After reading this chapter, you should be able to do the following: Show
What is Business Innovation?A century ago, Thomas Edison thought deeply about what drives invention or, as we call it today, innovation. One of his famous sayings, “Genius is 1 percent inspiration and 99 percent perspiration,” stresses that innovation involves more than just great ideas. Edison knew from his own experience that the systematic hard work of trial-and-error experimentation paid off. His inventions, like the lightbulb and the phonograph, emerged through thousands of attempts as he refined the process step by step.[1] There are many definitions for innovation and even the innovation experts in today’s business world cannot agree on the definition of innovation. Below are definitions from 15 innovation experts.[2] Which do you think best defines the term “innovation”? Why?
We might give business innovation a more encompassing definition. is “Executing an idea that addresses a specific challenge or opportunity and achieves value for both the company and its stakeholders.” Of course, stakeholders include customers, government, partners, suppliers, shareholders/owners, lenders, society, employees (and their families), and the community. Person wearing a prosthetic legWhen we think of innovation in the great big world, including the innovations of organizations, we might define in more broad terms, such as, “Creating something new that serves people’s needs or wants.” Why Do We Innovate?Innovative ideas are envisioned by individuals, businesses, and governments because of the following reasons.
As commonly said in business, innovation is the only Imperative. In a world where everything changes rapidly, the field of business has been left no other option but to keep pace. Whether the innovation is about making a product more user-friendly or creating a more efficient finance model, Innovation is bound to happen. What is the calculus of innovation? The calculus of innovation is quite simple: Knowledge drives Innovation, Innovation drives Productivity; Productivity drives Economic Growth. – William Brody[3] Where Do Good Ideas Come From?Innovation is the process of taking an idea and putting it into practice. Creativity, on the other hand, is what you do in your head to generate the idea. An innovative idea must be new, original, or improved, and must create value. Once a business has a creative idea it must determine if the idea is feasible to implement. Can it be done? Is it affordable? Are resources available or obtainable? Will it meet the needs of the target audience? Before spending time and money researching and developing a new product or changing a business model, feasibility and risk must be assessed. Watch the YouTube video below, “Where Good Ideas Come From” to learn about where you can find or how you can develop good ideas. [4] Transcript for “Where Good Ideas Come From” Video [PDF–New Tab]. Closed captioning is available on YouTube. Why is Innovation Important?Today, we need innovators more than at any time before. Every organization and business is feeling the impact of globalization, migration, technological and knowledge revolutions, and climate change issues. Innovation will bring added value and widen the employment base. Innovation is imperative if the quality of life in these trying circumstances is to improve. Innovation will make the world a better place for the younger generation.[5] What are the Types of Innovation?We often see innovations in products and services being offered to customers, but there are many other types as well. Innovation can be classified based on the degree of innovation as well as the object of innovation. Degree of Innovationis the concept of growing or improving a company by making a succession of small-scale improvements to existing products, services, processes, and tools. Incremental innovation focuses on improving existing offerings to align with current consumer trends and is considered a relatively low-risk approach. This approach is the most common type of innovation and has helped many companies remain competitive for decades. A few examples:
is the launch of a new business model, concept, product, or service that creates a new market segment and value drivers. Often, disruption comes from a new company, which eventually displaces established market leaders and products. This approach focuses on meeting consumer demands in ways that no other product or service has done before. Disruptive innovation often creates entirely new markets or a fundamental shift in how consumers interact with the current market after the disruptive product is introduced.
