as cultural change;

• innovation as social change;
• innovation as organizational change; political change; technological change;

D: innovation as commercialization of new product

IMPORTANCE OF INNOVATION

• Solving problems: Most ideas are actually derived from attempts to solve existing problems.
As such, when you encourage innovation, you are opening doors for solutions to problems both
within and outside your company. If your business provides services, you might realize that
your customer do not have an avenue to share their opinions, complaints, and compliments.
The only avenue available could be the physical office. So, to solve the problem, you could
decide to operate a virtual office where customers’ needs can be attended to within a short time.
The customers will be happy and as a result, your sales will go higher.

• Adapting to change: This is especially evident in the technological world where there are rapid
changes defining the business. Change is inevitable and innovation is the method to not only
keep your business afloat, but also ensure that it remains relevant and profitable. With the rise
in mobile phones, traditional telephone had to find ways to remain relevant. Same case with
your business, when you develop an innovation culture, you remain relevant at all times.

• Maximizing on globalization: With markets all over the world becoming more interlinked,
greater opportunities are emerging in these new markets and with that, new needs and
challenges. For instance, China and India are estimated to be the leading markets, and Africa
is predicted to be the next “hot spot”. Therefore, if your company hopes to tap into this market
share, innovation is a must to enable you to capitalize on the opportunities opening up.

• Facing up the competition: The corporate world is always very competitive, and with many
new companies coming up, the top position in the industry is no longer a reserve of a few. To
retain or establish your company’s cutting edge, you can compete strategically by having a
 dynamic business that is able to make strategic and innovative moves and thus cut above the
rest.

• Evolving workplace dynamics: The demographics in the work place are constantly changing.
With the new generation that has entered the market place; new trends are also coming up.
Innovation is therefore critical to ensure the smooth running of the company.

• Customers’ changing tastes and preferences: The current customer has a great variety of
products and services available to him and is well informed of his choices than before. The
company must therefore keep itself abreast with these evolving tastes and also forge new ways
of satisfying the custo

DIFFERENCE BETWEEN INVENTION AND INNOVATION

INNOVATION MANAGEMENT

Innovation management is a combination of the management of innovation processes,

and change management. It refers both to product, business process,
and organizational innovation. Innovation management includes a set of tools that allow managers
and engineers to cooperate with a common understanding of processes and goals. Innovation
management allows the organization to respond to external or internal opportunities, and use its
creativity to introduce new ideas, processes or products. It is not relegated to R&D; it involves
workers at every level in contributing creatively to a company's product development,
manufacturing and marketing. By utilizing innovation management tools, management can trigger
and deploy the creative capabilities of the work force for the continuous development of a company.
Innovation management helps an organization grasp an opportunity and use it to create and introduce
new ideas, processes, or products industriously. Creativity is the basis of innovation management;
the end goal is a change in services or business process. Innovative ideas are the result of two
consecutive steps, imitation and invention. The goal of innovation management within a company is
to cultivate a suitable environment to encourage innovation. The suitable environment would help
the firms get more cooperation projects, even ‘the take-off platform for business ventures. Senior
management's support is crucial to successful innovation; clear direction, endorsement, and support
are essential to innovation pursuits.

TYPOLOGY OF INNOVATION

Type of innovation Characteristic

Product or service innovation A product innovation is the introduction of a
product or service that is new or significantly
improved with respect to its characteristics or
intended uses.
Process innovation A process innovation is the implementation
of a new or significantly improved
production or delivery method. Process
innovations can be intended to decrease unit
costs of production or delivery, to increase
quality, or to produce or deliver new or
significantly improved products.
Marketing innovation A marketing innovation is the
implementation of a new marketing method
involving significant changes in product
design or packaging, product placement,
product promotion or pricing. Marketing
innovations are aimed at better addressing
customer needs, opening up new markets, or
newly positioning a firm’s product on the
market, with the objective of increasing the
firm’s sales.
Organizational innovation Organizational innovations can be intended
to increase a firm’s performance by reducing
administrative costs or transaction costs,
improving workplace satisfaction (and thus
 labor productivity), gaining access to no
tradable assets (such as non-codified external
knowledge) or reducing costs of supplies. An
organizational innovation is the
implementation of a new organizational
method in the firm’s business practices,
workplace organization or external relations.

