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Definition of innovation - basics Written on . Posted in Innovation.

Definition of innovation - basics
Summary : Want to improve the innovation power in your company? Start with the basics, including what you can to to power up the innovation portfolio.

Content

1. What triggers innovation?
2. What types of innovations are there?
3. Why is it often difficult to innovate?
4. How can the acceptance of innovations be increased?
5. What distinguishes an innovation from an invention?
6. Is it enough to be creative to become innovative?
7. What is the process for innovation?
8. Do I really need innovations in the company?
9. What does it really take to strengthen the innovative power in a company?
10. Who makes innovation in a company?
11. How are innovations diffusing into the market?

Definition of innovation

Innovation - a big word. Everyone knows it's important to be innovative. But the ideas of innovations differ.

In practice, one encounters descriptions such as: "Something different that creates value."

But what is different and how much? And values, which ones, for whom? This is where more terms come into play, for which everyone has other images in their heads.

Wikipedia refers in the definition to an international standard according to ISO 56000: "The practical implementation of ideas with the result in an introduction of products or services or the improvement of products or services."

Presumably, this explanation is inadequate. Think of management innovations that are changing the way value creation is organized.

Management thought leaders, such as Peter Drucker, have described innovation *1:

Innovation is the specific function of entrepreneurship, whether in an existing business, in a public institution, or in a new business founded by an individual in the family's kitchen. It is the means by which the entrepreneur either creates new wealth-producing resources or equips existing resources with an improved potential for wealth creation. *

However, you want to grasp it, it must contain a certain novelty and point in the direction of well-being or prosperity.

1.What triggers innovation?

Well, many different things can trigger innovation. Inherent in all of them is an urge for improvement, relief, or cost savings. Here are some examples

Trends

The trend towards electrification and autonomous driving is prompting a supplier of industrial electronics to develop new systems that automatically and quickly charge vehicles. Here, the manufacturer uses the anticipated trends and invests in a new area that will be relevant in the future. In doing so, it uses its strength to manufacture electronics and systems and uses them in new solutions.

Customers

Customers often have needs that the supplier does not recognize or experience himself. However, customers trust the supplier to provide a novel solution. The supplier develops a solution and can deliver it to the customer, possibly to other customers, in the future.

Technology

Technology offers the opportunity to save time and money on processes. This is therefore a popular approach. However, there is a risk of overlooking whether the customer can cope with the new possibilities at all.

Suppliers

Suppliers are often a source of innovation because they supply other customers and they have market knowledge.

Copy

Yes, that sounds strange. For one thing, copying doesn't create anything new. And if the solution already exists, then it brings no value. Nevertheless. Think of the MP3 players before IPOD times. The first IPOD, like other devices, was just a music player. Nevertheless, it was not a 1:1 copy. The capacity was significantly larger, the operating concept was new, the music store was new, the price model for music was new. Here, an existing solution was creatively copied, i.e. changed in many dimensions.

Simplification

Think of the common way in the USA to pay bills by check. Even salaries were paid with a check, which had to be redeemed in the bank. Innovations such as PayPal made it possible to make payments only with an email address. Almost immediately.

Service

Richard Branson has built a lot of companies. What they all have in common is the service he had raised to a new level.

You can certainly think of other sources.

2. What types of innovations are there?

There are many classifications. In practice, it is worthwhile to look at Clayton Christensen's. He spoke of three types

  • Sustaining innovations: small incremental improvements to products or services that allow you to stay on the market
  • Efficiency innovations: Things that speed up processes or make them cheaper, especially in your own value creation
  • Market-creating innovations: things that create new markets. Often these things replace classic offers (Uber vs. taxi, AirBnB vs. hotels) or create access for new customers through a low price (first mobile phones instead of satellite phone)

The first two species are often simpler than the third species. Everything you need for this is available in the company. Efficiency innovations also increase productivity and create the basis for new investments.

Market-creating innovations often require new competencies or contradict the status quo. They are therefore to be classified as particularly risky for existing companies and are often avoided. However, a new market participant is enough to turn an entire industry upside down.

