Chapter 3: Sources Of Innovation PDF

CHAPTER 3: SOURCES OF INNOVATION Prepared by: Tewodros wuhib ( Asst prof)  CHAPTER THREE: SOURCES OF INNOVATION 4.1 Sources of new ideas. 4.2 Methods for generating ideas 4.3 Product planning and development process 4.4 Creative problems solving Compiled by Teddy...

CHAPTER 3: SOURCES OF INNOVATION Prepared by: Tewodros wuhib ( Asst prof)  CHAPTER THREE: SOURCES OF INNOVATION 4.1 Sources of new ideas. 4.2 Methods for generating ideas 4.3 Product planning and development process 4.4 Creative problems solving Compiled by Teddy 5/11/2023  4.1 SOURCES OF NEW IDEAS. 3 As reflected in the stories of the millions of entrepreneurs throughout the world, there are many possible sources of ideas. Some of the more useful sources of new business ideas are discussed below.  Observing the Market: Careful observation of markets can reveal a business idea. One can easily observe demand and supply position for various products. Hence, a number of ideas can be generated just by observing the available demand and/or supply of a product/service.  Consumers Entrepreneurs should pay an increasing attention to the requirement of the consumer since the focal point of the idea for the new product or service will revolve around the consumers. This can take the form of monitoring ideas mentioned on an informal basis or formally arranging for consumers to have an opportunity to express their opinions.  Compiled by Teddy 5/11/2023  4.1 SOURCES OF NEW IDEAS. CONTINUE…. 4 A consumer knows best what he wants and the habit/test which are going to be popular in the near future. Contacts with prospective customers can also reveal the features that should be built into a product/service.  Developments in other Nations People in underdeveloped countries generally follow the fashion trends of developed countries. An entrepreneur can discover good ideas by keeping in touch with developments in advanced nations. Sometimes, entrepreneurs visit foreign countries in search of ideas for new products/process.  Study of Project Profiles Various government and private agencies publish periodic files of various projects and industries. These profiles describes in detail the technical, financial and market requirements and prevailing positions. A careful scrutiny of such project files is very helpful in choosing the lines of business. Compiled by Teddy 5/11/2023  4.1 SOURCES OF NEW IDEAS. CONTINUE…. 5  Government Organizations Today several government organizations assist entrepreneurs in discovering and evaluating new business ideas. Government can be helpful in finding out and developing new product ideas in two ways. Providing Advice and Assistance: Development banks, state industries, development/investment corporations, technical consultancy organizations, investment centers, export promotion agencies, etc provide advice and assistance in technical, financial, marketing and other areas of business. Formulating Regulations and Policies: Government identifies the priority sectors for investment through five years plans, industrial policy resolutions and guidelines for industry. In this connection, government publications on trade and industry can also be helpful in discovering business ideas. Compiled by Teddy 5/11/2023  4.1 SOURCES OF NEW IDEAS. CONTINUE…. 6  Existing Companies: Entrepreneurs should also establish a more formal method for monitoring and evaluating the products and services being offered by existing or new companies. Frequently, this analysis uncovers ways to improve on these present offerings resulting in a new venture being formed.  Distribution Channels: Members of the distribution channels are also excellent sources for new ideas. Because of their familiarity with the needs of the market, channel members frequently have suggestions for completely new products. Trade Fairs and Exhibitions: National and international trade fair are very good sources of business ideas.At these fairs, producers and dealers in the concerned industry put up their products for display and/or sale. A visit to these fairs provides information about new products. Compiled by Teddy 5/11/2023  4.1 SOURCES OF NEW IDEAS. CONTINUE…. 7  Hobbies/Interests A hobby is a favorite leisure-time activity or occupation. Many people in pursuit of their hobbies or interest have founded business. If you enjoy, for example, cooking, music, traveling, or sport, you may be able to develop it into a business.  Mass Media The mass media is a great source of information, ideas and business opportunity. Newspapers, magazines television and the like are all examples of mass media. Take a careful look and, for example, at the commercial advertisement in a newspaper or magazines and you may well find business for sale. Complaints: Anytime you hear a customer complain about a product such as I wish there was...if they had...etc there lies an idea for investment. You can either set up a competitor business with such firms offering a better product or sell that idea/product for improvement to the company directly. Talk to people, read comment and reviews on blogs and browse popular forums to gather complaints about that product. Compiled by Teddy 5/11/2023  4.2 METHODS FOR GENERATING IDEAS CONTINUE.. 8 Experience: Many investors find it convenient to choose business ideas in line with their background; this because they understand the terrain better. More than half of business ideas come from experiences at work place.  Research and Development In today‘s globalized world where there is neck-to-neck competition, the need for a separate research and development department is inevitable. To this end, the potential entrepreneur may need to setup a well-fledged department to conceptualize new ideas and develop successful new products. Research and development department creates a conductive atmosphere for the members of the department and even for other employees of the company to unleash their new product ideas. Compiled by Teddy 5/11/2023  4.2 METHODS FOR GENERATING IDEAS CONTINUE.. 9 There are many different idea-generating methods. In fact, many techniques can be combined so that the potential number of methods is very large indeed. Hoverer, in this attention is focused on the four major methods: Conducting Research, Focus groups, Brain storming, and Problem inventory analysis  Conducting Research: An entrepreneur can primarily generate new business ideas by conducting targeted research. It is necessary to estimate future demand and take into account anticipated change in fashion, income levels, technology, etc. Attempts should be made to determine the trend of demand and the composition and pattern of potential users of a product. A survey of the available channels of distribution should also be made. In this connection it will be useful for the entrepreneur to conduct formal or informal research for generating new business idea. Compiled by Teddy 5/11/2023  4.2 METHODS FOR GENERATING IDEAS CONTINUE.. 10  Focus Groups This method consists of a moderator leading a group of people through an open, in-depth discussion rather than simply asking questions to solicit participant response; the moderator focuses the discussion of the group on the new product area in either a directive or non-directive manner. In addition to generating a new idea, the focus group is an excellent method for initially screening ideas and concepts.  