Unit 3: Innovations within Firms:

Meaning and Definition:

What is innovation?

So ​what does innovation really mean?​ And how does it differ from ​invention​ and ​creativity​ in
a business? Let’s start from a definition of innovation, invention and creativity:

Innovation​ is the process of turning a new concept into commercial success or widespread use.

Invention​ is the creation of a new idea or concept.

Creativity​ is the act of turning new and imaginative ideas into reality. ​It is the thinking of
novel and appropriate ideas.

Innovation is a broad concept that can be understood in many ways. So, there are many
definitions offered by different scholars. Schumpeter (1939) considered innovation as “the
commercial use of scientific discovery or invention”. Pastakia (1996) offers a much broader view
of innovation defining it as something that “involves a new and significantly better way of doing
things” that is “associated with improved productivity or savings in costs, effort or time”, or “an
idea, practice or product perceived as being new and better by the innovator or by an external
observer (perception being influenced by the context and world-views of the people involved)”.
However, innovation is not just a single action or an event, but a process. Hence, Myers and
Marquis’ (1969) definition given below is considered as more comprehensive ​(Trott 2008):​

“Innovation is not a single action but a total process of interrelated sub-processes. It is not just
the conception of a new idea, nor the invention of a new device, nor the development of a new
market. The process is all these things acting in an integrated fashion​”.​

Innovation = theoretical conception + technical invention + commercial exploitation

Innovation VS Invention: Differences and Value

Often misinterpreted innovation has come to be thought of as being something new that never
existed before when actually it can involve both invention (something new), or an improvement
to something that already exists. People that invent new products, processes, or ideas are
inventors. An innovator is a broader term that includes both inventors and those that make
improvements to existing things.

To better understand this subtle but important difference please consider the following:

Here are a few examples of inventors and their invention:

 ● Alexander Graham Bell – the telephone
● Thomas Edison – the light bulb
● Samuel Morse – the telegraph

Here is a list of innovators and their improvements

● IBM – took the telephone and made it mobile

● Nick Holonyak Jr. (GE engineer) – took the light bulb and came up with LED lights
● Guglielmo Marconi – took the telegraph and made it wireless.

Different Types of Innovation:

1] Organizational Innovation

Organizational innovation refers to the development of a new organizational strategy that will
somehow change a company’s business practices, as well as the way its workplace is organized
and its relationship with external stakeholders. for example a new venture division or a new
internal communication system or introduction of a new accounting procedure

2] Process Innovation

Process innovation is about implementing a new or improved production or delivery approach,

including changes in operational methods, the techniques used and the equipment or software.
for example the development of a new manufacturing process

3] Product Innovation

Product innovation is the introduction of a new or improved good or service. These inventions or
changes may have to do with improving technical specifications, the materials or the software
used or even advancing on UX (user experience). However, product innovations don’t need to
improve all functions or performance specifications. An improvement to or addition of a new
function can also be merged with a loss of other functions or the downgrade of some other
specifications. ​Moreover, a product innovation must add available to potential users but doesn’t
necessarily need to generate sales. Because if it did, then innovations with low demand or, for
instance, digital products like apps that are free would be excluded. At the same time, routine
changes or updates aren’t considered product innovations as they are only correcting errors or
making some seasonal changes. example the development of a new or improved product like
sanitizers are now available in spray bottle.

4] Marketing Innovation

Marketing innovation means developing a new marketing strategy that produces changes in, for
instance, the way a product is designed or packed, or even other decisions regarding price or
promotion. for example Patanjali spelling that product by using Patanjali stores.
5] Production​ ​Innovation​

It involves constant monitoring and evaluation of the advances in research and technology
development in the areas of ​production​ management systems and. related technologies and
working methods. For example new constructs for production innovation like quality circles,
just in time approach or different new production planning software like MRP II.

