The Concept of Innovation and Innovation Management Week 4 The Concept of Innovation and Innovation Management Managing Innovation

Outline Innovation – what it is and why does it matters Models of innovation Innovation as a management process

Innovation – what is and why does it matters innovation is … new stuff that adds value for various stakeholders can be monetized  creates a competitive advantage  and is sustainable until the advantage erodes

Innovation – what is and why does it matters 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)

Innovation – what is and why does it matters Innovative Thinking Innovative thinking goes beyond the mere creation of business. “Ideas come from people. Innovation is a capability of the many.” Innovative thinking is an integrated mindset that permeates individuals and organizations.

Innovation – what is and why does it matters Who does it matter to? Entrepreneurs starting up a venture Established enterprises trying to grow Governments (local and national) Trade and sector bodies Supply chain ‘owners’

Innovation – what is and why does it matters innovation is … Innovation is driven by the ability to see connections, to spot opportunities and to take advantage of them. But innovation is not just about opening up new markets – it can also offer new ways of serving established and mature ones. Of course, technology often plays a key role in enabling radical new options. At the other end of the technological scale there is scope for improvement on an old product, often using old technologies in new ways.

Innovation – what is and why does it matters innovation is … Innovation is of course not confined to manufactured products; plenty of examples of growth through innovation can be found in services. Public services such as healthcare, education and social security may not generate profits but they do affect the quality of life for millions of people.

Innovation – what is and why does it matters Innovation matters… not only at the level of the individual enterprise but also increasingly as the wellspring for national economic growth. Importantly innovation and competitive success are not simply about high-technology companies. According to Statistics Canada,16 the following factors characterize successful small- and medium-sized enterprises: Innovation is consistently found to be the most important characteristic associated with success. Innovative enterprises typically achieve stronger growth or are more successful than those that do not innovate. Enterprises that gain market share and increasing profitability are those that are innovative.

Innovation – what is and why does it matters Innovation, Creativity, and Entrepreneurship Creativity is typically described as the process of generating new ideas. Innovation takes creativity a step further by being a process that turns those ideas into reality. Innovation is the process by which entrepreneurs convert opportunities (ideas) into marketable solutions.

Innovation – what is and why does it matters Innovation & Entrepreneurship The nature of innovation is that it is fundamentally about entrepreneurship. The skill to spot opportunities and create new ways to exploit them is at the heart of the innovation process. Entrepreneurs are risk-takers, but they calculate the costs of taking forward a bright idea against the potential gains if they succeed in doing something different – especially if that involves upstaging the players already in the game.

Innovation – what is and why does it matters Innovation & Entrepreneurship Stage in life cycle Start-up Growth Sustain/scale Renew Creating wealth Individual entrepreneur exploiting new technology or market opportunity Growing the business through adding new products/services or moving into new markets Building a portfolio of incremental and radical innovation to sustain the business and/or spread its influence into new markets Returning to the radical frame-breaking kind of innovation which began the business and enables it to move forward as something very different Creating social value Social entrepreneur, passionately concerned to improve or change something in their immediate environment Developing the ideas and engaging others in a network for change – perhaps in a region or around a key issue Spreading the idea widely, diffusing it to other communities of social entrepreneurs, engaging links with mainstream players like public sector agencies Changing the system - and then acting as agent for next wave of change

Innovation – what is and why does it matters Innovation & Entrepreneurship Innovation doesn’t just happen – it is driven by entrepreneurship. This powerful mixture of energy, vision, passion, commitment, judgement and risk-taking – provides the engine behind the innovation process. It’s the same whether we are talking about a solo start-up venture or a key group within an established organization trying to renew its products or services.

Innovation – what is and why does it matters Successful Innovators ….. explore and understand different dimensions of innovation (ways in which we can change things) manage innovation as a process create conditions to enable them to repeat the innovation trick (building capability) focus this capability to move their organizations forward (innovation strategy) build dynamic capability (the ability to rest and adapt their approaches in the face of a changing environment)

Innovation – what is and why does it matters Innovative companies are more… …Adaptable Flexible strategy, structure, culture …Competitive Better processes, services, business models

Innovation – what is and why does it matters

Innovation – what is and why does it matters Barriers to innovation include: Seeing innovation as ideas, not managing the whole journey; Not recognizing the need for change; Mindset and complacency – core competence becomes core rigidity; Closed information network, insulated from new ideas.

Misconceptions of Innovation Innovation Is Planned and Predictable Technical Specifications Must Be Thoroughly Prepared Big Projects Will Develop Better Innovations than Smaller Ones Technology Is the Driving Force of Innovation Success. © 2012 Pearson Education, Inc. publishing as Prentice Hall

Innovation – what is and why does it matters Nikolai Kondratieff / Joseph Schumpeter “virtually all of the economic growth that has occurred since the eighteenth century is ultimately attributable to innovation” Schumpeter’s “Creative Destruction”