3. Why is it often difficult to innovate?

Innovations have to do with risks. That brings with it the novelty. Investments may need to be made, new customers developed, or a new skill or process established in the company.

Not only do companies minimize risks, they often have to make changes that require a change in the players. Yes, and that's where the human component comes in. Man is a creature of habit, changes of habits are not easy for him. New information is evaluated in the brain in seconds, i.e. checked for potential dangers. And if the suspicion of danger persists, the escape reflex is triggered.

4. How can the acceptance of innovations be increased?

Now imagine an organization where there are many colleagues who are affected by changes. You can imagine which defenses will be mobilized.

What helps you in the situation is to let your colleagues participate from the beginning. To make them, so to speak, an integral part or co-initiator of the initiative. In addition, it helps to make the transition from something known to a new acquaintance, as to introduce completely unknown things. If the colleagues are immediately aware of how they have to deal with the new things (because they already know it from somewhere else), what they get out of it and how it fits into their environment, then they have a better chance of coping with the change. Both ways increase acceptance.

The same applies if you want to cause habit changes in customers.

You will just wonder what they have read. Yes, innovations are successful if, as such, they do not require changes in people's behavior. You can come in a new guise, such as a smartphone app to call an Uber car instead of dialing a taxi call phone number. The process is almost the same. Get your smartphone out, type, plug your smartphone back in. There are already enough changes. Starting another app, an often less distinctive car (because possibly not in the typical taxi color).

5. What distinguishes an innovation from an invention?

An invention initially ends in a claim filed in paper form with the patent office. Whether an invention is used to be used in a product or service is another question.

If the invention is used in a product or service and it resonates with the market (because customers see value in it), then it is an innovation.

6. Is it enough to be creative to become innovative?

Here you would first have to deal with the concept of creativity. Creativity is more the brainstorming or generation of ideas, less the implementation of the idea in products or services. An innovation without implementation in practice does not exist.

7. What is the process for innovation?

The process is quite clear: generate and evaluate ideas, implement ideas and market innovation.

innovation process idealized innovation process

In the rarest of cases, the process is straightforward. Risks, new findings often force a course correction or iterations, but without losing sight of the goal.

typical innovation process typical innovation process

8. Do I really need innovations in the company?

For a while, they do quite well without it if you have a good position in the market. For example, the market for lamps was dominated for several decades by a few manufacturers who had a deep value chain. The capabilities and scaling were difficult to copy. But then came several events. On the one hand, technological leaps were made (efficiency of LEDs), which made the old processes for the production of classic lamps obsolete. On the other hand, the legislator demanded more efficient light sources.

There are statistics that show how long stocks last in an index. There are statistics on the life expectancy of companies. If you put statistics aside how quickly successful innovations turn markets upside down, you can see that life cycles tend to shorten. A company that has lasted for 20 years is already a success and soon an exception.

So if you want a company to continue to fulfill its purpose, it is essential to continuously promote renewal with the help of innovations. This applies to entire companies, as well as to individual parts of a company.

9. What does it really take to strengthen the innovative power in a company?

Opinions differ on this issue. There are many things that encourage innovation, but it's hard to break it down to a few things.

Attitude

You'll agree that it helps to think like innovators. To look at old things or the status quo from a new angle, to question them, to challenge prevailing views or habits, to use undervalued trends, to know and apply one's own strengths, and to identify and address non-articulated needs.

Shared definition of innovation

Since everyone in a company has a different idea of innovation, they should try to give your company a uniform definition. Not in abstract, long and incomprehensible definitions, but in the form of categories (for example, product, service, efficiency, new business) and examples, as well as a description of the way.

The company Procter&Gamble, for example, had articulated that they could not keep up with the scientific world to produce all sorts of new ideas themselves. However, the company is world-class in manufacturing, sales and marketing. For this reason, the company had already relied on open innovation approaches at an early stage, where everyone (external) can contribute their suggestions and participate in their use.

Another point is the naming of value drivers for customers. This means which main qualities of products or services do customers value (e.g. performance, price, sustainability)? Often these are qualities that the company embodies. Mentioning the qualities helps employees to focus their search for ideas a bit.

