Understand Innovation in 5 Minutes

understandInnovationin five minutes © Gordon Graham 2008

What can you learn from this?• What innovation is• Why it’s important• The types of innovation• The degrees of innovation © Gordon Graham 2008

What is innovation?Hundreds of similar definitions can be found in the literature. Here is the one I use, adapted from various sources: “Innovation is the profitable implementation of ideas.” © Gordon Graham 2008

A Broad, American Perspective: "Implementing new ideas that create value.” - Innovation Network, U.S.A."The intersection of invention and insight, leading to the creation of social and economic value." - U.S. National Innovation Initiative © Gordon Graham 2008

What about the Brits?"The development of new ideas and their economic application as new products or processes." - U.K. Dept. Trade and Industry © Gordon Graham 2008

An innovation can increase profitson the value side (customers valuean innovation enough to pay more for it) . . . © Gordon Graham 2008

. . . or the cost side (the company produces a product offering in a more efficient way). © Gordon Graham 2008

Either way, value is created for the firm and the consumer. $ © Gordon Graham 2008

What are the essential ingredients, or elements, of an innovation ecosystem? * * * * ** * * * * © Gordon Graham 2008

There are many. They are rooted in nationalculture and can take years to develop: Trust, Curiosity, Tolerance of Diversity, Faith, Confidence, Lack of Fear, the Will to a)make the world a better place and b) wreck the status quo c) take risks and fail. © Gordon Graham 2008

Some firm-level elements include: a written innovation strategy, a filter, an innovation process, a rewards and recognition system, humility, respect for seemingly insignificanttechnologies/competitors (healthy paranoia) etc. © Gordon Graham 2008

An invention is different from aninnovation at any particular time in that it doesn’t have commercial value but . . . © Gordon Graham 2008

. . . it may have in future. © Gordon Graham 2008

Think of invention as the laying of an egg, innovation as the laying, incubation and hatching. © Gordon Graham 2008

There is no shortage of ideas and inventions in the world. The challenge is to introduce these successfully to a market. © Gordon Graham 2008

Only then can the idea/invention be called an innovation. © Gordon Graham 2008

In other words, innovation requiresinterplay between a product offering(technology) and a market (people). © Gordon Graham 2008

Hard science + Social science. © Gordon Graham 2008

A market can be inside or outside the firm’s physical walls. © Gordon Graham 2008

Why is innovation important? © Gordon Graham 2008

Innovation reduces waste and environmental damage. © Gordon Graham 2008

Innovation creates growth, increases productivity, and economic wealth (avoids stagnation). © Gordon Graham 2008

Innovation provides better goods and services at a cheaper price – higher standard of living. © Gordon Graham 2008

More interesting work for employees. © Gordon Graham 2008

Old strategies get replicated and,consequently, margins get squeezed. © Gordon Graham 2008

Survival!Source: United Kingdom Dept. Trade and Industry © Gordon Graham 2008

What are the types of innovation? © Gordon Graham 2008

Numerous types . . .© Gordon Graham 2008

. . . but all these labels just describe where something new, better or different occurs. © Gordon Graham 2008

. . . and many more, depending onlevel of detail. Basically, innovation can occur anywhere in the firm’s business by anyone. We all have great potential! © Gordon Graham 2008

Note! There is another type that needs to be considered separately. This is “disruptive innovation,” a term first coined by ClaytonChristensen. Disruptive innovation refers to a firm’s strategy relative to other firms. Often,low-cost business models and “good enough” solutions/products for low-end and/or non- consumers © Gordon Graham 2008

. . . however, they all describe the degree of change required by theinnovating firm and/or the market. © Gordon Graham 2008

Here’s a quote: "He who innovates will have for hisenemies all those who are well off under the existing order of things, and onlylukewarm supporters in those who might be better off under the new." Niccolo Machiaveli, The Prince © Gordon Graham 2008

Thanks! I completed an MSc dissertation on Innovation in Taiwanese/Chinesecompanies active in multiple international markets. Please feel free to get in touch if your firm is working in China, Taiwan etc., as I’m interested in these areas.Gordon@ westportwire.com © Gordon Graham 2008

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Understand Innovation in 5 Minutes

by Gordon Graham

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