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Innovation

Introduction

Innovation is a natural tendency of the human mind to thrive on variety, regardless of the activity

involved. All the man-made changes that the world has witnessed are a result of this tendency to

look for something different. The urge to try something else is a prominent human characteristic.

When properly directed, this urge can have results that enhance the quality of an activity. A

positive outcome of this urge to be different is called innovation. There is no end to the new

ideas in the world, but when these ideas create value, it becomes innovation. Often enough, it is

the application of existing knowledge in a different manner that stands out as an innovative idea.

Usually, one idea gives birth to the next and new technologies, processes and methods come into

being.

Good ideas are of no use unless they are implemented, and implementation in a new way always

attracts criticism. It is only by being optimistic in the face of odds that an individual stands a

chance of achieving something unique. At times, innovation is done by taking an existing idea,

concept or product and improving upon it. However what is more remarkable is to be able to

think beyond what already exists, and coming up with a brand new concept. Mankind has come

this far by riding on the benefits of innovative ideas through the ages. It is the problems that

people encounter that cause a solution to be sought. Great scientific inventions that we now take

for granted are products of the innovative ideas of great minds. Innovation is a key element in

providing growth and for increasing results. Innovation means a new way of doing something; it

may refer to incremental, radical and revolutionary changes. A company that overlooks new and

better ways of doing things will eventually lose customers to another competitor that has found a
better way. Innovation by businesses is achieved in many ways. One way leading to innovation is

the use of creativity techniques. These are methods that encourage original thoughts and

divergent thinking e.g. brainstorming morphological analysis. New ideas that have been

generated by the use of creativity techniques have to be structured and evaluated. In order to

complete the innovation process the valuable ideas have to be put into practice.

According to Peter F. Drucker, “The best way to predict the future is to create it”. We are facing

changes that cannot be addressed with traditional methods, because change itself has changed.

Solutions that worked in the past now simply cause more problems. A whole new perspective is

needed to approach breakthrough change with success.

Innovation as a Core Business Concept

A business concept or model is a framework for identifying how one’s business creates, delivers,

and extracts value. In today's world of discontinuous change, there is no continuity without

constant renewal. A survey found that more than 90% of large organizations are committed to

innovation. Yet when managers of these companies were asked to describe their corporate

innovation system, almost none of them could do it. One explanation for this mismatch is that

top management is just paying lip service to innovation and has no intention of really working

hard on it. Another and far more likely explanation is that senior leaders do not have a clear,

well-developed model of what innovation looks like as an organizational capability. Since they

don't know what it looks like, they don't know how to describe or build it. Innovation applies to

all business activities, not just end products. Innovation can be in logistics such as in the case of

Wal-Mart, merchandising like Starbucks, and selling like Dell. Pioneers rethink the entire

business concepts & build new business models from ground up. Today greatest amount of
wealth goes to those who create new business models, create new sources of revenue based on

changing technology, changing demographics and changing global demand.

According to Gary Hamel, “True innovation is based on the recognition that a business concept

represents a dozen or so design variables, all of which need to be constantly revisited and

constantly challenged”. Managers have to think creatively & holistically about their entire

business concept.

Strategic innovation differs from product innovation. Companies today can succeed through

innovative strategies alone. Southwest Airlines, Dell, IBM, EBay etc. succeeded through

innovative strategies.

Innovations need not be risky, but something that changes customer expectations &

competitiveness for the better. Only Innovation creates new wealth. Stock Markets reward only

those with successful innovation.

Innovation as a Change of Strategy

The change of strategy in a company can bring fruitful benefits to it. Dell can be used as an

example here. Dell was known as just a company who manufactured and sold hardware. During

2007, when Dell lost it first position to HP for the first time in a decade, Michael S.Dell had to

step back in as a CEO of the company by replacing Kevin Rollins. He took drastic measures

inside and outside the company to increase profitability. He masterminded the change in entire

product range. He started changing the company's image from hardware manufacturer to a

company which sells the entire IT solution. Organizations were struggling with IT complexity.

Dell forged a path to simplify IT, by building a low-touch uniform infrastructure spanning the

desktop to the data center. By doing this customer got operational efficiency, manageability and
flexibility to pinpoint ways to streamline how IT is acquired, maintained, and scaled. IT

simplification helps reduce the cost and complexity of maintaining systems, enabling

organizations to reclaim the time, money and personnel needed to drive true innovation into daily

business processes. Best of all, IT simplification is a way to differentiate one’s offerings from his

competitors, which leads to greater sales opportunities.

