Transcript innovation
MME 1208 TECHNICAL ENGLISH-II yücel birol Innovation = Creativity + Commercialization What is innovation? ● innovation is the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organisational method in business practices, workplace organisation or external relations. ● The main driver for innovation is often the courage and energy to better the world. ● An essential element for innovation is its application in a commercially successful way. ● Innovation has changed human history (consider the development of electricity, steam engines, motor vehicles) What is innovation? 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. Today it is also said to involve the capacity to adapt quickly by adopting new innovations (products, processes, strategies, organization, etc) 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? ● Technological innovations are defined as new products and processes and major technological modifications to products and processes. ● An innovation is considered performed if it is introduced to the market (product innovation) or implemented in the production process (process innovation). ● Innovation includes many research, technological, organizational, financial and commercial activities. Non technological innovation ● Many innovations are of a non-technological nature, for example in areas such as marketing, organisation, management and design. ● They are not primarily driven by a technological invention or improvement, and hence referred to as non-technological innovations. ● Nevertheless, technology is used as an enabler to support most of today's innovations, even when technology is not the main focus or driver of the innovation. Types of innovation Product innovation Process innovation Marketing innovation Organisational innovation Technological innovations Social innovations Business Model innovation product innovation Product innovation involves the introduction of a new good or service that is substantially improved. This might include improvements in user friendliness, components and materials, software in the product, functional characteristics, technical abilities or any other dimension. Process & marketing innovation Process innovation A new or significantly improved production or delivery method. This includes significant changes in techniques, equipment and/or software. Marketing innovation development of new marketing methods with improvement in product design or packaging, product promotion or pricing. Organisational & technological innovation Organisational innovation involves the creation of new organizations, new organisational methods in business practices, ways of running organizations or new organizational behavior, workplace organisation or external relations. Technological innovations based on specific technology, invention, discovery Social & business model innovation ● Social innovations in critical historic periods more important than technological ones (mail, educational systém, social systém, health care,..) ● Business Model innovation involves changing the way business is done in terms of capturing value e.g. Compaq vs. Dell. Degree of novelty Incremental innovations Radical innovations Systemic innovations innovation management innovation management encompasses an integrated approach to managing all dimensions of innovation, from innovation in products, services and business processes to organisational and business models, through continuous monitoring, development and improvement processes. Bench marking A management tool for comparing performance against an organisation that is widely regarded as outstanding in one or more areas, in order to improve performance. What is Creativity? there are three basic ingredients to creativity: Domain skills - Domain skills are developed as one becomes an expert in a field. To be a creative metallurgical engineer, one must first master the fundamentals of the discipline. Creative thinking skills - Creative thinking skills include seeking novelty and diversity, being independent, being persistent, and having high standards. Intrinsic motivation - Intrinsic motivation implies that the reasons for doing things come from within, from passion and pleasure, not as a result of external demands, pressures, or rewards. Portrait of a Creative Person Creative people pay attention to their world, see things differently, challenge assumptions, take risks, are not afraid to fail and strive to generate multiple solutions to problems. They are passionate about creativity and seek opportunities to innovate. Six Tips To Help You Enhance Your Creativity 1. Open Your Mind - Have one new experience every day; no matter how small. New experiences stimulate the brain and help you make new and original connections; critical for boosting breakthroughs. 2. Diversify - Involve others in your problem-solving efforts who bring a different perspective or cultural experience than yours. Six Tips To Help You Enhance Your Creativity 3. Mental Floss – Relax; Stress, exhaustion, boredom and even pain can block our pathways to creativity. 4. Stop Looking For the Right Answer - Look for many right answers. 5. Discover Your Creative Rhythm - Start paying attention to when you get your best ideas. 6. Health Makes Wealth - Regular exercise not only benefits your body, it boosts brain performance as well. … and another one: Find what you love to do “We know that people do their most creative work when they love doing what they’re doing. There’s no substitute for intrinsic motivation, that is, motivation that comes from within. Although such motivation doesn’t guarantee creativity, dislike or lack of interest in work practically guarantees non-creativity.” Classical models of innovation ● Science Push approaches suggest that innovation proceeds linearly: Scientific discovery invention manufacturing marketing ● Demand Pull approaches argued that innovation originates with unmet customer need: Customer suggestions invention manufacturing Characteristics of successful innovating companies Systematic collection of all impulses that could lead to innovation Creativity of employees Ability to evaluate the possibility of the innovation idea Good team work Project-based approach and ability to manage projects Characteristics of successful innovating companies Cooperation with external experts (universities, research laboratories…) Proper rate of risk-taking Employees’ motivation (the employees are willing to improve the product and the operation of the whole company) Continued education of employees Ability to finance the innovation activities Characteristics of successful innovation process Research and development (R&D) Production Marketing Innovation is an opportunity for something new, different. It is always based on change. Innovators do not view any change as a threat but as an opportunity. Three conditions for innovations ● Innovation means work, hard, concentrated and thorough work. If these qualities are lacking then there is no use for the big talent, cleverness or knowledge. ● Successful innovations must build on your strong points. The innovation must be important to the innovator. ● Innovation must focus on a market, must be controlled by the market (market-pull). Degree of novelty Diffusion New to the firm New to the market New to the world Disruptive innovations Degree of novelty Diffusion ● is the way in which innovations spread, through market or non-market channels, from their first worldwide implementation to different consumers, countries, regions, sectors, markets, and firms. ● Without diffusion, an innovation will have no economic impact. ● The minimum entry for a change in a firm’s products or functions to be considered as an innovation is that it must be new (or significantly improved) to the firm. Degree of novelty New to the firm: A product, process, marketing method, or organisational method might already have been implemented by other firms, but if it is new to the firm (or in case of products and processes: significantly improved), then it is an innovation for that firm. Degree of novelty New to the market: the firm is the first to introduce the innovation onto its market. The market is defined as the firm and its competitors. The geographical scope is subject to the firm’s own view of its operating market and thus can include both domestic and international firms. Degree of novelty New to the world: the firm is the first to introduce the innovation for all markets and industries, domestic and international. implies a qualitatively greater degree of novelty than new to the market. Degree of novelty Disruptive innovations: an innovation that has a significant impact on a market and on the economic activity of firms in that market. focuses on the impact of innovations as opposed to their novelty. These impacts can, for example, change the structure of the market, create new markets, or render existing products obsolete. However, it might not be apparent whether an innovation is disruptive until long after the innovation has been introduced. Innovation activities are all scientific, technological, organisational, financial and commercial steps which actually, or are intended to, lead to the implementation of innovations. Some innovation activities are themselves innovative, others are not novel activities but are necessary for the implementation of innovations. Innovation activities also include R&D that is not directly related to the development of a specific innovation. Classifying firms by degree of innovativeness The innovative firm is one that has introduced an innovation during the period under review. The innovations need not have been a commercial success – many innovations fail. An innovation active firm is one that has had innovation activities during the period under review, including those with ongoing and abandoned activities. In other words, firms that have had innovation activities during the period under review, regardless of whether the activity resulted in the implementation of an innovation, are innovation active. Classifying firms by degree of innovativeness A potentially innovative firm is one type of “innovation active firm”, that has made innovation efforts but not achieved results. This is a key element in innovation policies: to help them overcome the obstacles that prevent them from being innovative (converting efforts into innovations) – Annex for developing countries.