Name Tatenda Kudzai Gutu

Registration Number H200907E

Programme MTECH-Strategy and Innovation

Module Innovation for products and services (BS811)

Lecturer Dr Nyatsambo

Email tatendakgutu@gmail.com

Question

Critically analyse the internal and external sources of innovative ideas available to a business
organisations. Citing practical examples motivate for the reasons to choose some of these
sources over the others.[25]
Introduction

The purpose of this write-up is to identify and distinguish between internal and external
sources of ideas in the idea generation phase of new product development process. It is no
longer a question of whether to innovate or not, if companies wants to stay competitive they
must consistently develop new products and services that meet customer needs and wants. To
initiate a new product development, first, there has to be an idea beforehand to create
it(Hoornaert et al., 2017). Many ideas are generated until the business finds the most suitable
ones. Businesses use internal sources like R&D department, employees, complaints systems
external sources like customers and competitors and other sources like, universities.

Internal Research and Development (R&D)

Research and development department is the formal department of any organization to

generate new ideas(Bhuiyan, 2013). R&D department research according to the company’s
future plan and then come up with the new ideas which complete its journey with the
commercialization of the idea (product). Facebook spent $18.45 billion in the year 2020 on
their R&D. The innovations and expansion of services under the Meta brand can be alluded
to research and development(Doorasamy, 2021). Local companies in Zimbabwe invest less in
R&D because of the deteriorating economy and as a result are struggling to keep pace with
the changing environment. One recent survey showed that traditional R&D only contribute
less than 15% of the ideas of the organization. However, the importance of R&D in the
organization does not only depend on the idea generation, they also do some other important
things(Simms, 2012). The research and development at Premier Service Medical Aid Society
is response for generating new ideas as well as developing organisational strategy and setting
key performance strategy.

Employees

Employees are close to the processes, products and customers, know them best and are thus
able to identify potential for improvement and innovation(Cooper, 2019). It is essential that
they keep the necessary foresight and do not become blinkered in their work. It was shown in
a survey including 750 interviews of CEOs in global businesses that employees generated
41% of new product ideas(Gurbuz, 2018). Organisations such as Econet have internal
innovation hubs to solicit new ideas. PSMAS has MD innovation challenge to promote new
idea generation among employees. Many companies now use web technology to get the ideas
from their internal employees. In that web, employees can share their ideas about a new
product. However, picking up the great idea of it and rewarding the employees can encourage
employees to be more creative and contribute more in future. Companies like Google could
have regular meetings between different members of teams e.g. sales, IT development to
brainstorm new ideas

Complaints systems

A customer complaint is an opportunity to start something new that will finally meet the
demands of frustrated consumers(Hoornaert et al., 2017). When clients report encountering
some problems with your product or service, or simply features or aspects they do not like,
this is the gold. There is no longer need to look for ways how to make a service more
appealing to customers to ensure that they keep choosing one organisation over competitors.
Customer complaints serve as a source of insights on what areas should be worked on and
upgraded. Additionally, by studying bad reviews an organisation can find new good ideas for
improving a product. Companies such as Bakers Inn have toll free numbers where customers
that are unsatisfied with the service lodge their complaints. The gathered insights are used to
improve the service.

External Sources

Information from Customers

According to (Florén et al., 2018) ideas for new products can quite easily ensue from the very
customers of the company or from users of previous company products. In this case, the
golden rule is for the company to offer its customers what they want and not what the
company thinks they want. Gathering such ideas is very easy with the use of questionnaires
either upon the purchase of a product (research at the product outlets), or over the phone
(telephone research based on the company clientele list), or through the Internet (on-line
questionnaires). CBZ bank carryout a telephone research after a client has successfully
registered in order to identify new ideas for improvement of services. Other companies use
customer satisfaction surveys to generate new ideas. According to (Bhuiyan, 2013),
successful businesses and teams that drive winning new products have a dedication towards
the voice of the customer. There are web 2.0 methods that directly invite customers to
contribute to new products (Open Innovation methods). A strong customer involvement is
necessary right from the idea generation stage.
Information from Distributor

Distributors works very closely with the market and they know consumer problems and their
need(Business, 2013). Distributors can give the ideas for new product possibilities. Suppliers
can also help with the information of the market like a new concept, technique or materials,
which can be used for developing new products. Therefore organisations need to create good
relationships with suppliers so that there is motivation of giving valuable feedback from the
suppliers.

