•Module 1: Basic on Innovation

• Importance of Innovation Lesson

• Types of Innovation
• Recognizing innovation in products and services
• Recognizing innovation in processes and procedures
• Recognizing innovation in management practices
• Recognizing innovation in marketing and distribution
strategies and techniques
• Characteristics of Innovation
 TERMINOLOGIES IN INNOV MAN:
• Brainstorming -- Coming up with as many ideas or solutions possible for the
situation, singly, or in a group.
• Idea --- A formulated thought or opinion
• Concept--- An abstract or generic idea generalized from particular instances
• Project--- A collaborative enterprise, frequently involving research or design, that is
carefully planned to achieve a particular aim.
• Product--- A thing produced by labor or effort or the result of an act or a process.
• Collaboration --- People or organizations working together to realize and achieve
shared goals, by sharing knowledge, learning, and building consensus. Most
collaboration requires leadership, although the form of leadership can be
social within a decentralized and egalitarian group. In particular, teams that work
collaboratively can obtain greater resources, recognition, and reward when facing
competition
 TERMINOLOGIES IN INNOV MAN:
• Idea Management System (IMS)--- A formal process by which ideas can be
recorded, filtered, and selected for implementation
• Innovation Management System (IMS)--- A formal process by which an insight
growth can be recorded from an idea, concept, project, to a product on market.
• Open Innovation --- The use of external as well as internal ideas and paths to
market to advance innovation.
• Creativity--- The production of something new

• Platform Innovation ---defined as one that leads to the practical application of

