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The Importance Of Innovation As Concepts Business Essay

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Published: Mon, 5 Dec 2016

Innovation is an important concept to understand as a manager and for an organisation as a whole. Used in the correct manner, innovation can give an organisation the competitive advantage they need to be a success in their market. Firstly, it is useful to look at innovation in general. Naylor (1999, p 212) says ‘innovations are ideas that are developed into new products or processes. They result in changes that customers recognise as new.’ Dess et al (2007, p 96) describes innovation as ‘using new innovation to transform organisational processes or create commercially viable products and services.’ Put in even simpler terms, innovation is ‘the process of making improvements by introducing something new’. Therefore, the two words that sum innovation up are ‘process’ and ‘new’. Innovation is a process and there theories and models that I will evaluate in this essay. Innovation also has to be something new that an organisation can use as an advantage.

Modern economies are often referred to as innovation economies. Humans engaged in business world are continuously in the pursuit of wealth through innovation. It is an open truth that a company’s success does not come from its chandeliers, gardens, ambience, acres of lands rather it comes from its intellectual and systems capabilities. Innovation and information are the crucial assets of a business and there is a need to learn to handle these assets in new ways. Traditional monitoring systems which were designed to deal with tangible inputs & outputs are no longer adequate to survive in the market. Organizations are required to share information & innovation internally & learn to adapt more quickly to external circumstances in order to retain their competitive advantage. In response to this situation, the first phase of KM was focused on information technology & systems. Technical tools were used to collect the existing innovation in order to make the organization run more smoothly. In the second phase of KM, it focuses more on the creation of new innovation- Creativity & Innovation in order to keep the organization one step ahead of its competitors. (Mullins, 2005, p114)

In other words we can say that simply recycling old innovation will not serve the purpose of survival but creation & application of new innovation is required to achieve the lofty peak of competition and success. However it is important to keep in mind that the created new innovation should be useful for the organization.


To define the term innovation it is first required to differentiate between data, information, innovation and wisdom. Although innovation is often seen as a richer form of information but this differentiation is not helpful. What we can say here, as Neil Flemming (1996) has also given;

A collection of data is not information.

A collection of information is not innovation.

A collection of innovation is not wisdom.

A collection of wisdom is not truth.

The idea is that information, innovation & wisdom are more than simply collection. Rather, the whole represents more than the sum of its parts & has a synergy of its own.

The collection of data where is no relation between the factors of data is not information. The pieces of data may represent information, yet whether or not it is information depends on the understanding of the one perceiving the data. Information is quite simply an understanding of the relationship between pieces of data, or between pieces of data and other information. Beyond relation there is pattern, where pattern is more than simply a relation of relations. Pattern embodies both a consistency and completeness of relations which, to an extent, creates its own context. Pattern also serves as an Archetype with both an implied repeatability and predictability. (Denning, 2005, p 166)

When a pattern relation exists amidst the data and information, the pattern has the potential to represent innovation. It only becomes innovation, however, when one is able to realize and understand the patterns and their implications. A pattern which represents innovation also provides, when the pattern is understood, a high level of reliability or predictability as to how the pattern will evolve over time, for patterns are seldom static. Patterns which represent innovation have completeness to them that information simply does not contain. Wisdom arises when one understands the foundational principles responsible for the patterns representing innovation being what they are.

So, in summary the following associations can reasonably be made:

Information relates to description, definition, or perspective (what, who, when, where).

Innovation comprises strategy, practice, method, or approach (how).

Wisdom embodies principle, insight, moral, or archetype (why).

An example: A simple non-business example may be that of a shirt. An analysis of its molecular contents i.e. cloth, thread & buttons is data. If we look over these contents individually we can not even think that it may be a shirt. A list of the tools and material required for the preparation of a shirt is Information- more useful an experienced tailor could probably make the shirt- here the pieces of data are related. The method through which a shirt can be stitched is Innovation (written innovation) explicit innovation- tells how to prepare a shirt. On the other hand an inexperienced tailor even knowing the method of stitching may not make a good shirt. A person however with the innovation, experience and skill- innovation in their heads- that is not easily written down- tacit innovation- will almost certainly stitch an excellent shirt from the available material. Finally Wisdom is about knowing which type of shirt (fashionable or trendy) to stitch and how to use it. It is about wise judgement. (Dess, Lumpkind and Eisner, 2007, p 124)

An important point to note here – to make innovation productive – we need information. Knowing how to prepare a shirt is not sufficient – we need information – the list of tools and material needed. And to make a wise decision we too need information – the needs of the users of that chair. So innovation on its own is never good enough – we need information and innovation – and of course ‘doing the wrong thing well’ is also not productive, we need wisdom also. (Naylor, 1999, p 261)

Know-why is also important. Let us suppose that we are missing one content for the preparation of the shirt- knowing why a particular content was used in the method might help an innovationable tailor substitute an alternative. In fact know-why is often more important than know-how as it allows you to be creative – to fall back on principles – to reinvent your know-how.


There is no agreed definition of Innovation Management. The term refers to a process of generating value to the organization through the creation, dissemination, renewal and proper application of innovation. It can be defined as a creative way of utilizing information and people throughout the organization. A simple definition will be that innovation management is about make use of “what we know” in the best possible manner so as to gain the competitive advantage in the business world. (Mullins, 2005, p 241)

Innovation management is the mantra that facilitates the smooth flow and distribution of innovation of the individuals, groups or teams across the organization in certain ways that directly affects the performance and potential levels.

