Innovation Module

Module 3
Innovation is
the process of turning opportunity into new ideas and of putting these into widely used practice (Tidd &
Bessant, 2009)
the management of all the activities involved in the process of idea generation, technology development, manufacturing and marketing of a new (or improved) product[/service] (Trott, 2008) not just the conception of a new idea, nor the invention of a new device, nor the development of a new market. The process is all these things acting in an integrated fashion (Myers & Marquis, 1969)
Is an unsuccessful new product an innovation? Is the successful introduction of an old product in a new market an innovation? Does all innovation involve new technology? Xerox created the first computer with a Graphic User Interface. Steve Jobs used it to create the first Mac. Who was the innovator?
Desirability and viability are the two variables explain the critical role of MARKETING in the innovation process
Innovative companies are more

Adaptable
Flexible strategy, structure, culture
Competitive
Better processes, services, business models
Innovation= theoretical conception+ technical invention+ commercial exploitation Conception of new ideas is the starting point for innovation. The process of converting intellectual thoughts into a tangible artefact (usually a product or service) is an invention This is where science and technology usually play a significant role. At this stage inventions need to be combined with hard work by many different people to convert them into products that will improve company performance. These activities represent exploitation
Radical innovation, technological revolutions and creative destruction
Another approach, also based on Schumpeters work, has been to classify innovations according to how radical they are (see Freeman and Soete 1997). From this perspective, continuous improvements are often characterised as incremental or marginal innovations, as opposed to radical innovations (such as the introduction of a totally new type of machinery) or technological revolutions (consisting of a cluster of innovations that together may have a very far-reaching impact). In recent writings on the subject the latter type is often called general purpose technologies (GPTs) (Lipsey et al. 2005). .
Schumpeter focused in particular on the latter two categories radical innovation and technological revolutions which he believed to be of greater importance. It is a widely held view, however, that the cumulative impact of incremental or marginal innovations may be just as great (if not greater), and that to ignore these would lead to a flawed understanding of long-run economic and social change. In fact, the realisation of the economic benefits from radical innovations in many if not most cases (including those of the airplane and the automobile) requires a series of incremental improvements
Nikolai Kondratieff / Joseph Schumpeter

virtually all of the economic growth that has occurred since the eighteenth century is ultimately attributable to innovation Schumpeters Creative Destruction
Creative Destruction in Action

Innovate or die
Out of the 1957 Forbes 500, only 74 remained in 1997 Of the top 12 companies which made up the Dow Jones index in 1900 only one (GE) survives
Types of Innovation
Product Innovation Process innovation Organisational innovation Management innovation Production Innovation Commercial/ marketing innovation Service innovation
Innovation may strengthen or threaten existing business models. Schumpeter used the notion creative destruction to characterise the process through which innovation, especially of the market creating and/or organisational type, revolutionizes the structure from within, incessantly destroying the old one, incessantly creating the new one (Schumpeter 1942). More recently, Christensen (1997, 2003) has suggested the term disruptive innovation for innovations that via the exploitation of new markets or market niches gradually undermine the position of existing business models.
Innovation and imitation The distinction between innovation and imitation, although clear enough in theory, is often difficult to draw in practice. This has to do with the fact that something that is well-known in one context may be new in another etc. For example, if A for the first time introduces a particular innovation in one context, and B later does exactly the same in another, would we characterise both A and B as innovators? A common practice, to some extent based on Schumpeters work, is to reserve the term innovator for A and characterise B as an imitator. But one might also argue that it would be correct to call B an innovator as well, since B is introducing the innovation for the first time in a new context. This is, for instance, the definition adopted by the European Unions Community Innovation Survey (see Smith 2005). Moreover, introducing something in a new context often implies considerable adaptation (and, hence, marginal innovation) and, as history has shown, organisational changes (or innovations) that may significantly increase productivity and competitiveness.

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Module 3

Innovative companies are more

Radical innovation, technological revolutions and creative destruction

Nikolai Kondratieff / Joseph Schumpeter

Creative Destruction in Action

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