Problem Inventory Analysis Problem inventory analysis is another method of generating new ideas. It uses individuals in a manner analogous to focus groups. However, instead of generating new ideas themselves, consumers or group members are provided with a list of problem form a general product category. They are then asked to identify and discuss products in this category that have the particular problem. This method is often very effective, as it is easier to relate known products to suggested problems and arrive at a new product idea than to generate an entirely new product idea by itself. This approach is also an excellent way to test a new product idea. Compiled by Teddy 5/11/2023  4.2 METHODS FOR GENERATING IDEAS CONTINUE.. 11 Market Mapping: - It is a formal technique which involves identifying the dimensions defining a product category. These dimensions are based on the features of the product category. The features will differ depending on the type of product, but indicators like price, quality and performance are quite common. The characteristics of buyers may also be used to provide a more detailed mapping.. Features Stretching: - Innovation involves offering something new. This means looking for ways in which changes might be made. It involves identifying the principal factors which define a particular product or service and then seeing what happens if they are changed in some way. The trick is to test each feature with a range of suitable adjectives such as: bigger, stronger, faster, more often, more fun and so on and see what results from such testing. Product blending: - This technique involves identifying the features which define particular products. Instead of just changing individual features, new products are created by blending together features from different products or services. This technique is often used in conjunction with features stretching. Both features stretching and features blending make good team exercises and can prove to be quite good fun. Compiled by Teddy 5/11/2023  4.2 METHODS FOR GENERATING IDEAS CONTINUE.. 12 Customer Proposal: - A new opportunity may be identified by a customer on the basis of recognition of their own needs. Customer proposals take a variety of forms. At their simplest they are informal suggestions of the ―wouldn‘t it be great if---―type. Alternatively, they can take the form of a very detailed and formal brief.  Brainstorming One of the most popular forms generating new business idea is brainstorming, which takes in to consideration the formation of a group activity. It is based on the fact that people can be stimulated to greater creativity by meeting with others and participating in organized group experiences. The entrepreneur can gather a group of people to discuss and generate new ideas. Compiled by Teddy 5/11/2023  4.2 METHODS FOR GENERATING IDEAS CONTINUE.. 13 Brainstorming is a great technique to identify issues, solutions and opportunities. It can help organizations challenge their thinking, create openings for doing things differently, and get different (hopefully better) results. Tell the group that focusing on quantity will produce ―jewels‖ and ―junk‖ but there is no need to be concerned about the distinction at this point. It will be sorted out later. Brain storming Techniques Free-Form Brainstorming: This is the type of brainstorming where participants express their ideas as they occur. One of the key disadvantages of this type of brainstorming is that quieter, more self- conscious members might not participate unless actively drawn in the process  Round Robin Brainstorming: People contribute ideas in turn, feeling free to ―pass‖ if they have no idea to share in that round. The session is over when everyone passes. This ensures everyone participates.  c) Compiled by Teddy 5/11/2023  4.2 METHODS FOR GENERATING IDEAS CONTINUE.. 14  Mind Mapping: this offers a more graphic approach to scribing responses, than simply listing ideas on a flipchart. One or two people are used as scribes for the group. The process begins by creating a large writing space, at least 4 feet by 4 feet, on a wall. Write the topic statement in circle in the center of this space. Then gather responses and scribe them as lines branching out from the center circle. Participants can either offer new ideas – scribe as new main branched around the circle; or extensions of earlier ideas – scribe as sub- branches of the appropriate main branches. The completed map thus contains a record of key associations among ideas Pencil and Paper Brainstorming: Participants write their ideas first, and then share them, either in turn or anonymously. The advantage of this technique is that it encourages participation by people who might otherwise feel intimidated. Compiled by Teddy 5/11/2023  4.2 METHODS FOR GENERATING IDEAS CONTINUE.. 15 Nominal Group Technique: This is a very structured form of brainstorming that results in the generation and prioritization of ideas. It is particularly useful when a large group is involved in the brainstorming process and when there is a need to take a brainstormed list and synthesize it into several prioritized items. Another advantage is that it reduces the dominance of outspoken individuals and encourages participation by everyone. This brainstorming technique is lengthier and much more structured than the other approaches, but well worth the effort if the group is large and the topic is complex. A group of people put forward their ideas as they think of them, so that each idea has the opportunity to build on other ideas. Brainstorming creates an atmosphere of freedom which is maintained by four basic rules: No evaluation or criticism; encourage wild ideas; build on the ideas of others; and ; strive for quantity. Compiled by Teddy 5/11/2023  4.2 METHODS FOR GENERATING IDEAS CONTINUE.. 16  Brainstorming methods The three main brainstorming methods are of the followings:  Free Wheeling: - Members are encouraged to call out ideas freely and randomly until no one has anything further to add. Ideas are written on a flip chart exactly as they are stated — any editing is a form of judging.  Round Robin: - Each member is asked in turn to contribute an idea. Ideas are written on a flip chart. Members can decline to contribute an idea by saying: ‗Pass.‘ The brainstorming is continued until there is a complete round of passes.  Slips of paper: - Members write down as many ideas as they can imagine. The slips of paper are collected in and the results are written on a flip chart. Compiled by Teddy 5/11/2023  4.2 METHODS FOR GENERATING IDEAS CONTINUE.. 17 Brainstorming Techniques 1. Free Wheeling Method Members are encouraged to call out ideas freely and randomly until no one has anything further to add. Ideas are written on a flip chart exactly as they are stated — any editing is a form of judging. Advantage Spontaneous and open — consequently members are apt to open up and think along more creative lines. Dis-Advantage Individuals can dominate session. Quiet members may be reluctant to participate. Confusion may 1. Round Robin Method Each member is asked in turn to contribute an idea. Ideas are written on a flip chart. Members can decline to contribute an idea by saying: ‗Pass.‘ The brainstorming is continued until there is a complete round of passes. Advantage Difficult for individuals to dominate. Discussion is focused with less chance of straying. Everyone is encouraged to participate. Ideal for building. Dis-Advantage Anxiety may develop while people are waiting for their turn — possibly causing ideas to be forgotten. 