Change and innovation management(PMGT5033)

Chapter 6
Innovation and innovation process
 Innovation refers to the introduction of a
new quality of a good or a new good,
market, method of production, source of
supply, and organization in an industry.
 An innovation process is a set of steps
between an idea's conception and its
implementation.
6.5, Sources of innovation
some sources of innovation includes:
 Demographic Changes
Demographic changes or trends could include
an ageing population something which is
occurring in many Western countries.
 Changes In Perception
Innovations can arise as a result of peoples
changes in perception.
 New Knowledge
This is a very strong producer of innovation.
Advancements in science and the formation
of new knowledge. Such advancements are
used constantly to create new, innovative
products for us to use. Think of flat screen
technology, electric powered vehicles, solar
energy, wind energy, hydrogen fuel cells, etc.
 Unexpected Occurrences
Unexpected occurrences can be sources of
innovation. There are a number of occasions
that lead to the invention of new things.
 Incongruities
Incongruity as a discrepancy or a difference between what
something already is and what something should be. There
can be incongruities between perceived expectations and
actual customer expectations, between the reality of
something or industry and the assumptions about that thing
or industry.
 Process Needs
Incongruities in a process. Process incongruity would look
for something that is missing within a process or perfecting
an already existing process by replacing a weak link or
creating a new link.
Here we can think of any manual aspects of a process as
examples. Ovens are used daily and then they need cleaning.
Cleaning is a manual process and then came along self-
cleaning ovens.
 The Unexpected Success or Failure
.Unexpected successes and failures are
productive sources of Innovation
opportunities because most organizations
dismiss them, disregard them, and even resent
them.
 Changes in Industry or Market Structure
New opportunities rarely fit the way the
industry has always approached the market,
defined it or organized to serve it. Innovators
therefore have a good chance of being left alone
for a long time.
6.6, Innovation diffusion and adoption
 Definitionof adoption
Adoption process According to Rogers
(1995) Adoption process is a mental process
through which an individual passes from
hearing about an innovation to final
adoption.
 Definition of diffusion
Diffusion is the process by which an
innovation is communicated through certain
channels over time among the members of a
social system. It is a special type of
communication, in that the messages are
concerned with new ideas. Communication
is a process in which participants create and
share information with one another in order
to reach a mutual understanding.
 Differentiation between diffusion and
adoption
Diffusion is a social process while adoption is a
mental and individual process. Diffusion and
adoption are thus closely interrelated concepts
and processes.
Diffusion of innovations refers to the spread of
those innovations through a population, and is
simply the result of a host of individual adoption
decisions. If individual adoption decisions are, to
an extent, predictable, then the larger diffusion
process is also predictable
 Stages in adoption process
The decision to adopt an innovation, involves a
process composed of learning, deciding, and
acting over a period of time. . The way in
which an individual adopts an innovation is
involves the following five steps namely
(North Central Rural Sociology of Farm
Practices, 1955)
a) Awareness Stage
The farmer comes to know the existence of the
new idea but he doesn’t have full information
about the idea. At this stage farmer is aware of
the idea, but lacks detailed information about it.
b) Interest Stage
The farmer develops interest in the innovation and
seeks additional information about it. That means the
farmer acquires more information about an innovation or
idea by wanting to know what the innovation/idea is,
how it works and what are its potentialities .
c) Evaluation Stage
The farmer makes mental application of the new idea in
the present and anticipated future situations and decides
whether or not to try it. He judges the utility of the
innovation, makes an assessment whether the idea is
applicable to own situation and if applied what would be
the result.
d) Trial Stage
The farmer applies the new idea on a small scale in order to
determine its utility or feasibility and applicability in own
situation. If, in the judgment of the farmer, the innovation
has some plus points i.e. applicable to own situation, and if
applied shall in some way or other be of advantage, the
person takes a decision to try it.
e) Adoption Stages
The farmer uses the new idea continuously on a full scale.
Trial may be considered as the practical evaluation of an
innovation. The innovation becomes a part of his normal
farming activity. It provides the advantage of the innovation
and hence the farmer takes final decision and applies the
innovation in a scale appropriate to own situation on a
continued basis.