INNOVATION PROCESS

STEP: 1 IDEA GENERATION

This is the first step in an innovation process. It is where you decide on the concept that you
want to develop and come up with reasons why you want to improve the idea. It is important
for you to involve your employees and customers. Involving many knowledgeable people will
enable you to get a better understanding of the market.

Besides, it will give you an opportunity to look at the idea in different angles. At this stage
also, experts will also provide many viable ideas. There are five places where you can draw
ideas for your innovation:

• CUSTOMER INNOVATION

As you work on an innovation, remember that you should have your customer in mind. Your
customers should be the inspiration for all innovations. Hence, consider the feedback that they
give to come up with an innovative idea.

This is an important source because if you innovate something that does not meet the needs of
the customer, then the innovation is likely to fall. You can get the feedback from the social
media platforms, customer feedback forms, and your employees can report to you what the
customers say.

• EMPLOYEE INNOVATION

Your employees relate with the customers so closely so they know their needs. Moreover, they
also get first hand compliments, complains, and suggestions from the customers.

When a customer wants a service or a product, they explain to your employees so they can
keep tabs on what customers want. Besides, they are in a position to identify products that are
irrelevant to the customer.

When you innovate a product, your employees will be important so as to explain how a product
is used to the customers. In contrast, if they do not feel as part of the innovation, they might
disregard the product. As a result, they may never speak well of the product.

• PUBLIC INNOVATION

Public innovation depends on information gathered from the public. The amount of feedback
received through public innovation is a lot so you must have the required expertise and
equipment to handle it. Public innovation produces helpful information but you have to be
ready to sieve through the information to pick what is helpful.

As you consider this model, make sure you do not use it before the others: it could probably be
the last model that you employ. If you have the capacity to digest the information, you could
use public innovation.

• PARTNER/SUPPLIER INNOVATION

You can share your thoughts and opinions with your partners and suppliers. Opening up to
them helps them improve on the goods and services they supply.

A good example is wedding planners who outsource companies to provide flowers. The
wedding company may have realized that the flowers wither after a short time and they look
unattractive.

By sharing this information with the flower company, they can brainstorm on ways to keep the
flowers looking fresh for a longer time. This innovation helps your supplier and your business.
On your side, you are able to supply high quality and more improved good and services.
 • COMPITITOR INNOVATION

This is a very challenging but very efficient when it takes place. As a fact, competitors are very
careful with the information they share but with a good strategy, you can learn a lot from your
competitors.

This can only happen when you admit that there are other competent people outside your
company.

However, it does not mean that your employees are not competent enough, they are competent,
but listening from others can give you a different point of view concerning a matter.

STEP: 2 ADVOCACY AND SCREENING

Not every idea that is generated is worth implementing, for that reason; you must screen all the
ideas presented. When screening, ensure you measure the benefits and risks of each idea to
determine its viability.

Any idea that has a futuristic approach should be chosen for the next stage.

Moreover, participants in this stage develop the idea to enhance it. If an idea is not considered
ideal, make sure you communicate the reasons to the person who had suggested the idea.

This is important especially if the person who shared the idea is an employee so that you
encourage them to suggest more ideas even if it is in the future. For a company that wants to
instill an innovation culture, you should take three steps at this stage;

• Ensure the evaluation and screening process takes place in a transparent way

• Create a number of avenues for employees to receive feedback and advocacy

• As an organization, you should understand that evaluating an innovative idea is a difficult

assignment

STEP: 3 EXPERIMENTATION

At this stage, the idea is tested using a pilot test. The test takes place within a targeted market.
As you test your product, remember you want to know if the customers will accept it, if the
price is acceptable, and if they like the innovation. The aim is to test if the idea is ideal and
suitable for the company at a particular time.

Therefore, if an idea is too complex for the organization or it’s a premature idea, then it
should not be implemented. You should set aside premature ideas in your idea bank for a later
date.

So, even if you realize that your idea has been accepted in the market and the price is affordable,
you might want to hold back until you are sure the time is right to release it in the market. It is
only through the experimentation stage that you can get this information. So, do not assume
your idea is beyond reproach to the extent that the market cannot reject it.

However, note that experimentation can be a continuous process or a one-time activity. In

some instances, the experimentation stage generates new ideas. You can generate new ideas
from this stage by considering the feasibility of the original idea and by analyzing the
information from the results.