1. Slips of Paper Method Members write down as many ideas as they can imagine. The slips of paper are collected in and the results are written on a flip chart. Advantage All contributions are anonymous. Shy people are free to express ideas. Dis-Advantage Creativity may be blocked because there can be no building. The group may not understand something that is written on a slip of paper. Compiled by Teddy 5/11/2023 4.3 CREATIVE PROBLEMS SOLVING 18  Creative problem solving (CPS) is a way of solving problems or identifying opportunities when conventional thinking has failed. It encourages you to find fresh perspectives and come up with innovative solutions, so that you can formulate a plan to overcome obstacles and reach your goals.  Dealing with obstacles and challenges is a regular part of working life, and overcoming them isn't always easy. To improve your products, services, communications, and interpersonal skills, and for you and your organization to excel, you need to encourage creative thinking and find innovative solutions that work. Compiled by Teddy 5/11/2023 4.3 CREATIVE PROBLEMS SOLVING CONTINUE.. 19 Core Principles of Creative Problem Solving  Divergent and convergent thinking must be balanced. The key to creativity is learning how to identify and balance divergent and convergent thinking (done separately), and knowing when to practice each one.  Ask problems as questions. When you rephrase problems and challenges as open-ended questions with multiple possibilities, it's easier to come up with solutions. Asking these types of questions generates lots of rich information, while asking closed questions tends to elicit short answers, such as confirmations or disagreements. Problem statements tend to generate limited responses, or none at all. Compiled by Teddy 5/11/2023 4.3 CREATIVE PROBLEMS SOLVING CONTINUE.. 20 Core Principles of Creative Problem Solving  Defer or suspend judgment. As Alex Osborn learned from his work on brainstorming, judging solutions early on tends to shut down idea generation. Instead, there's an appropriate and necessary time to judge ideas during the convergence stage.  Focus on "Yes, and," rather than "No, but." Language matters when you're generating information and ideas. "Yes, and" encourages people to expand their thoughts, which is necessary during certain stages of CPS. Using the word "but" – preceded by "yes" or "no" – ends conversation, and often negates what's come before it. Compiled by Teddy 5/11/2023 4.3 CREATIVE PROBLEMS SOLVING CONTINUE.. 21 CPS Learner's Model Compiled by Teddy 5/11/2023 4.3 CREATIVE PROBLEMS SOLVING CONTINUE.. 22 1. Clarify  Explore the Vision Identify your goal, desire or challenge. This is a crucial first step because it's easy to assume, incorrectly, that you know what the problem is. However, you may have missed something or have failed to understand the issue fully, and defining your objective can provide clarity.  Gather Data Once you've identified and understood the problem, you can collect information about it and develop a clear understanding of it. Make a note of details such as who and what is involved, all the relevant facts, and everyone's feelings and opinions. Compiled by Teddy 5/11/2023 4.3 CREATIVE PROBLEMS SOLVING CONTINUE.. 23  Formulate Questions When you've increased your awareness of the challenge or problem you've identified, ask questions that will generate solutions. Think about the obstacles you might face and the opportunities they could present. 2. Ideate  Explore Ideas Generate ideas that answer the challenge questions you identified in step 1. It can be tempting to consider solutions that you've tried before, as our minds tend to return to habitual thinking patterns that stop us from producing new ideas. However, this is a chance to use your creativity are great ways to explore ideas during this divergent stage of CPS. Compiled by Teddy 5/11/2023 4.3 CREATIVE PROBLEMS SOLVING CONTINUE.. 24 3. Develop  Formulate Solutions This is the convergent stage of CPS, where you begin to focus on evaluating all of your possible options and come up with solutions. Analyze whether potential solutions meet your needs and criteria, and decide whether you can implement them successfully. 4. Implement  Formulate a Plan Once you've chosen the best solution, it's time to develop a plan of action. Start by identifying resources and actions that will allow you to implement your chosen solution. Next, communicate your plan and make sure that everyone involved understands and accepts it. Compiled by Teddy 5/11/2023 4.3 CREATIVE PROBLEMS SOLVING CONTINUE.. 25 TECHNIQUES OF CPS 1. Synectics Synectics is usually classified as a Creative Problem-Solving (CPS) Technique along with Brainstorming and Lateral Thinking. This problem solving methodology inspires thought processes that the subject might not be aware of. The process was gathered from tape recorded (starting with audio with video coming later) meetings, assessment of the outcomes, and experiments with other methods of coping with the barriers to achievements, in the meeting. In short, if people comprehend the working of creativity, they can improve their ability to be creative. Compiled by Teddy 5/11/2023 4.3 CREATIVE PROBLEMS SOLVING CONTINUE.. 26 2. TRIZ methodology TRIZ (or TIPS – Theory of Inventive Problem Solving) was created by Genrich Altshuller and his coworkers. It is a Russian method of problem solving. This strategy is meant to cultivate the creation of patentable inventions. However, the technique is also helpful for developing non-product solutions. 3. Brainstorming Brainstorming is an individual or group activity by which attempts are made to determine a conclusion for a particular problem by collecting a list of ideas that its members spontaneously contributed. Alex Faickney Osborn popularized the term in Applied Imagination, a 1953 book. Compiled by Teddy 5/11/2023 4.3 CREATIVE PROBLEMS SOLVING CONTINUE.. 27 4. Mind mapping This creativity technique both reframes the situation and cultivates creativity. A mind map is a representation of concepts and ideas in a graphical manner. This visual thinking tool assists with structuring information, assisting with better analysis, synthesis, comprehension, recall and engendering of new ideas. The power of the mind map is traceable to its simplicity. 5. Reversal of problem This approach is about coming up with ideas to solve problems by way of a different/opposite perspective (turning it around: upside-down, inside-out or back to front). Compiled by Teddy 5/11/2023 4.3 CREATIVE PROBLEMS SOLVING CONTINUE.. 28 6. Look beyond something’s common function Split an object into all its individual parts. If you have a description suggesting a function (just like the function of a prong is transporting electricity), describe it in a more generic manner by way of shape, size and the make-up of the material (such as rectangular, flat, small piece of metal). If you call an item an electric plug‘s prong, the description may conceal the fact that the item could also turn into a screwdriver if required. 7. Lateral thinking Lateral thinking is a manner of thinking that looks for a solution to an obstinate issue through unorthodox elements or methods that would usually be disregarded by logical thinking. To be more precise, ―lateral thinking‖ may be defined as a way to solve problems by a creative or indirect approach, utilizing reasoning that may not be obvious straight away or incorporating ideas that cannot be gathered by utilizing only conventional step-by-step logic. Compiled by Teddy 5/11/2023 4.3 CREATIVE PROBLEMS SOLVING CONTINUE.. 