Unit 1: Definition and Concepts of Innovation PDF

UNIT 1 Definition and Concepts of Innovation Unit 1. Definition and Concepts of Innovation 1. Concept and definition of innovation 2. Innovation versus research 3. Ways to innovate Concept and definition of innovation To innovate is to bring something new and yet unknown into a given c...

UNIT 1 Definition and Concepts of Innovation Unit 1. Definition and Concepts of Innovation 1. Concept and definition of innovation 2. Innovation versus research 3. Ways to innovate Concept and definition of innovation To innovate is to bring something new and yet unknown into a given context. This implies that to innovate is to go against routine, and for this reason it is an activity that has to face obstacles and resistance from individuals and organisations (Velasco Balmaseda 2010) The "Frascati Manual" (OECD/FECYT 2002) indicates that innovation is the transformation of an idea into a new or improved saleable product or into an operational process in industry and commerce. So, innovation is an idea that sells. In other words, an idea, invention or discovery becomes an innovation the moment it finds its way to the market. Innovation & quality management Innovation? “Innovation is the set of activities, within a given time and place, that lead to the successful introduction of an idea in the form of new or improved products, services or management and organisational techniques into the market for the first time.” (Pavón and Goodman; 1981) Innovation & quality management Concept and definition of innovation Innovation is synonymous with producing, assimilating and successfully exploiting a novelty, in the economic and social spheres, in such a way that it provides new solutions to problems and thus makes it possible to respond to the needs of people and society. (Green book of Innovation; EU (1995)) Innovation & quality management Innovation? “The introduction of a new product, a new production process, a new marketing method, a new organizational method in the company”. Oslo Manual (OECD, 2005) Innovation & quality management Concept and definition of innovation Based on the Oslo Manual definition: Innovation is the transformation of an idea into: a new or improved in an operational in a new method of social saleable process in industry service. The key aspect is the product, and commerce, commercial aspect of innovation, if there is no market introduction, there is no innovation. Innovation & quality management  Concept and definition of innovation https://youtube.com/shorts/I e71AG9Ev0I?si=fYOjdJGrHpcP aGMA Innovation & quality management Concept and definition of innovation: Joseph Schumpeter (1883-1950) Joseph Schumpeter, an Austrian economist, who was one of the first authors to highlight the importance of technological phenomena in economic growth. For this author, innovation is one of the three key phases of economic development and technological progress, the other two being invention and dissemination (Velasco Balmaseda 2010). This author considered that inventions do not imply any economic activity, they are considered an exogenous factor, and he focused on the economic aspects of innovation. At irregular intervals, companies select some of the existing inventions and through these they introduce a new production function. Innovation & quality management Concept and definition of innovation Innovation is not: ✓ Necessarily, creating new products. ✓ Inventing something that cannot be commercialised. ✓ Research. ✓ Necessarily, a process linked to technology. ✓ Necessarily, a process that generates economic progress. ✓ To have ideas ✓ Easy Innovation & quality management Concept and definition of innovation Innovation requirements: ✓ An idea ✓ A novelty ✓ Added value ✓ Answering the needs (gap) ✓ Success in commercialization ✓ Changes ✓ Opportunities analysis ✓ Overcome obstacles ✓ Economic or social progress Innovation & quality management  Concept and definition of innovation: why to innovate? new idea + added value = Innovation Innovation = novelty & value new to the company new to the market new to the sector Joseph Schumpeter: innovation is "a new combination of existing resources” The tool through which entrepreneurs are able to take advantage of change to create different companies, products or services. ‘A nation's competitiveness depends on its industry's Innovation is the systematic analysis of changes to ability to innovate and improve. Firms gain turn them into business opportunities. Peter F. competitive advantage through innovation’. Drucker Michael E. Porter Innovation & quality management Concept and definition of innovation: why to innovate? Value Chain Analysis, M. Porter Innovation & quality management Concept and definition of innovation: Where to innovate? Innovation for Schumpeter For Schumpeter, innovation would include the following five cases (Escorsa, Castells and Pasola 2003): A NEW GOOD A NEW PRODUCTION METHOD A NEW MARKET A NEW SOURCE OF SUPPLY OF RAW MATERIALS OR SEMI-PRODUCTS (semi- manufactured) A NEW STRUCTURE IN A MARKET (e.g. the creation of a monopoly position) Innovation & quality management  Concept and definition of innovation: where to innovate? Innovate in a new production method: new way of doing things: F1 pit stop https://youtube.com/shorts/2N4 ECR- OmVI?si=dL6OUWtNqGnpiVlm Innovation & quality management Concept and definition of innovation: where to innovate? Technological innovation examples: ✓ New material: Graphene ✓ New components or subsystems: Airbag, circuit boards ✓ New products based on simple principles: electrical toothbrush ✓ New complex system: Autonomous vehicle, internet ✓ New packaging or way of use products: drinking ibuprofen, coffee ✓ Use of new ingredients (substitutive): Fiber optics, bags (environment) ✓ New procedures by using new equipment: 3D printers to build prototypes Innovation & quality management Concept and definition of innovation: where to innovate? Commercial innovation examples: ✓ New use of a product: Spotify, Netflix ✓ New ways of product distribution: Franchising, online shopping, vending machines ✓ New use of a known product: marketing with influencers, pet trolley ✓ New commercial systems: paypal, 1-click payments in Amazon, Vinted Innovation & quality management Innovation versus research Innovation ≠ Research Innovation & quality management Innovation versus research Innovation? Research is not essential to innovate (it is one of the ways to ACCESS TECHNOLOGY) Acquisition of technology Embedded technology (in capital goods) Licences Technical assistance Agreements with other companies (Alliance) Innovation & quality management  Innovation versus research In the analysis of the innovation process, it is advisable to separate R&D (research and technological development) from other activities. R&D is in turn broken down into three types: ✓ Basic or fundamental research. ✓ Applied research. ✓ Experimental or Technological development. Innovation & quality management Innovation versus research: Basic Research Definition Type