Object of InnovationProducts and services are the most common objects to innovate, but there are many types of innovation and they are categorized in many ways. Business Modelis probably the most challenging of the innovation types as it will likely present an organization with major requirements for change. Often, the very capabilities or processes that have been optimized to make a company successful and profitable will become the targets for transformation. In some cases, these changes can threaten elements of the company’s identity and come into conflict with brand expectations or promises.[6] Whereas both product and process innovation can be incremental and moderate, business model innovation is almost always radical, risky, and transformative. When talking about business model innovation, without a doubt, names like AirBnB, Uber, or Spotify will come up. These are perfect examples of fast-moving companies that were able to disrupt age-old markets (hotel, taxi, music) by tweaking or inverting their industry’s traditional business model.[7] Social innovationrefers to a response to a social or environmental problem, which, once adopted, results in better solutions than existing approaches. Social innovations have a transformative impact and improve organizations, communities, regions, or systems. Social innovation can include:
Social enterprises are businesses that pursue a social or environmental mission.[8] In Canada, activity at the governmental level includes the government’s launching of a Social Innovation and Social Finance Strategy to provide better support to community organizations working to tackle social challenges. The strategy includes a Co-Creation Steering Group made up of 16 leaders, practitioners, and experts from multiple fields, including the community, philanthropic, financial, and research sectors, and complemented with public consultation.[9] Product innovationWhen people think of innovation, often, they’re thinking of product innovation. can come in three different forms. 1) The development of a new product, such as the Fitbit or Amazon’s Kindle. 2) An improvement of the performance of the existing product, such as an increase in the digital camera resolution of the iPhone 11. 3) A new feature to an existing product, such as power windows to a car.[10] Drivers of product innovation might be technological advancements, changes in customer requirements and demands, or outdated product design. Product innovation is generally visible to the customer and should result in a greater demand for a product.[11] Service innovationWith the growing economic importance of the services sector, service innovation is playing an ever more significant role in driving growth in today’s knowledge-intensive economy. ensure and enhance the utility, performance, and apparent value of an offering. Some offerings are purely service, such as getting a haircut, hiring someone to paint your house, or taking an Uber to your friend’s place. These are services you may utilize throughout your lifetime. Other service innovations may be combined with product offerings, such as purchasing groceries (products) and having them delivered to your home (service), or buying a new television (product), and purchasing the warranty (service). Service innovations may make a product easier to enjoy, reduce the risk associated with buying a product or may make a product more compelling to buy. Service innovations may simply make your life more enjoyable. Who doesn’t enjoy a visit to the spa? According to SuperOffice, 86% of buyers will pay more for a great customer experience.[12] Consider a business that you have been buying from for several years and answer the following questions.
Process innovationProcess is the combination of facilities, skills, and technologies used to produce, deliver, and support a product or provide a service. Within these broad categories, there are countless ways process can improve. While product innovation is often visible to customers, a change in process is typically only seen and valued internally. Generally, changes in process reduce costs of production more often than they drive an increase in revenue. Of the three types of innovation, process is typically the lowest-risk.[13] Vehicle Assembly Linecan include changes in the equipment and technology used in manufacturing (including the software used in product design and development), improvement in the tools, techniques, and software solutions used to help in supply chain and delivery system, changes in the tools used to sell and maintain goods, as well as methods used for accounting and customer service.[14] One of the most famous and groundbreaking examples of process innovation is Henry Ford’s invention of the world’s first moving assembly line. This process change not only simplified vehicle assembly but shortened the time necessary to produce a single vehicle from 12 hours to 90 minutes.[15] Technological Innovationfocuses specifically on technology and how to embody it successfully in many types of innovations such as products, services, processes, profit models, channels, and customer service engagement innovations. Regardless of the industry or products, technology is likely to be a pillar for businesses because many innovations stem from advances in technology. By embracing AI, machine learning, data science, and automation, businesses can innovate in each of these areas to improve internal processes and external communications. Ultimately, these advances will positively impact productivity, sales, marketing, and customer service.[16] Consider the following examples.