fundamental innovations. Such innovations normally are launching pads for a new
industry. Examples of platform innovations include personal computers, silicon
chips, cell phones, digital printers, operating systems, databases, drug delivery
devices, satellites, and space shuttle. The platform component increases the
portion of the laboratory or development component more so than do
fundamental innovations. Platform innovations launch industries and change ways
of life.
 TERMINOLOGIES IN INNOV MAN:
• Reverse Innovation Traditionally, rich nations have developed innovations and
transferred them to developing nations. Reverse innovation is the opposite; i.e.
innovating in developing nations (for example, India, Africa, etc) and bringing those
products to rich nations. Reverse innovation has increased in importance as high
growth is increasingly occurring in developing nations like China.
• Variation Innovation A variation innovation is a tertiary-level innovation that
requires less time to develop and is a slight variation of the next-level products or
services based on a derivative innovation. For example, variation innovations
in cell phones are various color covers, ring tones, camera feature and
additional software-based optional features. In the case of operating systems
software, variation innovations are applications developed and based on the OS
and derivative innovations. Typically, the variation innovation occurs close to the
customer and may be the candidate for reaching the ultimate in speed of
innovation or innovation on demand in real-time.
• Sustainable innovation Generating and validating ideas in a repeatable and more
predictable way. As a process, innovation can be systematized to bring
unprecedented efficiencies and ROI to idea generation, research, problem solving,
market and technology landscaping
 TERMINOLOGIES IN INNOV MAN:
• Fundamental Innovation A creative idea that leads to a revolution in thinking. Such
innovations are based on extensive research, knowledge-driven, theoretically
proven and lead to follow-up research and development
• Ideator One who is trained in the art and science of brainstorming to deliver
sudden, exciting and relevant ideas.
• Innovator One who is trained in the art and science of brainstorming to deliver
sudden, exciting relevant ideas.
• Innovation The act or process of inventing or introducing something new.
Leveraging insights into consumer needs to develop fresh thinking and unique
solutions that create meaningful distinctions in brands, products and services,
and enhances the consumer/end user9s experience.
• Integrated Innovation A holistic approach to innovating products, brands and
services by exploring a wide variety of opportunities from every aspect of the
marketing mix.
• B2B Value Capture Salespeople are often forced to compete on price only when
selling their products in a business-to-business (B2B) transaction. B2B value
capture is about quantifying the value that a supplier9s solution offers for the
 TERMINOLOGIES IN INNOV MAN:
• Challenge Driven Innovation (CDI) A portion of a larger project is formulated
as a challenge, in which a "challenge" essentially represents the problem
statement for a block of work that can be modularized and in most cases rendered
"portable" in that it can be outsourced or insourced as an integral unit.
• Customer Referral Value This is the value of an existing customer referring the
product (good and/or service) to an acquaintance, which can be calculated in a
number of ways: 1. the reduction in upfront capital (acquisition costs) 2. the
potentially greater perceived value (due to the reduction of perceived risk)
• Customer Satisfaction A customer9s perception of how well a product (good
and/or service) performs in specific situations or in general relative to their
expectations.
• Distributed Innovation A gathering of ideas and solutions from various sources and
entities by a central organization who then integrates the pieces into what is
considered the final innovation.
 TERMINOLOGIES IN INNOV MAN:
• Innovation Qualitative: An event characterized by an act of creation or
invention followed by successful implementation and deployment so that
the benefits of the creation may be widely enjoyed. Quantitative: An act of
creation or invention that upon implementation and deployment increases
the net product value.
• Meta-Innovation Innovating the method and process of innovation.
• Open Innovation Use of inventive sources independent of the organization
charged with delivering the innovation to the marketplace.
• Perception of Product Value is the process by which we select, organize, and
interpret information to create meaningful pictures of the world. Product
Value is based on each individual9s perception and can vary due to
selective attention, selective distortion, and selective retention.
 TERMINOLOGIES IN INNOV MAN:
• Process Orchestration Overlapping with the related concept of choreography,
orchestration directs and manages the on-demand assembly of multiple
component services, to create a composite application or business process.
Orchestration tends to imply a single coordinating force, whereas choreography
also applies to shared co-ordination across multiple autonomous systems.
• Product A bundle consisting of a good and/or services for which consumers pay.
• Quality A bundle of product attributes that can be used to describe and compare.
• Reference Price Any product price that is used by a consumer to evaluate
the reasonableness of other prices.
• Shareholder Value The Market Value (# of Shares x Stock Price) of the firm9s stock
held by shareholders, which is determined by the expectations of future
performance of the firm, primarily future revenues, earnings, and cash flows.
• Value Relative worth of a product or prospect
 TERMINOLOGIES IN INNOV MAN:
• Value Calculators Spreadsheet-based applications that business-to-business salespeople
can use to demonstrate the cost-savings or incremental value that the client will receive by
using the supplier9s offerings. Value of the Customer (often referred to as Customer Value)
How much value the relationship with a customer delivers to the firm. Can be calculated on
a current basis to-date basis, an as-is basis, or projected lifetime basis.
• Values Abstract concepts of what is right, worthwhile, or desirable. The values of
management impact how an organization creates value.
• Innovation Management The concept of innovation management encompasses an
integrated approach to managing all dimensions of innovation, from innovation in
products, services and business processes to organizational and business models,
through continuous monitoring, development and improvement processes.
• Innovation An innovation is the implementation of a new or significantly improved
product (good or service), or process, a new marketing method, or a new organizational
method in business practices, workplace organization or external relation. The minimum
requirement for an innovation is that the product, process, marketing method or
organizational method must be new (or significantly improved) to the firm.
1.2 DEFINITIONS of
INNOVATION

• DICTIONARY Definition
• Innovation (Latin-innovare): to make something new.
• (Oxford English Dictionary) Opportunity Exploitation Innovation is a process
that turns new ideas into opportunities and puts these into widely used
practices. (Tidd et al, 1997)
INDUSTRIAL INNOVATION
 • Innovation is one of those words that suddenly seems to be all around us.
Firms care about their ability to innovate, on which their future allegedly
depends (Christensen and Raynor, 2003), and many management consultants
are busy persuading companies about how they can help them improve their
innovation performance.