Elements of diffusion
The four main elements are:
1. Innovation
An innovation is an idea, practice, or object that is
perceived as new by an individual or other unit of
adoption. It matters little, so far as human behavior
is concerned, whether or not an idea is
"objectively" new as measured by the lapse of time
since its first use or discovery. The perceived
newness of the idea for the individual determines
his or her reaction to it. If the idea seems new to
the individual, it is an innovation .
2. Communication channels
Communication defined as the process by
which participants create and share
information with one another in order to
reach a mutual understanding. Diffusion is a
particular type of communication in which
the information that is exchanged is
concerned with new ideas.
3. Time
Time is an important element in the diffusion
process. In fact, most other behavioral science
research is timeless in the sense that the time
dimension is simply ignored. Time is an obvious
aspect of any communication process, but most
(non-diffusion) communication research does not
deal with it explicitly. Perhaps it is a fundamental
concept that cannot be explained in terms of
something more fundamental. Time does not
exist independently of events, but it is an aspect
of every activity.
4. Social system
A social system is defined as a set of
interrelated units that are engaged in joint
problem solving to accomplish a common
goal. The members or units of a social system
may be individuals, informal groups,
organizations, and/or subsystems.
6.7, First movers advantage
First-mover firms are those that enter the
market earlier than other firms and
constitute a pioneer in the field .
Lieberman and Montgomery proposed the
idea of first-mover advantages in 1988 as
“the ability of pioneering firms to earn
positive economic profits” .
The first-mover advantage refers to
an advantage gained by a company
that first introduces a product or
service to the market. The first-
mover advantage enables a company
to establish strong brand recognition
and product/service loyalty before
other entrants to the market.
Advantages of First Movers
 Being the first to develop and market a product comes with
many prime advantages that strengthen a company's
position in the marketplace. For example, a first-mover
often gains exclusive agreements with suppliers, sets
industry standards, and develops strong relationships with
retailers.
Other advantages include:
 Brand name recognition
is the main first-mover advantage. Not only does it engender
loyalty among existing customers, but it also draws new
customers to a company's product, even after other
companies have entered the market. Brand name recognition
also positions companies to diversify offerings and services.
 Economies of scale,
particularly those regarding manufacturing
or technology-based products, is a massive
advantage for first movers. The first mover
in an industry has a longer learning curve,
which frequently enables it to establish a
more cost-efficient means of producing or
delivering a product before it competes with
other businesses.
 Switching costs
let a first-mover build a strong business
foundation. Once a customer has purchased
the first mover's product,
switching to a rival product may be cost-pro
hibitive
. For example, a company using the
Windows operating system likely would not
change to another operating system, because
of the costs associated with retraining
employees, among other costs.
6.8 Innovation decision making process
 The Innovation -Decision Process is an
alternative to the earlier concept of ‘stages in
the adoption process” involving the five
stages : awareness stage, interest stage,
evaluation stage, trial stage and adoption stage
I-D process is the process through which an
individual or other decision making unit passes
from first knowledge of an innovation to a
decision to adopt or reject, to implementation
of the decision and to confirmation of the
decision (Rogers)..
This process involves a series of actions
and choices over time through which an
individual or organization evaluates a new
idea and decides whether or not to
incorporate the new idea into the ongoing
practices or activities.
Five stages are involved in the I-D process
: Knowledge stage, persuasion stage,
decision stage, Implementation stage and
confirmation stage.
 Knowledge stage
This stage occurs when an individual (or
decision making unit) is exposed to the
innovation’s existence and gains some
understanding of how it functions
 Persuasion stage
Persuasion occurs when the individual
forms a favorable or unfavorable attitude
towards the innovation.
 Decision stage
Decision occurs when an individual engages
in activities that lead to a choice to adopt or
reject an innovation.
 Implementation stage
Implementation occurs when the individual
puts his decision on the innovation into use.
Till this stage, the I-D process is a mental
exercise but implementation involves overt
behavior.
 Confirmation stage
Confirmation occurs when an individual
seeks reinforcement of an I-D already made
but the individual may reverse the previous
.
decision if exposed to conflicting messages/
experience about the innovation.