Introduction to innovation
DEFINITIONS
DIMENSIONS
DRIVERS
GRADES
What is innovation?
Innovation From a European Commission Perspective
Innovation is the successful production, assimilation and exploitation of
novelty in the economic and social spheres.
► “The renewal and enlargement of the range of products and
services and the associated markets;
►The establishment of new methods of production, supply and
distribution;
►The introduction of changes in management, work organisation,
and the working conditions and skills of the workforce.”
European Commission’s Green Paper on Innovation
What is innovation?
Innovation is the process and outcome of creating
something new, which is also of value.
►Innovation involves the whole process from
opportunity identification, ideation or invention to
development, prototyping, production marketing
and sales, while entrepreneurship only needs to
involve commercialization (Schumpeter).
What is innovation?
► Today it is said to involve the capacity to quickly
adapt by adopting new innovations (products,
processes, strategies, organization, etc)
► Also, traditionally the focus has been on new
products or processes, but recently new business
models have come into focus, i.e. the way a firm
delivers value and secures profits.
What is innovation?
Schumpeter argued that innovation comes
about through new combinations made by
an entrepreneur, resulting in
◦a new product,
◦a new process,
◦opening of new market,
◦new way of organizing the business
◦new sources of supply
What is innovation?
Gary Hamel argued that today’s market
place is hostile to incumbents, who now
needs to conduct radical business
innovation:
◦Radically reconceiving products and services, not
just developing new products and services
◦Redefining market space
◦Redrawing industry boundaries
What is innovation?
► Innovation From a World Perspective
► The improvement of existing or the creation of
entirely new products, processes, or services.
► The transformation of existing conditions into
preferred ones.
► The creation of new value for the world.
At its root INNOVATION IS CHANGE
Innovation-Why does it
Matter?
It is the core driver of modern
economic growth.
90% of the variation in the growth of
income per worker across nations is
attributed to innovation.
Drivers for innovation
► Financial pressures to reduce costs, increase
efficiency, do more with less, etc
► Increased competition
► Shorter product life cycles
► Value migration
► Stricter regulation
► Industry and community needs for sustainable
development
Drivers for innovation (cont.)
► Increased demand for accountability
► Demographic, social and maket changes
► Rising customer expectations regarding service
and quality
► Changing economy
► Greater availability of potentially useful
technologies coupled with a need to exceed
the competition in these technologies
Dimensions of innovation
There are several types of innovation
◦Process, product/service, strategy,
which can vary in degree of newness:
◦Incremental to radical,
and impact:
continuous to discontinuous
Grades of
Innovation
Innovation-a metaphor
Incremental Innovation
The new product incorporates a few new elements, absent in the
previous one, without changing the basic functionalities.
Distinctive Innovation
Although possessing some traits similar to previous
products, the new product incorporates attributes
which correspond to previously non-existing
functions.
Disruptive Innovation
Complete break-up with previously existing products. It may arise in
response to the satisfaction of a certain need, or by creating a new
need which previously did not exist.
New conditions for
innovation
Small start-up entrepreneurs increasingly depend on large firms:
◦ as suppliers or customers
◦ for venture finance,
◦ for exit opportunites,
◦ for knowledge (production, markets and R&D)
◦ and for opening new markets.
New conditions for
innovation
Large firms increasingly depend on small start-ups
◦for NPD,
◦as suppliers of new knowledge (which they cannot
develop themselves),
◦or organizational renewal, for experimentation with
busienss models,
◦for opening new markets, etc
New developments in innovation
raises new issues and problems
► Greater emphasis on commercializing scientific
discoveries, particularly in IT and the bio-sciences
► Speed and potential value of scientific progress leads to
emphasis on solid and well-designed portfolios of
research projects
► Universites as active drivers of innovation: Academic
entrepreneurship and the entrepreneurial university
► University-industry partnerships
► Increased search for radical innovation and top-line
growth.
Q&A