6] Service Innovation

The Finnish research agency (FA) is for example a new customer interaction channel, a
distribution system or a technological concept or a combination of them. A service innovation
always includes replicable elements that can be identified and systematically reproduced in other
cases or environments. The replicable element can be the service outcome or the service process
as such or a part of them. A service innovation benefits both the service producer and customers
and it improves its developer’s competitive edge. A service innovation is a service product or
service process that is based on some technology or systematic method. In services however, the
innovation does not necessarily relate to the novelty of the technology itself but the innovation
often lies in the non-technological areas. Service innovations can for instance be new solutions in
the customer interface, new distribution methods, and novel application of technology in the
service process, new forms of operation with the supply chain or new ways to organize and
manage services.for example different online services or trivago for comparing Hotel online.

​MODELS OF INNOVATION

1] ​Serendipity​:

Many studies of historical cases of innovation have highlighted the importance of the unexpected
discovery/​Luck. ​The role of serendipity or luck is offered as an explanation.Everyone's dream
that they will accidentally discover a major new invention and enjoy Fame and popularity for the
same Serendipity concept is based on.

India Liberty, serendipity is rare indeed. because with love, for innovation one should have
some prior knowledge in that area most discoveries are the result of people who have had intense
knowledge with a particular area of science of Technology why creating something new for
example pharmaceutical industries are based on the Serendipity model. According toLouis
Pasteur says, “chance favours the prepared mind”.

3] Linear models of innovation

US economists after the 2nd world war championed the liner models of innovation.

The model focuses that innovation occurs through the ​interaction of the science base,
technological development and needs of the market ​was a significant step forward.Nation of
the interaction of these activities form the basis of models of innovation today.
Figure 1.4 Conceptual framework of innovation

The diagram reveals that the race interlinkages between three key components that is science and
technology, technological development and the needs of the market. there are two basic
variations of this model for product innovation as the innovation process has traditionally been
viewed as a sequence of separable stages or activities do interconnectivity with each other the
first part of model space the technology driven model which often referred as Technology push
model.​The first generation model was developed by NASA in 1960 as a management tool.
NASA referred to the process as the Phase-review-processes or the technology push. The process
was broken down to help in systematizing the work and for controlling contractors and suppliers
who were working on space projects.

Advantages of the model

● First, all the tasks were completed as one process had to be completed before moving on
to the next one.
● Secondly, the model reduced technical uncertainties.

Disadvantages of the model

● The fact that all activities within a given phase had to be completed before progressing
created delays. This is because all other activities were put on hold until the management
review for the particular stage was completed.
● Another disadvantage is that the marketing phase was left out; the model mainly dealt
with the development stage of an idea.
 

Technology driven model assume that scientists make unexpected Discoveries, technologists
apply them to develop product ideas and engineers and designers turn these ideas into prototypes
for testing. It is left to manufacturing device ways of producing the product efficiently. Finally,
marketing and sales will promote the product to the potential consumer and make it
commercialised.marketing spaces and Research and Development isactive function. for example
pharmaceutical industry using this model

On the other hand the second part of the model is called a market driven model which is often
referred as market pull model of innovation. This model was invented in1970. Here this model is
a consumer need driven model. The model emphasis the role of marketing as an initiator of new
ideas resulting from close interaction with customer.these, in turn, Conveyed to to research and
development for design and Engineering and then to manufacturing for production for example
fast moving consumer goods industry are using this model.

Figure 1.5 Linear models of innovation

3] Simultaneous coupling model:

This model was invented in1980. this model focuses on only ​where the initial source of
innovation was born that is where the trigger for the idea on Eid was initiated and this model is
not focusing on how part of innovation so the modern above concentrate on what is driving for
innovation and in this model there is no starting point of the innovation.starting point may be
anyone out of three functions Pair with ​knowledg​e that is science and technology, technological
development or need the market.This model can better understand with the help of following
diagram .

Figure 1.6 The simultaneous coupling model

Advantages of the model

● The stage gate model is very efficient and it offers a standardized way of achieving an
innovation.
● Consequently, the model relies on loops of feedback which make it more interactive and
efficient.
● The processes involved are transparent and the teams involved share a common
understanding. Therefore, there is communication within the team and with the top
management. ​IBM​, General Motors, Northern Telcoma, and 3M all use this model in all
their innovations. The companies say that the model enables them to achieve success in
their innovation processes.

