PowerPoint presentation Unit 320 (B&A 59): Principles of business Handout 7: Innovation

To improve performance To keep ahead of the game Why innovate? To improve performance To keep ahead of the game To find new and more efficient ways To create value from ideas To seek new approaches to work Organisations must be constantly seeking to improve performance and keep ahead of the game. The most successful business review their products, services, systems and procedures in order to find new and more efficient ways. Innovation in business creates value from ideas eg making something in a different way, or finding new ways of satisfying customers or carrying out routine activities

Models of business innovation New ways of doing business Value propositions Innovation ecosystem Social innovations New ways of doing business – reviewing existing ways of working, embracing new technologies and ways of communicating. Through making use of eg cloud data storage and social media, new businesses can reduce their outlay on technology, staff and marketing and promotion. Value propositions – like a USP, convincing customers how their product or service will benefit them. Innovation ecosystem - mutually-beneficial partnership networks to promote and showcase organisations’ products and services Social innovations – products/services offered to provide solutions to problems/changes in society, eg longer life expectancy, climate change, resource scarcity.

Innovation may relate to: Emerging new technologies The market The economic and political climate New regulations or legislation Competitors Environmental issues Emerging new technologies – the use of smartphones has had a dramatic effect on all sorts of existing industries apart from telecommunications – photographic, gaming, computing – and has spawned new industries, eg apps, and new ways of doing old things, eg shopping. The market - consumer choices and habits are influenced by all sorts of factors and as such are apt to change, meaning that businesses need to constantly review the way they do things to keep up with trends. The economic and political climate – business may fall or rise in times of economic recession, depending on the nature of the organisation, and finding innovative solutions for customers can help businesses ride a recession. New regulations or legislation may mean that organisations have to adapt to accommodate them. Competitors may force the organisation to change its strategy in order to retain its market share. Environmental issues – both environmentally-aware customers and legislation designed to protect it, may mean the organisation has to change the way it operates.

Reasons why an organisation reviews the ways it works Increasing efficiency, profitability, productivity Greater competitiveness Better use of resources Reducing costs Better response to customer requirements Increasing customer satisfaction Reducing in waste

Positive ways of reviewing working methods Seeking feedback from both customers and staff Effective, two-way communication within an organisation Listening and responding to staff suggestions

Process for developing new products or services Idea generation Idea screening Concept testing Business analysis Product development Test marketing Commercialisation Review of market performance Idea generation – from eg employees, focus groups, customer feedback, market research, R & D department. Idea screening – to look critically at ideas in terms of feasibility and profitability. Concept testing – gaining feedback on the idea from prospective customers; crowdsourcing via social media. Business analysis – analysis of competition and feedback to estimate price, sales volumes, profitability and break-even. Product development – creating a specification and producing the product. Test marketing – eg creating an initial run, launching at trade fairs, creating prototypes and gauging customer reaction. Commercialization – launching, promoting and advertising the product/service. Review of market performance – review sales against forecasts, adjust pricing which is often initially low to attract customers (penetration pricing).

Introducing new working methods, products or services May impact upon one or more of the following: the business as a whole management structures departments within a business employees in teams individuals customers competitors.

Sources of support and advice for business innovation Department for Innovation & Skills (BIS) Business Innovation Facility (BIF) Grants – government, European funded, local business grant schemes Technology Strategy Board (TSB) Innovation vouchers