Innovation is a constantly evolving concept which is being recognized and applied by society. Innovation is most commonly defined as the “lifting of new technological goods, new techniques, new processes, or new ways of operating, using, and sharing specific information that has been developed from scientific, technological, and social research”. The key areas of innovation are: market development, financial sector development, services sector development, culture and education, and government sector development. In the business realm, innovation can be viewed as a number of strategies adopted by an organization to stay ahead of the competition. It can involve any or all of the following strategies:
When you want to get started with innovation, it helps to first define the purpose behind innovation in the first place. The goal of most businesses looking to innovate is to get a competitive advantage in their field or industry. Most often, organizations look to innovation to get started on new products before they get started with new processes, systems, or business practices. Others look to innovate as a way to get a head start on their competitors. Regardless of what the reason for starting innovation, it is important to define what the product or process being innovated is intended to do.
A second step to defining innovation is to provide a simple description of the innovation. After all, if the goal of an organization is to bring in more customers or create a better way to serve a customer, it doesn’t matter how the innovation is created, but simply that it is bringing in or creating new value. An example of creating new value through innovation is when Nike releases a new color or design or adds a new logo to its shoe line. The new way of doing something means adding a new consumer segment to the marketplace. The process, therefore, is not just about creating new value in a new way, but rather, creating new ways of providing service to the existing customer.
Finally, the definition of true innovation should also include the definition of disruptive innovation. By now, it should be obvious that defining innovation has become increasingly difficult. After all, some people are claiming that disruption is when a new product or process causes consumers to have a fundamental change in their shopping behavior, or when consumers’ purchasing patterns are affected to the point that they no longer buy the same products that have been bought by millions of people before them. While there is some truth to these claims, this form of disruptive innovation is often thought of as being radical and far outside of traditional thinking about innovation. In fact, it can even be considered as a type of creativity that is a departure from prior innovative practices.
The most useful tool to help with the definition of innovation is a “value chain” analysis. Value chains are simply a list of linked products that have a single purpose. Each product has a clear benefit-cost ratio and a chain of cause and effect that can be seen easily. When developing new ways of creating new value, however, it is important to make sure that the products that are part of the chain are not only economically efficient, but also do not waste materials and energy in the process of creating those products. If an innovation is found to waste too much of these resources, it may be necessary to rethink the definition of innovation entirely.
While many in the business world feel that innovation is a necessary concept for the business to continue to succeed, many others disagree. The reality is that innovation is necessary for all companies, big and small-successful businesses alike. Larger organizations often excel at creating innovations that are disruptive and have a profound effect on society at large. Smaller companies, however, must often rely on innovations that are more directed toward increasing company profits while also establishing new markets and introducing products that solve problems.