Politicians care about innovation, too: how to design policies that stimulate
innovation has become a hot topic at various levels of government.
The European Commission, for instance, has made innovation policy a central
element in its attempt to invigorate the European economy. A large amount of
literature has emerged, particularly in recent years, on various aspects of
innovation and many new research units focusing on innovation have been
formed (Martin, 2012).
•There is extensive scope for examining the way
innovation is managed within organizations. Most of us,
are well aware that, good technology can help
companies achieve competitive advantage and long-term
financial success.
•But there is an abundance of exciting new technology in
the world, and it is the transformation of this technology
into products that is of particular concern to
organizations.
•There are numerous factors to be considered by the
organization, but what are these factors and how do they
affect the process of innovation?
• Innovation has long been argued to be the engine of growth. It is important to
note that it can also provide growth, almost regardless of the condition of the
larger economy.
• Innovation has been a topic for discussion and debate for hundreds of years.
Nineteenth-century economic historians observed that the acceleration in
economic growth was the result of technological progress. However, little effort
was directed towards understanding how changes in technology contributed to
this growth.
• Schumpeter (1934, 1939, 1942) was amongst the first economists to emphasize
the importance of new products as stimuli to economic growth. He argued that
the competition posed by new products was far more important than marginal
changes in the prices of existing products.
• For example, economies are more likely to experience growth due to the
development of products, such as new computer software or new pharmaceutical
drugs than to reductions in prices of existing products, such as telephones or
motorcars. Indeed, early observations suggested that economic development
does not occur in any regular manner but seemed to occur in bursts or waves of
activity, thereby indicating the important influence of external factors on
economic development.
Individuals as a key component of the innovation
process.
•Within organizations, it is individuals who define problems,
have ideas and perform creative linkages and associations
that lead to inventions. Moreover, within organizations.
•It is individuals in the role of managers who decide what
activities should be undertaken, the amount & number of
resources to be deployed, and how they should be carried
out.
•This has led to the development of so-called key individuals
in the innovation process, such as inventor, entrepreneur,
business sponsor, etc.
 What is innovation management?
•Innovation management involves the process of managing an
organization's innovation procedure, starting at the initial stage
of ideation, to its final stage of successful implementation. It
encompasses the decisions, activities and practices of devising
and implementing an innovation strategy.

•According to Gartner, innovation management is a business

discipline that aims to drive a sustainable innovation process or
culture within an organization. Oftentimes, these innovation
management initiatives utilize a disruptive method of change to
transform business.
 Innovation management methods
• Broadly speaking, innovation can be incremental, breakthrough or
disruptive.

• Incremental: In an era where businesses are required to constantly reinvent

themselves, incremental innovation helps them thrive by constantly
improving current products, services, processes or methods.
• Breakthrough: A breakthrough innovation refers to technological
advancements that can boost the level of a product or service, within an
existing category, ahead of its competitors.
• Disruptive: Any ideas that are capable of radically changing the market
behavior after being implemented are disruptive innovations.
Achieving innovation management success

• For the innovation management process to be successful, it is

essential that the company support an innovation culture and make
employees feel valued. This will encourage employees to generate
quality ideas in return.

• Organizations can leverage collaborative technology like social

networking to get feedback, which helps generate a steady stream of
ideas from stakeholders both within and outside the company.
• With digital transformation, organizations are faced with the need to
innovate more and innovate quickly. Innovation drives business
growth and helps organizations stay ahead of their competitors.