Give the participating team enough time to experiment and analyze the results from the
experimentation. It is at this stage where you apply for intellectual rights protection.

STEP: 4 COMMERCIALISATION

When you get to this stage, just know the product is ready for the market. The major work at
this stage is to persuade your target audience that the innovation is good for them.

To do this, explain how the innovation will be of use to them, when it will be used, and
demonstrate the benefits of the innovation using the prototypes. Be very specific about the idea
in regards to any information that could attract customers to your idea.

STEP: 5 DIFFUSION AND IMPLEMENTATION

Diffusion and implementation are two different stages: diffusion is where the company accepts
the innovation and implementation is setting up everything that is needed to develop and
utilize or produce the innovative idea.

Knowledge brokers are used to diffuse the idea in an organization. The knowledge brokers
communicate the specification about the idea and its usability. This information helps your
employees to understand the idea in a deeper way. After they understand it, then they
implement the idea.

Diffusion and implementation requires access to production files, logistics, and market routes
amongst others. For the idea to succeed, work in collaboration with industries and businesses,
get into partnership and subcontract management to ensure the innovation is fully implemented.
The feedback that you receive at this stage can be used to come up with future ideas.

BARRIERS OF INNOVATION

KEY OBSTACLES TO INNOVATION

Obstacles that will need to be addressed if you expect to establish a sustainable culture of
innovation:

1. Lack of a shared vision, purpose and/or strategy

2. Short-term thinking/focus
3. Lack of time, resources or staff
4. Lack of “spec time” to develop new ideas and opportunities
5. Innovation not articulated as a company-wide commitment
6. Lack of ownership by senior leaders
7. Leadership expects payoff sooner than is realistic
8. Lack of a systematic innovation process
9. Management incentives are not structured to reward innovation
10. No reward and recognition programs
11. Constantly shifting priorities
12. Belief that innovation is inherently risky
13. Internal process focus rather than external customer focus
14. Inadequate understanding of customers
15. Focus on successes of the past rather than the challenges of the future
16. Unwillingness to change in the absence of a burning platform
17. Unwillingness to acknowledge and learn from past “failures”
18. Politics – efforts to sustain the status quo to support entrenched interests
19. Rewarding crisis management rather than crisis prevention
20. Hierarchy – over-management and review of new ideas
21. Micromanagement
22. Under-funding of new ideas in the name of sustaining current efforts
23. Fear that criticizing current practices and commitments is a high-risk activity
24. Risk aversion
25. Addiction to left-brained, analytical thinking
26. Absence of user-friendly idea management processes
27. Innovation not part of the performance review process
28. Lack of skillful brainstorm facilitation
29. No creative thinking training
 ORGANISATIONAL ASPECTS OF INNOVATION
2.1 What is Organizational Innovation

1. Implementation of a new organizational method in the firm's business practices, in the

organization of its workplace or in its external relations, to improve the use of knowledge,
workflows efficiency or quality of goods or services. Learn more in: Challenges for Innovation
Due to Firm Size: The Case of Brazilian Industrial Firms
2. The implementation of a new organizational method in the firms business, workplace
organization and external relations (Oslo Manual). Learn more in: Innovation Policies and
Barriers to Innovation: An Analysis in Extremadura (Spain)
3. Organizational innovation is understood to encompass processes which lead to the
establishment or adoption of new production and management models, not only for production
but also for tangible and intangible resources. The organizational innovation concept is part of
the concept of innovation and development, and accentuates new ideas and the propensity for
change within organizations. This is also called process innovation and includes expenditures
for innovation and development in the calculation of cost. Learn more in: Telework and
Management in Public Organizations
4. The introduction of a new organizational method in business practices, in workplace
organization or in the firm’s organizational relationships. Learn more in: The Effect of R&D
Cooperation on Organizational Innovation: An Empirical Study of Portuguese Enterprises
5. First use of a product, service, process or idea by an organization. Learn more in: Can an
Innovation Oriented Vision Statement Really Trigger Innovation in Small and Medium Sized
Enterprises?
6. The process of translating an idea or invention into a good or service that creates
organizationalvalue. Learn more in: The Roles of Knowledge Management and Organizational
Innovation in Global Business
7. The successful utilization of processes, programs, or products which are new and introduced
as a result of decisions made within the organization Learn more in: Sustaining Organizational
Innovation
8. Also known as non-technological innovation is the implementation of a
new organizational method in the firm business practice, workspace organization or external
 relations. Learn more in: Determinants of Organizational Innovation: The Case of Portuguese
Firms
9. The process of translating an idea or invention into a good or service that creates
organizationalvalue. Learn more in: The Roles of International Entrepreneurship and
Organizational Innovation in SMEs
10. Is the implementation of a new organizational method in the firms business, workplace
organization and external relations. Learn more in: Innovation in Extremadura: Opportunity for
Companies or Obstacle for their Development?
11. It includes the production of knowledge, development and marketing, and the introduction
of a new, redesigned or substantially improvement in the goods and services rendered to the
society. Learn more in: The Mediating Effect of Organizational Culture, Size, and Structure on
the Relationship Between Innovations and Resilience in Selected Nigerian Universities
12. First use of a product, service, process or idea by an organization. Learn more in: An
Examination of the Relationship Between Vision Content and Amount of Innovation in SMEs:
Findings From Turkey
13. Is the implementation of a new organizational method in the firm’s business, workplace
organization and external relations (Oslo Manual). Learn more in: Perceptions of Extremaduran
Firms Towards Innovation: Manufacturing vs. KIBS Comparative Study

