LEARNING UNIT 1

WHAT IS INNOVATION? LEARNINGUNIT1

Contents

1.1 INTRODUCTION 10
1.2 THE PHASES OF INNOVATION 11
1.2.1 EXPLORATION 13
1.2.2 EXPLOITATION 14
1.2.3 DIFFUSION 15
1.3 ATTRIBUTES OF INNOVATION 18
1.4 CONCLUSION 18
1.5 SELF-EVALUATION QUESTIONS 18

LESSON UNIT NUMBER 1

TITLE OF TOPIC What is innovation?
TITLE OF UNIT What is innovation?
NOTIONAL STUDY HOURS 6
NUMBER OF PLANNED SELF- N/A
REFLECTIVE ACTIVITIES
NUMBER OF ASSESSMENT LINKED N/A
ACTIVITIES
NUMBER OF E-TUTOR ACTIVITIES N/A
(Where necessary/applicable)

AIM OF LEARNING UNIT 1

The aim of learning unit 1 is to explore what innovation really is and what types of
innovation there are. Additionally, we will explore the theories of innovation or
frameworks we can employ to explain the various facets of innovation. The topic will build
the fundamental knowledge necessary for more detailed discussions on what innovation
involves and how to manage innovations from multiple perspectives.

LEARNING OUTCOMES FOR UNIT 1

After studying this unit, you should be able to:
● Interpret the importance of innovation for business and the national economy.
● Distinguish between invention and innovation.
● Describe the steps involved in undertaking innovation.

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● Distinguish between individual and corporate innovation.

● Analyse the factors that can cause innovations to fail.

KEY CONCEPTS IN UNIT 1

You need to understand the following key concepts to attain the learning outcomes for
this learning unit
● innovation
● diffusion
● exploitation
● exploration
● invention

SYSTEMATIC OVERVIEW OR LEARNING UNIT 1

Figure 1.1 provides an overview of learning unit 1

Figure 1.1: A systematic overview of learning unit 1

1.1 INTRODUCTION

Reading: To complete learning unit 1, you should study part 1, chapter 1 of

your prescribed textbook (Smith, 2015)

When we hear the word “innovation” we often think of futuristic inventions which are
often connected to highly sophisticated and complicated technology. Innovations such as
a re-usable rocket designed by Space X; or a new form of currency, such as crypto
currency, are most likely the examples that come to mind when one thinks of innovation.
However, innovations are not bound to technology or sophisticated computer-based
inventions. Innovation can take simple yet effective forms, such as a simpler method of
doing something, for example an easier way to peel potatoes (which can still require a
new product but is much less sophisticated than a designing a rocket that can be re-used).
“Innovation” is also a term which is used widely in various facets of our society. Businesses
use the term to indicate a differentiated position from competitors; governments state

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innovation as a key to economic and social prosperity and financial institutions use
innovation as a key predictor of success for stocks. As such, innovation is a critical
component of a growing and evolving world.
When considering the definition of innovation, one can determine that innovation
consists of three main ideas:
1. newness
2. novelty
3. implementation or commercialisation – turning the newness and novelty into a
commercially viable product
Study the section “Innovation – what’s the big deal?” on pg 33 of the prescribed book for
a detailed understanding of what is innovation.

LEARNING ACTIVITY 1.1

Complete this e-tutor activity, using the Discussion Forum option 1.1 on myUnisa

Can you find examples of innovations that comply with the three elements of the
definition of innovation (newness, novelty and implementation or commercialisation)?
Identify the innovation and explain it in relation to each of the three elements of the
definition of innovation. In what way is the innovation you have identified different from
an invention?
Read the responses of other peers. Comment on two postings of your peers

FEEDBACK

Comment on e-tutor activity: The students should search for innovations and explain them in
relation to newness (which refers to slight changes in innovations, such as a new flavour of
cold drink), novelty (explains a completely new element, such as re-usable rockets) and
implementation ( relates to a product that is commercially available, such as the iPhone). The
specific innovation identified by the student may not comply with all criteria, but it is
important for the e-tutor to see if the student can take a practical example and apply the
three components of innovation to it. The student should also explain the difference between
the innovation he or she picked and an invention in general. Broadly, an invention is not
necessarily commercialised, but all innovations are commercialised.

