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In innovation, we amalgamate the inventions to come out with something new and attractive product that can commercialize. A simple example of innovation is solar fan cap. Where the cap, solar cell and the fan are inventions, and when all put together is an Innovation.
Innovation doesn't come from braking free the past, it comes from harnessing the past in powerful new ways.( Joe Murtagh, the Dream Speaker business journal). When we put our heads up and look around all that we see is an Innovation.
Studies show that management innovation is introduced in order to enable the organization to achieve their goal (Van de Ven, 2003). And organizational innovation is more process centric, which refers to new ways of organizing work in areas.(Tushman & Nadler,1996) . Innovation in all these areas can perk up the competitiveness of an industry. (Dr. Chich-Jen Shieh, international journal of organizational innovation, pg 395).
Innovation plays a very important role in any form of organization. Several organizations adopt different types of innovation theories and methodology strategy's. Innovation is an iterative process and constant ittiration is important but also bringing new ideas into the market leads to success. We cannot toss ideas in the market, their could be huge failure and embracement and reputational change to your company, we have to do it in a controlled way and manage that properly. So that's then having the right process around the early stages having many ideas, about holding ideas,. Its not only about having ideas, but also understanding the vary nub of your problem putting ourselves in the consumers wants in your particular area. ( An interview with David Kester, Chief Executive, Design Council , Harvard business publications, Creatinb a culture of innovation.)
An organization can undergo various innovations as lined below.( Ezra Bar,2005)
Process innovation can be simply defined as the change in the process of carrying out a particular job. Doing what is already done, but doing it in a better way. As per Schumpeter (1934) one of the primary causes of Process innovation is to increase the sustainability of the innovated product and its life span in the market. Process innovation is cheaper, quicker, easy way to run a business.
Example: A great example for Process innovation in fashion and textile industry was the Computer Aided Design (CAD) Software. CAD software has changed the way fashion and textile industry functions of doing things. Designs were designed in the digital software made it faster, more accurate, and cost effective.
This type of innovation is to create a new item as that of a solar fan cap. This are basically new "things" that can be sold to the customers, which results in increase of revenue and the profits of the business. The reason behind product innovation is to solve an unmet customer needs, increasing the profits. The main objective of product innovation is get your customers buy more from the organization. (Applied management, types of innovation)
Example: There are number of examples of product innovation that can range from kitchen products, ipods, almost all electronic gadgets. Most of the companies have a separate Innovation and technological department setup, who's job is to analyze and think about what are the various innovations that can be brought in , to gain the customer attention.
Service innovation can be put in simple words as selling new services to the customers. It could be like add-on for a product, so that they can attract more customers. Selling services could be a tough as they are intangible. Service innovation is complementary in nature to product innovation as it can patch up the voids left by product innovation.
Example: One of the best examples for service innovation can be seen "The Gentlemen's League", a business in New York City. The business is to take a standard product (bag) and through the service enhancing the value of the product. A simple product is sold for around 2000$ to 3000$. For customer, it's a valuable service.
Figure 1.a Figure 1.b
( Source : thegentlemensleague.com )
This is an example of service innovation where we are taking and standard product and enhancing the value of the product.
Business model innovation:
This is the innovation that talks about changing the way a business functions or an industry operate. Often it's a result of an entrepreneur business and changing the way the business works. Existing business which goes through this kind of innovation has to go through a total business reconstruction.
Example: A great example of business model innovation is the company Threadless, which is an American based T-Shirt company, which is online and anyone can buy from around the world. And what Threadleass has done, is changed the way the T-shirt industry works, by not having their own design. Instead, they outsource their design. People from all around the world, can submit their design to Threadless. After the design is submitted, the Threadless community, which is the consumers and people who are interested, vote and comment on the design. And based on that score, Threadless decides which design to put on production. Every designer who's design gets selected receives 2000$ in cash and 500$ Threadless gift certificate, so, good for the designers and talking about Threadless , this has brought down their costs and also allowed them access to far more designs , and good for the customers because that translate it into cheaper prices which comes to about 18$.
Hence this has changed the way an industry traditionally operated.
Considering, the frequency of occurrence of the above kinds of innovation in organizations with respect to the degree of change, we can clearly understand them looking at the following table.
Types of innovations
Frequency of occurrence
Degree of change
Business model innovation
This can be plotted in a graph as follows.
(Source: applied management , types of innovation)
How can an organization select an innovation?
Shelley Zaliz (Founder & CEO, OTX) express innovation is, taking chances, taking risk, and not being afraid of asking new questions. It's about believing that change can happen. And if don't ask ourselves new questions and challenge ourselves, life will never change.