8 Ways to Bring Innovation Into Your Organisation

Innovation is essential for the growth of any company. But that’s a very generic way of
describing innovation. To successfully implement innovation, you need to know exactly what
makes an innovative organization as well as how it contributes to its [Link] the majority
of us, innovation is about seeking an approach to blue-sky thinking. But that’s a far too clichéd
definition to go by. What business people don’t know is that creativity is challenging to achieve.
It requires investment of resources to fulfill the needs of innovative management in an
organization.

Truly innovative organizations spend hours developing an approach to imaginative thinking in

their workers so that they can cultivate new ideas. In other words, the secret of their
unprecedented success is associated with their ability to get the best out of the creative tanks
of their employees.
But that requires an innovative culture where everyone is able to think independently. Business
leaders perceive innovation as something that triggers progress and lacking it can stifle the
growth of an organization. Unfortunately, the majority of the companies still lack a strategy to
create an innovative culture.

For those ambitious business people out there, here are 8 ways to bring innovation into your
organization and to pave the way for more creative ideas:

1. Give your workers a sense of freedom

Employers that impose rules tend to suffocate the creativity of their employees. This limits the
freedom of your most valuable asset and they will feel reluctant to ever think outside the box.

The essence of an innovative organization lies in their employees’ ability to contribute to the
creative process of the organization. As a company, you need to give your workers the
autonomy to practise their novel ideas.

It calls for a sense of freedom that can enable your workers to unshackle themselves from the
clutches of hierarchical imposition so that they can focus on new ideas to execute their day-to-
day tasks.

2. Provide your team with the resources to implement innovative ideas

Make it possible for your workers to convert their ideas into reality. Without the right
resources, even the best ideas tend to fall flat.

The most innovative companies in the world invest in their R & D department to allow their
creative team to execute the innovative concepts for future product development.

Samsung is one of the leading contenders in the list of the most innovative organizations having
invested $12.6 billion in the last twelve months into its R & D department

3. Invest your time in the creative nourishment of your workers

The essence of innovation is achieved when you are able to demonstrate to your workers a path
that leads to creativity. Don’t just preach to your team the importance of creativity. Rather
demonstrate the specific ways to find creativity so that they can implement innovation in their
work.

For example, you can dedicate a day to motivate your workers to experiment with new ideas.
Similarly, you can conduct weekly workshops to encourage your employees to brainstorm
ideas for an upcoming project.

Google was among the first companies to create a business model based on innovation. The
company allocates 20% of its time to nurture the innovative side of their employees.

4. Don’t focus only on R&D

As an organization, you should not confine innovation to just the R&D department. To
implement an effective innovative culture, it is important that each and every department of
your company is included.

When you implement a holistic innovation strategy, you are able to foster a change in the
mindset of every single member of the team.

5. Allow your employees a chance to fail

Failure is a part the learning process. If you penalize your employees for making mistakes, you
inject in them a fear of failure. Such an approach drastically affects their ability to come up
with creative ideas. Fear cannot cultivate creativity. When you give your employees the scope
to make a mistake, you are allowing them to think independently without any constraints of
fear. So they are able to think beyond the boundaries of their job.

