Innovation has been identified by organisations and governments as a key strategy for growth and sustainability in the turbulent and highly competitive global arena. Innovation has the potential to create competitive advantage by providing new technologies and products, new services, new ways of doing things, identifying new market opportunities or serving market segments that others have ignored.
Innovate or die has been the catch phrase of the 21st Century. The modern organisation operates in an ether of discontinuous change and is faced with numerous influences that continually challenge its integrity and survival. These include the impact of rapid globalization, discontinuous change, increasing levels of competition, technological change, unstable economic conditions, transition from an industrial to knowledge-based society, diversified workforce and increasing complexity of the external environment.
But, what is innovation?
We still find it difficult to establish a clear definition for innovation that can be accepted widely. I have attended a number of âinnovationâ seminars and workshops recently and have found varying definitions and uses of the word âinnovationâ. Therefore, I wanted to present a clear definition of innovation through this blog, having worked in the innovation space for most of my working life. In simple terms:
Innovation is the practical application of new ideas and concepts into something of value in the market, in society or in an organisation, whether it is a new product, service, process or organisational system.
Value created through innovation can be in the form of different currencies, including: economic, social, community or environmental value. The traditional definition of innovation is based on technological innovation, that is, the development of a new product or process. Non-technological innovation relates to business operations such as changes in corporate strategy, business models, and organisational structures.
Activities such as creativity, ideation, invention and R&D are just subsets of the innovation process, however, we incorrectly interchange these terms with the word âinnovationâ.
From my previous knowledge and experience innovation can generally be separated into five types:
1. Product/Service Innovation â involves the development of new products and services, or the enhancement of existing products and services. This also includes product and service extensions. e.g. the Post-It note from 3M or the PayPal service
2. Process Innovation â the enhancement of new processes that improves the efficiency and effectiveness of an organisation or system e.g. implementing a knowledge management system to manage documents and information in a business
3. Marketing Innovation â related to the development of new channels to market, innovative promotional strategies, new pricing models and new marketing concepts e.g. a good example is eBay.com or Amazon.com
4. Organisational Innovation â the development of new strategies, structures and organisational systems across functional areas or the whole organisation e.g. moving from a bureaucratic organisational structure to a flexible self-directed project team structure
5. Business Model Innovation â related to organisational innovation, however, the focus is on reviewing the business model of an organisation and investigating alternative business models e.g. Wells Fargo is now a bank when previously the company was a stagecoach business.
Author: Dr John Kapeleris, Deputy CEO, Australian Institute for Commercialisation. This is an entry from Dr John Kapelerisâ blog which can be viewed here. To read more AIC-authored articles please click here.