Precisely, Innovation Management aims at getting the right information within the right context to the right person at the right time for the right business purpose. It comprises of a range of practices used in an organization to identify, create, represent, distribute and enable adaptation of insights and experiences. Such practices contribute in the things like improved performance levels, competitive advantages, innovations and sharing of lessons learned and continuous improvement of organization.

According to Rudy Ruggles (2003, p 181), a leading KM thinker, the following items are integral components of KM:

Generating new innovation

Accessing valuable innovation from outside sources

Using accessible innovation in decision making

Embedding innovation in processes, products, and/or services

Representing innovation in documents, databases, and software

Facilitating innovation growth through culture and incentives

Transferring existing innovation into other parts of the organization

Measuring the value of innovation assets and/or impact of innovation management

In this way innovation can be seen as a crucial resource for an organization which needs to be managed by the creation of new innovation, collection of valuable innovation from internal as well as external sources, proper implementation of this innovation in processes, products or services, maintaining the innovation within the organization at various places i.e. databases, documents or in people’s heads, establishing an creative environment in the organization and sharing the innovation across the organization.


For many organizations and countries alike, innovation and innovation management are no longer luxury items, but rather necessities and a means of sustaining economic development and competitiveness. To serve customer well & maintain the competitive position in business, companies are forced to focus on the creation, updating, availability, quality & use of innovation by all employees & teams at work and in the market place.

“Innovation management is a framework within which the organization views all its processes as innovation processing, where all business processes involve creation, dissemination, renewal and application of innovation toward organizational sustenance and survival” (Dibb, Simkin, Pride, 2005, p 154)

Innovation can be defined as the implementation of new created ideas for generating business value. Innovation mixed with innovation management can be termed as innovation.

Many a times, people use the term ‘innovation’ for ‘innovation creation’. But there is a difference between the two. While innovation creation is an important aspect of innovation processes, so is the ability to search for and identify relevant external innovation, applying existing innovation to new contexts, understand & absorb unfamiliar external innovation & to blend & integrate different bodies of innovation together. Thus innovation processes are much more than innovation creation process.

Innovation is the creation, evolution, exchange and application of new idea into marketable goods and services, leading to the success of an enterprise, the vitality of a nation’s economy and the advancement of society.

In simple words we can explain the term innovation as generation of novel ideas and their implementation to create new products and services to gain competitive advantage and achieve new heights in the market.


When we think about innovation one question arises in the mind: Does the innovation come naturally? Or it may be taught.

The answer is that everyone can be creative and innovative the only requirement is to encourage the innovation among people. In the words of Peter Drucker (2006, p112) “Innovation is real work and it can & should be managed like any other corporate function but that does not mean it is the same as other business activities. Indeed, innovation is the work of knowing rather than doing.”

Buzz today is to encourage and manage innovation through innovation management. One strategy to build up an innovative organization is getting people to accept that the way they work just might not be the best. The most important thing is to help people broaden their perspective. Innovation is like a sky with horizons defined. These horizons can only be broaden through innovation. (Leonard and Straus, 2001, p 212)

Another way to manage innovation is to have creative people in order to produce ideas which are novel and worthwhile; they should continuously update their innovation, find the gaps in their innovation and get that innovation from right sources. Encouraging the people for innovation is not an easy task. What the problem today with many of the organizations is that people with ideas have a sense of irresponsibility. They think that their jobs are finished once the ideas have been suggested and it is the work of someone else to find out the details and then implement the ideas. However implementation of ideas is the finally desired goal. Therefore, it is needed to encourage the employees not to just producing the ideas but also to implement them for generating value from them. (Uecke, 2002, p 1-13)

One strategy that may be used for inspiring innovation is to share the innovation by reorganizing the people. To have an innovative environment, frequent restructuring of the organization can be utilized. When people adapt a new structure they are required to rethink what they are doing on a day to day basis & thus creating something new.

Innovation is all about taking risks. It is required to encourage innovation when an organization is doing well because the last thing which is desired is to gain competitive advantage and for that innovation is required. When we create some new product or services it may be acceptable in the market or not but until we wouldn’t take the risk of the failure, we will not achieve the success. One must not afraid of the possibility of failure & of taking risks. (Reddy and Rathan, 2004, p145)

For achieving the new heights in the business, it is required to encourage not only product innovation but innovation in every field. One of the misconceptions about innovation is that innovation is about creating the next new product, that’s why most of the companies focus on their R&D. But since it is easy for other companies to copy any new product, the return on investment is very less. Hence it is required to encourage innovation in every field such as in customer service, in business models, in networking and so on. One can actually spend less and make more money in innovation if he pays attention to the valleys, those places which competitors have overlooked. (Gurteen, 2005, p 66-74)

A challenge in Managing innovation is the development of an organization, which will foster innovation and change. The development of such an organization itself is an innovative task and all the above ways can help in inspiring innovation in an organization. Innovation, ingenuity, and focus these are the three essentials of innovation.


It can be concluded that in this competitive world where complexity & uncertainty increases every day, the only way to survive is to manage the innovation with the help of creativity & innovation. Innovation can be managed through capturing & making the full use of a firm’s collective expertise. In fact, innovation management is the fuel or raw material for innovation which is the only competitive advantage that a company can use for sustaining in the unpredictable business environment. Today Innovation is the final way to land on the aeroplane of Success & growth which can only be used by the fullest & optimum use of Innovation management. To innovate successfully one must hire, work with & promote people who are unlike to him who make one uncomfortable because only those will challenge him for his decision and . The need is to encourage every type of innovation in an organization, to inspire people for taking risks & to make them know that whatever they are doing is not the best. Thus by building an innovative organization, companies can ensure their future growth and success.


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