Module-1

EXPLORING INNOVATION

CONCEPT OF INNOVATION

Innovation … is generally understood as the introduction of a new thing or method. Innovation

is the embodiment, combination or synthesis of knowledge in original, relevant, valued new
products, processes or services.
Creativity is often seen as the basis for innovation. For innovation to occur, there needs to be a
creative idea and the ability to convert that idea into action to make a difference. The result is a
specific and tangible change in the products, services or business processes provided by an
organisation
All innovation begins with creative ideas. we define innovation as the successful
implementation of creative ideas within an organization.
Innovation can be simply defined as a "new idea, creative thoughts, and new imaginations
in form of device or method". However, innovation is often also viewed as the application of
better solutions that meet new requirements, silent needs, or existing market needs.
Such innovation takes place through the provision of more- effective products, processes,
services, technologies, or business models that are made available to markets, governments and
society. All organizations can innovate, including hospitals, universities, and local
governments. Innovation processes usually involve: identifying customer needs, macro and
micro trends, developing competences, and finding financial support for new inventions and at
last practically applying those inventions for better solutions.

Innovation is:

• New stuff
• That adds value
• For various stakeholders
• Can be monetized
• Creates a competitive advantage
• And is sustainable
• Until the advantage deteriorate
Innovation is the process of turning opportunity into new ideas and of putting these into widely
used practice. It is the management of the entire activities involved in the process of idea generation,
technology development, manufacturing and marketing of a new (or improved) product. The process
of translating an idea or invention into a good or service that creates value or for which customers will
pay. In business, innovation often results when ideas are applied by the company in order to further
satisfy the needs and expectations of the customers.

IMPORTANCE OF INNOVATION

• Solving problems: Most ideas are actually derived from attempts to solve existing problems.
As such, when you encourage innovation, you are opening doors for solutions to problems both
within and outside your company. If your business provides services, you might realize that
your customer do not have an avenue to share their opinions, complaints, and compliments.
The only avenue available could be the physical office. So, to solve the problem, you could
decide to operate a virtual office where customers’ needs can be attended to within a short time.
The customers will be happy and as a result, your sales will go higher.

• Adapting to change: This is especially evident in the technological world where there are rapid
changes defining the business. Change is inevitable and innovation is the method to not only
keep your business afloat, but also ensure that it remains relevant and profitable. With the rise
in mobile phones, traditional telephone had to find ways to remain relevant. Same case with
your business, when you develop an innovation culture, you remain relevant at all times.

• Maximizing on globalization: With markets all over the world becoming more interlinked,
greater opportunities are emerging in these new markets and with that, new needs and
challenges. For instance, China and India are estimated to be the leading markets, and Africa is
predicted to be the next “hot spot”. Therefore, if your company hopes to tap into this market
share, innovation is a must to enable you to capitalize on the opportunities opening up.

• Facing up the competition: The corporate world is always very competitive, and with many
new companies coming up, the top position in the industry is no longer a reserve of a few. To
retain or establish your company’s cutting edge, you can compete strategically by having a
 dynamic business that is able to make strategic and innovative moves and thus cut above the
rest.

• Evolving workplace dynamics: The demographics in the work place are constantly changing.
With the new generation that has entered the market place; new trends are also coming up.
Innovation is therefore critical to ensure the smooth running of the company.

• Customers’ changing tastes and preferences: The current customer has a great variety of
products and services available to him and is well informed of his choices than before. The
company must therefore keep itself abreast with these evolving tastes and also forge new ways
of satisfying the customer.

HISTORIC RETROSPECTIVE OF INNOVATION

If we look at humanity’s slow rise from prehistory, there have been three waves or evolutionary
acceleration. The first was the transition from hunting-gathering to the development of the
agricultural age, propelled by man’s ability to fashion basic tools, like hammers, spears and
plows. This happened roughly a few thousand years ago. The second was the industrial
revolution, propelled by the invention of automation, assembly lines and organized workflow
and standardization. This happened a few hundred years ago. And the third is the information
revolution, which is rapidly evolving humanity’s relationship with the tools it invents, and this
started a few decades ago.
The processes and technologies that comprise the art and science of innovation have progressed
in three oddly similar phases. In what I call the BC era, “before computers,” innovators were
equivalent to hunter gatherers of ideas.

But in the AD era, "After Digital," the invention of computers changed everything, in much
the same way that hand tools changed cavemen. We are building brain tools now, not hand
tools.