There are two main ways in which innovation can be done
Incremental innovation and
Incremental innovation enhances more improvements that add more value to the products or services and as a result generate more benefits to the customers. This innovation goes slowly up, so, this type of innovation is based on existing knowledge and technology. More over incremental innovation faces low uncertainty. So it can be defined as technical modification in an existing product, service or business and sometimes known as evolutionary innovation.
An example of incremental innovation could be an evolution of a car, improving it step by step consistently. So, incremental innovation is like going upstairs.
Radical innovation is like a long leap across a huge landscape. Radical innovation is like a new product vs. old system resulting from a technological breakthrough. Old applications with the technology having far reach impact. Radical innovations are often incremental at times, but with the technology development, they are radical in their application and ultimate impact on society.
One of the top-drawer examples of radical innovation is Violin-Playing Robot built by Toyota.
Pertaining to an organization there are two choices to innovate, even though it is hard to be on only radical or only incremental innovation, as its very dependent on the institutional situation and view point.
Figure 3.a Figure 3.b
Source: Google vice presedent Marissa Mayer,lecture at stanford university on think differently!!
An innovative scheme directs conclusions on how resources are to be used to meet a business's objectives for innovation and thereby deliver value and build competitive advantage. (Australian Institute for Commercialization, 2010)
Edison and his modern counterpart, created one break through after another because their organization is build around technology brokery, which is a strategy for exploiting the networking nature of the innovation process. Innovation brokery involves combining existing objects, ideas, people in ways that spark technical revolutions, innovation strategies rely not on braking from the past, but on exploiting it by harnessing the knowledge, efficiency and everything that resides in the elements of the existing technologies. (An interview with David Kester, Chief Executive, Design Council, Harvard business publications, Creating a culture of innovation.)
Process of Continual observation by the business owners helps in the out come of new ideas.
The majority of organizations adopt a similar process approach when innovating business, product and market sustaining strategies. These activities can be bunched into four key phases of strategy formulation:
Scope: A magnifier of images of objectives, scope, approach, design and roles.
Assess: Understanding the business capabilities of the organization and competitors, place in the assess chin and strategic selection.
Innovate: Discover and work on the minuet issues that could lead to great innovations and build up the chances to defend and boom up their revenue inflow and improve their perspective in the market.
Mobilize: Develop line of sight to the organization elements that shape the strategy and engage the business in its pursuit.
"â€¦For each of these key strategy process phases, different dogmas can emergeâ€¦"( Innovation strategy: Finding a Dogma-free View , By Victor Cascella and Edoardo Monopoli, www.realinnovation.com, viewed on 10Mar2010).
Studies show that various organizations like DuPont, Apple and Singapore Airlines tend to have an impregnable research orientation and always tend to be the first mover in market and technological lead the organization. They tend to gain all the information from extensive sources and don't hesitate to take risks. In simple words we can address this kind of strategy as proactive. The innovation process can be radical or incremental.
Some organizations such as Microsoft, Dell and British Airways have an in-house R & D. Their innovation strategy is to defending the existing technologies and market, with the readiness to respond quickly. Often, incremental innovation is used in this kind of organizations. Besides having wider sense of knowledge, they tend to have medium to low risk vulnerability. This kind of strategy is classified as Active.
Another kind of innovation strategy is termed as Reactive. Organizations that adopt this kind of innovation strategies are more focused on processes and follow the laid-back approach. These businesses follow only incremental innovation and hence have low risk hazards. They depend upon the proven innovation. A good example of Reactive innovation strategy can be seen in Ryanair airlines which has successfully replicated the no frills service model of Southwest Airlines.
Passive innovation strategy is something where in innovation doesn't take place until there is a call for change in their merchandise or services. Organizations which follow this innovation strategy are the companies that furnish goods and commodities to automotive companies. They wait for the automotive companies to demand for a specific change before they implement it.
(Dodgson M., Gann D., Salter A., The Management of Technological Innovation: Strategy and Practice. Oxford University Press 2008)
Innovation strategy can provide a starting point for the development of your innovation strategy, but No one of these strategies performed consistently better than any other.
The fact that innovation is an ongoing process in organizations to secernated themselves from their competitors, with the clock ticking, there is going to be an innovation in innovation strategies and new styles of innovations are going to emerge.
"The more you look at the world, the more you recognize that people value the same things but in different way" is one of the captions that is used by HSBC- the world local bank, on their advertisements. This shows how magnificently an organization distinguishes themselves over other competitors, and initiates innovation on their clientele. This is a dewy-eyed example to illustrate that innovation has no boundaries and can be executed at any leave in an organization.