basis of innovation

8/12/2019 Basis of Innovation

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INNOVATION

Perhaps no ingredient is more important tobusiness success than innovation. How can

your organization deploy knowledge andinformation management to enable it tothrive throughout the enterprise?


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INTRODUCTIONThe term innovation may refer to both radical andincremental changes in thinking, in things, in processesor in services (Mckeown, 2008).Invention that gets out in to the world is innovation. In

many fields, something new must be substantiallydifferent to be innovative, not an insignificant change. In economics the change must increase value, customervalue, or producer value. The goal of innovation ispositive change, to make someone or something better.Innovation leading to increased productivity is thefundamental source of increasing wealth in an economy.


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INTRODUCTION (CONTD) In the organizational context, innovation may belinked to performance and growth throughimprovements in efficiency, productivity, quality,

competitive positioning, market share, etc. All organizations can innovate, including for examplehospitals, universities, and local governments.While innovation typically adds value, innovation mayalso have a negative or destructive effect as new

developments clear away or change oldorganizational forms and practices.Organizations that do not innovate effectively may bedestroyed by those that do. Hence innovationtypically involves risk.


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Innovation Vs Invention

"An important distinction is normally made between inventionand innovation. Invention is the first occurrence of an idea for anew product or process, while innovation is the first attempt tocarry it out into practice" (Fagerberg, 2004: 4)

Invention the creation of new forms, compositions of matter,or processes is often confused with innovation. Animprovement on an existing form, composition or processesmight be an invention, an innovation, both or neither if it is notsubstantial enough. It can be difficult to differentiate changefrom innovation. According to business literature, an idea, achange or an improvement is only an innovation when it is putto use and effectively causes a social or commercialreorganization.


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Innovation Vs Invention

Innovation occurs when someone uses an inventionor an idea to change how the world works, howpeople organize themselves, or how they conduct

their lives.In this view innovation occurs whether or not the actof innovating succeeds in generating value for itschampions. Innovation is distinct from improvementin that it permeates society and can causereorganization.It is distinct from problem solving and may causeproblems. Thus, in this view, innovation occurswhether it has positive or negative results.


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Invention is a creation (a new device orprocess) resulting from study and

experimentationIt is the creation of something in the mindInitiation: the act of starting something forthe first time; introducing something new;"she looked forward to her initiation as anadult"; "the foundation of a new scientificsociety"


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Innovation Vs Creativity

Innovation typically involves creativity, but is notidentical to it: innovation involves acting on thecreative ideas to make some specific and tangibledifference in the domain in which the innovationoccurs. For example, Amabile et al (1996) propose: "All innovation begins with creative ideas . . . Wedefine innovation as the successful implementation ofcreative ideas within an organization. In this view,creativity by individuals and teams is a starting pointfor innovation; the first is necessary but not sufficientcondition for the second".


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Innovation Vs CreativityFor innovation to occur, something more than thegeneration of a creative idea or insight is required:the insight must be put into action to make a genuine

difference, resulting for example in new or alteredbusiness processes within the organization, orchanges in the products and services provided.Thus creativity is typically seen as the basis forinnovation, and innovation as the successfulimplementation of creative ideas within anorganization. From this point of view, creativity may be displayedby individuals, but innovation occurs in theorganizational context only.


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Innovation Vs Creativity

" Often, in common parlance, the words creativity andinnovation are used interchangeably. They shouldn't be,because while creativity implies coming up with ideas, it's the"bringing ideas to life" . . . that makes innovation the distinctundertaking it is."In "The Innovation Equation." Dr Jacqueline Byrd, the brainbehind the Creatrix Inventory which can be used to look atinnovation and what is behind it.

The Innovation Equation she developed is:Innovation = Creativity * Risk TakingUsing this inventory it is possible to plot on axis whereindividuals fit on their Risk Taking and Creativity.


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Economic conceptions of

innovationJoseph Schumpeter defined economic innovation in The Theoryof Economic Development, 1934, Harvard University Press,Boston:

The introduction of a new good that is one with whichconsumers are not yet familiar or of a new quality of a good.The introduction of a new method of production, which need byno means be founded upon a discovery scientifically new, andcan also exist in a new way of handling a commoditycommercially.The opening of a new market, that is a market into which theparticular branch of manufacture of the country in question hasnot previously entered, whether or not this market has existedbefore.