29 8. SCAMPER The basis for SCAMPER is the belief that everything new is a variation of something already in existence. SCAMPER is an acronym, and each letter indicates a different method by which the person can toy around with the features of whatsoever it is that is challenging him to come out with new ideas. The letters and their full forms are as follows:  S = Substitute  C = Combine  A = Adapt  M = Magnify  P = Put to Other Uses  E = Eliminate (alternative is Minify)  R = Rearrange (alternative is Reverse) Compiled by Teddy 5/11/2023 4.3 CREATIVE PROBLEMS SOLVING CONTINUE..… 30 Once you have identified the challenge, you need to come up with questions. Utilize the SCAMPER checklist for guidance. Here‘s a sample:  S: What to substitute in my process of selling?  C: How do I blend selling with other activities?  A: What to copy or adapt the selling process of another person or company?  M: What do I put more weight on or magnify when selling?  P: What other uses can I put my selling to?  E: What do I eliminate or make easier in my process of selling?  R: How do I change, reverse or reorder my manner of selling? With the help of these questions, you are pushed to a different viewpoint with respect to your problem and ultimately come up with original solutions. Compiled by Teddy 5/11/2023 4.3 CREATIVE PROBLEMS SOLVING CONTINUE.. 31 9. Root Cause Analysis As the name suggests, Root Cause Analysis deals with identifying the origin of a problem and finding a solution for the same so that the problem is treated at the root level where the real cause exists and not only the symptoms of the problem are treated. Compiled by Teddy 5/11/2023 4.3 CREATIVE PROBLEMS SOLVING CONTINUE.. 32 The Root Cause Analysis Process Step One Define the Problem – It includes seeing what is exactly happening and finding out the specific symptoms of the problem. Step Two Collect Data – It includes finding proof that the problem exists. And finding out how long the problem has existed and the impact of the problem. Step Three Identify Possible Causal Factors – It includes finding the sequence of events that led to the problem, the conditions that allowed the problems to occur; and other problems that surround the occurrence of the central problem. At this step, try your best to find as many causal factors as possible. Compiled by Teddy 5/11/2023 4.3 CREATIVE PROBLEMS SOLVING CONTINUE.. 33 Use these tools to help identify causal factors Appreciation – Use the facts and ask ―So what?‖ to determine all the possible consequences of a fact. 5 Whys – Ask ―Why?‖ until you get to the root of the problem? Drill Down – Break down a problem into small, detailed parts to better understand the big picture. Cause and Effect Diagrams – Create a chart of all of the possible causal factors, to see where the trouble may have begun. i.e Fishbone Analysis Compiled by Teddy 5/11/2023 4.3 CREATIVE PROBLEMS SOLVING CONTINUE.. 34 Step Four Identify the Root Cause(s) – It includes finding out why the causal factors exist and the real reason behind the problem that occurred. Step Five Recommend and Implement Solutions – It includes finding solution to prevent the problem from happening again, implementation of the solution. And the responsibility of the implementation to be given to someone and the risks involved in implementing the solution. Compiled by Teddy 5/11/2023 4.4 CHARACHTERSTICS OF INNOVATION The characteristics of innovations, as perceived by individuals, help to explain 35 their different rates of adoption. Relative advantage is the degree to which an innovation is perceived as better than the idea it supersedes. The degree of relative advantage may be measured in economic terms, but social-prestige factors, convenience, and satisfaction are also often important components. It does not matter so much whether an innovation has a great deal of "objective" advantage. What does matter is whether an individual perceives the innovation as advantageous. The greater the perceived relative advantage of an innovation, the more rapid its rate of adoption is going to be. 2. Compatibility is the degree to which an innovation is perceived as being consistent with the existing values, past experiences, and needs of potential adopters. An idea that is not compatible with the prevalent values and norms of a social system will not be adopted as rapidly as an innovation that is compatible. The adoption of an in-compatible innovation often requires the prior adoption of a new value system. An example of an incompatible innovation is the use of contraception in countries where religious beliefs discourage uthe se of birth- control techniques, as in Moslem and Catholic nations. 3. Complexity is the degree to which an innovation is perceived as difficult to understand and use. Some innovations are readily understood by most members of a social system; others are more complicated and will be adopted more Compiled by Teddy 5/11/2023 slowly. For example, most people living in the villages did not understand germ 4.4 CHARACHTERSTICS OF INNOVATION 36  4. Trialability is the degree to which an innovation may be experimented with in a limited basis. New ideas that can be tried on the installment plan will generally be adopted more quickly than innovations that are not divisible. Ryan and Gross (1943) found that every one of their Iowa farmer respondents adopted hybrid-seed corn by first trying it on a partial basis. If the new seed could not have been sampled experimentally, its rate of adoption would have been much slower. An innovation that is trialable represents less uncertainty to the individual who is considering it for adoption, as it is possible to learn by doing.  5. Observability is the degree to which the results of an innovation are visible to others. The easier it is for individuals to see the results of an innovation, the more likely they are to adopt. Such visibility stimulates peer discussion of a new idea, as friends and neighbors of an adopter ask him or her for innovation-evaluation information about it. Solar panels on a household's roof are highly observable, and a California survey found that the typical solar adopter showed his equipment to about six of his peers (Rogers et al, 1979). Compiled by Teddy 5/11/2023 4.5 COMPONENTS AND PROCESS OF INNOVATION Innovation requires flexibility and37a willingness to try new things while always ensuring constant risk mitigation. What follows are the six essential components of innovation:  Strong, courageous leadership: The leadership of an innovative organization establishes a positive, stable environment where new challenges can be safely taken on. It ensures that costs and risks are properly managed. Moreover, the leadership is engaged in the company framework and respects its infrastructure.  The ability to self-examine: Innovation cannot occur without first knowing what needs to be changed. It‘s key to have a good overview of a company‘s position in the industry in order to pinpoint what needs to be changed about the status quo, as well as what innovations are possible.  