Disadvantages of the model

● On the contrary, the gates are rigorous in the first stages of concept and idea generation.
● Although the model is effective, it might be inappropriate when you anticipate radical
innovations. Thus, in such a case, then a more flexible, learning-based approach is
sufficient.
● The model leaves out post launch refinement, exploitation and optimization.

4] Interactive Model:

This model was invented between 1980-90. The interactive model used both Technology push
and market pull model of linear models of innovation. I​ t emphasizes that Innovations occurs as
the result of the interaction of the Marketplace, the science waste and the organisation
capabilities. model, Heera also no explicit starting point. The use of information flows is used to
explain how innovation links and that they can arise from a wide variety of points. This model is
a comprehensive representation of the innovation process which focuses on innovation at the
logical sequential steps where all the steps are distinct but interrelated and interdependent on
each other. At the centre of this model there are 3 major functions of organisation that is research
and development or engineering and design, manufacturing and marketing and sales. This model
can be better understood with the help of the following diagram.
Figure 1.7 Interactive model of innovation

Table 1.6 The chronological development of models of innovation

 
5]Network model:

● The fifth generation model is also known as the network model or a closed innovation
model. The model was developed in the 1990’s. Closed innovation models explain the
intricacy(complexity) of the innovation process.
● Its main focus is the involvement of the external environment. Besides, the model also
focuses on ​effective communication with the external environment. Since innovation
relies on both external and internal networks, the model emphasizes on the need for
establishing links between the two networks.
● Galanakis developed an innovation model which borrows a lot from the fifth generation
model. His model uses the thinking approach which he refers to as the ​‘creative factory
concept. ’The firm is at the center of the model. Its position signifies its role in
generating and promoting innovations in the nation, industrial sector and the market.
Hence, the model relies on​ ​three​ main innovation processes:
● The first process involves ​creating knowledge​ from industrial or public research.
● Secondly, the product ​development process where the knowledge is transformed into a
product.
● Thirdly, product success in the ​market. The success of the product is dependent upon the
product’s functional competencies. Further, it also depends on the firm’s competency to
produce high quality products at a reasonable price and to place it in the market
adequately.
● Internal factors such as organizational structure and corporate strategy amongst others
affect the process. Additionally, external factors like national infrastructure and
regulations amongst others also affect the process.

6]Open innovation model

● The open innovation model is also known as the sixth generation model. The model is a
network model. It focuses on;
● Internal and external ideas
● External and internal paths to markets
● Open innovation model looks at ​how a combination of the two concepts can lead to
technological advancements.​ Chesbrough came up with the team's open innovation.
Besides, the model presents less risks when innovation. Companies who use this model
enjoy a large pool of ideas to start with. They then narrow down to the most ideal idea.
Innovation as a Management Process:
Innovation is not a singular event, but a series of activities that are linked in some way to the
other.This may be described as the process involves three major features which are also
suggested by Kelly and kranzberg in 1978

1. Are response to either need or an opportunity that is context dependent

2. a creative effort that if successful weather in the introduction of novelty
3. the need for further changes

Due to the complexity of innovation, managers are working hard to manage this
Complex process the framework of innovation as a management process can we
understand with the help of following diagram.

Figure. innovation as a management process

this does not pretend to have any analytical status, it is simply a model which describes
the main factors which need to be considered in successfully managed innovation. it has
to show that the interactions of the function inside the organisation are important, so too
are the interaction of those functions with the external environment. scientists and
engineers within the form will be continually interacting with fellow scientists in
university and other forms about scientific and technological developments. Similarly,
the marketing function will lead to interaction with suppliers, distributors, customers and
competitors to collect the data regarding day to day activities and understand customer
 needs and getting products to customers are achieved. On the other hand business
planners and senior management will likewise communicate with a wide variety of
forms and other external institutions, such as government departments, suppliers and
customers .

within any organisation there are likely to be many different functions. depending
on the nature of the business, some functions will be more influential than others. The
Framework shown in the above diagram identifies only three main functions: marketing,
research and development and business planning. the Framework also reveals that that is
effective communication with the external environment for encouragement and support.

