Republic of the Philippines

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES

OFFICE OF THE VICE PRESIDENT FOR BRANCHES AND CAMPUSES
STO TOMAS BRANCH

INSTRUCTIONAL MATERIAL IN ENTR 20033

(Innovation Management)

CONCEPCION R. SUMADSAD, DPA

(First Semester 2020-2021)

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 INNOVATION
MANAGEMENT

Course Title : INNOVATION MANAGEMENT

Course Code : ENTR 20033
Course Credit : 3 UNITS
Pre-Requisite :
Course Description : The aim of the course is to provide understandings of how innovation takes
place and what the important explanatory factors, as well as the economic
and social consequences, are. The focus of the course is on practices and
processes that entrepreneurs and managers use to manage innovation
effectively in new and existing organizations and in networks. The course
design is grounded in the assumption that an integrated approach to
strategy (why?) and implementation (how?) of innovation is necessary. The
module provides exercises on applying innovation related theories to
specific context and phases of innovation.

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 Lesson 1: Innovation and its Significance
Innovation and entrepreneurship are essential ingredients in building a successful
commercial venture. Entrepreneurship without innovation of some sort is not only ineffective but
could also result to its death in this era where business entities are highly competitive in terms of
offering innovation. With technology present, the commercial market is widely open for
innovation opportunities that creates impact not only for the entrepreneur and the business
entity, but also to the society.
Entrepreneurs are not entrepreneurs without the sense of innovation. It is because
innovation is a facilitator of entrepreneurship and is a way to take charge of social and economic
prosperity. It stimulates general business sector growth of a nation and has a power to change
the way of living for the better. However, it must be also understood that innovation does not
happen overnight and requires time and endeavor to generate difference. There are many factors
and elements to consider to make the pursuit for innovation be successful (Rejendran, 2017).
LESSON OBJECTIVES:
By the end of the lesson, the students must be able to:

• Define the nature and meaning of Innovation;

• Describe the significance of innovation and its relevance to entrepreneurship;
• Analyze the types of innovation and determine which type is suitable on certain
situations; and
• Recognize the significance of innovation to the evolution of the current market
and society.
LESSON MATERIAL:
Innovation

Innovation is not just represented by introducing or implementing new ideas or methods.

The definition of innovation can be defined as a process that involves multiple activities to
uncover new ways to do things. T should not be confused with creation since this can be defined
as act of making, inventing, or producing something. However, new innovations can be realized
with creativity. People need to think outside the box in order to create incremental
enhancements.
At this moment, we are positioned in a fast-paced environment where technology is
advancing and globalization is increasing. This means that distances only get shorter, and as a
result, competition is increasing, customer expectations are more demanding, and disruptions in
the economy is more likely to occur. For a business or an organization to realize competitive
advantages, it should be able to adapt and innovate to the changing trends and new

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generations. Innovation s apply for management and organizations on all levels, sizes and in
operating in all industries.
Innovation create bigger opportunities and are critical for the survival, economic growth,
and success of a company. Innovating helps developing original concepts and is a driver of
optimizing operations. Companies that innovate are able to set the organization in a different
paradigm in order to identify new opportunities and best methods to solve current problems.
In order to realize innovation, leaders should be open-minded and collaborative. Feeling
comfortable with uncertainty and manage changes in behavioral components to innovate.
Innovative leaders are curious and are optimistic since they dare to take risks. No one knows
where innovation will bring the organization or individual. ( Janse, 2020)
Innovation in Business is a new or improved product or business process (or combinations
thereof) that differs significantly from the firm’s previous products or business processes and that
has been introduced on the market or brought into use by the firm.
Nonetheless, innovation isn’t just about business. It’s a dynamic process that needs
implementation, i.e. that something is put into active use or made available, but it can take place
in all sectors of an economy. In fact, it can happen, according to the UN System of National
Accounts (SNA), in four broad sectors of an economy: business, the general government,
households, and NGOs serving households (Youmatter, 2020).
Different Types of Innovation

According to Janse (2020) , there are four main types of innovation:

1. Organizational Innovation
Organizational Innovation refers to the development of a new
organizational strategy that will somehow change a company’s business practices,
as well as the way its workplace is organized and its relationship with external
stakeholders.
Examples:

• Companies adopting a four-day week working schedule

• Companies which started to use the power of digital technology and
allowing workers to skip office and work from home.

2. Process Innovation
Process Innovation is about implementing a new or improved production
and delivery approach, including changes in operational methods, the techniques
used and the equipment or software.

