Lean: From Theory to Practice — One City’s (and Library’s) Lean Story… Abridged
Module 2_Session 1.pptx
1. Module 2:
Product and service innovation
By-
Dr. Anushree Singh
Associate Professor
SOM
2. What's innovation?
• Innovation refers to the process of “Turning an idea into a
solution that adds value from a customer’s perspective”.
• Innovation is the process of executing an idea that addresses a
specific challenge and achieves value for both the company and
the customer.
3. Definition of Innovation
• Innovation refers to a change that creates a new dimension of
performance. The process of making improvements by introducing
something new. – Peter Drucker (Hesselbein, 2002)
• An Innovation is a new or improved product or process (or a
combination thereof) that differs significantly from the unit’s previous
products or processes and that has been made available to potential
users (product) or brought into use by the unit (process). – The
Oslo Manual (OECD, 2019)
4. Objectives of Innovation
• Improve Overall Quality
• Identify new markets
• Product range extension
• Reducing labor cost
• Reducing environmental damages
• Replacement of product and services
• To gain economic benefits from new technology.
• To reduce new product development time period.
• To manage large, complex, and multiple projects
6. Fields of Innovation
1.Product Innovations
• Product innovation is the development and launch of a new product or service
that directly affects the market it sells in.
• It can also develop improved versions of existing products in a market,
enhancing the functionality or desire for an item by taking consumer feedback
to make improvements or discovering additional features and technology to
add.
• Most often product innovation is achieving an improvement on existing
products, though creating a true invention also happens.
7. Fields of Innovation
1.Product Innovations - Example
• The automobile industry and its companies release new vehicle lineups every
year, often with fresh features, designs or technology.
• Historically, automobiles have gone from roll-up windows to power ones,
stationary seat placement to manual seat maneuvering to electronic push-
button movement and now have even more advanced elements, like self-driving
automation.
• Elements like seat belts, anti-lock breaks and airbags are also examples of
innovation that reduces risk and improves safety.
8. Fields of Innovation
2.Technology Innovations
• Technology innovation is defined as the creation and application of
new or improved technologies, tools, systems, and processes that
bring about significant advancements or breakthroughs in various
fields.
• It involves harnessing knowledge, expertise, and resources to develop
innovative solutions that solve problems, improve efficiency, drive
progress, and deliver value.
9. Fields of Innovation
2.Technology Innovations –Example
Artificial Intelligence
• This is one of the technological innovation examples that has made a
potential impact on the business. Artificial intelligence could be
defined as the invention of machines with programming like that of a
human. It helps a business grow by presenting customer service by
telephone and a chatbot, product recommendations, and advertising.
• It is already creating an impact on the business through services like
automation of work, processing natural language, analytics.
10. Fields of Innovation
3.Service Innovations
• Service innovation refers to any positive changes in the services
sector that alter how services are provided or introduce new services.
• The main aim of innovative services is to simplify existing customer
processes to enhance ease and speed.
• As a service manager or supervisor, you can integrate service
innovation into a business by improving or launching a service
concept in a new market.
• This may also involve delivering an existing product or service in a
more convenient, efficient and affordable way to customers or
integrating value-added services into an existing service.
11. Fields of Innovation
3.Service Innovations -Example
An example is a ride-sharing service that offers affordable
transportation, adding a delivery service option for customers to send
packages to different locations.
12. Fields of Innovation
4.Process Innovations
• A process innovation is the implementation of a new or significantly
improved production or delivery method. This includes significant
changes in techniques, equipment and/or software.
• A company may consider using process innovation to improve its
product or service production and delivery to make them more
efficient and cost-effective.
• This innovation may relate to product manufacturing or include
improving secondary or supporting business processes.
13. Fields of Innovation
4.Process Innovations-Example
An example of process innovation in action is a coffee roaster selling
bulk packages of roasted coffee beans to various cafés. The roaster can
integrate product and sales management software that automatically
reorders a client's usual volume of coffee every month. This innovation
doesn't directly impact the coffee's quality but affects how clients receive
it by ensuring they never run out of coffee.
14. Fields of Innovation
5.Business Model Innovations
• Business model is the way an organization creates, delivers and
captures value.