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Economic conceptions of

innovation (CONTD) The conquest of a new source of supply ofraw materials or half-manufactured goods,

again irrespective of whether this sourcealready exists or whether it has first to becreated.The carrying out of the new organization ofany industry, like the creation of a monopolyposition or the breaking up of a monopolyposition.


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Sources of innovationThere are several sources of innovation:The traditionally recognized source is manufacturer innovation . This iswhere an agent (person or business) innovates in order to sell the

innovation. Another source of innovation, only now becoming widely recognized, isend-user innovation . This is where an agent (person or company)develops an innovation for their own (personal or in-house) usebecause existing products do not meet their needs.Innovation by businesses is achieved in many ways, with muchattention now given to formal research and development for

"breakthrough innovations."But innovations may be developed by less formal on-the-jobmodifications of practice, through exchange and combination ofprofessional experience and by many other routes.


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Sources of innovationBut more radical and revolutionary innovations tend to emergefrom R&D, while more incremental innovations may emergefrom practice but there are many exceptions to each of thesetrends.Regarding user innovation, rarely may they becomeentrepreneurs, selling their product, or more often they maychoose to trade their innovation in exchange for otherinnovations.Whether innovation is mainly supply-pushed (based on new

technological possibilities) or demand-led (based on socialneeds and market requirements) has been a hotly debatedtopic. Similarly, what exactly drives innovation in organizationsand economies remains an open question.


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Sources of innovationMost empirical works show that innovation does not

just happen within the industrial supply-side, or as aresult of the articulation of user demand, but through

a complex set of processes that links many differentplayers together not only developers and users, buta wide variety of intermediary organisations such asconsultancies, standards bodies etc. Work on social networks suggests that much of themost successful innovation occurs at the boundariesof organisations and industries where the problemsand needs of users, and the potential of technologiescan be linked together in a creative process thatchallenges both.


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a ue o exper men a on ninnovation

When an innovative idea requires a new business model, or radicallyredesigns the delivery of value to focus on the customer, a real worldexperimentation approach increases the chances of market success.New business models and customer experiences cant be testedthrough traditional market research methods. Pilot programs for newinnovations set the path in stone too early thus increasing the costs offailure.Experimentation Matters argues that every companys ability toinnovate depends on a series of experiments [successful or not], thathelp create new products and services or improve old ones.That period between the earliest point in the design cycle and the final

release should be filled with experimentation, failure, analysis, and yetanother round of experimentation. Lather, rinse, repeat, Unfortunately, uncertainty often causes the most able innovators tobypass the experimental stage.


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In his book, Thomke of Havard Business School outlinessix principles companies can follow to unlock theirinnovative potential:

Anticipate and Exploit Early Information Through Front-Loaded Innovation ProcessesExperiment Frequently but Do Not Overload YourOrganization.Integrate New and Traditional Technologies to

Unlock Performance.Organize for Rapid Experimentation.Fail Early and Often but Avoid Mistakes.Manage Projects as Experiments.


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DIFFUSION OF INNOVATION


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DIFFUSION OF INNOVATION(CONTD)

Once innovation occurs, innovations may be spread from theinnovator to other individuals and groups.Rogers proposed that the life cycle of innovations can bedescribed using the s -curve or diffusion curve. The s -curvemaps growth of revenue or productivity against time.In the early stage of a particular innovation, growth is relativelyslow as the new product establishes itself. At some pointcustomers begin to demand and the product growth increasesmore rapidly.New incremental innovations or changes to the product allow

growth to continue. Towards the end of its life cycle, growthslows and may even begin to decline. In the later stages, noamount of new investment in that product will yield a normalrate of return.The s-curve is derived from h


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DIFFUSION OF INNOVATION(CONTD)

There is an assumption that new products are likely to have"product Life". i.e. a start-up phase, a rapid increase in revenueand eventual decline. In fact the great majority of innovationsnever get off the bottom of the curve, and never produce

normal returns.Innovative companies will typically be working on newinnovations that will eventually replace older ones. Successive s-curves will come along to replace older ones and continue todrive growth upwards.In the figure above the first curve shows a current technology.

