Unit 1

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 customer.

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.
BASIS FOR INVENTION INNOVATION
COMPARISON
 Meaning Invention refers to the Innovation implies the
occurrence of an idea for a implementation of idea for
product or process that has product or process for the
never been made before. very first time.
What is it? Creation of a new product. Adding value to something
already existing.
Concept An original idea and its Practical implementation of
working in theory. new idea.
Skills required Scientific skills Set of marketing, technical
and strategic skills.
Occurs when New idea strikes a scientist. A need is felt for a product
or improvement in existing
product.
Concerned with Single product or process. Combination of various
products and process.
Activities Limited to R & D Spread across the
department. organization.

TECHNOLOGY-INNOVATION RELATIONSHIP
Most people often interchange the word technology with innovation.
However, each word has its own definition. According to Posadas (2013),
technology is the “system of infrastructure, know-how, and process by which
humans make tools and other useful stuff and accomplish other tasks.”
Whereas,
innovation was defined by Joseph Schumpeter (1947) as “doing of new things
or the doing of things that are already being done in a new way” in his essay.
Schumpeter’s definition matches the Oxford dictionary etymological definition
of the word innovate (Innovate, n.d.) which is the Latin word innovare,
composed of in- ‘into’ + novare ‘make new’.

Using Schumpeter’s definition as a guide, Sundbo (1995) emphasized the

innovation formula,
Innovation = Invention + Commercialization + Social
Adaptation


The said formula was also backed by a similar formula, Innovation

= Invention and Creativity + Realization + Implementation

, developed by
Mentz (1999) in his thesis. Despite the difference of definitions of technology
from innovation, both go hand in hand in technological innovation.
According
to Mentz (1999), technology innovation is said to have the following purposes:
● “To conceive and produce a new solution (from a scientific and
(Invention)
● “To develop this solution into a viable and producible entity”
(Realization)
● “To successfully introduce and supply this entity to the real or
(Implementation)

Mentz’s identification of technological innovation purposes clearly uses

the know-hows or the technological knowledge in doing innovation.

Furthermore, Mentz (1999) described technological innovation as a process of

focusing and embodying technology successfully in products, services, and
processes.

To sum up all aforementioned formulas, we can take a look at Betz’s

proposed formula for technological innovation
vation = Invention + Innovation


Hence, as shown in the diagram in Figure 1,

technology is a sub-system inside the innovation sub-system. The innovation
sub-system is inside the technological innovation. The diagram was adapted
from Betz’s innovation
Figure 1. Technological Innovation System (adapted from Betz 2011)
Figure 1 suggests that technology is the heart of innovation. Since
technology has always been at the core of innovation, one must leverage
technology, which is regarded as the sub-system in the innovation system, to
propel a firm’s innovation.
● technology as efficiency and cost-reduction driver,
● technology as cost-mitigator,

INNOVATION MANAGEMENT

Innovation management Definition and concept ‘Innovation … is generally

understood as the introduction of a new thing or method ... Innovation is the
embodiment, combination or synthesis of knowledge in original, relevant,
valued new products, processes or services.’ For innovation to occur, there
needs to be a creative idea and the ability to convert that idea into action to
make a difference. The result is a specific and tangible change in the products,
services or business processes provided by an organisation: ‘All innovation
begins with creative ideas . . . we define innovation as the successful
implementation of creative ideas within an organisation. In this view, creativity
by individuals and teams is a starting point for innovation; the first is a
necessary but not sufficient condition for the second.’
Innovation management is the process of managing innovations, that is, ideas,
in organisations through the stages of the innovation cycle.
The innovation cycle describes the activities involved in taking an innovative
product or service to the marketplace.
In essence, there are two aspects to this:
1. Developing the innovative product or service.
2. Building the business to market the product or service.
The chart below provides an example of a typical innovation cycle with
activities at each stage:
The first stage in the innovation cycle is ideas generation. Ideas will often arise
from observation of a current or future problem. They could be inspired by the
organisation’s objectives or by a new market situation that suddenly becomes an
opportunity.
Once the opportunity has been recognised, it needs to be evaluated. An
important test for an idea is that it matches the goals of the organisation and
available resources – people, finance and facilities. If there is alignment with the
objectives of the organisation, the idea moves to a new stage where it can be
investigated and further developed. The development phase may involve further
research into the opportunity or the patenting of the concept. Prototypes may
well be designed, developed and tested at this stage. The decision to start selling
the innovation is a critical stage. This is when significant resources are often
required to support the launch. Sometimes an organisation might wait at the end
of the development phase for suitable market conditions. The final stage of the
innovation cycle is commercialisation, where the innovation is marketed and
sold to the customer. The innovation now moves out of the organisation’s
control and into the hands of the users. This is the hardest stage of the
innovation cycle for organisations to ‘manage’. It is crucial that the organisation
monitors the innovation’s performance so that any shortcomings are corrected.
Innovative organisations will typically be working on new innovations that will
eventually replace older ones. This is important as product life cycles show
reduced growth for older products and services. Growth may even begin to
decline eventually, therefore impacting an organisation’s ability to expand. New
incremental innovations or changes to the product allow growth to continue.
Companies typically generate far more technical innovations than they can
possibly hope to bring to market effectively. There is a need for structured
management and processes to handle innovation from the ideas stage to
commercialisation.