FOR EXAMPLE:

Moving more toward our era, we can track over 100 years of innovation just looking at our
family history. Our grandparents’ generation was born into a time of outdoor plumbing. Our
parents’ generation grew up with the automobile. None of our grandparents learned to drive,
too disruptive, although they purchased automobiles for their children to transport the family

Flipping over to computer technology for the baby boomer generation, we’ve seen the evolution
from the mainframe through to the PC. In particular, the PC defined the difference between my
parents and me like the automobile defined the difference between my parents and their parents.
My parents never really used a PC, yet they had one in the house for us to use. In terms of what
comes next, it’s a bit hard to say.
TYPOLOGY OF INNOVATION

Type of innovation Characteristic

Product or service innovation A product innovation is the introduction of a
product or service that is new or significantly
improved with respect to its characteristics or
intended uses.
Process innovation A process innovation is the implementation
of a new or significantly improved
production or delivery method. Process
innovations can be intended to decrease unit
costs of production or delivery, to increase
quality, or to produce or deliver new or
significantly improved products.
Marketing innovation A marketing innovation is the
implementation of a new marketing method
involving significant changes in product
design or packaging, product placement,
product promotion or pricing. Marketing
innovations are aimed at better addressing
customer needs, opening up new markets, or
newly positioning a firm’s product on the
market, with the objective of increasing the
firm’s sales.
Organizational innovation Organizational innovations can be intended
to increase a firm’s performance by reducing
administrative costs or transaction costs,
improving workplace satisfaction (and thus
 labor productivity), gaining access to no
tradable assets (such as non-codified external
knowledge) or reducing costs of supplies. An
organizational innovation is the
implementation of a new organizational
method in the firm’s business practices,
workplace organization or external relations.

1. Incremental innovation
Incremental innovation seeks to improve the systems that already exist, making them better,
faster cheaper.

2. Process innovation
Process innovation means the implementation of a new or significantly improved production
or delivery method.

3. Service innovation
Service Innovation can be defined as “a new or considerably changed service concept, client
interaction channel, service delivery system or technological concept that individually, but
most likely in combination, leads to one or more renewed service functions that are new to
the firm.

4. Business model innovation

Business Model Innovation (BMI) refers to the creation, or reinvention, of a business itself.
Whereas innovation is more typically seen in the form of a new product or service offering,
a business model innovation results in an entirely different type of company that competes
not only on the value proposition of its offerings, but aligns its profit formula, resources and
processes to enhance that value proposition, capture new market segments and alienate
competitors.

5. Sustainable innovation
Eco-innovation is a term used to describe products and processes that contribute to
sustainable development.
6. Frugal innovation
Frugal Innovation is about doing more with less. Entrepreneurs and innovators in emerging
markets have to devise low cost strategies to either tap or circumvent institutional
complexities and resource limitations to innovate, develop and deliver products and services
to low income users with little purchasing power.

7. Blue ocean innovation

Blue Oceans represent the unknown market space, i.e. all the industries not in existence
today. Blue oceans are defined by untapped market space, demand creation, and the
opportunity for highly profitable growth. In blue oceans, competition is irrelevant because
the rules of the game are not set. Blue oceans can be created by expanding existing
industry boundaries or by reconstructing industry boundaries.

8. Disruptive innovation
A disruptive innovation is an innovation that helps create a new market and value network,
and eventually goes on to disrupt an existing market and value network (over a few years or
decades), displacing an earlier technology. . In a nutshell, disruptive innovation is that when
the basis of competition changes, because of technological shifts or other changes in the
marketplace, companies can find they getting better and better at things people want less and
less. When that happens, innovating your products won’t help — you have to innovate your
business model.

9. User led innovations

The user is king. It’s a phrase that’s repeated over and over again as a mantra: Companies
must become user-centric. But there’s a problem: It doesn’t work. Here’s the truth: Great
brands lead users, not the other way around.

10. Supply chain innovation

Supply chain innovation is about applying best practices and technological innovations to your own
supply chain in order to reduce such cycle and wait times and other waste in your in-house processes.
 INNOVATION PROCESS

STEP: 1 IDEA GENERATION

This is the first step in an innovation process. It is where you decide on the concept that you
want to develop and come up with reasons why you want to improve the idea. It is important
for you to involve your employees and customers. Involving many knowledgeable people will
enable you to get a better understanding of the market.

