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Innovation can be defined as a process that involves multiple activities to uncover new ways
to do things. Innovations create bigger opportunities and are critical for the survival,
economic growth, and success of a company. Innovating helps developing original concepts
and is a driver of optimizing operations. Companies that innovate are able to set the
organization in a different paradigm in order to identify new opportunities and best
methods to solve current problems.
Innovation refers to the introduction of a new good or a new quality of a good, method of
production, market, source of supply, and/or organization in an industry. It also refers to
improving on an existing concept or idea using a step-wise process to create a
commercially viable product.
Creation since this can be defined as the act of making, inventing, or producing
something. The scientific process of defining creativity is a continuous effort covering a
number of decades of research and reasoning.
Creativity Process
Myths of Creativity
Dimensions of Innovation
Product
Process
Position
Paradigm
Product innovation is the easiest to understand. It means changes in the things which an
organization offers.
Process innovation is also quite easy to understand. It means changes in the organization’s
processes. In the other words it means changes in the ways in which organization is created
and delivered.
Position innovation is to understand needs some thinking and it is not as clear as the first
two innovation types. It means changes in the context in which the products/services are
introduced.
Paradigm innovation is by far the hardest to understand. Meaning for that is changes in the
underlying mental models which frame what the organization does.
Creation Innovation
Meaning Creativity means bringing Innovation means to bring
something into existence. something into use.
Creation Creativity is creation of a new Innovation is the ability to
Ability idea change this idea into some new
product, new service or the new
system of production.
Nature Creativity related to ideological Innovation is related to changing
creation. ideas into reality.
Form Creativity may be either for Innovation is always practical,
pleasures, enjoyments, business-oriented and provider
extravagance or for solutions of of benefits, meaning thereby that
any problem is related to making of business
use of ideas
Function Creativity is a function of Innovation is a specific function
Thinking, which is possessed by of entrepreneurship.
almost all persons
Result and Creativity is a big result of sweet It may be developed in any
Pre- mistakes and improvements. particular person.
requisites
WHY IS INNOVATION IMPORTANT?
Innovation is important because it’s the only way that you can differentiate your products and
services from those of your competitors. For customers and clients to choose your business,
your offer needs to be distinctive and valuable, and the only way to achieve this is through
innovation.
Innovation doesn’t have to be focused on changing a product or service. If you can
find an innovative new process that enables you to create a product more efficiently without
compromising on quality, you’ll be able to stand out from your rivals by undercutting their
prices. Similarly, your innovation could come in the form of a new distribution system,
enabling you to stand out by offering the fastest delivery to customers.
Easy and effective solution to the problems
Creative and Continuous Improvement provides organizational sustainability
Innovation lead to increase in productivity as innovation can be done in any
function of organization
Innovation stands out business from the crowd and competitors helping the
business to have a distinct image
Eventually, innovation provides the better opportunities than your competitor
Solving problems: Most ideas are actually derived from attempts to solve existing problems.
As such, when you encourage innovation, you are opening doors for solutions to problems
both within and outside your company. If your business provides services, you might realize
that your customer do not have an avenue to share their opinions, complaints, and
compliments. The only avenue available could be the physical office. So, to solve the
problem, you could decide to operate a virtual office where customers’ needs can be attended
to within a short time. The customers will be happy and as a result, your sales will go higher.
•Adapting to change: This is especially evident in the technological world where there are
rapid changes defining the business. Change is inevitable and innovation is the method to not
only keep your business afloat, but also ensure that it remains relevant and profitable. With
the rise in mobile phones, traditional telephone had to find ways to remain relevant. Same
case with your business, when you develop an innovation culture, you remain relevant at all
times.
•Maximizing on globalization: With markets all over the world becoming more interlinked,
greater opportunities are emerging in these new markets and with that, new needs and
challenges. For instance, China and India are estimated to be the leading markets, and Africa
is predicted to be the next “hot spot”. Therefore, if your company hopes to tap into this
market share, innovation is a must to enable you to capitalize on the opportunities opening
up.
•Facing up the competition: The corporate world is always very competitive, and with many
new companies coming up, the top position in the industry is no longer a reserve of a few. To
retain or establish your company’s cutting edge, you can compete strategically by having a
dynamic business that is able to make strategic and innovative moves and thus cut above the
rest.
•Evolving workplace dynamics: The demographics in the work place are constantly
changing. With the new generation that has entered the market place; new trends are also
coming up. Innovation is therefore critical to ensure the smooth running of the company.
•Customers’ changing tastes and preferences: The current customer has a great variety of
products and services available to him and is well informed of his choices than before. The
company must therefore keep itself abreast with these evolving tastes and also forge new
ways of satisfying the customer.
•Financial strain – Often, the innovation process is faced with the challenge of draining out
the company resources as returns are usually long-term as opposed to immediate. This may
lead to abortion of the product or idea once it is perceived to be non-profitable. However, you
should look at the projected returns and consider whether or not the innovation aligns with its
long-term goals.
•Market failure – For innovations which involve the introduction of new products or
technology to the market, it is imperative that the product meets the needs, tastes and
preferences of the consumers. Failure to do this would mean that demand would be low and
therefore the innovation not viable commercially. To avoid this, you should undertake
extensive and in-depth market research before committing limited resources to its
development and production.
•Redundancy – With trends in the market constantly changing and many innovations
emerging, it is possible that a profitable innovation today may be redundant in the near
future. To counter this, there must be constant research on how to improve the existing
systems and a keen observance of global trends and the factors influencing them in order to
stay a step ahead.