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Examples:

•First firms taking risk on SaaS (Software as a service) technology, and using,
for instance, cloud contact centers changed the way customers support
processes used to be organized.
• Hotels that decide to make decisions based on big data using/ data bases.
3. Product Innovation
Product innovation is the introduction of a new or improved good or
service. These inventions or changes may have to do with improving technical
specifications, the materials or the software used or even advancing on user
experience. However, product innovations don’t need to improve all functions or
performance specifications. An improvement or addition of a new function can
also be emerged with a loss of other functions or the downgrade of some
specifications. Moreover, a product innovation must add available to potential
users but doesn’t necessarily need to generate sales. At the same time routine
changes or updates aren’t considered as product innovations as they are only
correcting errors or making some seasonal changes.
Examples:

• Lego has been changing the materials of its famous bricks to

biodegradable or oil-based plastics.
• Introduction of electronic vehicles

4. Marketing innovation
Marketing innovation means developing a new marketing strategy that
produces changes in, for instance, the way a product is designed or packed, or
even other decisions regarding price and promotion.

Eco-Innovation and the Sustainability Approach: Fifth Type of Innovation

Eco-innovation is an innovation resulting in significant progress towards the 2030 goals

for sustainable development established by the United Nations. In practice, it means reducing the
impacts of our production modes on the environment, improving nature’s resilience to
environmental stresses, or achieving a larger efficient and responsible use of natural resources.
In this way, we can say that eco-innovation may create value in two different areas. First,
from sustainable development perspective, as it promotes sustainability throughout a product’s
entire life cycle. It helps address challenges such as climate change, resource scarcity, and
biodiversity. Second, it can also boost a company’s performance and competitiveness. By
embracing new and greener processes, technologies and services, eco-innovation can help

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organizations access new markets, increase productivity and profitability across the value chain,
strengthen their reputation or attract new investors.

Examples:
• A while ago, Procter and Gambler realized householders could save on their electricity bill
by switching to cold-water washing and started developing cold-water detergents
(product innovation).
• Nestle’s new paper-based straw as an alternative plastic straws (marketing innovations).
• The first companies concerned with the sustainability of their suppliers and partners if
they don’t prove they are also they are also making efforts to become more sustainable
(organizational innovation).
INNOVATION MANAGEMENT
Innovation Management refers to the active organizing, monitoring, and carrying out of
activities, processes, and policy which leads to creating substantial new value for the company
and its customers. This is done by creatively changing one or more dimensions of the company
system. Using the combined meanings of the individual terms “innovation” and “management”,
it can be defined as the systematic promotion of renewal and innovation in an organization
through planning, organizing, management and monitoring.
In practice this can be the development of new products and services to gain new or
existing market share. Drastically updating existing products and services in order to distinguish
these from what the competition offers is also innovation. At a smaller internal scale, innovation
means the improving the internal processes to strengthen the company or lower costs, and the
development of new business models in order to create and exploit revenue streams.
Innovation Management and its Organizational Innovation Aspects

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 It can be quite challenging to understand what innovation management means for
organizations in reality. In order to clarify this, the diagram divides innovation management into
four aspects that generally apply to innovation in the private sector.
1. Capacities
Capacity in relation to innovation is a term that’s used in order to describe
the capacities and means that an organization needs to create and manage
innovations. Innovation is highly dependent on people, so capacities mainly refer
to the human side of innovations. It primarily refers to the skills of both teams and
individuals, unique insights, knowledge, and practical skills of the people working
at the organization. However, it also includes areas such as information capital and
tacit knowledge, as well as financial capital. All these aspects are needed to create
innovations.

2. Structure
The difference between structure and capabilities is that structure
enables the effective use of the capabilities. In practice, this generally relates to
the organizational structure, internal and external processes, and the
infrastructure within the organization. Innovation management can only be
implemented effectively if the organization is set up correctly, for instance
regarding the flow of capital and information. It is also important that decision
making authority is assigned to the right players. This is crucial to not fall behind
compared to the competition due to decisions taking too long because of a slow
hierarchy.
3. Organizational Culture
Another important part of innovation management within an organization
is the organizational culture. Structures make the effective use of capacities
possible; the company culture makes it possible to recruit the right capacities in
terms of people.
Within the right open and pro-innovation culture, chances are better that
the organization will be able to attract and retain talented employees. A pro-
innovation culture encourages specific beneficial behavior and discourages
unwanted behavior. Some aspects of an open and pro-innovation culture are:
• Emphasizing the necessity of constantly coming up with new ways to become
better, faster, or more effective.
• Appreciating speed, learning , and experimentation
• Seeing failure as a normal part of business operations to create something
new. There shouldn’t be any fear of making mistakes.
• Encourage freedom and responsibility