Table 1.7 Explanations for innovative capability

Table 1.8 Studies of innovation management 

Innovation as a management process

Stage #1: Evaluating ideas. In this stage, ideas are evaluated for their contribution to the
planned business model/product. A wide array of ideas may be considered. However, it is
essential to maintain balance in the ideation process so that too many stray ideas do not
overpower the core objective.

Stage #2: Conceptualizing the product. In this stage, concepts are developed based on the
accepted ideas. Other important criteria like investment required, ​break-even time and
returns​ are evaluated.

Stage #3: Demonstrating the plan. Once a concept is formulated, an all-encompassing

plan is developed and demonstrated to the customer/end-user.

Stage #4: Validating value to the customer/end-user. Once the customers or end-users
interact with the demonstrated plan, it becomes possible to ascertain how much value the
product will deliver to the customer. This validation is vital for continuous improvement
of the planned product.
 Stage #5: Developing the product. In this stage, the actual development of the product
takes place. The earmarked investment is utilized on planned lines in order to build the
product, or to commercialize the already developed product.

Managing innovation within firms:

● Innovation is often a ​technological change that outperforms a previous practice. To lead

or sustain with innovations, managers need to concentrate heavily on the innovation
network, which requires a deep understanding of the complexity of innovation.
Collaboration is an important source of innovation. Innovations are increasingly brought
to the market by networks of organizations, selected according to their comparative
advantages, and operating in a coordinated manner.
● When a technology goes through a major transformation phase and yields a successful
innovation, it becomes a great learning experience, not only for the parent industry but
other industries as well. Big innovations are generally the outcome of intra- and
interdisciplinary networking among technological sectors, along with a combination of
implicit and explicit knowledge. Networking is required, but network integration is the
key to success for complex innovation. Social economic zones, technology corridors, ​free
trade agreements​, and ​technology clusters are some of the ways to encourage
organizational networking and cross-functional innovations.
● Innovation management tools
● Antonio Hidalgo and Jose Albor proposed the use of typologies as an innovation
management tool. The study conducted at a European level used 10 typologies for
knowledge-driven Innovation Management Tools. These typologies were found by
looking at 32 characteristics​[ that classify Innovation Management Tools. Hidalgo and
Albors were able to narrow the list down to 8 criteria (knowledge-driven focus, strategic
impact, degree of availability, level of documentation, practical usefulness, age of the
IMT, required resources for implementation, measurability), that are especially relevant
for IMTs in the knowledge-driven economy (​knowledge economy​). The advantage of
using typologies is the easy integration of new methods and the availability of a broader
scope of tools​.
SOURCES OF INNOVATION IN BUSINESS : 
1. The Unexpected

Innovations can take place unexpectedly. They can happen by chance. Someone might just
stumble upon a new idea or product. There is a long list of unexpected innovations in human
history.

2. Incongruities

An incongruity is basically thinking differently. Not only thinking differently from your
competitors, but also thinking differently from society. You must find a creative idea to sell, and
you can only do this by thinking differently to discover a new invention or idea. A good example
of this would be how Steve Jobs and Apple created the Iphone.

3. Process need

Process need is similar to Incongruities in that you must think differently than everyone else. If
there is something missing in society or in a business you must find an innovative way to fix it.
4.Changes in Industry and Market Structures.

This topic is related to the "Unexpected" if you are a business owner you must expect the
unexpected in your industry or market. Other businesses from within or even from without your
market could change your market.

4.Demographic

It is essentially the change in population. These changes in Demographics change the way
innovators run their business.

5. Changes in Perception

Perception is the way people perceive something. In the business world the general public might
perceive an industry a certain way that could be good or bad. Perception changes over time.

6. New knowledge

New knowledge can also be a source of innovation. Whether it is Nano-technology,

biotechnology or even artificial intelligence, new knowledge in any area is a source of
innovation. Science keeps progressing. Every year new areas are discovered and much gets
added to the existing base of human knowledge. This new knowledge paves way for innovations
that can sometimes be life changing.