1.2 THE PHASES OF INNOVATION

Study the section “The phases of innovation” on pages 35 to 57 in

Smith (2015)

A new idea does not appear on the market overnight. Similarly, a good invention does
not always become an innovation, as the inventors may fail to commercialise or diffuse

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the invention to the broader public. The three distinct phases of innovation is depicted in
figure 1.2 below:

Figure 1.2: Phases of innovation

Learning activity 1.2

This is an individual activity.

Read the following article:

https://www.lee.k12.nc.us/cms/lib03/NC01001912/Centricity/Domain/2150/The%
20Evolution%20of%20Digital%20Photography.pdf

Can you categorise the three phases of innovation for digital photography? Discuss
how each step contributed to the innovation of digital photography

FEEDBACK

Comment on the article: The invention of photography has a long-standing history; however
digital photography is a more recent innovation. One can ask the student how he or she
perceives the transition from film photography to digital photography. This may well be the
exploration phase. Exploitation is where Kodak failed to capture the new invention in the firm.
Other companies, such as Fuji , and later cell phone companies, like Apple and Samsung,
capitalised on the idea. Exploitation of the idea can be seen with the release of digital
cameras, and diffusion is more widely accepted when digital photography became a regular
and key selling feature for many smartphones.

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1.2.1 EXPLORATION

Study the section “Exploration” on pages 38 to 47 in Smith (2015)

Although the concepts “innovation” and “invention” are often used interchangeably,
there is a significant difference between them. Innovation is a subset of invention and
requires a different range of capabilities. There are numerous definitions of invention and
innovation. Invention can best be described as discovering something new, while
innovation refers to changing what has been invented and applying it commercially.
According to Smith (2015), most innovations have a degree of novelty about them, and
this newness and novelty are captured in most definitions of innovation.
The exploration phase of innovation relates more to invention, where we are on an active
search for something new. This phase of innovation is often triggered by a specific factor
that sets the process of exploration in motion. The three main events that can occur are:
● Idea generation: This is essentially a cerebral process whereby individuals conceive
something new. Idea generation is often a result of a subset of three possible
scenarios:
– Problem-related – some kind of problem or bottleneck tends to be the trigger that
generates an idea for a potential new product or service that will help to solve a
problem.
– Associative – Associative processes are similar in as much as they also tend to
revolve around an individual rather than a group. They are informal rather than
structured.
– Serendipitous – serendipitous processes are even more haphazard and informal.
They rely entirely on chance, especially chance events that have nothing to do with
innovation. Quite literally a chance event gives rise to a spontaneous moment of
inspiration.
● Scientific discovery – Science is concerned with the systematic acquisition of
knowledge.
● Technological breakthrough – A technical or technological breakthrough is one that
involves the application or development of technology to create something that
advances capability or technique, leading to improved performance.

LEARNING ACTIVITY 1.3

Complete this activity under the Discussion Forum option 1.3 on myUnisa
There are three examples of inventions at the links below. Classify each invention into
either idea generation, scientific discovery or technological breakthrough and provide a
motivation for the classification. Justify whether it is possible to have an invention in more
than one category.

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A. Example 1: Nike Air Zoom Alphafly Next%

Read more on the invention here: https://time. com/collection/best-inventions-2020/
5911372/nike-air-zoom-alphafly-next/
B. Example 2: More Inclusive Gaming Logitech Adaptive Gaming Kit
https://time. com/collection/best-inventions-2020/5911314/logitech-adaptive-gaming-
kit/
C. Example 3: The Roll-Your-Own Whiteboard 3M Post-it Flex Write Surface
https://time.com/collection/best-inventions-2020/5911406/post-it-flex/

FEEDBACK

Comment on discussion forum: Inventions can be placed in various categories. Shoes and the
whiteboard seem to fit in with idea generation and the gaming system with technological
breakthrough. Compare your reasoning with that of your peers in the discussion and try to
clearly explain the reasons why you have given a specific classification to each example. Try
to discuss more examples with your peers, especially those that could fall within the Scientific
discovery category.