• Innovation in business models basically refers to adjusting the
business model in accordance with emerging trends.
• Generally, innovation in business models focuses on introducing
fundamental changes in the way a company delivers value for its
customers.
• Businesses could work on developing new distribution channels or
new revenue streams as part of their plans for innovation in their
business model.
15. Fields of Innovation
5.Business Model Innovations -Example
An example of this is an online makeup retailer experiencing poor sales
as it faces increased competition from other online beauty retailers. The
retailer may revisit its business model and switch to offering monthly
subscription boxes of curated and themed makeup products. This
business model allows the business to better plan its product demand
and helps it secure a more stable income.
16. Fields of Innovation
6.Marketing Innovations
• Marketing innovation is the incorporation of new marketing methods
and techniques that differ from the previous ones and involve
significant changes in product promotion, design, packaging, and
placement. It helps improve a product or service and reach a wider
audience.
• It may help a business better connect and engage with new customers
by finding new uses for an existing product or highlighting qualities
customers might not be aware of.
17. Fields of Innovation
6.Marketing Innovations -Examples
• An example of this is a menswear boutique that specialises in
designing and creating bespoke tuxedos for male grooms. The
boutique may expand its market base by advertising its services to
women or non-binary individuals who may prefer to wear a suit to
their wedding.
18. Fields of Innovation
7.Architectural Innovations
• This innovation refers to how a business combines various system
components to create or add value.
• It can also involve revisiting these combinations to determine areas
that may benefit from improvement.
• This may include improving one of the core business systems,
including existing networking, accounting, manufacturing or inventory
systems.
• It does this without changing the fundamental components of the
system itself or altering or changing these components.
19. Fields of Innovation
7.Architectural Innovations - Example
• A common example of this is businesses that develop certain
technologies for industrial use and rework how these components
interact to create smaller versions of the product for a retail market.
20. Fields of Innovation
8.Social Innovations
• Social innovation involves adopting or developing new practices or
tools a business can use to meet its responsibilities.
• Non-profit and commercial companies often rely on social innovation
and may use it to create improvements in a wide range of societal
areas.
• Communicating these innovations to customers can help them view
the business positively and help the company become more
sustainable.
21. Fields of Innovation
8.Social Innovations - Examples
• An example is a business that manufactures certain products,
switching to using less energy-intensive machinery to reduce its
reliance on fossil fuels and communicating this to customers in print
adverts.
22. Types of Innovation
Essentially, there are three types of innovation:
• Radical Innovation
• Incremental Innovation
• Disruptive Innovation
They may vary depending on the niche, market, brand essence, services, and products
offered.
24. Radical innovation
• As the name suggests, a radical innovation really changes the
circumstances of a brand, whether in terms of market or of business
dynamics.
• It can occur due to a complete change in a company's positioning, work
method, processes, services, and products offered, or how it relates to
customers.
• The best illustration of revolutionary advancement was the innovation of the
plane. This revolutionary new innovation opened up another type of
movement and created an industry and an entirely different market.
• An example of radical innovation would be Apple's iPhone. When it was
released, smartphones already existed, but Apple included features that
changed the market and made it more popular.
25. Incremental innovation
• Another type of innovation is incremental innovation. It adds new features to
a product, brand, or production methods without promoting a very drastic
change.
• It's usually an evolution of an innovation already implemented by the
brand that complements and offers improvements, be it to employees,
customers, or features of a business.
• An example of incremental innovation is Gmail, which was created with the
purpose of sending emails quickly – but over time, different features were
added to improve the customer experience and make it more useful and
competitive.
26. Disruptive innovation
• Technological and behavioral changes have favored the emergence of
disruptive innovation in recent decades.
• This type of innovation follows the market more than a specific brand,
product, or service. It can be leveraged by something a company has offered
and, as a result, made their name, but, in general, it's a scalable change
that reaches many people at the same time.
• Examples of disruptive innovation include Netflix, as the market used to rely
on companies like Blockbuster for movies and TV series. Netflix started
offering DVD-by-mail rental services but decided to innovate. It started
offering video streaming services through a monthly subscription and, in
doing so, drove Blockbuster out of the market. In addition to being
innovative, this also gave Netflix a predictable monthly revenue.