6. Develop an accommodating leadership style

As the leader of a company, it is your responsibility to foster and nurture the attitudes of your
individual team members. Being a leader, you cannot develop a culture of innovation if you
fail to show them the way to innovation through your own attitude and behaviour.
Expecting your workers to give you more in less time is one such way you kill the desire of
your workers to do something extraordinary. When you prefer short-term results over long-
terms benefits of innovative ideas, you will kill their innovative spirit.

Rather than resorting to a ‘do more’ approach, you need to give your employees the room to
experiment and learn so that they can improve,

Remember that innovation develops from trial and error and it demands an investment of time.
But when you deprive your employees of time, you suffocate the urge of your employees to
learn different perspectives to their work.

7. Don’t look down on your subordinates

Intellectual arrogance is the biggest enemy of implementing innovation into any organization.
When you disregard the ideas of your employees just because they are your subordinates, you
hinder the process of creative thinking in them. Such an organization cannot possibly thrive on
the creative ideas of their workers.

To promote a culture of innovation, you and your leadership team need to shut down any
preconceived notions about your employees and rather allow them to speak their minds. You
need to encourage them to share their opinion and be a part of every creative process in the
business.

8. Acknowledge the contribution of your employees

Employees feel valued when you recognize their efforts. Similarly, if you want to promote a
culture of innovation in your organization, you need to implement an incentive-based policy
that rewards workers on the degree of innovation in their work.

Such a policy will make your employees feel appreciated for their innovative efforts and it will
pave the way to a culture of innovation in your organization.

Innovation provides a culture of creative thinking that enables your workers to think beyond
the regular hurdles of their work and come up with something new and unique.
 However, innovation is not a temporary thing and rather it is a long-term strategy that demands
an investment of your time and efforts. Therefore, if you want to ensure that your organization
continues to benefit from the positive outcomes of innovation, you need to implement the
above-mentioned strategies.

Features of Organisational Aspects of Innovation

It is a problem-solving process

It is process occurring primarily within commercial firms

Role of govt agencies or public lab’s is to a certain extent secondary

Interactive process involving relationships between firms with different actors

Has both Formal and Informal relationships

Helps in positioning firm within commercial networks

It is diversified learning process

Process involving the exchange of codified and tacit knowledge

Involves the establishment of new methods of production, supply and distribution

Includes the introduction of changes in management, work organisation, and the working
conditions and skills of the workforce

ELEMENTS OF ORGANISATIONAL ASPECTS

Identify purpose

Achievable dreams

Build loyalty

Set standards

Inspire enthusiasm

Encourage commitment

Culture and Values

Unique strenghts
SYSTEMATIC AND ANALYTICAL METHODS AND TECHNIQUES OF INNOVATION

1. 3C Analysis

The 3 C’s of marketing, a strategic marketing concept, is a very popular concept for marketers.
This concept takes into consideration 3 variables to explain a complete marketing strategy.
These 3 variables are dynamic in nature and fully depend on each other. In case of any variable
changes, it affects the other variables as well.

The 3 C’s of marketing strategy are

§ The Customer
§ The Company
§ The Competitors
The strategic 3 C’s of Marketing is a strategic triangle when integrated, a sustainable
competitive advantage can be achieved. Customers have different wants and needs. The
company find out these wants and offer products and services. To fulfill their customer wants
and needs the company offers low cost and differentiated products from their competitors.
Similarly, competitors also try to offer a differentiated product to have a competitive advantage.
his concept of marketing strategy focuses on the dynamic and interrelated relationship of 3 Cs
Here I will explain these 3 variables with examples.

• The Customers
Customers are the important part of any business. If your company customers are loyal it will
be difficult for your competitors to penetrate. In case you don’t have loyal customers, it will be
difficult for you to penetrate. When do a customer analysis keeping the mind the following
question?

§ Who are your customers? what are their demographics? They are men or women, what is
their disposable income?
§ Why do they buy? Are they looking for value, economy or prestige?
§ How many customers do we have in present and future?
§ They are satisfied customers and are looking for improvements
§ What is their decision-making process?
§ What are the different segments in the market?
§ Who are the most valuable customers for our brand?
Use detailed interviews and questionnaires to collect the relevant data. We can create charts,
diagrams variety for reports using the Business Analytical Data. By this way, you can reach to
the most appropriate customers and sever them for a longer time.