 
Organizational characteristics that facilitate the innovation process: 

Organizational structures and innovation: 

● Traditional corporate structures are being challenged by the growth of new companies
that uniquely structure their operations to meet rapidly changing customer demands.
Coordination, collaboration, outsourcing and open-source software have been keys that
have helped shape new business structures. While centralized authority was the driving
force of business in the 20th Century, brainstorming and independent business divisions
characterize emerging companies of the new century. Innovative organizational structure
is less formal and more likely to allow creative input from teams and individuals.

1] Multidivisional Structure

● Many big companies like Johnson & Johnson, GE and AT&T are broken down into
separate divisions headed by presidents. Johnson & Johnson allows their divisional
 executives freedom to manage their operations independently. A major benefit to this
structure is that managers can develop a closer connection to their markets by assuming
more responsibilities. Multidivisional structure, also known as M-Form, is useful to
companies who compete on the global market. In some of these organizations, the parent
company simply provides funding to its divisions or independent profit centers while
letting those entities have autonomy for developing their own business strategies.

2] Team Structure

● A business does not need a traditional chain of command in which bosses control all
work activity to be successful if teams work independently to reach common goals.
Software developers, for example, may divide a project into teams of individuals who
each contribute their specialty without necessarily reporting to a manager, although major
corporations typically do have team supervisors. Team diversity that pools hundreds of
innovative minds together can lead to "out of the box" ideas that may have otherwise
been overlooked by executives who cling to unchallenged company traditions. Teams can
provide a unified spirit to a company such as when Starbucks schedules cross-country
team field trips to its restaurants, inspiring staff to learn from the customer experience.

3] Project Structure

● A big company engaged in continuous projects can enhance its culture by bringing
different department leaders together in one physical environment. BMW coordinates its
innovative car design projects by relocating members to its research center, for three-year
periods. Engineers and marketers work together in person, which accelerates
communication and reduces late-stage conflicts. Known as "cross functional
collaboration," this brainstorming technique can speed up project timelines from years to
months. Some companies work on multiple projects at once so that leaders can select the
most promising opportunities for product releases.

4] Matrix Structure

● Project managers who bring together specialists from within the company and beyond to
work on multiple projects operate under a Matrix Structure. The concept can be extended
to include outsourcing specialists, similar to what Procter & Gamble did when they
reorganized their research department, embracing collective ideas from around the world
to generate new products. By interfacing with networks from the scientific community,
the company has created new job positions such as "technology entrepreneurs," who
scout universities and other labs for new scientific discoveries. Magnetic tape
manufacturer 3M, along with many other technology companies, award grants to outside
inventors to help generate innovative products.
Role of individual in innovation process:
Leading Self: Creating

● At the level where you don’t have direct reports — where you are an individual
contributor, maybe serving as a role model or perhaps a leader of project teams — the
responsibilities around innovation fall mainly into the realm of knowing ​how to generate
creative solutions and having a keen interest in participating on a team made up of
diverse talent.
● Core to this is the ability to find sources of inspiration for new approaches, whether that
means looking at other industries, engaging customers and stakeholders, or exploring
patent databases for similar challenges that have been solved by others.
● Basically, at this level, your role in innovation is that you’re responsible for ideation and
creation, generating novel solutions to challenging problems.

Leading Others: Facilitating Innovation

● Team leaders or line supervisors need to possess additional skills. They must know ​how
to lead the group process​, which requires special facilitation skills on top of those
necessary for being an effective team leader or project manager.
● And for innovation to take root and spread through the organization, these leaders or
supervisors need to know ​how to obtain resources from outside their units to support
the work of innovation.
● At this level, your role in innovation is about leading group processes that support
innovation and obtaining resources to support your team’s efforts.

Leading Managers: Advocating/Bridging Innovation

● When you lead people who are leading others, a key value you bring to the challenge of
innovation is supporting and protecting the team from superiors or other parts of the
organization.
● Great leaders create a protective umbrella over their people to ensure that the discomfort,
risk, and potential disruption of the business don’t cause others to try to shut down these
efforts. These managers also have to know ​how to build a case for grassroots
innovation and ​how to bridge groups that are working on similar challenges to
ensure constructive cooperation.
● At this level, your role in innovation is facilitating cooperation between groups working
on similar opportunities.