Besides, it will give you an opportunity to look at the idea in different angles. At this stage
also, experts will also provide many viable ideas. There are five places where you can draw
ideas for your innovation:

• CUSTOMER INNOVATION

As you work on an innovation, remember that you should have your customer in mind. Your
customers should be the inspiration for all innovations. Hence, consider the feedback that they
give to come up with an innovative idea.

This is an important source because if you innovate something that does not meet the needs of
the customer, then the innovation is likely to fall. You can get the feedback from the social
 media platforms, customer feedback forms, and your employees can report to you what the
customers say.

• EMPLOYEE INNOVATION

Your employees relate with the customers so closely so they know their needs. Moreover, they
also get first hand compliments, complains, and suggestions from the customers.

When a customer wants a service or a product, they explain to your employees so they can
keep tabs on what customers want. Besides, they are in a position to identify products that are
irrelevant to the customer.

When you innovate a product, your employees will be important so as to explain how a product
is used to the customers. In contrast, if they do not feel as part of the innovation, they might
disregard the product. As a result, they may never speak well of the product.

• PUBLIC INNOVATION

Public innovation depends on information gathered from the public. The amount of feedback
received through public innovation is a lot so you must have the required expertise and
equipment to handle it. Public innovation produces helpful information but you have to be
ready to sieve through the information to pick what is helpful.

As you consider this model, make sure you do not use it before the others: it could probably be
the last model that you employ. If you have the capacity to digest the information, you could
use public innovation.

• PARTNER/SUPPLIER INNOVATION

You can share your thoughts and opinions with your partners and suppliers. Opening up to
them helps them improve on the goods and services they supply.

A good example is wedding planners who outsource companies to provide flowers. The
wedding company may have realized that the flowers wither after a short time and they look
unattractive.

By sharing this information with the flower company, they can brainstorm on ways to keep the
flowers looking fresh for a longer time. This innovation helps your supplier and your business.
On your side, you are able to supply high quality and more improved good and services.
• COMPITITOR INNOVATION

This is a very challenging but very efficient when it takes place. As a fact, competitors are very
careful with the information they share but with a good strategy, you can learn a lot from your
competitors.

This can only happen when you admit that there are other competent people outside your
company.

However, it does not mean that your employees are not competent enough, they are competent,
but listening from others can give you a different point of view concerning a matter.

STEP: 2 ADVOCACY AND SCREENING

Not every idea that is generated is worth implementing, for that reason; you must screen all the
ideas presented. When screening, ensure you measure the benefits and risks of each idea to
determine its viability.

Any idea that has a futuristic approach should be chosen for the next stage.

Moreover, participants in this stage develop the idea to enhance it. If an idea is not considered
ideal, make sure you communicate the reasons to the person who had suggested the idea.

This is important especially if the person who shared the idea is an employee so that you
encourage them to suggest more ideas even if it is in the future. For a company that wants to
instill an innovation culture, you should take three steps at this stage;

• Ensure the evaluation and screening process takes place in a transparent way

• Create a number of avenues for employees to receive feedback and advocacy

• As an organization, you should understand that evaluating an innovative idea is a difficult

assignment

STEP: 3 EXPERIMENTATION

At this stage, the idea is tested using a pilot test. The test takes place within a targeted market.
As you test your product, remember you want to know if the customers will accept it, if the
price is acceptable, and if they like the innovation. The aim is to test if the idea is ideal and
suitable for the company at a particular time.

Therefore, if an idea is too complex for the organization or it’s a premature idea, then it
should not be implemented. You should set aside premature ideas in your idea bank for a later
date.

So, even if you realize that your idea has been accepted in the market and the price is affordable,
you might want to hold back until you are sure the time is right to release it in the market. It is
only through the experimentation stage that you can get this information. So, do not assume
your idea is beyond reproach to the extent that the market cannot reject it.

However, note that experimentation can be a continuous process or a one-time activity. In

some instances, the experimentation stage generates new ideas. You can generate new ideas
from this stage by considering the feasibility of the original idea and by analyzing the
information from the results.

Give the participating team enough time to experiment and analyze the results from the
experimentation. It is at this stage where you apply for intellectual rights protection.

STEP: 4 COMMERCIALISATION

When you get to this stage, just know the product is ready for the market. The major work at
this stage is to persuade your target audience that the innovation is good for them.

