Introduction to the Oslo Manual: main definitions (Part I) ECO - UIS Regional Workshop on Science, Technology and Innovation (STI) Indicators Tehran, Iran 8-10 December 2013 Luciana Marins, UIS

UIS - Annex (OM, 2005): Innovation Surveys in Developing Countries Measuring Innovation Oslo Manual: Guidelines for collecting and interpreting innovation data UIS - Annex (OM, 2005): Innovation Surveys in Developing Countries

Why measure innovation? Innovation and economic development; Innovation is more than R&D; Innovation policy should be evidence-based; Innovation data… Understanding of innovation and its relation to economic growth; Indicators for benchmarking national performance. Innovation: key to the growth of output and productivity; Much innovation activity is not R&D-based.

What is innovation? Innovation is the implementation of: New or significantly improved product or process; New marketing or organisational method. Implementation: A new or improved product is implemented when it is introduced on the market; New processes, marketing methods or organisational methods are implemented when they are brought into actual use in the firm’s operations.

The innovation measurement framework OM, p. 33

Types of innovation - Product (1) Product Innovation: Introduction of a good or service that is new or significantly improved with respect to its characteristics or intended uses; New products: different characteristics or intended uses from previous products; Significantly improvements: changes in materials, components, and other characteristics that enhance performance.

Types of innovation - Product (2) Product Innovation - examples: New products: The first microprocessors; The first digital cameras; The first portable MP3 player; Significantly improvements: Introduction of ABS braking, GPS navigational systems, or other subsystem improvements in cars; The use of breathable fabrics in clothing; Improvements in internet banking services, such as greatly improved speed and ease of use.

Types of innovation - Process (1) Process Innovation: Implementation of a new or significantly improved production or delivery method (changes in techniques, equipment and/or software); Intended to: decrease unit costs of production or delivery, increase quality, or produce or deliver new or significantly improved products.

Types of innovation - Process (2) Process Innovation - examples: Introduction of a bar-coded goods-tracking system; Introduction of GPS tracking devices for transport services; Implementation of computer-assisted design for product development; Implementation of a new reservation system in a travel agency.

Types of innovation - Marketing (1) Marketing Innovation: Implementation of a new marketing method involving significant changes in product design or packaging, product placement, product promotion or pricing; Better addressing customer needs, opening up new markets, or newly positioning a firm’s product on the market  increasing firm’s sales; Marketing method NOT previously used - part of a new marketing concept or strategy; For both new and existing products.

Types of innovation - Marketing (2) Marketing Innovation: Product design or packaging: changes in form and appearance that do not alter products’ functional or user characteristics + changes in the packaging; Product placement: new sales channels; Product promotion: new concepts for promoting firms’ goods and services; Pricing: new pricing strategies to market the firms’ goods or services.

Types of innovation - Marketing (3) Marketing Innovation - examples: Development and introduction of a fundamentally new brand symbol; First use of a significantly different media - product placement in a television programme; Introduction for the first time of a franchising system.

Types of innovation - Organisational (1) Organisational Innovation: Implementation of a new organisational method in the firm’s business practices, workplace organisation or external relations; Increase firm’s performance by reducing administrative/transaction costs, improving workplace satisfaction, accessing non-tradable assets, or reducing costs of supplies; Organisational method NOT used before - result of strategic decisions taken by management.

Types of innovation - Organisational (2) Organisational Innovation: Business practices: implementation of new methods for organising routines and procedures for the conduct of work; Workplace organisation: new methods for distributing responsibilities and decision making among employees for the division of work within and between firm activities + new concepts for the structuring of activities; External relations: new ways of organising relations with other firms or public institutions.

Types of innovation - Organisational (3) Organisational Innovation - examples: First implementation of a database of best practices; Establishment of new types of collaborations with research organisations; First implementation of an organisational model that gives the firm’s employees greater autonomy in decision making and encourages them to contribute their ideas.

Diffusion and degree of novelty Firm; Market; World. 211. A related concept is a radical or disruptive innovation. It can be defined as an innovation that has a significant impact on a market and on the economic activity of firms in that market. This concept focuses on the impact of innovations as opposed to their novelty. The impact can, for example, change the structure of the market, create new markets or render existing products obsolete (Christensen, 1997). However, it might not be apparent whether an innovation is disruptive until long after it has been introduced. This makes it difficult to collect data on disruptive innovations within the period reviewed in an innovation survey.

Example - product innovation/degree of novelty

Example - organisational innovation

Types of innovation - example Innovation in a restaurant: Product innovation: delivery (new service); Process innovation: new type of oven (new equipment used in the production process); Organisational innovation: new delivery unit (new organisational unit/model); Marketing innovation: billposting (new media for promoting the delivery service). 211. A related concept is a radical or disruptive innovation. It can be defined as an innovation that has a significant impact on a market and on the economic activity of firms in that market. This concept focuses on the impact of innovations as opposed to their novelty. The impact can, for example, change the structure of the market, create new markets or render existing products obsolete (Christensen, 1997). However, it might not be apparent whether an innovation is disruptive until long after it has been introduced. This makes it difficult to collect data on disruptive innovations within the period reviewed in an innovation survey. Note. Source: Adapted from Heinlo, A. (2011). Measuring R&D&I in Estonia. Almaty, Kazakhstan S&T Indicators Workshop. (PowerPoint Presentation)

http://www.uis.unesco.org Thank you! l.marins@unesco.org CIS: http://www.oecd.org/dataoecd/37/39/37489901.pdf

Exercise 1: Types of Innovation