Innovation: Definition, Differences, and Goals

Definition of Innovation

• Involves introducing a new product, service, or process into the marketplace.
• Innovation is invention plus commercial exploitation.

Difference between Invention and Innovation

• Invention is the creation of a new product, service, or process, whereas innovation is its introduction into the marketplace.
• Inventions may not be commercialized, but innovation always leads to commercialization.
• Invention can be autonomous or induced, innovation is usually induced.
• Invention can be for economic or non-economic motives but innovation is an economic motive.
• Invention is usually restricted to an R&D center, while innovation spreads across the organization.
• Invention may bring few changes in the organization compared with innovation that brings organizational change.
• Innovation succeeds invention.

Goals of Innovation

• Improving quality
• Creating new markets
• Extending product range
• Reducing labor costs
• Improving production processes
• Reducing materials
• Reducing environmental damage
• Replacing products/services
• Reducing energy consumption
• Conforming to regulations

Reasons for Innovation

• Incongruities in operations
• Changes in perceptions or needs of the customer
• Demographic changes
• Market changes
• Emergence of new scientific knowledge
• Industry requirements
• Desire to make more profit

Sources/Ideas for Innovation

• Users or customers
• Competitors and foreign manufacturers
• Suppliers of raw materials, components, parts
• Research institutions, universities, internal sales force

Advantages of Innovation

• Increased sales through new products and services
• Enhanced market competitiveness
• Increased profitability

Risks Associated with Innovation

• Undertaking innovation in the wrong direction based on technology forecasting, firm's technology objectives, and strategy.
• Implementation requires substantial funds, efforts, and time.
• Risk of rejection of new products/services by the marketplace.
• Displacement of existing products leading to a decline in sales.
• Employee resistance if it displaces existing products and affects employment.
• Risk of starting a market war with competitors, affecting profits.

Characteristics of Innovation

• It can be applied to all products, services, and processes.
• Innovation leads to significant improvement or development.
• Innovation differs from invention.
• Innovation leads to inevitable organizational change.
• Innovation has an economic motive, seeking profits.
• There can be many sources of innovation.
• Innovation is broader than R&D.
• It involves risk and uncertainty.
• Innovation happens with the first commercial transaction.

Types of Innovation

• Product, Service, or Process innovations
• Open and Closed innovations
• Incremental and Radical innovations
• Modular and Architectural innovations
• Generic and Epochal innovations

Innovation Process

• It involves search and selection, exploration and synthesis, cycles of divergent thinking and convergence.
• Innovation process needs support at three levels: national, enterprise, and individual.

Innovation Process Support Levels

• National Level: Depends upon the national government's policies and support.
• Enterprise Level: Depends upon top management's support and commitment.
• Individual Level: Depends upon the actions and motivation of multifunctional teams and involved individuals.

Innovation Process at Enterprise Level

• Linear Model of Innovation (Traditional Phase Gate Model):
  • Products or services are frozen early to minimize risk.
  • It involves a series of sequential steps where each preceding phase must be cleared before moving to the next.
  • Criteria for passing through each gate and the person at each gate are defined beforehand.

Linear Model Works When

• The time required to innovate is shorter than the rate of change in the environment.
• Quality, reliability, and safety requirements are critical.
• It is safe and suitable for a first-time beginner.

Limitations of Linear Model

• Delayed evaluation or rejection of good projects
• Time-consuming
• Focused on control
• Long review preparation time
• Rigid
• Focused on attaining the target

Two Models for Understanding Linear Innovation Process

• Technology Push Model: Technology drives innovation, involves fundamental research, application research, design, engineering, manufacturing, marketing, and sales.
• Market Pull Model: Integrates user needs in the innovation process, involving assessing customer needs, concept/idea generation, refining the idea, design, engineering, manufacturing, test marketing, and sales.

Innovation Process Flexible Model

• A combination of linear and non-linear approaches has led to the emergence of third-generation models.
• These models include technology push + market pull combinations, R&D + marketing, and cyclical models such as concurrent engineering
• Third generation models attempt to explain radical innovation process in a rapidly changing environment.
• In these models, phases are overlapped.

Concurrent Engineering

• Many organizations focus on new product development and its commercialization during initial innovation process stages.
• Less effort is made during the initial period.
• The focus shifts to attaining process efficiencies during later stages.
• Suitable when the rate of technological change is slow.
• In this approach, product design proceeds at the same time as process design with continuous interaction between two departments.

Failures of Innovation: Internal Causes

• Failure in the Cultural Infrastructure
  • Poor leadership
  • Poor organization
  • Poor communication
  • Poor empowerment
  • Poor knowledge management
• Failure within the Innovation Process
  • Poor goal definition
  • Poor alignment of actions to goals
  • Poor participation in teams
  • Poor monitoring of results
  • Poor communication access to information
• Examples of Internal Causes
  • R&D efforts guided by marketing research/customer preferences
  • R&D efforts not guided by manufacturing capabilities/skills resulting in no manufacturing change/improvement
  • Lack of corresponding change in organizational processes
  • New product launch is not accompanied by change in marketing strategies

Failures of Innovation: External Causes

• Mismatch between price charged and perceived value benefits by the customer
• Mere imitation/copy without any increase in value/utility to the customer
• Competitor introduces disruptive technology or innovation
• Government regulations undergo changes that adversely affect innovation

Innovative Organization Emphasis

• Top management's commitment and support
• Capability/need to manage corporate restructuring and transient senior management
• High degree of flexibility in planning and control
• Effective communication
• Multifunctional teams
• Internal integrity
• Supporting organizational culture and environment

Innovision

• It is the long-term orientation/approach of a nation or organization toward innovation.
• It means building the future through technological excellence, technological leadership, and innovation.
• Exists at macro (national) and micro (organizational) levels.

Innovation Strategies Depend upon

• Government support and policies
• Risk-taking ability
• Organizational goals and policies
• Degree of technological changes
• Degree of competition
• Availability of funds
• Age of the organization

Types of Innovation Strategies

• Innovation leader
• Innovation follower

Change in Innovation Strategies

• From incremental to radical innovation
  • Strategic framing
  • Scouting R&D
  • Idea portfolio
  • High impact research
  • Target selection
  • Rapid product development
  • Rapid commercialization
• From radical to incremental innovation
  • Install various gatekeepers at various stages.
  • Extended budgetary support.
  • Carry out rigorous progress review.
  • Use more controls.

Process of Innovation Management in Projects

• Innovation generation
• Innovation control
• Monitoring results of innovation
• Assimilation

Need of Innovation Management

• Integrate technology into the overall strategic objective of the organization.
• Get into and out of technologies faster and more efficiently.
• Accomplish technology transfer.
• Reduce new product development time.
• Manage large, complex, and interdisciplinary projects and systems.

Essentials for Proper Management of Innovation

• Failures and unsuitable ideas are identified and screened out immediately.
• High-productive teams are created to increase productivity.
• Maximum participation of concerned individuals.
• Strong integration of cross-functional activities.
• Top management's commitment and support
• Planning and control systems with a high degree of flexibility
• Corporate restructuring and transient senior management
• Respect for individual initiative and personal growth
• Building a unified and committed multifunctional team
• Supporting organizational culture and environment
• The manager of the technology must be well-trained and sensitive to the pattern of technology change, market needs, and business opportunities.
• Effective communication within the organization