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Innovation Defined
Innovation is a process of taking new ideas through to
satisfied customers. It is the conversion of new knowledge into
new products and services.
Innovation is about
creating value and
increasing efficiency, and therefore growing your business. It is a spark
that keeps organizations and people moving ever onward and upward. "Without
innovation, new products, new services, and
new ways of doing business would never emerge, and most organizations would
be forever stuck doing the same old things the same old way."4
Innovation: A Paradigm Shift
 Innovation is bringing a
paradigm shift in
the way the business is done in a
rapidly globalizing economy. This new economy is characterized by
enhanced frequency of innovations, shortening of product, technology, and
economic life cycles, rapid generation and
commercialization of new technologies, globalization not only large but
also small businesses, enhanced emphasis on
business partnerships
and
strategic alliances, intensive and multi-country research and
development programs and difficulty in accessing critical technologies.
Different
Forms of Innovation
Until recently innovation has been seen as the
means to turn research results into commercially successful products or
services. Today, while research keeps playing its critical role as a major
contributor to innovation, many new forms of innovation have emerged. They
include system's approach to integration of new technologies and processes
from other fields,
new business models and ways of doing business, and new ways of
reaching and servicing customers.
Innovation can have different:
-
focus: technology, organization, or
external relationships,
-
types: incremental or
radical, and
-
sources:
technology transfer or development of new business models/concepts.
Entrepreneurial Action
–
the Engine of Innovation
While research and invention is a major
contributor to innovation, if there is no
entrepreneurial action there is no
value creation.
Technological Innovation Alone Is Not Enough
 Facing a tidal wave of global economic,
technological and social change, you are not going to survive in the
new rapidly globalizing economy through
technological innovation alone. If you are going to withstand relentless
global competition, you need to radically change
the way of doing business. Innovation is everything that helps your
enterprise adapt to rapidly changing business environment.
Renewed Emphasis on Innovation
Shift to the
new knowledge-based economy, combined with a dramatic increase in highly
capable global competition, demands a renewed emphasis on innovation. Rapid
changes in the competitive environment create the new world of competition – "a
fierce contest set in truly global context, with more capable players, higher
stakes, and vastly different rules of engagement from those that we have enjoyed
to date."3 This new economy is led by those who innovate – create,
find and/or combine knowledge into new products, services, and distribution
methods –
faster than their competitors.
Innovation is above all spurred by
entrepreneurial action, aimed at creating value through the application of
knowledge.
Engine of Economic Growth
The speed and efficiency of the diffusion of
innovation through the economy is critical to productivity and economic
growth. It can be pictured as a cascade process. Through the forces of
competition and imitation, an initial innovation is developed and improved
so that the impact on the economy is many times greater than that brought
about by the first application of the innovation.2
Leaders in technology development are not
necessarily leaders in technology adoption.
 The most important economic
contribution does not necessarily come from the "early adopter" but from the
"fast follower" who adopts the innovative design that captures the
international market.2
As
Jack Welch, former CEO of
General Electric, puts it:"
The operative assumption today is that
someone, somewhere, has a better idea; and the operative compulsion is to
find out who has that better idea, learn it and put into action – fast."
In fast-moving sectors it is the new
enterprises with growth potential that are often the most innovative,
forcing established enterprises to respond to the change by themselves
becoming more innovative. Encouraging the emergence of new firms is a strong
force for innovation in many sectors.2
Demand-side Innovation
With product life cycles shortening, make
innovation efforts
on the demand side. It's how
customer interactions are managed, not simply products are offered,
which determines success or failure.
Continuous Change and
Innovation as a Norm
Companies, like any living organism, must become
learning organizations that change and
adapt to suit their changing
business
environment.
According to Bill Gates, if you don't practice
the
change management that looks after the future, the future will not look
after you. "...The tendency for successful companies to fail to innovate is
just that: a tendency. If you're too focused on your current business, it's
hard to look ahead..." The constant formation of new units within a
corporation is one means of gearing up to change.
To determine the improvements to make in
response to the change, you should continuously:
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