Leading Functions: Directing/Protecting Innovatio​n

● Leaders of a function or significant silo need to provide clear direction for the scope of
the innovation efforts and also need to manage conflicting demands for resources. They
 must initiate strategic and structural changes to accommodate promising innovations and
establish a strategy that bridges the silos.
● As if that’s not enough, they are critical to modeling behavior and driving communication
that sets the organizational tone that determines broader support of innovation. They’re
also critical in the management of the innovation pipeline and balancing the portfolio
“bets” that help determine the future direction of the organization’s innovation. Consider
how you respond to new ideas and whether you foster innovative mindsets​ on your team.
● At this level, your role in innovation is knowing ​how to develop the innovation strategy
and manage the pipeline of new products and services, while bridging silos in the
organization.

Leading the Organization: Mandating/Fostering Innovation

● Finally, we have the top of the organization. These are the people who have the critical
job of setting a strategy to ensure that the organization has clear direction on where it’s
going.
● More than that, they are the keystone for fostering a culture of innovation, a big part of
which is modeling behaviors to ensure that the walk matches the talk, which sometimes
means showing support for different, new, or disruptive ideas.
● Like other top leadership responsibilities, it’s imperative that they know ​how to
communicate the vision over and over and over again. And at this level, it’s critical you
avoid ​subconsciously sabotaging innovation​. Perhaps the hardest job is finding ways to
hear and see unfiltered concepts, since the further you go up the hierarchy, the less
connected to “what’s really true” you become.

Establishing an innovative environment:

● Successful innovation doesn’t just happen overnight in organizations – it needs to be
nurtured. The healthier the environment, the greater the results, according to Bob
Rosenfeld, innovator-in-residence at the Center for Creative Leadership. He has some
sound advice for organizations that want to be innovation leaders.
● Remember, avoid the temptation to separate your “innovation” efforts from your
everyday work. Instead, recognize that innovation is part of the real world, and strive to
create a fostering, sustainable environment where it can prosper. In the end, innovation
will either thrive or be threatened in any given working environment. Listen to these
three principles​ to figure out what direction innovation is headed in your organization:
● First, ​the elements of destruction are present at creation​. Destructive elements to
innovation aren’t always easy to see but are present from the start. The life of a product
or procedure – no matter how innovative – depends on a number of factors. It is difficult,
if not impossible, to manage the elements of destruction. The best anyone can do is to be
aware of them and, when a seed of destruction is detected, take appropriate action.
 ● The second principle to remember regarding innovation is this: ​soft values drive the
organization. Hard values are results, like the scores and statistics of sports. Soft values
have to do with how the game is played. Soft values such as motive, spirit, service and
patience create environments conducive to innovation. By contrast, contentiousness,
stubbornness, pride, indiscriminate criticism and dominating attitudes will prevent
innovation from flourishing.
● And the third principle to remember: ​trust is the means and love is the unspoken word​.
According to Rosenfeld, obstacles, problems, doubts and objections are frictions that
slow down the innovative process. Trust and love enable that process to glide over
friction.

Role of IT systems in Innovation & its impact on business:

● Information technology drives innovation and innovation is the path to business success.
Innovation in business has the same impact that steam had on the industrial revolution.
● In fact, it’s hard to imagine any business that has not benefited from the digital
revolution. Even something as hands on as agriculture uses computers. Farmers use
computers for production records, financial planning, research on technical issues, and
procurement.
● Nowadays the formula for business success is simple: drive innovation with information
technology. So, the first thing startups in any industry try to figure out is how to make
smart IT recruiting choices. Without a backbone of information technology, a business is
not going to go far.

1. Information technology has given business the tools to solve complex problems.

Improved hardware (more memory, faster processors, sharper visual displays, etc)
combined with smarter applications (Mindmapping software like X Mind, collaborative
software like Kanban boards, organizers like Google calendar, etc) have made it easier to
research data, analyze it, and plan scalability. Many tools available to solve complex
problems.