Objective Comments Basic research Original works Analyze: Formulate: The results do not aimed at acquiring Properties Hypothesis aim at any specific new scientific Structures Theories objective. knowledge about Relations Laws They are usually the foundations of Discovering published in fairly phenomena and what already or highly observable facts. exists in nature specialised publications. geomarketing, leadership, finance, marketing innovations…. Innovation & quality management  Innovation versus research: Applied Research Definition Type Objective Comments Applied research Original works that aim Study: Practical The results to acquire new scientific Possible uses of the objective generate: knowledge but are results of basic determined. A unique oriented towards a research To invent what product. specific practical New methods and does not exist. A limited objective. means to achieve number of a specific products. objective. A limited number of operations, methods or systems. Results are patentable. Innovation & quality management Innovation versus research: Experimental or Technological Research Definition Type Objective Comments Experimental or Use of scientific It carries out: Launches a concrete Usually ends with technological knowledge for the Systematic work innovation on the the testing and trial development production of new based on existing market. of a prototype to a materials, devices, knowledge (from pilot plant. procedures, applied research systems or services or practical with substantial experience) improvements. Innovation & quality management Innovation versus research Innovation & quality management Innovation versus research: https://youtu.be/1QztwBzcVaw?si=01_e97TdleyN9yQs Innovation & quality management Innovation versus research: https://youtu.be/PjdSBS0ab2s?si=rwo6O6FHcfWrwZb_ Innovation & quality management Ways to innovate: Types of innovation Product INNOVATION Technological - nature & object- Process Commercialization Non-Technological Organization Innovation & quality management Ways to innovate: Types of innovation Innovation & quality management Ways to innovate: Types of innovation A company is innovative to the extent that it brings novelties to its reference market. Following the examples proposed by: Vilà and Muñoz-Nájar (2006): Innovation & quality management Ways to innovate: Types of innovation Innovation & quality management Ways to innovate: Types of innovation Innovation & quality management Ways to innovate: Types of innovation Innovation & quality management Ways to innovate: Types of innovation Innovation & quality management Ways to innovate: Types of innovation Innovation & quality management Ways to innovate: Organization Steve Jobs personally designed Pixar's facilities to encourage the exchange of ideas and collaboration. A main atrium was created where the bathrooms, lockers and cafeteria area are located, with the purpose of forcing people from different departments to meet. Innovation & quality management Ways to innovate: Types of Innovation; examples Innovation & quality management Ways to innovate: Types of Innovation; examples They concern fundamentally new applications of a technology, or an original combination of known INNOVATION Radical technologies, resulting in Grade of novelty comp letely new products or processes. These are those that introduce minor changes to existing products, exploiting the design potential. Incremental Often these types of innovations reinforce the dominance of the established company. Innovation & quality management Ways to innovate: Innovation - reminder Radical innovations produce very important improvements in results, without cost improvement being the relevant variable. On the other hand, incremental innovation takes shape, above all in the reduction of costs. Disruptive innovations. See this video: https://hbr.org/video/2688242135001/the- explainer-disruptive-innovation Innovation & quality management Ways to innovate: Knowledge as a basis for innovation Precisely, it can be said that innovation is any change ADDED VALUE that is based on knowledge and that generates value. This expresses that innovation has: Knowledge + change ➞ Value as its goal, ➞ Change as the way and ➞ Knowledge as its basis. Innovation & quality management Ways to innovate: Knowledge as a basis for innovation; Knowledge types Not all knowledge is of equal interest to innovate and create competitive advantages. In this sense, it is important to distinguish between "Know About" and "Know How". Know About , i s e x p l i c i t For its part, the know-how is fundamentally knowledge that is manifested in tacit. It is based on in skills and factual information, acts and competencies that manifest themselves in events, in theoretical approaches the achievement of certain outcomes (e.g. or user manuals. It is therefore product design). The difficulty of codifying eas ily t rans ferable between tacit knowledge makes it difficult, in terms of individuals and organisations. Its cost and time, to transmit it to other people coding potential and the simplicity and organisations. As codification is not of its communication mean that it possible, the appropriatio n of tacit can be considered as a public knowledge can only be achieved through good. experience and practice Innovation & quality management  Ways to innovate: Knowledge as a basis for innovation; Knowledge types The differentiation between explicit and tacit knowledge has an impact on strategic management. Given the easy communication capacity of explicit knowledge, the risk of copying or imitating it is very high, so it is difficult to base a competitive advantage sustainable over time. Characteristics Transmission Examples Explicit Systemized, Easy transferable Instruction manual codified Tacit Personalized, no Difficult to Competences and codified communicate skills for the work Innovation & quality management Ways to innovate: Knowledge as a basis for innovation; Knowledge types Innovation & quality management  Ways to innovate: Knowledge as a basis for innovation; Knowledge types Operational organisation Innovative Organization Structure Bureaucratic structure. Specialisation Flat organization without excessive and division of labour. Hierarchical hierarchical control. control. Processes Operational units controlled by senior Processes aimed at generating, selecting, management, who carry out strategic collecting and developing ideas. planning, financial resource allocation and operational planning. Reward systems Economic compensation, hierarchical Autonomy, recognition, capital promotion, symbols of power and participation in new projects. status. People Recruitment and selection based on The crucial need is to find idea generators the needs of the organisational who combine the necessary technical structure to obtain specific skills: knowledge with a creative personality. functional and staff specialists, Managers must act both as sponsors and managers and operational workers. as orchestrators. Innovation & quality management Thanks!