• The Competitors
Customer has always a choice to buy from your company or your competitors. you should
always create a unique value proposition than your competitors’ UPS, for example, Lululemon,
Nike and Under Armour.

Ask the questions when conducting a competitors’ analysis.

§ Do the customers buy for us or from competitors as well.

§ Who are those competitors?
§ What value proposition the offer we don’t?
§ What are the competitor goals and accomplishments?
§ What are the strengths and weaknesses in terms of competitive advantages?
You can collect competitor analysis data by conducting research, gather competitive
information then analyze competitive information and determine what is your own competitive
position. You can use their website, newsletters and annual reports and utilize your sales force
to access competitive information.

• The Company
You can stand out of crowd and reach your target customer if you have a completive advantage.
Your company can achieve it by cost leadership strategies and product differentiation strategies.

§ How is the market where the company competes? Do products are commodities or can
they be differentiated?
§ Estimate the full product cost. This cost gives you a lower bound for pricing.
§ Estimate the value of the product to the potential buyers. This value gives you an upper
bound for pricing.
§ Investigate your competitors’ pricing strategies. How do their products and prices compare
to your company?
§ Set prices and take into account all these inputs.
The 3 C’s of marketing strategy is focused on certain grounds i.e. if you are unable to capture
the audience, someone else will capture it. According to 3 Cs model, strategists should focus
on customers, competitors and company or corporation for a competitive edge.

2. PEST analysis

Closely linked to the SWOT approach (Strengths, Weaknesses, Opportunities and Threats) this
is a simple way of developing a map of the factors and forces in the environment which affect
the strategic challenges and opportunities facing an organization. The idea is to consider these
elements under four headings:

• Political – changes in legislation, regulation, popular opinion, etc. which might have an
effect on the rate and direction of innovation

• Economic – shifts in the economic landscape – for example the rapid growth of emerging
markets in the Far East, Latin America and Africa represent opportunities whereas the
current slowdown in Europe poses challenges.
 • Social – trends and patterns in the underlying social structure and behaviour. For example
the ageing population, the rise of social networking and the growing concern for the
environment would all be relevant social trends

• Technological – emergence of new technologies, changes in the rate and direction of

progress along existing trajectories, competence enhancing and destroying technologies,
etc.

PEST analysis is used as part of a wider review of strategy and the main aim is to stimulate
discussion and exploration. The results can be simply listed or arranged into a matrix or
sometimes represented as a rich picture.

3. SWOT ANALYSIS

The organization can form the strategy based on the different factors as following:

§ Strength-Opportunity (S-O) – strategies target the opportunities that fit well with the
innovative product strength.
§ Weakness-Opportunities (W-O) – strategies targets overcoming the weakness to build
opportunities for the new product or service.
§ Strength-Threats (S-T) – strategies aim to identify the methods to use the product’s strengths
to reduce the threats and market risk.
§ Weakness-Threads (W-T) – strategies which builds a plan that prevent the product’s
weakness from being influenced by external threats.
Using the SWOT Analysis tool

The SWOT analysis tool can be used on two different approaches. The first approach is an
icebreaker tool used during strategic planning meetings. The second approach is as a tool for
building strategy or exploring innovation.
The SWOT analysis depends on asking questions and finding answers related to each factor;
strengths, weakness, opportunity and threats.

Strengths
§ What are the advantages of the new product or service?
§ What are the product advantages over similar competitors in market?
§ What strength points do people see in the product or service?
§ What are the product’s unique selling factors?
 Weakness
§ What weakness could be improved in the design?
§ What issues should be avoided?
§ What are the factors that reduce your sales?
§ Does the production process have limited resources?
Opportunities
§ What are the opportunities for the new product?
§ What are the trends to take advantage of?
§ How can we turn strengths into opportunities?
§ Are there any changes in the market or government which can lead to opportunities?
Threats
§ Who are the existing or potential competitors?
§ What are the factors that can put business into risk?
§ What issues can threaten the product on the market?
§ Will there be any shifts in consumer behavior, government or market that can affect the product
success?
SWOT Analysis Example
As mentioned earlier the SWOT analysis is initially used to evaluate and build organizational
structure. But it can be applied in evaluating the success of new innovative products. In order
to understand how to use the SWOT analysis tool, below is an example that shows the SWOT
analysis for a new product development.

