CHAPTER 3 UNDERSTANDING INNOVATION PDF

UNDERSTANDIN G INNOVATION Chapter 3 A241 2024/2025 LEARNING OBJECTIVES To explain the importance of innovation to entrepreneurs. To discuss managing innovation. To describe the types of innovation. To discuss the process of design thinking ...

UNDERSTANDIN G INNOVATION Chapter 3 A241 2024/2025 LEARNING OBJECTIVES To explain the importance of innovation to entrepreneurs. To discuss managing innovation. To describe the types of innovation. To discuss the process of design thinking  DEFINITION OF INNOVATION Innovation refers to the process where ideas are transformed into practical applications, resulting in value creation. It involves bringing novelty into the market, workplace, or society by converting an idea into a real-world product, service, or process (Schumpeter, 1934). Innovation can manifest in various forms: 1.Tangible: Physical products like smartphones or electric vehicles. 2.Intangible: Non-physical improvements like new software, business models, or service processes As organizations and societies evolve, innovation plays a crucial role in driving economic growth, competitive advantage, and organizational survival by continuously adapting to changes in technology, consumer preferences, and market conditions (Tidd THE IMPORTANCE OF INNOVATION TO 2. Stay Ahead of the Competition By continuously innovating, ENTREPRENEUR 1.Offers Products and Services to Targeted Customers businesses can differentiate themselves from competitors, Innovation helps entrepreneurs establishing a competitive advantage design products or services that meet in the marketplace (Porter, 1990). 3. Solves Business Problems the evolving needs of their target Innovative solutions allow market, ensuring relevance and entrepreneurs to tackle challenges customer satisfaction. such as operational inefficiencies, 5. Attracts Investors and Partners Innovation showcases a company’s market changes, or customer demands more effectively (Tidd & potential for growth and Bessant, 2018). sustainability, making it more 4. Boosts Employee Morale and attractive to investors and strategic Productivity partners looking for opportunities in a A culture of innovation fosters dynamic business creativity and engagement, leading to higher productivity and job satisfaction among employees.  MANAGING INNOVATION  MANAGING INNOVATION 1.Recognizing Opportunities 3. Developing the Venture Entrepreneurs must have the ability Careful planning is essential to to spot opportunities amidst determine how the product or service numerous possibilities. can be produced and delivered to the Sources of opportunities include target market. changes in customer behavior, Entrepreneurs must understand that government regulations, market acceptance is uncertain and technological advancements, or shifts requires ongoing assessment and in competitor strategies adjustment 2. Finding Resources 4. Creating Value Turning an idea into reality requires Entrepreneurs need to identify the type of time, money, knowledge, and often, value they aim to generate—be it financial external support. wealth, personal satisfaction, or social Entrepreneurs must evaluate the impact. feasibility of the idea, ensuring it has It’s also crucial to determine how to commercial value and is workable capture and recover the value, ensuring within available resources the efforts invested in innovation result in tangible benefits  TYPES OF INNOVATION (KURATKO & HODGETT, 2007) Invention Duplication Creating something entirely new that did not exist Replicating an existing idea with slight before. modifications or for a new market. Example: The invention of the smartphone—a Example: Uber copied the concept of taxi breakthrough that integrated phone, camera, internet, services but revolutionized it through app- and applications into one device. based ride-hailing, scaling it globally. Extension Synthesis Expanding or enhancing an existing product, Combining existing ideas or technologies to service, or process. create something new. Example: Apple’s iPad extended the smartphone Example: A smartwatch that combines the concept by creating a larger, more versatile tablet functions of a traditional wristwatch with for media consumption, education, and work. health tracking features like heart rate monitoring, step counting, and notifications.  TYPES OF INNOVATION BESSANT & TIDD Product Innovation (2015) Process Innovation Involves the development of new Focuses on improving the or improved products to meet methods of production or customer needs or open new delivery to enhance effi ciency markets. and reduce costs. Example: The introduction of Example: Automation in electric vehicles like the Tesla manufacturing using robotics to Model S, off ering an eco-friendly speed up production while alternative to traditional cars. reducing errors. Paradigm Innovation Position Innovation Refers to changes in the context or perception of a product or Involves a fundamental shift in the service, often by repositioning it in the market. business model or way of thinking, Example: Amazon Echo was initially marketed as a smart speaker changing the way products are primarily for music playback and voice-controlled assistance. created, delivered, or perceived. Example: Netfl ix shifting from a DVD Over time, it has been repositioned as a smart home hub, integrating with various smart devices (like lights, thermostats, rental service to a global leader in and security systems) to enhance home automation and provide a streaming services, disrupting the centralized control system. entertainment industry. This repositioning expands its market appeal beyond just music to becoming an essential part of modern smart homes. UNDERSTANDING Definition: Design thinking is a human- centered approach focused on understanding ESIGN THINKING user needs and developing innovative solutions to meet those needs. User-Centric Focus: It encourages organizations to prioritize the people they are designing for, resulting in better products, services, and internal processes. Impact on Innovation: When implemented effectively, design thinking can lead to innovations that extend beyond mere aesthetics or product development; it can instigate systemic change within organizations, enhancing overall efficiency and  UNDERSTANDING DESIGN 1. Empathize THINKING Research your users’ needs through methods such as interviews, surveys, and observation to gain a deep understanding of their experiences and challenges. 2. Define Clearly articulate and state your users’ needs and problems in a concise way, focusing on the insights gathered during the empathize phase. 3. Ideate Brainstorm and suggest a variety of solutions to the defined problems, encouraging creativity and thinking outside the box to explore innovative ideas. 4. Prototype Develop a prototype or a simplified version of the solution to bring your ideas to life, allowing for tangible experimentation. 5. Test Conduct testing of the prototype with users to collect feedback, which is crucial for refining and improving the solution based on real user experiences. THANK YOU! FOR YOUR ATTENTION