Global sophistication: Companies need a deep understanding of current best practices, as well as existing and emerging technology. They need to have a relationship with thought leaders in their industries, as well as connections to professional organizations and institutes of higher education. Compiled by Teddy 5/11/2023 4.5 COMPONENTS AND PROCESS OF INNOVATION  Focus on the customer: Innovation38 is driven by the needs and desires of the customer. It‘s essential to maintain a range of fully developed customer profiles that guide strategies. This enables companies to pinpoint and address unmet needs and wants that fit within their range of products or services.  Active methodology: The methodology for innovation should stand on the shoulders of a company‘s past while always being relevant to the contemporary market. It should be structured, customized, well- developed, and clearly communicated to the workforce. The framework should allow for both flexibility and precision, and it should facilitate continuous improvement.  Imaginative and agile teams: The work environment should encourage innovation by providing employees with opportunities to work in multifunctional teams and collaborate with external experts who contribute a new point of view.  Innovation isn‘t something that happens overnight, but by continuously striving to incorporate these six components, you can help make your company more innovative and globally competitive. Compiled by Teddy 5/11/2023 4.5 COMPONENTS AND PROCESS OF INNOVATION  39 The steps involved in the innovation process are as illustrated below.  1. Begin with a problem  The innovation process starts with a problem or possibly a goal. However, the fact that the business has not already achieved the goal might be considered a problem. So, we can safely say the process begins with a problem. All businesses have problems. Sales could be better, products could be better, processes could be more efficient, costs could be reduced and so on.  2. Convert the problem into a challenge  A well-defined problem is half solved. Once a problem has been identified, it needs to be converted into a challenge. A challenge is a short, concise question that invites creative solutions. Example challenges include: "In what ways might we improve product X?" and "How might we reduce wastage in our manufacturing process?" A challenge may also be in the form of a call to action: "Sketch design ideas for product X" or "Use building blocks to demonstrate ways in which we might combine processes in manufacturing."  3. Challenge colleagues to suggest creative solutions  Once you have a terrific innovation challenge, you need to communicate it to colleagues -- or others such as business partners, customers or even the public -- so that they can generate ideas. How you communicate depends on the method of idea generation you will use for each instance of the innovation process.  4. Collaborative idea generation  Idea generation might be in the form of a brainstorming activity, through the use of real idea management software or a team may be assigned to devise and develop ideas. You could even generate ideas yourself, but as a general rule, diverse teams generate more creative (both in terms of quantity and quality) than individuals at least in the right circumstances.  Note: lots of people think that idea generation is the most important element of the innovation process. It's not. A great idea, unimplemented, is worthless to business. Nevertheless, you do need ideas to keep the process going and creating an environment for generating creative ideas means that the resulting innovations will be more. Innovative! Compiled by Teddy 5/11/2023 4.5 COMPONENTS AND PROCESS OF INNOVATION  5. Combine and evaluate ideas 40  With lots of ideas in the pot, the next step is to combine similar ideas into idea clusters or big ideas. Each idea cluster can be processed as a single idea, thus making the next steps of the process more efficient. This is done, you can then evaluate ideas with an evaluation matrix in which promising ideas are compared to relevant business criteria. The better the idea meets each criterion, the higher its score. In the end, those ideas with the highest evaluation scores are taken to the next step.  Note: evaluators tend to be overly critical of ideas. Hence it is important to ask them not only what does not work with an idea, but also to ask them how these problems might be dealt with in order to improve the idea.  6. Develop ideas  How you develop ideas depends on the innovation challenge and the kind of ideas generated. New product ideas might be developed into prototypes. Process efficiency ideas may be modeled. Marketing ideas may be evaluated in consumer surveys and so on. The purpose of developing ideas is to test them in the business environment and, if no insoluble problems are discovered, prepare them for implementation.  7. Implement ideas  Finally, you are now ready to manufacture your new product, restructure your processes or do whatever is necessary to turn the evaluated and developed ideas into implementations that generate value for the organization. It is at this step that creative ideas grow up and become innovations. Compiled by Teddy 5/11/2023 4.5 CATEGORIES/TYPOLOGY OF INNOVATION The term innovation is often associated with products. When we think about innovation we think about a physical product: a television, car, or digital music player. However, innovation 41 can also occur in processes that make products, services that deliver products, and services that provide intangible products. Many services don‘t involve physical products at all. For example, a hospital or government department offers a range of services without producing products. In this book we focus on innovation in the organizational context, and although product innovation is an impor-tant part of this, it is still only a part. We can say that innovation relates to products, processes, and services. 1.PRODUCT INNOVATION  Product innovation is about making beneficial changes to physical prod-ucts. Product innovation is about making beneficial changes to physical products. Examples include: Introducing a new screen size for TVs ; Changing from a CRT TV to a flat screen ; Adding functionality such as Internet access to TVs  Related terms that are often used interchangeably include product design, research and development, and new product development (NPD). Each of these terms offers a particular perspective on the degree of changes to products. The degree of change can include the following (Wheelwright & Clark, 1992): Incremental improvements; Additions to product families; Next-generation products ; New core products Compiled by Teddy 5/11/2023 4.5 CATEGORIES/TYPOLOGY OF INNOVATION 2. PROCESS INNOVATION  42 Process innovation is about making beneficial changes to the processes that produce products or services, for example: Building new systems that assemble a TV set faster and cheaper; redesigning the assembly line so that TVs can be manufactured more reliably; outsourcing the production of the plastic covers on TVs so costs can be reduced and quality improved  Process innovation can be viewed as the introduction of a new or significantly improved method for the production or delivery of output that interrelated set of activities designed to transform inputs into a specified output for the customer. It implies a strong emphasis on how work is done within an organization rather than what an organization does (Davenport, 1992). Processes relate to all operational activities by which value is offered to the end customer, such as the acquisition of raw materials, manufacturing, logistics, and