It helps you if you look back over the last two decades and identify what has made products or services successful from the customer's point of view.

A practical, agreed definition of innovation makes it easier to set targets for innovation, allocate resources to innovative projects, plan a rhythm of innovative product launches, target advertising for high-quality breakthroughs, and measure innovation performance.

Key indicators

Since innovation takes place in a process, measures can be collected. These can be expenses, success statistics, management time, implementation time, competence building, portfolio according to horizons (short, medium, long-term), finances or impact.

It is important to include relevant metrics that last for a longer period of time.

Leadership

If leaders are to advocate for innovation, it is helpful if they are trained in the discipline of innovation and are given resources (time and money). The objectives should be coordinated in such a way that they promote innovation.

Managers have an important role in the innovation process, in which, for example, they provide security, are role models themselves, provide time and money, and remove obstacles.

Friendly process

The process of initiating and implementing innovation initiatives should not be too complicated. It should serve the employees instead of controlling them. It should provide clarity on the procedure and contact persons and responsibilities.

Teamwork

Innovations are usually implemented in teams. The ability to build teams in ever new constellations and to perform quickly is another prerequisite. This is a point that is quickly overlooked.

Aspiration

An articulated vision can be a compelling catalyst, provided it is realistic enough to inspire action today. Think of Apple's short slogan: "Think Different." Have you ever seen something like this at a facility management company?

But help your employees think in the right categories. Explicitly state the size that an innovation should have (for example, sales). Otherwise you will get a lot of inappropriate suggestions. Your employees then think in the right category. For example, by analogy, if you want to double your salary instead of a 10% salary increase, you will find and take other measures than with the low goal.

The claim should be reflected in target values for managers. This is how they become active.

Decisions

Innovations present companies with countless decisions. Where do you look for which customer groups, existing customers step on their feet with the innovation or not, buy or do it yourself, implement, invest or rent in your own unit or in the line, when use how many employees, old employees or even new ones?

These decisions are often complex and should be made quickly. At this point, startups with flat structures and large companies with complex decision-making structures differ.

Ultimately, major innovations are also a directional decision. This has a strategic character. This means that the strategy should be clear, so that quick decisions can be made for innovations.

Understanding the solution

Understanding the needs of customers, what can be implemented, the alternatives, the resources required, the risks and much more is a prerequisite for synthesizing the innovation as a solution to a problem. Here some methods help, such as Design Thinking, Lean Startup, agile project methods. The aim is to design a good and safe solution with as little effort as possible. Prototypes are often involved.

Speed

With a right focus and a good idea, you can reach your goal faster with speed. The faster you set up a team, the faster you test ideas with customers, the faster you can launch or market products, the faster you will succeed.

This means that you have to trim your processes or introduce new processes.

After the successful introduction of the innovation, you should continue to support it. At best, you'll be overrun by a lot of demand and can't deliver fast enough. If scarcity is sometimes advantageous from a marketing point of view, it is a hindrance to innovation in the medium term.

Cooperation

The opportunities arising from the challenges of our time are enormous. Isolated innovations cannot be the answer. This leads to cooperation with interested parties, new development partners, suppliers or customers.

Methods and tools for cooperation with external parties are therefore essential for success.

10. Who makes innovation in a company?

If you have read this far, you will already guess the answer. Yes, there is usually a person who had the idea or at least wants to continue to implement it. But only in rare cases will she be able to do it alone.

No, it's not up to development departments. Others in the company have to make their contribution.

It takes a small but cross-functional team. Members with different tasks and abilities who can throw different perspectives on questions.

11. How are innovations diffusing into the market?

The adaptation follows an S-curve. The early adaptors are followed by the early majority, the late majority, and finally the latecomers. But only if the innovation offers a benefit. Early adaptors may be technology-savvy or show innovation as a status symbol. The majority have other needs. For them, innovation must be a simplification. Even if it means embedding the innovation in order to swim with the others, so as not to be an outsider. The latecomers jump on when prices have fallen and the practical benefit then seems beneficial.

curve of diffusion curve of diffusion

[1] "The Discipline of Innovation". Harvard Business Review. August 2002. Retrieved 13 October2013.

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