To do this, explain how the innovation will be of use to them, when it will be used, and
demonstrate the benefits of the innovation using the prototypes. Be very specific about the idea
in regards to any information that could attract customers to your idea.

STEP: 5 DIFFUSION AND IMPLEMENTATION

Diffusion and implementation are two different stages: diffusion is where the company accepts
the innovation and implementation is setting up everything that is needed to develop and
utilize or produce the innovative idea.

Knowledge brokers are used to diffuse the idea in an organization. The knowledge brokers
communicate the specification about the idea and its usability. This information helps your
employees to understand the idea in a deeper way. After they understand it, then they
implement the idea.

Diffusion and implementation requires access to production files, logistics, and market routes
amongst others. For the idea to succeed, work in collaboration with industries and businesses,
get into partnership and subcontract management to ensure the innovation is fully implemented.
The feedback that you receive at this stage can be used to come up with future ideas.

MACROECONOMIC VIEW OF INNOVATION

Innovation drives economic growth. This is one of the most consistent findings in
macroeconomics, and it’s been true for centuries. Economists have calculated that
approximately 50% of U.S. annual GDP growth is attributed to increases in innovation.
The states and regions that lead the transformation to the knowledge- and technology-based
economy currently have enormous advantages. “Innovation driven enterprises,” which
include a wider universe of entrepreneurial firms whose competitive advantage might be a
process, service, or business model, are also an important piece of the puzzle for states
wanting to foster a more innovative economy. “Technology-based economic development”
is the approach employed by states to help create a business climate and to enable an
environment where an economy based on innovation and technology can thrive. Innovation is
about putting a new idea or approach into action. Innovation is commonly described as 'the
commercially successful exploitation of ideas
 • Process innovation: This relates to improvements in production processes, the more
efficient use of scarce resources - leading to better productive efficiency and a rise
in productivity
• Product innovation: This is the emergence of new products which satisfy our needs and
wants - leading to improvements in the dynamic efficiency of markets

Innovation is a stimulus to long-run growth because:

1. It is a catalyst(impulse) for investment which helps to shift out the production

possibility frontier (PPF)
2. It is a spur to productivity growth because of its impact on technological progress
3. Innovation also creates a demand for new products from consumers for example in
industries where existing products are nearing the end of their product life-cycle
4. Effective innovation can establish a unique selling proposition (“USP") for a product
– something which the customer is prepared to pay more for. This helps businesses
move up the value chain

The analysis suggests new approaches to innovations in open economies in many ways
including the new monetary growth models. A specific focus is on the role of innovations for
output, employment and exchange rate developments. Innovation driven technology-
intensive businesses are viewed favorably for their potential and disproportionate impact on
competitiveness, future economic growth, and prosperity because they often:

1. create jobs that command above-average salaries;

2. pay a high percentage of their income to their employees, rather than out-of-state
capital equipment or out-of-state raw materials

3. can be located almost anywhere because of the connective power of the Internet and
improved transportation systems, particularly air travel;

4. Create additional quality jobs that are not technology focused, both inside and outside
the companies themselves; and serve markets that are outside the state, thereby bringing
new wealth into the state.

Economic theories emphasize the critical importance of innovation in sustaining long-run

economic growth. That the innovation-intensive industries created highly skilled jobs,
 had higher wages, were more productive, led exports and enhanced competitiveness
during the thick and thin of business cycles is now well established. The link between
innovation and economic growth and the effect of innovation on productivity and income
is examined. The raging debate on the impact of automation on employment is discussed.
Finally, the seemingly waning influence of innovation is analyzed. Innovation is essential
for sustainable growth and economic development. Several core conditions enable
innovation and encourage economic growth. In the modern economy, innovation is crucial
for value creation, growth and employment and innovation processes take place at the
enterprise, regional and national level. Innovation will lead to new businesses as well as
to the increased competitiveness of existing enterprises..

Innovation is an essential driver of economic progress that benefits consumers, businesses

and the economy as a whole. How does it play that role, how does it contribute to economic
growth and what can be done to promote it?

In economic terms, innovation describes the development and application of ideas and
technologies that improve goods and services or make their production more efficient.

New ideas and technologies are developed and applied, generating greater output with the
same input.

One of the major benefits of innovation is its contribution to economic growth. Simply put,
innovation can lead to higher productivity, meaning that the same input generates a greater
output. As productivity rises, more goods and services are produced – in other words, the
economy grows.

