INNOVATION
NATURE AND PURPOSE
• OF INNOVATION
Learning outcomes
• By the end of this lesson you should be
able to:
Define the term
Innovation. Importance
of Innovation
Discuss the relationship between
innovation and invention
Sources of innovation
Barriers to innovation
Explore the innovation dilemmas
Review Questions and Solutions
What is innovation?
• The term innovation means a new way of
doing something.
• The goal of innovation is positive change, to
make someone or something better.
• In the organizational context, innovation
may be linked to performance and growth
through improvements in efficiency,
productivity, quality, competitive
positioning, market share, etc
• Luecke and Katz (2003), who wrote:
• "Innovation . . . is generally understood as the
successful introduction of a new thing or method .
Innovation
Amabile et al. (1996) propose:
• "All innovation begins with creative ideas . . . We
define innovation as the successful implementation of
creative ideas within an organization. In this view,
creativity by individuals and teams is a starting point for
innovation; the first is necessary but not sufficient
condition for the second
Business innovation is new models of conducting
business for competitive advantage (Jonash and
Sommerlatte 1999 )
Distinguishing
• Innovation from
Invention is the embodiment of something
invention
new. While both invention and
innovation have "uniqueness"
implications, innovation also carries an
undertone of profitability and market
performance expectation
• . According to certain business literature,
an idea, a change or an improvement is
only an innovation when it is put to use
and effectively causes a social or
commercial reorganization
Cont..
In business, innovation can be easily distinguished
from invention.
Invention is the conversion of cash into ideas.
Innovation is the conversion of ideas into cash.
Innovators produce, market and profit from their
innovations.
Inventors may or may not profit from their work
Cont..
• Innovation = Traditional conception
+Technical invention + commercial
exploitation.
• Importance of innovations: why
should firms innovate?
Goals of innovation
• Improved quality
• Creation of new markets
• Extension of the product
range
• Reduced labor costs
• Improved production
processes
• Reduced materials
• Reduced environmental
damage
• Replacement of
products/services
• Reduced energy consumption
• Conformance to regulations
Sources of Innovation
• Incongruities
• The unexpected
• Process needs
• Changes in
demographics
• Changes in perception
• New knowledge
Incongruities
• That is things are not really in harmony or
when things do not work in expectation
or when there is dissonance. In many
firms when incongruities occur people
begin to question the common
knowled
The Unexpected
• The market place is the number one area
to look for opportunities. A good
manager should be constantly studying
the market. Is a particular product or
service in greater or lesser demand
than anticipated? Why? Is there a way we
can exploit this unexpected success?
What has to happen if we want to
convert this success into an opportunity
Process needs
• It is also a source of innovation and occurs
when conditions in the process dictates
that something new has to be created
in order to solve a problem. For instance,
American telephone and telegraph, the
company used manual switchboard for a
long time which caused a lot of traffic such
that companies could not cope and was
thus branded as inefficient. The company
had to innovate an automatic switchboard
other examples include; automatic vehicles
Changes in
demographics
• Study of world's human population
characteristics
e.g. income, age for instance, Japanese
robot industry was a reaction to change
in population since young people stayed
long in schools.
• They had to innovate for labor and had
foretold that manufacturing industries
had to suffer and therefore came-up
with robots to do the work
Changes in perception
• This occurs when consumer perceptions
about certain products/services
changes.
• For instance, innovations in food industries
are just reactions to consumer perception
immediately every food that is seems to
cause degenerative diseases disorder, and
has led to organic foods herbal foods
New knowledge
As the speed of technological revolution
increases there will be an ever
increasing number of opportunities that open
up.
The internet has been the most notable one in
the last couple decades but there have been a
plethora of other industries and opportunities
pop up as a result of this technological
revolution.
New knowledge is about more than just
technology though; it’s about finding better
ways of doing things and improving
processes. Your company should look to this
new knowledge for ways it can improve
incrementally. Intel does this constantly and
Types of innovatioin
• 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.
Types of innovation
• 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.
Types of innovation
Organizational innovation: is the implementation of
a new organizational method in the firms business
practices e.g reducing administrative costs or
transaction costs, improving workplace
satisfaction etc.
Types of innovation
• Incremental innovation Incremental
innovation seeks to improve the
systems that already exist, making
them better, faster cheaper
• Frugal innovation: Frugal Innovation is
about doing more with less.
Entrepreneurs and innovators in emerging
markets have to devise low cost
strategies to either tap or circumvent
institutional complexities and resource
limitations to innovate, develop and
deliver products and services to low
income users with little purchasing power.
Types of innovation
• A closed innovation is based on the
view that innovations are developed
by companies themselves. From the
generation of ideas to development
and marketing, the innovation
process takes place exclusively within
the company
• Open innovation is innovating in
partnership with those outside your
company by sharing the risks and
rewards of the outcome and process.
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:
STEP: 1 IDEA
• [Link]: This is an important source because if you
GENERATION
innovate something that does not meet the needs of
the customer, then the innovation is likely to fall.
• 2. Employees: 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.
• 3. Public: Public produces helpful information but you have to
be ready to sieve through the information to pick what is
helpful.
• 4. Partners and suppliers
• 5. Competitors: 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.
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.
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
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.
• 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
isfully implemented. The feedback that you receive at
this stage can be used to come up with future ideas.
BARRIERS OF INNOVATION
• . Lack of a shared vision, purpose and/or
strategy
• Short-term thinking/focus
• Lack of time, resources or staff
• Lack of “spec time” to develop new ideas and
opportunities
• Innovation not articulated as a company-wide
commitment
• Lack of ownership by senior leaders
• Leadership expects payoff sooner than is realistic
• Lack of a systematic innovation process
• No reward and recognition programs
•BBAeliRef RthaItEinRnoSvatOionFis
IinNheNreOntlVy rAisTkyION
• Internal process focus rather than
external customer focus
• Inadequate understanding of
customers
• Focus on successes of the past rather
than the challenges of the future
• Unwillingness to change in the
absence of a burning platform
• Unwillingness to acknowledge and learn
from past “failures”
•
Innovation Dilemmas
Innovation raises fundamental strategic
dilemmas for strategists.
• Innovation is more complex than just
invention.
• Invention involves the conversion of new
knowledge into a new product, process or
service. Innovation adds the critical extra step
of putting this new product, process or service
into use, in the private sector typically via the
marketplace and in the public sector through
service delivery.
• The strategic dilemmas stem from this more
complex and extended process.
Question
• Explain ten incentives that the
government may provide to innovation