Doblin’s Ten Types of InnovationThe Ten Types of Innovation Framework® is a great way to categorize innovation types. For many years, executives equated innovation with the development of new products. But creating new products is only one way to innovate, and on its own, it provides the lowest return on investment and the least competitive advantage. The Ten Types of Innovation® framework provides a way to identify new opportunities beyond products and develop viable innovations.[21] Doblin’s Ten Types of InnovationWhat is Systematic Inventive Thinking (SIT)?(SIT) is a thinking methodology where creativity takes center stage. It contains five thinking patterns that humans have used for thousands of years. It directly contradicts the principle of ‘thinking outside the box’ and uses ‘thinking inside the box’ as a guiding principle.[22] Studies have found that the majority of new, inventive, and successful products result from only five patterns or templates, which form the basis of the innovation method called Systematic Inventive Thinking (SIT)-or inside-the-box thinking.[23] Most innovators and creative people use patterns and structured thinking to innovate. Agatha Christie, for example, wrote over 60 novels and has sold more books than anyone. She did it by using a familiar template in each of her books. That template helped structure her thinking in a way that made her more creative.[24] This is the essence of a method called Systematic Inventive Thinking (SIT). With SIT, innovation follows a set of patterns that can be reapplied to any product, service, or process. Cognitive FixednessSIT helps you overcome cognitive fixedness. is a state of mind in which you think of an object or situation in one specific way, to the exclusion of any alternative. SIT promotes thinking of objects in various situations and uses. Two PrinciplesAccording to Drew Boyd, a global leader in creativity and innovation, using the five SIT patterns correctly relies on two key principles. The first is the is the notion that the best and fastest way to innovate is to look at resources close at hand. The famous architect Frank Lloyd Wright followed this principle when he created the spectacularly beautiful and unique home in Pennsylvania called Fallingwater. He used existing rocks, streams, and elements around the home as part of the building, visualizing all of the environmental components as part of the Closed World.[25] With the second principle, , you begin with an abstract, conceptual solution and then work back to the problem that it solves. The Function Follows Form Principle is the opposite of the famous “form follows function” principle, which has been followed by many innovators throughout the past century. This principle helps overcome the drawbacks of traditional research-led or design-based innovation. Conventionally, product innovation begins with consumer need identification that’s then translated into functions, therefore the form of the product is identified by the functions the product will be used for by consumers. Most consumers however struggle to articulate unmet needs and would have difficulty imagining a new product that never existed before. For example, people most probably would not have thought of needing a car when horses and buggies were being used for locomotion. There is a famous quote from Henry Ford, “If I had asked people what they wanted, they would have said faster horses.”[26] Five Thinking PatternsSIT applies a backward approach to innovation. Rather than starting with needs in the market, SIT would have you start by applying the five thinking patterns to existing products and services in order to ideate new products and services. After some ideas were generated you would evaluate whether or not these new innovative ideas will fill a need or want of consumers. If they will then you determine if developing these new ideas is feasible for the company (e.g., resources) and if the company can mitigate the risks involved. Surprisingly, the majority of innovative products and services can be explained by just five patterns as listed in table 1.1 below.[27] Check out Drew Boyd’s Pinterest page for multiple examples of each pattern. Table 1.1 Systematic Inventive Thinking (SIT) – Five Patterns
Creative ConstraintSIT uses thinking inside the box as a guiding principle, which means using constraints to help you be more creative in solving problems. can foster innovation when they represent a motivating challenge and focus efforts on a more narrowly defined path. Having some constraints may incite big thinking, while having too many constraints may limit outcomes. Constraints may include limited time, money, or requiring results to include very specific needs. Watch “The Power of Creative Constraints” YouTube Video below to learn more about creative constraints.[28] Transcript for “The Power of Creative Constraints” Video [PDF–New Tab]. Closed captioning is available on YouTube.
To complete this exercise you may need to do a little research on Dolbin’s Ten Types of Innovation first. Have fun testing your memory by matching image cards with text cards to pair each type of innovation. Note: Cards have audio (please adjust audio settings on your device as desired). References(Note: This list of sources used is NOT in APA citation style instead the auto-footnote and media citation features of Pressbooks were utilized to cite references throughout the chapter and generate a list at the end of the chapter.) Which of the following is characteristic of companies that successfully innovate?Innovative companies share common characteristics that include empowerment and trust, team collaboration, leading by example, and listening to customers.
What are the characteristics of innovative companies?The Seven Essential Characteristics of Innovative Companies. Unique and Relevant Strategy. ... . Innovation Is a Means to Achieve Strategic Goals. ... . Innovators Are Leaders. ... . Innovators Implement. ... . Failure Is an Option. ... . Environment of Trust. ... . Autonomy.. What are the characteristics of an innovation?In a series of diffusion studies across multiple areas, Rogers found that innovations that have these 5 characteristics -high relative advantage, trialability, observability, and compatibility, and low complexity- are likely to succeed over innovations that do not.
What makes an innovation successful?In sum, the secret of successful innovation is focusing more on the progress people seek to achieve than on the product that gets them there. Customers can't always tell you what they want, but they can most certainly tell you what they are hoping to accomplish.
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