2. Information technology allows businesses to make better decisions.

Good decisions in business are based on solid market research. This can be done through
engaging teams through video conferences, reviewing public sentiment on social media
and industry forums, and using online surveys to get customer feedback. There are also
tools like Microsoft CRM Dynamics and Google Analytics.

3. Information technology has improved marketing.

 Internet marketing using online advertising methods (SEO, PPC, Facebook Ads) are far
more accurate ways than traditional marketing of finding target audiences, discovering
their needs, and building a marketing campaign to persuade them to buy. It’s difficult to
see how many people read a newspaper ad. It’s easy to figure out how many people
clicked on an online banner.

4. Information technology has improved customer support.

Customers can receive support from multiple channels telephone, emails, social media
platforms, webinars, and so on. Additionally, customer relationship management systems
help businesses understand customer behavior.

5. Information technology has improved resource management.

Cloud computing allows a company’s employees to use any device anywhere in the
world to access their enterprise level software.

Innovation is the Wave of the Future

If the purpose of business is to increase profits, then innovation is the way to make more
profits, faster. The story of Jan Koum gives us a clue how much big businesses value
innovation. He went from food stamps to billionaire because of his invention of
WhatsApp.

● Information technology fosters innovation in business. Innovation results in smarter apps,

improved data storage, faster processing, and wider information distribution. Innovation
makes businesses run more efficiently. And innovation increases value, enhances quality,
and boosts productivity.
● Innovation through information technology has created the following radical changes in
business:
● Online shopping is more efficient than shopping in a store.
● Digital marketing is more efficient than high cost newspaper, television, and radio
advertising.
● Social networking is more efficient than going to clubs.
● VoiP communication is more efficient than legacy telephony.
● Cloud computing is more efficient than a private computer network.
● Businesses that have embraced the innovation paradigm tend to have the following
characteristics:
● They have more accurate business planning
● They have more effective marketing
● They have higher global sales
● They have more systematic management
 ● They use real time monitoring
● They offer instant customer support
● In fact, it’s hard to think of long term business growth without the push of information
technology.

History of business Incubators: 

● A business incubator is a company that helps new and startup companies to develop by
providing services such as management training or office space. The National Business
Incubation Association (NBIA) defines business incubators as a catalyst tool for either
regional or national economic development. NBIA categorizes their members' incubators
by the following five incubator types: academic institutions; non-profit development
corporations; for-profit property development ventures; venture capital firms, and
combination of the above.
● The formal concept of business incubation began in the US in 1959 when Joseph L.
Mancuso opened the Batavia Industrial Center in a Batavia, New York, warehouse.
Incubation expanded in the U.S. in the 1980s and spread to the UK and Europe through
various related forms (e.g. innovation centres, technopoles/science parks).
● The U.S.-based International Business Innovation Association estimates that there are
about 7,000 incubators worldwide. A study funded by the European Commission in 2002
identified around 900 incubation environments in Western Europe. As of October 2006,
there were more than 1,400 incubators in North America, up from only 12 in 1980. Her
Majesty's Treasury identified around 25 incubation environments in the UK in 1997; by
2005, UKBI identified around 270 incubation environments across the country. In 2005
alone, North American incubation programs assisted more than 27,000 companies that
provided employment for more than 100,000 workers and generated annual revenues of
$17 billion.
● Incubation activity has not been limited to developed countries; incubation environments
are now being implemented in developing countries and raising interest for financial
support from organizations such as UNIDO and the World Bank.
  

Meaning of Business Incubators:

A business incubator is a company that helps new and startup

companies to develop by providing services such as management
training or office space. This is also Facility established to nurture
young (startup) firms during their early months or years. It usually
provides affordable space, shared offices and services, hand-on
management training, marketing support and, often, access to some
form of financing. Business incubators differ from research and
technology parks in their dedication to startup and early-stage
companies. ​The formal concept of business incubation began in the
USA in 1959 when Joseph Mancuso opened the Batavia Industrial
Center in a Batavia, New York, warehouse.