A company is specialized in designing mobile applications and would like to evaluate the idea
of creating a new mobile application called Y App. The application is designed to create a
social network for over-weight people to help them to succeed in their diet and build a
challenging environment between them to help achieve their goals.

In order to evaluate the project idea, the company used a SWOT analysis template as in the
following. You can download the SWOT Analysis template at the end of this article:

Strengths:
§ Knowledge and experience: Our team has the skills and experience to build a professional
application at responsible cost and high quality.
§ Creativity and innovation: We have a talented design team that can create an eye-catching user
interface (UI)
§ Reputation: Along with our experience in the market, we have built a good reputation in the
mobile app development business
Weakness:
§ Experience: although we have experience with the mobile app business, we did not build a
similar project before
§ Brand: The new application needs to compete with powerful brands in the same niche of the
market
§ Budget: Since this is a new application, the budget allocations are very limited
Opportunities:
§ The project idea is unique and innovative which can lead the market
§ There is an increasing number of people who seek this type of application
§ The government is encouraging people to do more activities, which can be an opportunity to
increase sales
Threats:
§ Many competitors are presenting their application at a very low price due to their long standing
in the market
§ Many people think that all diet mobile application are the same, which may be challenge the
application to stand out in the crowd of competition

Based on the above SWOT analysis, the team has a clearer observation of the strengths,
weakness, opportunities and threats that can face the new product development (NPD). The
company may try to overcome the weakness and threats in order to turn the project into a
successful product.

4. Gap Analysis

It can be understood as a strategic tool used for analyzing the gap between the target and
anticipated results, by assessing the extent of the task and the ways, in which gap might be
bridged. It involves making a comparison of the present performance level of the entity or
business unit with that of standard established previously.
 • Gap Analysis

Gap Analysis is a process of diagnosing the gap between optimized distribution and integration
of resources and the current level of allocation. In this, the firm’s strengths, weakness,
opportunities, and threats are analyzed, and possible moves are examined. Alternative
strategies are selected on the basis of:

§ Width of the gap

§ Importance

§ Chances of reduction

If the gap is narrow, stability strategy is the best alternative. However, when the gap is wide,
and the reason is environment opportunities, expansion strategy is appropriate, and if it is due
to the past and proposed bad performance, retrenchment strategies are the perfect option.

• Types ofGap

The term ‘strategy gap’ implies the variance between actual performance and the desired one,
as mentioned in the company’s mission, objectives, and strategy for reaching them. It is a threat
to the firm’s future performance, growth, and survival, which is likely to influence the
efficiency and effectiveness of the company. There are four types of Gap:
1. Performance Gap: The difference between expected performance and the actual performance.
2. Product/Market Gap: The gap between budgeted sales and actual sales is termed as
product/market gap.
3. Profit Gap: The variance between a targeted and actual profit of the company.
4. Manpower Gap: When there is a lag between required number and quality of workforce and
actual strength in the organization, it is known as manpower gap.

For different types of gaps, various types of strategies are opted by the firm to get over it.

• AlternativeCoursesofAction

In case, gaps are discovered the company’s management has three alternatives:
 § Redefine the objectives: If there is any difference between objectives and forecast, first and
foremost the company’s top executives need to check whether the objectives are realistic
and achievable or not. If the objectives are intentionally set at a high level, the company
should redefine them.

§ Do nothing: This is the least employed action, but it can be considered.

§ Change the strategy: Lastly, to bridge the gap between the company’s objectives and
forecast, the entity can go for changing strategy, if the other two alternatives are considered
and rejected.

Before making any change in the strategy, one must consider that the gap exists between the
present and proposed state of affairs. It is too wide to be noticed, and the organization is
encouraged to reduce it. The company’s management is of the opinion that something can be
done to reduce it.

• Stages inGap Analysis

1. Ascertain the present strategy: On what assumptions the existing strategy is based?
2. Predict the future environment: Is there any discrepancy in the assumption?
3. Determine the importance of gap between current and future environment: Are changes
in objectives or strategy required?
Whether it is anticipated sales, profit, capacity or overall performance, they are
always based on the past, and present figures and some amount of guess are also
involved in it. So, the occurrence of the gap is quite natural, but if the gap is large,
then it is a point to ponder because it might have an adverse affect on the
company’s future.