1.2.2 EXPLOITATION

Study the section “Exploitation” on pages 47 to 53 in Smith (2015)

The essence of the exploitation element of innovation is to find an appropriate way of

unlocking what Chesbrough (2006: 64) describes as the ‘latent value’ of a technology to
generate real value. More simply stated, the exploitation phase is where we put plans in
place to ensure that our invention sells and that we make money from the invention.
We can employ the use of business models as a framework to allow us to create and then
capture as much value from potential customers as possible. Any entrepreneur or
inventor must have a business model idea in order to explain how value will be captured
for their product or service.
A business model is defined as an enabling device; that is, a tool that allows inventors to
profit from their ideas and inventions.
The prescribed textbook notes three types of business models:
● Incorporating technology into the current business (When Samsung creates a new
feature for their cell phones such as 5G compatibility or an upgraded camera).
● license the technology to a third party (Production companies that license their movies
and series to Netflix.)

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● launch a new venture to exploit the technology in new business areas (Space X is a
good example here.)
There are however many more business models that one can employee to create and
capture value from an invention. In their book “Business Model Generation” Osterwalder
and Pigneur (2010) mention several types of business models which can be used for this
exact purpose. The long tail, multi-sided platforms, FREE and many more models are
discussed in their book. Regardless of the strategy, they recommend that one follows a
simple business model canvas when trying to exploit new ideas.
You can find the business model canvas here:
https://www.alexandercowan.com/business-model-canvas-templates/
This is an excellent resource which covers the main functions of any working business
model and ensures that you have answers to how you will create and capture value.

1.2.3 DIFFUSION

Study the section “Diffusion” on pages 53 to 57 in Smith (2015)

Diffusion refers to the rate of acceptance and use of an innovation. One may have
generated a good idea in the exploration phase and even put together a functional
business model which is capable of creating and capturing value, but if the innovation is
not accepted by the users, it will be considered an unsuccessful innovation. A lack of
diffusion often results in failed innovations.
In our current highly technologically reliant and connected world, we are noticing faster
adoption or diffusion of new innovations than ever before. Figure 2 below shows the time
it took each product to gain 50 million users:

Figure 1.3: Time it took to reach 50 million users

Source: https://search.creativecommons.org/photos/949328e8–fe3d-4f59–aecd-111878855ffd

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Rogers (2003) has done some of the most significant work in the field of innovation
diffusion and have put forward a model for us to understand how this works in general.
This model explains the rate of diffusion one can depend on:

Figure 1.4: Diffusion of innovation model

Source: “The Law of Diffusion of Innovation” by Gavin Llewellyn

The model above shows that innovation diffusion often starts slow, with only a few users
adopting it early on, and then growing as the products or services become more popular,
widely advertised and accepted by users. It is critical to understand the groups of users in

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order to communicate the correct value that they will receive and customising your
product or offerings to each group.

LEARNING ACTIVITY 1.4

This is an individual report writing activity

In 2011 over 50 million BlackBerry devices were sold. With their popular messaging
service BBM, these devices were the go-to device of the time. However, companies, like
Apple and Samsung, currently dominate the market in terms of smart devices.
Do some additional research on BlackBerry and write a brief report (1 page) on what
caused this innovation to fail. Can you link it to the characteristics of the innovation itself,
as noted by Rogers (2003)?

FEEDBACK

BlackBerry failed to keep up with the times, stubbornly sticking with its trademark physical
keyboard rather than adopting an iPhone-like full touchscreen, which quickly became
fashionable. By 2016, BlackBerry was selling only about 4 million devices annually. BlackBerry
exists today only as a shadow of its former self, but the company’s devices paved the way for
the super-powered smartphones we are carrying around today. From Roger’s (2003)
framework:
● Relative advantage – with new smartphones entering the market, the blackberry offered
little improvement and therefore lost any relative advantage as an early mover in this
industry.
● Compatibility – many new apps on smartphones were not compatible with the old
operating system of the blackberry.
● Complexity – Ironically, the more complex smartphones with better features were the ones
who gained market share, it was the simplicity or user-friendliness of the blackberry that
probably kept a few users for the company.
● Trialability – Not really applicable in this case.
● Observability – By 2011 most people could observe the benefits of having a blackberry,
but the observable benefits of a smartphone, such as an iPhone, was gaining much more
traction than the blackberry.
You could also note that Apple, for example, had many more early adopters in comparison to
blackberry, which caused the diffusion of innovation of the iPhone to happen much quicker
than blackberry, resulting in the downfall of blackberry. This can be tied to the relative
advantage created by the overall brand perception and marketing of the Apple devices as the
leading products in the cellphone categories.