2. Definitions of Business Incubation:

According to Allen and Rahman, “The universal purpose of a business

incubator is to increase the chances of a firm surviving its formative
years, but the business incubator also adds value by maximizing the
firms’ growth potential.”
As per Allen, “A business incubator is defined as a facility that
provides affordable rent to new and small firms, shared office and
logistical services, and arranges business management and financial
assistance.”
3. Types of Incubation Services:

Since startup companies lack many resources, experience and

networks, incubators provide services which helps them get through
initial hurdles in starting up a business. These hurdles include space,
funding, legal, accounting, computer services and other prerequisites
to running the business.

Following are the most common incubator services:

(i) They help with business basics

(ii) They provide Networking activities

(iii)​ ​They provide Marketing assistance

(iv)​ ​Incubators help in Market Research

​ hey provide High-speed Internet access

(v)​ T

(vi)​ ​Incubators Help with accounting/financial management

(vii) They help in providing Access to bank loans, loan funds and
guarantee programs

(viii) Incubators help with presentation skills

​ hey link to higher education resources

(ix)​ T

​ hey link to strategic partners

(x)​ T

​ hey provide Access to angel investors or venture capital

(xi)​ T

(xii)​ ​They organize Comprehensive business training programs

(xiii) They act as Advisory boards and mentors

Public and private incubators:

business incubator can be private or public.Private incubator are for

profit firms take equity or receive a fee what are the business services
they provide to their claints. in essence, they are a Consulting firm that
is specialised in new form creation. since1980 , many developed and
developing countries systems public business incubators to encourage
and assist and Entrepreneurship. in many cases, public incubators are
focused on Hi-tech industries.for science based business incubators,
an effective collaboration with Universities and Research Institutes
can motivate researchers into taking the risk of a initiating a company.
Incubators can have Partner in addition to Universities. since new
form require finance to grow, incubator have close relationship with
many kinds of investors. seed capital and start up capital Integrated
companies. business incubators are powerful economic development
tools, they Collaborate actively with regional and national
government incubators have National Associations to represent their
interests and organise meetings where Best practices are
disseminated.
evaluations of business incubators in Europe and the US suggest that
90% of incubated startups were active and growing after three years of
operation, which is the much higher success rate than that observed in
startups launch without assistance.
history of business incubators:
the formal concept of business incubation began in the US in the
1960s. it later developed in the UK and Europe through various
related forms like innovation centres, Science Park etc during the
1980s. In 1997, research carried out for the UK’s Her Majesty’s
treasury identified around 25 incubation environments in the UK.
This number has increased dramatically in the last 10 years. UKBI’s
most recent mapping survey(2005) identified around 270 incubation
environments across the country.
This Rapid increase in integration activity can be attributed to a
number of factors. incubation has been identified as a means of
meeting a variety of economic and social economic policy needs,
which may include:
● Employment and wealth creation;
● support for small firms with high growth potential;
● transfer of Technology;
● promoting innovation;
● enhancing link among University, research Institution and the
business community;
● industry cluster development
A study funded by the European commission in 2002 identified
around 902 vation and governments in western Europe. The NBIA
estimates the current number in the US to be around 1500.
incubation activity has not been Limited two developed countries;
incubation and environments are now being implemented in
developing countries and raising interest for financial support from
organisations such as UNIDO and the World Bank.
Among the range of economic development program tools, the
process of business incubation and the development of facility based
incubators growth industry over the past two decades. In the early
1980s there were at best only you dossen programmes that would
have met the following definitional criteria of business incubator.
Business incubators accelerate the successful development of
entrepreneurial companies an array of business support resources and
services, developed bi into better management and offered both in the
incubator and through its network of contracts.Business incubator's
main goal is to produce successful firms that will leave the program
financially viable and free standing. These incubator graduates have
the potential to create jobs, revitalize neighborhoods, commercialize
critical Technologies and strengthen local and national economies.
 Among the first generation of incubators, the maturity focus on
relatively low Technology businesses ,typically in the service and
manufacturing sectors. gradually, the incubation industry expanded in
size and sophistication of business represented among client
companies. Currently, the national business incubation Association-
International membership organisation for those professionally
associated with business incubation and Enterprise development has
about 1,000 members, representing approximately 600 into basin
programs.