after-sales service. Compiled by Teddy 5/11/2023 4.5 CATEGORIES/TYPOLOGY OF INNOVATION  A number of common approaches to process innovation have emerged through the work of operations and quality management movements over the past 20 years. Although these may not be applicable to all organizations, they can43stimulate the innovation process. The more common approaches include just-in-time, total quality management, lean manufacturing, supply chain management, and enterprise resource planning. a)Just-In-Time  This approach originated in Japan and was originally designed to improve high-volume production by reducing setup times and other forms of inefficiency such as high inventory. Improvement is achieved through coordination of the flows of materials through a process so that the right material arrives in the correct location just as it is needed. b)Total Quality Management  This seeks to improve the quality of an organization‘s output by eliminating defects, that is, by introducing systems that prevent defects from occurring in the first place. It also engages all employees in the effort toward continuous improvement. It focuses on all aspects of organizational quality rather than just manufacturing quality and encompasses the entire organization. The approach is also characterized by the development of standards such as ISO 9000 and accreditation of organizations to these standards by accreditation bodies. c)Lean Manufacturing  This approach seeks to reduce all forms of waste across the total organizational system in order to increase value. It identifies seven forms of waste: transportation, inventory, motion, waitingbytime, Compiled Teddy overproduction, unnecessary processing, and defective products. The approach 5/11/2023 4.5 CATEGORIES/TYPOLOGY OF INNOVATION 3. SERVICE INNOVATION  Service innovation is about making changes44 to products that cannot be touched or seen (i.e., intangible products). Services are often associated with work, play, and recreation. Examples of this type of service include banking, recreation, hospitals, government, entertainment, retail stores, and education. In the past decade a vast number of knowledge-based ser-vices have been offered through Web sites.  These services involve intangi-ble products, have a high degree of customer interaction, and are usually activated on demand by the customer. Defining a service can be somewhat problematic. Some define service as a sequence of overlapping value-creating activities. Others define service in terms of performance, where client and provider co-produce value. There are three types of services operations: Quasi-manufacturing (e.g., warehouses, testing labs, recycling); mixed services (e.g., banks, insurance, realtors) and pure services (e.g., hospitals, schools, retail)  Services can clearly involve products that form an extended part of the product life cycle, from initial sales to end-of-life recycling and disposal. Service industries in areas such as finance, food, education, transportation, health, and government make up most organizations in any economy. These organizations also need to innovate continuously so they can increase levels of service to their customers. Compiled by Teddy 5/11/2023 4.5 CATEGORIES/TYPOLOGY OF INNOVATION 4. INCREMENTAL INNOVATION Although radical innovations often make headlines,45 most organizations spread the risk associated with innovation by also looking for small or incremental innovations to their products, processes, and services. In fact, some companies shy away from radical innovations altogether, preferring instead to invest in incremental innovation. Incremental innovation is less ambitious in its scope and offers less potential for returns for the organization, but consequently, the associated risks are much less. Apart from using fewer resources, incremental innovations consist of smaller endeavors, making them easier to manage than their larger counterparts. Incremental innovations such as increasing television speaker power or screen size often lead to small changes in growth. 5. RADICAL INNOVATION  The definition of innovation does not refer to the size and scope of the change to the product, process, or service. For example, introducing color television in the mid-1960s was clearly a major or radical change to the established black-and-white TV market. But what if a smaller change were made, such as changing the material of the television cabinet? Innovation can be classified as either radical innovation or incremental innovation. Compiled by Teddy 5/11/2023 4.5 CATEGORIES/TYPOLOGY OF INNOVATION  Radical innovation is about making major changes in something established. Focus is significant in relation to this issue. A change 46 can represent a radical innovation when viewed at a technological level, but the impact may be only incremental when viewed at an organizational level. When we examine innovation, it is the impact at this level that we are interested in. The term radical often refers to the level of contribution made to the efficiency or revenue of the organization (MacLaughlin, 1999).  For example, by introducing the flat-screen television, manufacturers radically increased the demand for such products. We can visualize radical innovation as a step change in some measure of growth such as revenue or efficiency. Most organizations engage in some form of radical innovation over their lifetime.  Radical innovation can threaten to transform the industry itself by destroying the existing market and thus creating the next great wave (Christensen, 1997; Utterback, 1996). Undertaking radical innovation can bring dramatic benefits for an organization in terms of increased sales and extraordinary profits, but it is also highly resource intensive and risk laden.  Compiled by Teddy 5/11/2023 4.5 CATEGORIES/TYPOLOGY OF INNOVATION 5. DISRUPTIVE INNOVATION  47 that transforms business practice and rewrites the Every now and again a radical innovation is introduced rules of engagement. In other words, business practice across an entire industrial sector change radically. Christensen (1997) defines these types of innovations as disruptive inno-vations. Disruptive innovation often occurs because new sciences and technology are introduced or applied to a new market that offers the potential to exceed the existing limits of technology.  Research laboratories usually are the source of disruptive technologies. Many companies watch out for the outcome of this type of technology, and from this they choose potential winners that are quickly adopted for new products and services. Some large companies, such as Intel, have their own internal research lab-oratories but also work in cooperation with universities and other such organizations in order to develop the latest disruptive technologies, which can take many years to develop and exploit successfully.  