The second shows an emerging technology that current yieldslower growth but will eventually overtake current technologyand lead to even greater levels of growth. The length of life willdepend on many factors.


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Goals of innovationIn general, business organisations spend a significant amount of theirturnover on innovation i.e. making changes to their establishedproducts, processes and services.The amount of investment can vary from as low as a half a percent ofturnover for organisations with a low rate of change to anything overtwenty percent of turnover for organisations with a high rate ofchange.The average investment across all types of organizations is fourpercent. For an organisation with a turnover of say one billion currencyunits, this represents an investment of forty million units. This budget will typically be spread across various functions including

marketing, product design, information systems, manufacturingsystems and quality assurance.Davila et al (2006) note,"Companies cannot grow through costreduction and reengineering alone . . . Innovation is the key element inproviding aggressive top-line growth, and for increasing bottom-lineresults"


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Goals of innovation (CONTD) The investment may vary by industry and by marketpositioning.One survey across a large number of manufacturingand services organisations found, ranked indecreasing order of popularity, that systematicprograms of organizational innovation are mostfrequently driven by:Improved qualityCreation of new marketsExtension of the product rangeReduced labour costs


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Goals of innovation (CONTD) Improved production processesReduced materialsReduced environmental damageReplacement of products/servicesReduced energy consumptionConformance to regulations

These goals vary between improvements to products,processes and services and dispel a popular myththat innovation deals mainly with new productdevelopment. Most of the goals could apply to anyorganisation be it a manufacturing facility, marketingfirm, hospital or local government.


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Failure of innovationFailure is an inevitable part of the innovation process, and mostsuccessful organisations factor in an appropriate level of risk. Theimpact of failure goes beyond the simple loss of investment. Failure can also lead to loss of morale among employees, an increasein cynicism and even higher resistance to change in the future.Innovations that fail are often potentially good ideas but have beenrejected or shelved due to budgetary constraints, lack of skills or poorfit with current goals.Failures should be identified and screened out as early in the processas possible. Early screening avoids unsuitable ideas devouring scarceresources that are needed to progress more beneficial ones.

Organizations can learn how to avoid failure when it is openlydiscussed and debated. The lessons learned from failure often residelonger in the organisational consciousness than lessons learned fromsuccess. While learning is important, high failure rates throughout theinnovation process are wasteful and a threat to the organisation'sfuture.


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Failure of innovation(CONTD)

The causes of failure have been widely researchedand can vary considerably.Some causes will be external to the organisation and

outside its influence of control. Others will be internaland ultimately within the control of the organisation.Internal causes of failure can be divided into causesassociated with the cultural infrastructure and causesassociated with the innovation process itself.

Failure in the cultural infrastructure varies betweenorganisations but the following are common acrossall organisations at some stage in their life cycle(O'Sullivan, 2002):


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Poor LeadershipPoor OrganisationPoor CommunicationPoor EmpowermentPoor Knowledge Management

Common causes of failure within the innovation process inmost organisations can be distilled into five types:Poor goal definition

Poor alignment of actions to goalsPoor participation in teamsPoor monitoring of resultsPoor communication and access to information


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Effective goal definition requires that organisations stateexplicitly what their goals are in terms understandable toeveryone involved in the innovation process.This often involves stating goals in a number of ways. Effective

alignment of actions to goals should link explicit actions such asideas and projects to specific goals. It also implies effectivemanagement of action portfolios.Participation in teams refers to the behaviour of individuals inand of teams, and each individual should have an explicitlyallocated responsibility regarding their role in goals and actions

and the payment and rewards systems that link them to goalattainment.


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Finally, effective monitoring of results requires themonitoring of all goals, actions and teams involved inthe innovation process.

Innovation can fail if seen as an organisationalprocess whose success stems from a mechanisticapproach i.e. 'pull lever obtain result'.Organisational gatekeepers frame the organisationalenvironment that "Enables" innovation; howeverinnovation is "Enacted" recognised, developed,applied and adopted through individuals.

basis of innovation

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