INNOVATION . . . an introduction

What can you learn from this? What innovation is Why it’s important The types of innovation The degrees of innovation

What can you learn from this?

What innovation is

Why it’s important

The types of innovation

The degrees of innovation

What is innovation? Hundreds of similar definitions can be found in the literature. Here is the one I like to use: “ Innovation is the profitable implementation of ideas.”

An innovation can increase profits on the value side (customers value an innovation enough to pay more for it) . . .

. . . or the cost-cutting side (the company produces a product offering in a more efficient way).

Either way, value is created for the firm and the consumer. $

An invention is different from an innovation at any particular time in that it doesn’t have commercial value but . . .

. . . it may have in future.

Think of invention as the laying of an egg, innovation as the laying and hatching.

There is no shortage of ideas and inventions in the world. The challenge is to introduce these successfully to a market.

Only then can the idea/invention be called an innovation.

In other words, innovation requires interplay between a product offering (technology) and a market.

A market can be inside or outside the firm’s physical walls.

Why is innovation important?

Innovation reduces waste and environmental damage.

Innovation creates growth, increases productivity, and economic wealth (avoids stagnation).

Innovation provides better goods and services at a cheaper price – higher standard of living.

More interesting work for employees.

Old strategies get replicated and, consequently, margins get squeezed.

Survival! Source: United Kingdom Dept. Trade and Industry

What are the types of innovation?

Numerous types . . .

. . . but all these labels just describe where something new, better or different occurs.

BROADLY:

Product Process Service Business model Value Market

. . . and many more, depending on level of detail. Basically, innovation can occur anywhere in the firm’s business by anyone .

Note! There is another type that needs to be considered separately. This is “disruptive innovation,” a term coined by Clayton Christensen. This type of innovation refers to a firm’s strategy relative to other firms.

The degrees of innovation.

Once again, many labels . . .

. . . however, they all describe the degree of change required by the innovating firm and/or the market.

Incremental (sometimes called “continuous” or “evolutionary” or “small”)

Semi-radical

Radical (sometimes called “discontinuous” or “revolutionary” or “big”)

Incremental and radical innovations need to be managed differently .

Here’s a quote: "He who innovates will have for his enemies all those who are well off under the existing order of things, and only lukewarm supporters in those who might be better off under the new." Niccolo Machiaveli, The Prince