The driving force in creating disruptive technologies is the same as for any innovation, that is, to add value for customers that will encourage them to purchase products and services over and over from the same organization. However, determining the appropriate technology trajectory to pursue can often be difficult because there are numerous options. The task becomes even more difficult because disruptive technologies initially appear at a lower performance level than that of the existing technology. There are many examples of disruptive technologies introduced in recent years, including the following: Data storage disks; Digital photography; RFID tags; Digital media (music and video) ; The Internet and the World Wide Web; and Text messaging and the mobile phone  Compiled by Teddy 5/11/2023 4.5 CATEGORIES/TYPOLOGY OF INNOVATION 6. OTHER CLASSIFICATIONS 48  Defining the scope of innovation as either radical or incremental is sim-plistic and can be problematic. An alternative product-oriented view of innovation views its scope as consisting of four levels (Olson, Walker, & Ruekert, 1995): products new to the world, line extensions, products new to the organization but not the market, and product modifications.  Another perspective promoted by Tidd, Bessant, and Pavitt (2005) discusses the scope of innovation using the four alternative labels discontinuous, architectural, modular, and incremental. i) Continuous innovations  Continuous innovations to the product require little change to the purchase and consumption behavior in customers. For example, the introduction of fluoride in water, additives in food, and new chemicals in fertilizers or the use of CFC-free refrigerants in refrigerators would appear to have no significant effect on the purchase process or use of the product at least so far as the consumer is concerned. Consumers are becoming more knowledgeable and demanding however, and, with pressure groups raising questions, they are more likely to question certain types of continuous innovations. The introduction of genetically modified (GM) foods has raised fears in consumers‘ minds and made them reluctant to purchase the products without greater proof of their safety. i) Dynamically continuous innovations  Dynamically continuous innovations have a more disruptive effect on the way that the products and services are used. For example, the introduction of the DVD recorder required some changes in routine to ensure that it is used effectively but it operates in a very similar way to previous recording formats. If the innovation is dynamically continuous it can be difficult to explain to customers the advantages compared to existing products or services, especially if the price is much higher.   Compiled by Teddy 5/11/2023 4.5 CATEGORIES/TYPOLOGY OF INNOVATION 6. OTHER CLASSIFICATIONS Defining the scope of innovation as either radical or incremental is sim-plistic and can be problematic. An alternative product-oriented view of innovation views its scope as consisting of four levels (Olson, Walker, & iii) Discontinuous Innovations 49  Discontinuous innovations have a highly disruptive effect upon usage and purchasing patterns and these innovations require a high level of marketing to explain the benefits and to educate consumers about how the product should be used. Microwave ovens had a significant effect on customer lifestyles but it was necessary to explain to customers that the invention was safe; that there were convenience benefits; and that a change in cooking methodology was possible. MP3 players for music downloaded from the Internet have a more disruptive effect on purchasing and usage behavior of customers as they require different customer skills and knowledge.  The more disruptive the innovation is to customers‘ normal purchasing, consumption, and disposal patterns the greater the investment that is needed to educate these customers in respect of why they need the innovation, how they will benefit from it and how they should use it (and not use it). iv) Architectural innovation  Tushman and Anderson (2004: 6) explain that architectural innovation are the changes in the subsystems and linking mechanisms that are necessary to obtain the best benefit from minor technological changes. Innovation can therefore be understood as a knowledge-based process. For small-scale incremental innovations the level of uncertainty, for example, in the expected technical success and customer acceptance of the new offer is likely to be low. Step change innovations involve greater uncertainty but if the organization has the experience, expertise, a track record of innovation and adopts a learning approach, it is likely to be able to predict the outcome of projects with a higher degree of certainty.   Robertson (1967) identified three categories of innovations according to the disruption they cause to customers‘ buying and usage patterns and thus the amount of customer education and promotion that might be needed. The suggestion is that the more disruption, even if the result is a greater benefit to customers, the more education and persuasion is needed. The problem is that providing high levels of customer education can be very expensive and sometimes beyond the means of some smaller organizations that have limited resources and limited capability in many business functions. Compiled by Teddy  5/11/2023 4.5 CATEGORIES/TYPOLOGY OF INNOVATION CHALLENGES, BARRIERS AND WAYS TO IMPROVE INNOVATION  The challenges an entrepreneur‘s faces are immense. They might include: finding ideas, developing a solution, sponsoring and funding, reproduction, etc. There are a number of factors that hinders innovation. These barriers include: A leader is not open to new ideas, time and resources, seen as being too expensive, lack of direction by the organization, etc.  THE CHALLENGES OF INNOVATION 50 1.Finding an idea. Ideas can come from anywhere: concentrated thinking, daydreaming, personal problems, observations of others, a coincidence, or the result of studying something in the world. The idea could be for a problem you want to solve or merely for an experiment you want to follow (hoping he problem it solves will surface later—a scenario often mocked as a ―solution in search of a problem‖).  2. Developing a solution. The idea is one thing; a working solution is another. Leonardo da Vinci sketched a helicopter in the1500s, but it would be centuries before developments in aerodynamics and engines would make even a working prototype possible. Execution demands more effort than idea generation, and it‘s difficult to know how much more until you try. When developing something new, technologies, bank accounts, and people all have a surprising tendency to disappoint, sending humbled innovators back for variations of challenge #1: many smaller ideas need to be found to enable the big idea. Or, the idea is narrowed to make development possible.  3. Sponsorship and funding. If you work for someone else, you‘ll need permission or political influence. The management of innovation— in an MBA sense—is finding, working with, and satisfying sponsors, or positioning an innovation within their political climate and objectives. If you‘re independent, you‘ll need investors or bank loans, and you must complete enough to convince them you‘re worthy of their support.  