Innovation means thinking differently. It means thinking differently about one’s products, his

processes, and employees. In other words it involves “Change”. Change is like a wave. Either

one can ignore it, in which case the change will overtake him and will drown him or one can get

a surfboard and ride the wave. It may not take him where he thought he would be, but it will be a

whole lot better than drowning. Organizations that are innovative are change-ready.

Practical Innovation

Practical innovation is about taking ideas and new thinking and focusing them into a direction

and then executing that direction; in other words, starting with the thinking, creating the strategy

(strategic planning) and then executing the strategy. This focuses the innovation on real-time

problem solving.

Innovation as a Corporate Value

Innovation is a driving force in a company. It enables to create new products and technologies as

well as processes. A first reason why innovation doesn't fit very well in the catalog of corporate

values is that it is too much business related. Some companies more than others need continuous

innovation, but that doesn't mean each and every employee must be screened to match the

innovator. A suitable value that may replace innovation is creativity. Change is another, but as a
value it is not very suitable. One can ask people to act with integrity, responsible, focused on

performance, but cannot ask them to accept any change without knowing what and why. The

dilemma with innovation is similar; it must serve a purpose.

Innovation begins with understanding the key elements. A way to get in, a way to keep others out

- these are key elements. Attitude helps innovation. The creative problem-solving technique of

concept-combination involves combining two ideas to see what new idea or product results.

Playfulness helps innovation. A playful mind is a creative mind, and while high IQ doesn't

correlate with creativity, when put it together with playfulness can bring a change.

Different Points of view regarding Innovation

One of the first groundbreaking developments in innovation was Joseph Schumpeter’s (1934)

definition of the process. He argued that economic development is driven by innovation. He

described innovation as a process of new technologies replacing old technologies, which he

called “creative destruction”. He was also the founder of the terms: “radical” and “incremental”

innovations, which entail major sudden changes and continuously changing processes,

respectively. Schumpeter set out a list of types of innovations which form the basis of today’s

definitions and strategic choices.

Innovation may occur due to several reasons, according to Tirole (1995), innovation is a way of

staying ahead of competitors. Adapting or developing ones products may help a company to

protect or conquer market share from competitors.

According to Rosenberg (1994), innovation goes together with uncertainty. Often, innovation is

neglected or postponed due to the uncertainty of the outcomes. This may lead to the company not

being able to obtain funding for their projects.


Contributing Factors Leading to Innovation

In turbulent times, companies that constantly innovate achieve significant competitive advantage

over those that do not. Innovation in a custom installation company can take many forms. It

involves a process of questioning everything one does, including what is sold, how the products

and services are bundled, one’s levels of customer service and how one comes to the market.

Innovation requires a company to learn to do things that it doesn’t already know how to do.

According to Jeff DeGraff, a keynote speaker at PARA Management Conference and author of

Leading Enterprise Innovation and Growth, “In order for companies to truly innovate, they need

to develop faster, more flexible organizations with lower overhead, less scale and more scope to

diversify. Most importantly, leaders must populate their companies with individuals who embody

four distinct managerial styles that work together to create a dynamic that is conducive to

creating and sustaining innovation.”

Each of these four types embodies a distinct set of positive corporate values that work together to

enable companies to innovate effectively. However, certain value sets also create inherent

tensions with other value sets. When unaddressed, the internal friction created by these

competing sets of values can frustrate and undermine a leader’s efforts to spearhead and execute

meaningful change.

Innovation is no longer about the big one-off idea. Innovation is about strategy. New ideas are

important, but too often businesses neglect their innovation strategy. Developing an innovation

strategy is essential to the long term growth and sustainability of any organization. CE Studios
developed an Innovation Strategy Chart. Figure 1 shows a model of this chart. The purpose of

this model was to develop a strategy of innovation which creates future experiences.

The Innovation Strategy Chart is divided into five parts. The four small parts (offering,

environment, people, and time) are elements of the fifth, larger part (experience). In other words,

experience consists of the interaction between offering, environment, people, and time. The

model also consists of three rings. The outer ring represents the past, the middle ring represents

the present, and the inner ring corresponds to the future. The innovation boundary covers the

edge of the inner circle. It is the boundary between present experiences and future experiences.

Each new innovation changes experience and therefore moves through the innovation boundary,

creating a new present and a new future. While there are only three rings in this simplified

model, one could view it with an infinite number of past rings and an infinite number of future

rings.
Tables & Charts

Figure 1