Understanding Innovation

• It involves the introduction of new ideas, products, processes, or services that add value or solve problems, improving existing solutions to better meet market needs.

Key Authors:

• Joseph Schumpeter: Innovation establishes a new production function, emphasizing creative destruction where disruptive innovations overhaul entire industries, driving economic growth and transforming market structures.
• Peter Drucker: Innovation combines technology, methods, new products, production methods, marketing, and new customer groups, viewing innovation as a manageable practice.
• Oslo Manual (OECD): Business innovation is defined as a new or improved product or business process that significantly differs from previous versions and has been introduced to the market or used by the company.
• Tidd & Bessant: Encompasses four dimensions: product, process, position (market shift), and paradigm (business model change).

Types of Innovation by Intensity:

• Incremental: Small, continuous improvements to existing products, services, or processes to enhance efficiency or performance gradually with low risk.
• Radical: Breakthrough changes alter industries or markets, introducing new business models or technologies for a significant competitive advantage.
• Transformational: Introduces ideas that transform markets or create new sectors, profoundly changing how people and companies operate, involving high uncertainty.

Types of Innovation by Nature:

• Product: Development of new or significantly improved goods or services.
• Process: Enhancing production methods or business processes to increase efficiency, reduce costs, or improve quality.
• Organizational: Changes in business structures, practices, or strategies that improve overall performance.
• Marketing: New marketing strategies, distribution channels, or branding to better meet customer needs.

Continuous Innovation:

• It is a sustained, ongoing effort integrated into company culture, leading to regular updates and gradual improvements.

• Involves fostering a culture of innovation via employee incentives and creative spaces, implementing agile methodologies, using technology for analysis and prediction, and integrating innovation as a standard process.

• Innovation should be new, profitable, and requires knowledge and system development.

• Innovation management includes procedures that allow new ideas and economic benefits to be generated in an organization.

• Provides tools to facilitate continuous, profitable innovation as a standard process

• Successful innovations advance society and improve social welfare by addressing existing problems and difficulties.

Broader Economic Benefits:

• Job creation
• Increased productivity
• Improved quality of life through technology advancement. Innovation also benefits organizations by providing large gains, temporary market dominance, and brand revaluation.

Internal Benefits:

• Enhanced organizational capacity
• Improved management
• Streamlined processes
• Cost reduction. Companies can also gain competitive advantages, enter new markets, and improve operational efficiency.

Key Participants in Innovation:

• Initiators or triggers, pushing knowledge boundaries to generate innovation. They may or may not be inventors.
• Developers: They Collaborate to make the idea concrete.
• Innovation managers: They make the innovation profitable.
• End-users: Receive enhanced products or services that better meet their needs.

Internal Factors:

• Organizational culture
• Leadership
• Available resources
• Capabilities

External Factors:

• Technological advances
• Economic changes
• New consumer demands
• Changing regulations

Innovation Strategies:

• Market Pull: Driven by customer needs and market demands, responding with products that meet current demands.
• Technology Push: Initiated by technological advancements, allowing companies to develop previously unimagined products.
• Coupling Model: Integrates market needs with technical and organizational capabilities to develop innovations.

Types of Innovation:

• Closed: Companies develop new products, services, or technologies internally.
• Open: Companies seek external ideas, knowledge, and resources from universities, startups, suppliers, and clients to promote collaboration and accelerate development.
• It involves cooperative management models where innovation is acquired or sold on the market, not just produced or consumed internally.

Organizational Structures for Innovation:

• Centralized: Manages all innovation initiatives with strategic alignment and resource centralization, but may lack agility.
• Decentralized: Led by each functional area, adapting to specific needs and generating diverse ideas, but risks duplication and coordination issues.
• Hybrid: It balances control with flexibility through self-contained teams reporting to a central unit.

Innovation Roles:

• Innovation Committee: Defines the innovation process with members from key departments and possibly external contributors, defining tasks, communication, strategic action, and project selection, portfolio planning, monitoring, and control.
• Innovation Circles: Disseminate innovation culture to solve challenges.
• Chief Innovator Officer (CIO): Leads and promotes innovation.
• Innovation Unit: Manages specific projects.

Strategic and Technological Watch :

• Systems for obtaining external information, analyzing it, and distributing it to relevant personnel to create innovative solutions.
• It involves capturing information about new scientific knowledge, technology, organization, and processes to anticipate changes.
• It also Includes systematizing the collection, analysis, and distribution of external information to identify opportunities.

Sources of Information:

• Informal Sources: Suppliers, company knowledge, exhibitions, customers, consultants, competitors, networks, congresses, and seminars.
• Formal Sources: Databases, scientific publications, regulations, journals, libraries, catalogs, theses, directories, and patent offices.

Key Patent Offices:

• Spanish Patent and Trademark Office: www.oepm.es
• European Patent Office: www.european-patent-office.org
• United States: www.uspto.gov
• World Intellectual Property Office: www.wipo.int

Foresight Tool:

• 9V Matrix: used to explore the future of science, technology, and society.
• It aims to identify technologies and research areas likely to provide economic and social benefits
• It uses long-term strategies to predict technology and science scenarios, and their effect on the organization to discover potential disruptive innovations.

Stages of Technology Adoption:

• Introduction: A new technology starts with a promising idea and uses previous analysis for improvement and innovation.
• Rapid Growth: The product introduces market segmentations to gain recognition, substantially increasing performance.
• Maturity: The technology reaches its performance limit.
• Decline: Strategy shifts, and new generations replace or remove the old product, introducing it in special market areas.

Impact vs. Effort Matrix:

• It prioritizes innovation areas by filtering according to criteria.

Criteria for Evaluating Innovative Solutions:

• PMI: Positive, negative, interesting
• SCAMPER: Substitute, combine, adapt, modify, put to other uses, eliminate, reverse
• Commonly used criteria for analysis of ideas are: Adaptation, originality, feasibility, cost, time, intellectual property, and durability.

Components of a Business Case:

• A detailed explanation of an idea with a brief analysis of business possibilities, including aspects like needs, technical and legal feasibility, competence, market potential, process steps, resources, financial analysis, objectives, scope, and the proposed innovative solution.

Business Case Should Include:

• Clients: Needs, segments, and distribution channels.
• Solution: Description, value to customers, and alternatives.
• Strategy: Fit with current strategy and required resources.
• Financial Aspects: Market size, price, and costs.
• Risks: Identification and prioritization.

Steps for Planning Innovation Projects :

• Project Breakdown
• Manager Assignment
• Estimation
• Risk Management
• Critical Path Determination
• Communication and Documentation (GANTT CHART)

Types of Indicators:

• Input: Resources used.
• Process: Actions transforming inputs.
• Output: Tangible result.
• Outcome: Long-term effect.
• Impact: Long-term effect on society.

Profitability Factors:

• Payback Curve: It is used to measure time to recoup innovating investments, considering the time to detect the opportunity.
• Returns on Innovation: It can be direct (money) or indirect (knowledge, talent attraction, ecosystem relationships, and brand impact).

Financing innovation:

• Own Financing: Involves self-financing through profits and reinvesting contributions.
• External Private Financing : Includes incubators and business angels.
• Investors : Venture funds and family offices.
• External Partners: It includes industrial groups.