4. Reproduction. It‘s difficult to scale something: you might design a better mousetrap, but can you manufacture 50,000 cheaply enough to profit? It‘s a different challenge to make thousands of something than it is to make one. Software and new technologies are appealing to innovators because they ease many reproduction challenges (DVDs are cheap to repro- duce, as are websites or servers), but they face issues of scale: having enough bandwidth, speed, or services to satisfy customers. Cheap reproduction also creates ―noise‖: low expenses mean the numbers of competitors can be large, making it hard for customers to find you.   5. Compiled by Teddy 5/11/2023 4.5 CATEGORIES/TYPOLOGY OF INNOVATION CHALENGES, BARRIERS AND WAYS TO IMPROVE INNOVATION  5. Reaching potential customers. An idea is not an innovation until it reaches people. Some trivialize this by saying they ―don‘t do marketing,‖ but the truth is that 51 many innovations fail because they never reach the people they‘re designed for. Great innovations have been lost for decades, recovered only when someone found a way to bring them to the right people. The wheel, the steam engine, and freeze-dried foods were innovations that existed before 100 BCE, but it took centuries for innovators to position each of them in ways the average person could use. Lost Discoveries, by Dick Teresi, details dozens of innovations lost to civilization for generations— failures of marketing and communication more so than of technology.  6. Beating competitors. While you‘re working hard at #1–5, you won‘t be alone. Steve Jobs (Apple) was not the only maker of personal computers. Bill Gates (Microsoft) did not have the only operating system. Jeff Bezos (Amazon.com) did not have the first online bookstore. The opportunity seen by every successful innovator is visible to others, and those who succeed always leave competitors in their wake. Every break- through, at any time, is chased by dozens of talented and motivated people—the wise innovator keeps an eye on her peers‘ work for purposes of collaboration, inspiration, or tactical recognizance.  7. Timing. As great as your idea is, will the culture be ready when it‘s finished? Revolutionary ideas can be too much change for people to handle. Innovations often need to be explained in terms of the status quo, which is why automobiles are rated in horsepower and electric lights in candles. The risk is that a sufficiently advanced idea, regardless of how it‘s positioned, won‘t match the interests or concerns of the moment. Timing is also a factor: what news will break on the day you announce your innovation? What components needed to finish your innovation is delivered late? What will other players and competitors do on the day you launch?   8. Keeping the lights on. While you‘re dealing with all the innovation fun above, the bills will keep coming. Being an innovator doesn‘t give you a ―get out of other obligations free‖ card. Compiled by Teddy 5/11/2023 4.5 CATEGORIES/TYPOLOGY OF INNOVATION CHALENGES, BARRIERS AND WAYS TO IMPROVE INNOVATION 5. BARRIERS TO INNOVATION  There are a number of factors that prevent innovation from occurring. Being able to recognize and work through these factors will help you to create an innovative culture52 in your organization and help you to make your business successful.  The most common barrier to innovation in organizations is a leader or manager that is not open to new ideas. This negatively impacts the team by discouraging creative thoughts. Employees won't be motivated to come up with new ideas if nobody is going to bother listening to them. There are also managers who listen to ideas but are reluctant to take them any further, resulting in lost opportunities.  Managers are also guilty of shooting down ideas before they are given a chance. If employees come up with new ideas, they should at least be given a chance to explain and justify them, rather than have a manger who immediately says ‗no' based on past experiences or because an idea isn't directly in line with the business' regular operations. Just because something hasn't been done before doesn't necessarily make it a bad idea.  Time and resources are also significant barriers to innovation. Employees are often so busy with just doing their regular work that there is insufficient time and incentive to generate new ideas. When ideas are generated, they are not taken any further due to the potential risks associated with developing the idea.  Generally, innovation is also seen to be too expensive for small businesses to get involved in. However, there are cost effective ways to generate new ideas and managers need to look at the potential benefits that come as a result of investing in innovation.  Often, organizations lack direction in terms of innovation. Whilst people require freedom to be creative, some boundaries or guidelines can help focus their efforts and motivate them to achieve outcomes. Without structures in place, the wrong ideas are be prioritized and time and resources can be wasted.  Organizations with the inability to implement and commercialize new ideas are the biggest barrier to innovation. After spending the time, resources and effort to develop an idea, they fail at the final step and the product is never successful in the market. It takes careful management and planning, as well as commitment from an organization, to generate profitable returns from good, innovative ideas. Compiled by Teddy 5/11/2023 4.5 CATEGORIES/TYPOLOGY OF INNOVATION CHALENGES, BARRIERS AND WAYS TO IMPROVE INNOVATION  WAYS TO IMPROVE INNOVATION 53 To improve the level of innovation in your business, first you need to assess where you currently stand. You should be aware of your strengths and weaknesses and understand how they impact on what you are able to achieve.  Firstly, you need to assess the potential within your team for innovation. You need to ensure that you have people who are creative, knowledgeable and motivated to develop new ideas. It is also important to ask them if they have the resources they need to create and develop new ideas. Identifying the people who are likely to be creative will help you to delegate tasks effectively.  Assessing your organization‘s level of innovation means looking at your past successes and failures. Try to work out what made one project a success, where other similar projects didn't work out. Look for areas that you can improve upon and try to learn from past mistakes. You should also look for ideas that didn't work previously and see if they have any future potential. Sometimes an idea will fail simply because of mismanagement or poor timing. Some of these ideas could be updated or adapted and given a second chance.  When assessing your organization's level of innovation, also consider the amount of innovation coming from your competition as well as what is happening in the market. This will help you to decide whether or not you are being innovative enough to remain competitive.  Most importantly, consider whether or not your organization is focusing a sufficient amount of time and resources into developing new ideas. How many employee ideas are actually followed up on after they are initially brought forward? Many organizations miss out on opportunities because they don't put enough effort into developing good ideas.  An innovation audit takes into account the opinions of your customers and your employees. Work out how much you have invested in innovation over a period of time and compare that to the amount of return you have received from your investment. Gather as many opinions and as much information as you can and take the time to identify and work through any issues that are preventing you from being an innovative business.  A thorough understanding of your organization‘s level of innovation will help you to move forward. Identify areas in which you can make improvements and ensure that you commit a sufficient amount of time and resources to these areas. The benefits of supporting an innovative culture in your organization will outweigh some of the initial expenses and should help you to achieve your business goals.  Compiled by Teddy 5/11/2023 THE END !!!!!!!!!