• Innovation management helps generate new business models and

creates new products, services and technologies designed for the
changing market. Proper innovation management also boosts
customer satisfaction and employee engagement.
 QUESTIONS
1. What is innovation about? (slide #11)
2. What does oxford dictionary tell about opportunity exploitation innovation? (slide #12)
3. What do firms care about according to Christensen and Caynor? (slide # 13)
4. Historically, why does European Commission do to invigorate the European
economy? (slide# 13)
5. What does European Commission Green Paper tell about innovation? (slide# 14)
6. What are the two common ways of using innovation? (slide# 14)
5. What is comprehensive definition of innovation? (slide # 15)
6. What is argued about innovation? (slide # 17)
7. Who is considered the key component of the innovation process? (slide #18)
8. What is involved in innovation management as a process? (slide #19)
9. What is innovation management according to Gartner? (slide #10)
9. What are the three innovation methods? (slide # 20)
10. How can innovation management be successful? ( slide # 21)
WHAT IS INNOVATION?
• • Innovation is both a necessary means and a desirable end for
business in a fast-moving global economy.
• It is about managing a process that delivers either new products
and services to the customers, efficiently, effectively and faster
than the competition, or about enhancing the delivery of existing
products and services by process improvement.
• Generally, innovation involves managing a complex mix of
procedures in a context that often conditions the way the end result
will be achieved (Korona Plus d.o.o. 2013)
ENTREPRENEURSHIP
• The popular and traditional view of entrepreneurship is that of an individual who spots an
opportunity and develops a business; it is understood that entrepreneurs often seem to
have innate talents.
• The subject of innovation management is often covered within ‘entrepreneurship’.
• In a study of past and future research on the subject of entrepreneurship, Howard
Stevenson, who did so much to establish entrepreneurship as a discipline at Harvard
Business School and was Director of the Arthur Rock Centre for entrepreneurship there,
defines entrepreneurship as: the pursuit of opportunity beyond the resources you
currently control. (Stevenson and Amabile, 1999)
• It is the analysis of the role of the individual entrepreneur that distinguishes the study of
entrepreneurship from that of innovation management. Furthermore, it is starting small
businesses and growing them into large and successful businesses that was the traditional
focus of attention of those studying entrepreneurship. This has been changing over the
past 10 years, especially across Europe, where there is now considerable emphasis,
especially within the technical universities, on trying to understand how entrepreneurship
and innovation can help create the new technology intensive businesses of tomorrow.
• Moreover, it is the recognition of the entrepreneur’s desire to change things that is so
important within innovation. The role of an entrepreneur is central to innovation
management.
 TYPES OF INNOVATION IN ENTREPRENEURSHIP
• Process Innovation
---is concerned with improving the processes involved in creating, delivering, and
supporting a product or service.

---is sometimes overlooked, as it doesn’t always generate a direct or measurable

increase in demand or sales.
---this type of innovation can reduce production costs and translate into increased
profits.
---lowest risk, yet it is often underappreciated since the benefits of such changes
might only ever be seen or valued internally.

Some examples of process innovation include:

1. Upgrading equipment and technology to become more efficient.
2. Making the supply chain more predictable and systematic.
3. Modifying business processes and workflows to reduce redundancies.
 TYPES OF INNOVATION IN ENTREPRENEURSHIP
• Business Model Innovation
---is a broader and more complex term than product or process innovation.
Rather than focusing on the introduction of a new or improved product or
service, this type of innovation relates to the way that the product or
service is brought to market.

---is the process of changing the value that will be provided to customers
and how that value will be delivered to generate profit. A retail business
model, for instance, might include delivering value to customers by selling
products in a brick-and-mortar store. In this case, innovation might take the
form of transitioning the store to operate in an online retail format.
TYPES OF INNOVATION IN ENTREPRENEURSHIP
Product Innovation
---includes the development of a new product or the
improvement of an existing one.
---could be as simple as adding a new feature to an
established good or service or as complex as creating a
new one altogether.
---overall goal of this type of innovation is to make the
lives of consumers easier by solving a problem in an
unexpected or unique way.
 TYPES OF INNOVATION IN ENTREPRENEURSHIP
• Business Model Innovation
---is a broader and more complex term than product or process innovation.
Rather than focusing on the introduction of a new or improved product or
service, this type of innovation relates to the way that the product or
service is brought to market.

---is the process of changing the value that will be provided to customers
and how that value will be delivered to generate profit. A retail business
model, for instance, might include delivering value to customers by selling
products in a brick-and-mortar store. In this case, innovation might take the
form of transitioning the store to operate in an online retail format.