Innovation usually starts on a small scale, e.g. when a new technology is first applied in the
company where it has been developed. However, for the full benefits of innovation to be
realized, it is necessary for it to spread across the economy and equally benefit companies in
different sectors and of different sizes. Experts call this process the diffusion of innovation.
 ASSUMPTIONS AND BARRIERS TO INNOVATION

The 4 Assumptions of Innovation are:

1. Innovation as it is currently practiced is good enough.

2. Innovation is for executives.
3. Innovation is for practitioners.
4. “Innovation Planning” is an oxymoron.

1. Innovation as it is currently Practiced is good enough

Innovation as it is currently practiced is good enough, is a common assumption and the reality
of the situation is that, “current innovation practices don’t reliably deliver breakthroughs.” I
believe this has to do with the way companies approach the product development process. More
often than not our current processes are designed to provide incremental features to existing
products. Those processes break down when companies attempt to explore innovative solutions
to undefined needs in rapidly changing marketplaces. Due to the ambiguous nature of
 opportunities in emerging marketplaces; existing tools need to be evaluated based on the need
that is trying to be fulfilled. In short, if the only tool you have in your tool belt is a hammer,
everything looks like a nail.

2. Innovation is for Executives

Another assumption is that innovation is for executives. This assumption relates to the
commonly held belief that executives are primarily responsible for the strategy and
direction a company takes therefore they must own innovation initiatives as well. In truth,
the people doing the day-to-day work that often develop innovative ideas with the products
they are developing. However, they need structures and processes to help them plan and define
innovation.” When a team has made the decision to move forward on an innovative initiative,
it must be defined with a well thought out plan on how to bring the product to the market place.

3. Innovation is for Practitioners

While the seed of innovative ideas often resides with the marketers, designers, researchers and
engineers that develop the products for a company; to be successful practitioners must work
with executives.“The designers and technologist developing new offerings must not only
know how to innovate on a tactical level, they must also comprehend the strategic objectives
and wider implications of their work.” For a product to be truly innovative in an emerging
marketplace, practitioners and executives must both have an understanding of the strategic and
tactical business decisions. They must work together to develop a plan.

4. “Innovation Planning” is an Oxymoron (two words used together that have opposite
meanings)

Product development often involves documents detailing the business requirements,

specifications and objectives outlining the scope, measures and criteria of success. The
commonly held belief that innovative products are produced purely out of “out-of-box
thinking” which leads to the final assumption of “innovation planning” is an oxymoron. Very
few companies can afford to invest large amounts of time and money without a measure
of control. For companies to be innovative, they must develop new and structured
approaches.
Innovation isn’t magic, it’s a discipline. Asking a product team to be innovative without
having the proper tools and processes in place will more than likely result in failure.

The lesson learned is that before you move forward on an innovative initiative have a plan or
you may find yourself in the position of having to hire an expensive expert to clean up the
mess. As the saying goes, “If you fail to plan, you are planning to fail.”

BARRIERS OF INNOVATION

KEY OBSTACLES TO INNOVATION

Obstacles that will need to be addressed if you expect to establish a sustainable culture of
innovation:

1. Lack of a shared vision, purpose and/or strategy

2. Short-term thinking/focus
3. Lack of time, resources or staff
4. Lack of “spec time” to develop new ideas and opportunities
5. Innovation not articulated as a company-wide commitment
6. Lack of ownership by senior leaders
7. Leadership expects payoff sooner than is realistic
8. Lack of a systematic innovation process
9. Management incentives are not structured to reward innovation
10. No reward and recognition programs
11. Constantly shifting priorities
12. Belief that innovation is inherently risky
13. Internal process focus rather than external customer focus
14. Inadequate understanding of customers
15. Focus on successes of the past rather than the challenges of the future
16. Unwillingness to change in the absence of a burning platform
17. Unwillingness to acknowledge and learn from past “failures”
18. Politics – efforts to sustain the status quo to support entrenched interests
19. Rewarding crisis management rather than crisis prevention
20. Hierarchy – over-management and review of new ideas
21. Micromanagement
22. Under-funding of new ideas in the name of sustaining current efforts
23. Fear that criticizing current practices and commitments is a high-risk activity
24. Risk aversion
25. Addiction to left-brained, analytical thinking
26. Absence of user-friendly idea management processes
27. Innovation not part of the performance review process
28. Lack of skillful brainstorm facilitation
29. No creative thinking training