Competitor Analysis

Competitors are another important source. Organisations can analyze their competitors and
can find many things which can be used for idea generation(Hallstedt, Isaksson and
Rönnbäck, 2020). Researching competitors can give the idea that which thing an
organisation is missing or which thing the competitors are missing, and can decide then what
things need to be included in the new product(Ernst, 2002). Competitors are not enemies,
they act as an organisation strength. The ideas can be generated by benchmarking and taking
advantage of competitor products or service design weaknesses. Samsung is an example of a
company that benchmark its products with IPhone and Huawei and come with an improved
product.

Market research

Market research is another good source of ideas for new products(Cooper, 2019). The
successful development of a new product requires very good knowledge of customers and
their needs and, more generally, of the market to which the new product is addressed. Thus,
all the more companies or enterprises develop new products based on the orientation of the
market. The orientation of the market can be defined as a set of interlinked procedures and
activities, aiming at the creation and fulfilment of customer needs through constant
assessment of those needs (Simms, 2012). In other words, the enterprises that develop their
products based on market orientation, develop tools to study the market and elaborate
development strategies to constantly satisfy the needs and desires of the customers. Japanese
enterprises depend all the more on the development of products through market orientation
studies. As to European and other Asian enterprises, studies have shown that the market-
orientation analysis process is very important especially for those enterprises that are based
on rapid technological changes; it is equally important within the framework of those markets
characterised by stiff competition.

Exhibition

Expos, shows and seminars of rival companies may be a very good source for the creation of
ideas, because through these events a company may become informed on market innovations,
on technological advances, as well as on possible improvements on existing products –
competitive or not(Gurbuz, 2018). The Zimbabwe Agriculture Show, Zimbabwe international
trade fair, SMEs expo among others provide businesses with opportunities of gaining new
insights in the industry. According to (Business, 2013) business would regularly attend trade
shows such as the Dublin Web Summit to inspire them to make a new product for the
domestic market or search for gaps in the market. Companies like Google could travel to
America to attend trade shows over there to see if there is an opportunities for an alliance on
a new product These new insights can be used to generate new ideas for new product
development.

Universities and Research centres

Universities and research centres contribution to innovation and economic development has
been widely documented(Cooper and Kleinschmidt, 2010). Earlier studies show that the
manner in which universities foster innovation is contingent on the technology that is being
developed and on industry characteristics(Bhuiyan, 2013). Universities are viewed as
“creators, receptors, and interpreters of innovation and ideas, as sources of human capital,
and as key components of social infrastructure and social capital.” Moreover, in partnerships
with other participants in economic and social development, universities have a positive
economic role to play For example Harare Institute of technology has developed the Zupco
tap card, electricity transformers and ventilators.

Conclusion

The internal and external source are important in generating ideas for new product
development. There is need to validate the source before developing a new product. For the
proper development of a new product, an enterprise should follow the New Product
Development Model.
References

Bhuiyan, N. (2013) ‘A framework for successful new product development’.

Business, L. C. (2013) ‘Chapter 14 – Business Ideas (Internal/External Sources; New Product

Development) 2013 Q6 (A)’, 6, pp. 1–5.

Cooper, R. G. (2019) ‘Identifying Industrial New Product Success : Project NewProd’,

(December 1980). doi: 10.1108/EUM0000000004906.

Cooper, R. and Kleinschmidt, E. J. (2010) ‘Success Factors for New ‐ Product Development’,
(December). doi: 10.1002/9781444316568.wiem05021.

Doorasamy, M. (2021) ‘“ Product portfolio management for new product development ”’.

Ernst, H. (2002) ‘Success factors of new product development : a review of the empirical
literature’, 4(1), pp. 1–40.

Florén, H. et al. (2018) ‘Critical success factors in early new product development : a review
and a conceptual model’, pp. 411–427. doi: 10.1007/s11365-017-0458-3.

Gurbuz, E. (2018) ‘Theory of New Product Development and Its Applications’, in Marketing.
InTech. doi: 10.5772/intechopen.74527.

Hallstedt, S. I., Isaksson, O. and Rönnbäck, A. A. Ö. (2020) ‘The need for new product
development capabilities from digitalization, sustainability, and servitization trends’,
Sustainability (Switzerland), 12(23), pp. 1–26. doi: 10.3390/su122310222.

Hoornaert, S. et al. (2017) ‘Crowd or Screening Ideas in Real Time’, (June). doi:
10.1111/jpim.12396.

Simms, C. D. (2012) ‘Chapter 3 : New Product Development Literature Review’, Chapter 3 :
New Product Development Literature Review, 3, pp. 42–100. Available at:
https://researchportal.port.ac.uk/portal/files/6059840/Chapter3_Literature_1.pdf.