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 4. Strategy
Innovation management and strategy are closely related because
innovation is simply one of the ways in which strategic objectives can be achieved.
Naturally, there are also examples of innovations to be a goal and based on the
strategy. In practice, organizations should allow for sufficient freedom to innovate,
but also keep in mind practical limitations such as strategic focus and available
resources.
Importance of Innovation

According to McKinsey, 84% of executives say that their future success is dependent on
innovation. Although innovation may sound like a buzzword for some, there are many reasons
why companies put a lot of emphasis on it. Without innovation, there isn’t anything new, and
without anything new, and without anything new, there will be no progress. If an organization
isn’t making any progress, it cannot stay relevant in the competitive market.

Because organizations are often working with other individual organizations, it can
sometimes be challenging to understand the impacts of innovation on our society at large. There
is however, a lot more to innovation than just firms looking to achieve competitive advantage.
In addition to the fact that innovation allows organizations to stay relevant in the
competitive market, it also plays an important role in economic growth. The ability to resolve
critical problems depends on new innovations and especially developing countries need it more
than ever.
Innovation really is the core reason for modern existence. Although innovation can have
some undesirable consequences, change is inevitable and in most cases, innovation creates
positive change.

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Macro and Micro Perspective of Innovation (Kylliainen,2019),

1. Macro Perspective: The Role of Innovation in our Society

Over the last decades, innovation has become a significant way to combat critical social
risks and threats. Our society revolves around continuous economic growth, which mainly
depends on population growth. The population is shrinking and ageing in the developed counties
and is likely to do so in other parts of the world as well.
Innovation is important to the advancement of society as it solves these kinds of social
problems and enhances society’s capacity to act.
It’s responsible for resolving collective problems in a sustainable and efficient way, usually
with new technology. These new technologies, products and services simultaneously meet a
social need and lead to improved capabilities and better use of assets and resources. In order to
be able to solve these kinds of societal problems, private, public and non-print sectors are
involved.
The Fundamental Outcomes of Innovation
Because innovation has an impact on so many different parts of our society. In
general, the result, the result of innovation should always be improvement. From the
society’s perspective, the fundamental outcomes of innovation are economic growth,
increased well-being and communication, educational accessibility and environmental
sustainability.
Micro perspective: The Importance of Innovation for an Organization
In general, it’s difficult to identify industries where innovation wouldn’t be important.
Although certain industries depend on innovation more than others, innovation and the ability to
improve considers everyone. Even highly regulated industries, such as taxis and banks aren’t

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 immune to change. Take Uber as example for change done on the traditional taxi industry and
online banking on financial services.
Organizations also gains competitive advantage among those that didn’t pursue
innovation. Successful, innovative businesses are able to keep their operations, services and
products relevant to their customers’ needs and changing market conditions. Innovation
increases your chances to react to changes and discover new opportunities. It can also help foster
competitive advantage as it allows you to build better products and services for your customers.
It also increases productivity and efficiency as it makes work more meaningful as less time
needs to be spent on low impact tasks. The more time you’re able to spend on tasks that have a
direct impact on your business, such as improving processes, solving problems or having
conversations with your customers, the more likely you’re able to actually reduce cost, increases
the ability to acquire, create and make the best use of competencies, skills and knowledge.
Innovation practices can help build a culture of continuous learning, growth and personal
development. This type of innovative environment can again motivate people to constantly
improve the way they and their team work.

RESOURCES:

• Youmatter, (2020), Innovation: Definition, Types of Innovation and Business Example. Retrieved from:
https://youmatter.world/en/defiitions-innovation-definition-types-
examples/?fbclid=IwAR0uGR7vPCU_CKjKcsU7uMK9UDc4X3GblBrlh_NISVtvah0g1pNSSapqkeQ
• Janse, B. (2020), Innovation. Retrieved from:
https://www.toolshero.com/innovation/?fbclid=IwAR3ve5PClbNuDhxVTBWtu28GNLazA6WPI2OZP1iX_eA
8zPlPibMLxx6plc
• Janse, B. (2020), Innovation Management. Retrieved from:
https://www.toolshero.com/innovation/innovation-
management/?fbclid=IwAR0Wbwtv0LiuO5MAwasfsNNMGOOw2whs3rvsgQ2-LLaqWYMo6DzDy0yEFGn8
• Kylliainen, J. (2019), The Importance of Innovation – What does it Mean for Businesses and our Society?
Retrived from: www.viima.com/blog/importance-of-innovation

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