INNOVATION

WHAT IS INNOVATION
WHAT IS AN INNOVATION?

• It is an idea, practice or object that is perceived as new by an

individual or other unit of adoption.  It is a use of new knowledge
to offer a new product or service that customers want. Thus, it is
• Invention + Commercialization.
• “Innovation is the search for and the discovery, developed,
improvement, adoption and commercialization of new processes,
new products and new organization structures and procedures.”
Invention

1. It’s creation of new product, service or process.

2. May not be commercialized
3. It can be autonomous or induced
4. Can be for economic or noneconomic motive
5. Usually restricted to R&D centre
6. May bring few changes in organization
7. Precedes innovation
Innovation
• It is the introduction of new product, service or process into the
marketplace.
• Results into commercialization
• Usually induced
• Economic motive
• Spread across the organization
• Brings organizational change
• Succeeds invention
Why Innovate
• Turbulent And rapidly changing economy
• Organization prepare themselves to Innovate on a continuing basis
• Otherwise their survival chances are seriously threatened
Characteristics of Innovation
• Relative Advantage
• Compatibility
• Complexity
• Trialability
• Observability
Types of Innovation
• Product Innovation
• Process Innovation
• Business Model Innovation
Product Innovation

Product innovation can come in three different forms.

1) The development of a new product, such as the Fitbit or Amazon’s
Kindle.
2) An improvement of the performance of the existing product, such as
an increase in the digital camera resolution of the iPhone 11.
3) A new feature to an existing product, such as power windows to a car.
• Drivers of product innovation might be technological advancements,
changes in customer requirements, or outdated product design.
Product innovation is generally visible to the customer and should
result in a greater demand for a product.
Process Innovation
• Process is the combination of facilities, skills, and technologies
used to produce, deliver, and support a product or provide a
service. 
• Process innovation can include changes in the equipment and
technology used in manufacturing
• While product innovation is often visible to your customers, a
change in process is typically only seen and valued internally.
• Changes in process reduce costs of production more often than
they drive an increase in revenue. 
Business Model Innovation

• Business model innovation is probably the most challenging of the

innovation types as it will likely present an organization with
major requirements for change. Often, the very capabilities or
processes that have been optimized to make a company successful
and profitable will become the targets for transformation. 
What is Disruptive Innovation
• According to Christensen, disruptive innovation is the process in which a
smaller company, usually with fewer resources, is able to challenge an
established business (often called an “incumbent”) by entering at the bottom of
the market and continuing to move up-market. This process usually
happens over a number of steps:
• Incumbent businesses innovate and develop their products or services in order
to appeal to their most demanding and/or profitable customers, ignoring the
needs of those downmarket.
• Entrants target this ignored market segment and gain traction by meeting their
needs at a reduced cost compared to what is offered by the incumbent.
• Incumbents don’t respond to the new entrant, continuing to focus on their more
profitable segments.
What is Disruptive Innovation
• Entrants eventually move upmarket by offering solutions that
appeal to the incumbent’s “mainstream” customers.
• Once the new entrant has begun to attract the incumbent
business’s mainstream customers en masse, disruption has
occurred.
Incremental , Disruptive , Radical
Innovators
• INCREMENTAL INNOVATORS
• Are existing businesses that innovate as necessary to stay in the game. They remain
relevant without causing an industry-wide stir.

• DISRUPTIVE INNOVATORS
• Are new businesses that challenge existing firms and products. They’re often successful
because they enter the low end of the market, snagging customers largely ignored by
established companies.

• RADICAL INNOVATORS
• Are existing firms that create new information or products that transform the industry.
They rely on a company’s organizational capacity to be successful.
Historical Retrospective of Innovation
• Nineteenth- century economic historians observed that the
acceleration in economic growth was the result of technological
progress.
• Schumpeter was among 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 the marginal changes in the prices of existing
products.
• Early observations suggested that the economic development does
not occur in any regular manner but seem to occur in bursts or
waves of activity , thereby indicating the important influence of
external factors on economic development.
• This macro view of innovation as cyclical can be traced back to the
mid-nineteenth century.It was Marx who first suggested that
innovations could be associated with waves of economic growth.
Abernathy and Utterback contended that at the birth of any
industrial sector there is radical product innovation which is then
followed by radical innovation in production processes followed in
turn by widespread incremental innovation.
• After WWII economists began to take an even greater interest in the
causes of economic growth. During the war military research and
development had produced technological advances and innovations,
including radar aerospace and new weapons. But economists soon
found that there was no direct correlation between R&D spending
and national rates of economic growth.
• A series of studies of innovation were undertaken in the 1950s
which concentrated on the internal characteristics of the innovation
process within the economy. A feature of these studies was that they
adopted a cross discipline approach incorporating economics, OB
and business and management. The studies looked at
• The generation of new knowledge
• The application of this knowledge in the development of products
and processes
• The commercial exploitation of these products and services.
In particular these studies revealed that firms behaved differently.
This led to development of new theoretical framework that placed
more emphasis on the firm and its internal activities than had
previously been the case. The firm and how it used its resources was
now seen as the key influence on innovation.
NEO-CLASSICAL ECONOMICS
• Neo-classical economics is a theory of economic growth that explains how savings,
investment and growth respond to population growth and technological change.
• The rate of technological change influences the rate of economic growth, but
economic growth does not influence technological change . Rather. Technological
change is determined by chance.
• Population growth and technological change are exogenous.
• Neo-classical economics tends to concentrate on industry or economic wide
performance.
• It tends to ignore difference among firms in the same line of business.
• Any differences are assumed to reflect differences in the market environment that
the organisations face.
 RECENT AND
CONTEMPORARY
STUDIES.

SCHUMPETER: It was Schumpeter who argued

that modern firms equipped with R&D
laboratories have become the central
innovative actors.
This evolutionary theory of dynamic firm
capabilities is having a significant impact on the
study of business and management today.
Success in the future, as in the past, will surely
lie in the ability to acquire and utilise
knowledge and apply this to the development
of new products.
Uncovering how to do this remains one of
today’s most pressing management problems.
2.HAMEL,PRAHALAD AND CHRISTENSEN:

1.The importance of uncovering and satisfying the needs of the customer is the most
important role played by marketing and these activities feed into new product
development process.
2.Recent studies suggest that listening to your customers may actually stifle technological
innovation and be detrimental to long-term business success
3.To be successful in the firms may require to pursue innovations that are not demanded
by current customers.
4.CHRISTENSEN distinguishes between ‘disruptive innovation and ‘sustaining innovations’.
5.Sustaining innovations appealed to existing customers, since they provided
improvements to established products.
INNOVATION PROCESS
UNDERSTNADING THE PROBLEM:
 Gathering information
 Clarifying the real problems
 Setting innovation goalposts
IMAGINATION:
 Seeking stimuli
 Uncovering insights
 Identifying ideas
ACTIONS AND IMLEMENTATIONS:
 Developing the innovation roadmap
 Gaining commitment
 Implementing the innovation roadmap