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1.3 ATTRIBUTES OF INNOVATION

Study the section “What does innovation involve? The attributes of

innovation” on pages 55 to 57 of the prescribed book.

So far, we have considered the definition of innovation and explored the activities, such
as exploration and exploitation within innovation. What is currently lacking is
understanding how individuals innovate. What exactly does this process entail? The
features or attributes of innovation make innovation inherently difficult; and an aspiring
innovator must be aware of these features or attributes they will eventually come across.
The following are some important features or attributes of the process of innovation:
● uncertainty and risk
● trial and error
● failure
● fits and starts
● perseverance
● collaboration

Watch the video below on the invention of the first digital computer. Note how the
inventory struggled during this process and how these problems were solved in the
innovation process.
Atanasoff and the Computer; an Invention that Changed the World.
https://www.youtube.com/watch?v=ZXnO5HFBZK4&ab_channel=JacobSiepker
Credit: Jacob Siepker

1.4 CONCLUSION
Innovation is much more than gadgets and technology as it requires a keen business
sense to exploit the value created by the innovation. It is critical to understand how the
innovation is diffused or adopted to determine how to manage each user group in the
diffusion model. The process of innovation is often difficult and can contain many failures
before an innovation is successfully exploited.
Each of the facets of innovation that this learning unit has touched on is now considered
in more depth in the learning units that follow. An overview of the chapters and the work
to be covered is presented in this section of the prescribed book (Smith 2015:21).

1.5 SELF-EVALUATION QUESTIONS

Read the Twitter case study in your prescribed textbook in chapter 1 (Smith
2015:58) and answer the questions that follow:

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1. Describe the phases of innovation in general.

2. What triggered the start of the exploration phase of the innovation process for
Twitter?
3. How was the initial phase of exploration conducted, and who participated in this
process and why?
4. What was the business model employed to facilitate exploitation of the idea for
Twitter?
5. How has your understanding of innovation in general changed after working through
the learning unit?

FEEDBACK AND GUIDELINES ON THE SELF-EVALUATION QUESTIONS

1. The concepts of a) exploration; b) exploitation; and c) diffusion are discussed in and the
phases of innovation are explained in figure 1.2, Smith (2015:5–6) & Smith (2015:7–19).
2. The idea or trigger event first came about as an idea that came out of a brainstorming
session at the podcasting company Odeo. The event was declined sales which thus can
categorise the trigger event as idea generation (idea generation is essentially a cerebral
process whereby individuals conceive something new). Within the sub-category of
problem-related some kind of problem or bottleneck tends to be the trigger that generates
an idea for a potential new product or service that will help in solving a problem.
3. The initial phase of exploration was done via a brainstorming session.
The individuals present were Jack Dorsey who originally put forward to Odeo’s co-
founders, Evan Williams and Biz Stone, the idea of a text-based communications platform
whereby groups of friends could keep track of what each of them was doing based on
their status updates. Additionally, a software developer, Noah Glass, was a big part of the
process. These individuals were part of this process as strategic leaders in the firm
charged with coming up with new ways to grow the firm. They also had a set of
specialised skills needed to contribute to the exploitation of the idea.
4. Odeo’s business model was seriously in trouble as its original investor, Apple, started a
podcasting service which directly competed with theirs. The founders decided to buy their
company back from the investors. By doing this, they acquired the rights to the Twitter
platform. The student can argue that he or she either incorporated the technology into
the current business or launched a new venture to exploit the technology in new business
areas. Either argument can be seen as valid.
5. This is a reflective question open to the student’s interpretation/perspective.

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