•Lack of capacity for implementation – This is especially a challenge for start-ups where
they lack the structural and financial capacity to roll out the innovation. You then risk
remaining a pipe dream. So, you may choose to look for partners who will assist in your area
of lack and thus overcome the challenge. It is important that the partner also shares in the
vision of the innovation to avoid conflicting interests in future.
•Organizational risks – This refers to the risks that are faced in the structure and running of
the business once the innovation is introduced. For instance, the company may revert to
focusing all resources and time towards innovation at the expense of its daily activities.
Proper planning and allocation of resources has to be ensured by the leadership to ensure this
does not happen.
•Unprecedented risks – These are risks that would not have been foreseen and may be
influenced by factors outside the company’s control. They may involve changes in policies or
political instability whose ripple effect spills over hindering the effectiveness of the
innovation. It is important for the business to keep a contingency plan to buffer it against
such unseen events.
Barriers to Creative Thinking
• Negative Attitude: Do you have the tendency to focus on the negative aspects of new
ideas when creating a display, like too expensive – too difficult – I don't have the
knowledge/ skills / time / space – we can't do it.
• Fear of Failure: The second major obstacle to creative thinking is the fear of failure
or loss. It is the fear of being wrong, of making a mistake, or of losing money or time.
As it happens, it is not the experience of failure that holds you back. You have failed
countless times in life and it hasn’t done you any permanent damage. It is the
possibility of failure, the anticipation of failure that paralyses action and becomes the
primary reason for failure and ineffective problem solving.
• Fear of Criticism: The third major obstacle to creative thinking is the fear of
criticism, or the fear of ridicule, scorn or rejection. It is the fear of sounding dumb or
looking foolish. This is triggered by the desire to be liked and approved of by others,
even people you don’t know or care about. As a result, you decide that, “If you want
to get along, you have to go along.”
It is amazing how many people live lives of underachievement and mediocrity
because they are afraid to attempt to sell themselves or their ideas for business
success. They are afraid to ask someone to buy or try their product or service. As a
result of these fears of rejection and criticism, they play it safe and settle for far less
than they are truly capable of earning.
• Executive Stress: You might not have the time to think creatively. The over-stressed
person finds it difficult to think objectively at all. Stress reduces the quality of all
mental processes. It limits creative thinking because that requires inspiration and
exploration. Thinking outside the box requires a relaxed state of mind.
• Following Rules: You might not be aware that it hampers the creativity when you
have a tendency to conform to accepted patterns of belief or thought – the rules and
limitations of the status quo. You restrict yourself with staying on the safe side. You
prevent yourself from being open to suggestions and ideas that are new or not
associated with your field of work.
• Passive Vs. Proactive: The fifth obstacle to creative thinking for business success is
passivity. If you do not continually stimulate your mind with new ideas and
information, it loses its vitality and energy, very much like a muscle that is not
exercised. Instead of thinking proactively and creatively, your thinking becomes
passive and automatic.
A major cause of passive thinking is routine. Most people get up at the same time
each morning, follow the same routine at their jobs, socialize with the same people in
the evenings, and watch the same television programs. As a result of not continually
challenging their minds, they become dull and complacent. If someone suggests or
proposes a new idea or way of doing things, they usually react with negativity and
discouragement. They very soon begin to feel threatened by any suggestion of change
from the way things have been done in the past.
• Rationalizing and Justifying: The sixth obstacle to creative thinking for business
success is rationalizing. We know that human beings are rational creatures, but what
does that mean? Being rational means that we continually use our minds to explain
the world to ourselves, so we can understand it better and feel more secure. In other
words, whatever you decide to do, or not do, you very quickly come up with a good
reason for your decision. By constantly rationalizing your decisions, you cannot learn
to improve performance for business success.
• Over-Reliance on Logic: Investing all your intellect into logical or analytical
thinking – the step-by-step approach – excludes imagination, intuition, emotion or
humour. Use your emotions to create a display, if it makes you smile it makes others
smile. If it makes you happy it makes others happy and if it makes you think about the
theme of your display it draws people in and they will stop and contemplate the
philosophy or opinion that you (indirectly) portray.
• Making Assumptions: Conscious and unconscious assumptions restrict creative
thinking. Are you sure that a specific subject is not done? Is it the topic that is taboo?
Religious reasons? Is it a touchy subject or is it because you feel uncomfortable
tackling the issue, not knowing how to make a display about it?
Lateral thinking is a technique used to induce innovation in idea creation by trying to shift
patterns of thought off their linear and predictable trajectory using unconnected inputs to
open up new lines of reasoning.
Complimenting the use if logical (vertical) thinking, Lateral Thinking can be used to:
• Break down the No Barrier: The mind can reject any concept it wishes. In these
circumstances problem to solution may be difficult for the mind to travel in one jump.
‘Intermediate impossible’ could then be employed. Whilst not valid in itself it may
enable the brain to pause briefly and move on to a viable option.
For example: ‘we do not have enough firemen to combat this bush fire.
Intermediate impossible – ‘make everyone a fireman’
• Random Juxtaposition – Brings into a discussion something new which generates a
new set of ideas. Dr De Bono recommends a list of about twenty nouns from which
you can choose.
For example: In discussing ideas for improving supermarket visits – the addition of
the word say – ‘cafe’ could open up new ideas in terms of somewhere to leave your
trolley safely whilst you have a cup of tea.
• Challenging Accepted Outlooks/Statements– This technique brainstorms
statements/outlooks and challenges their validity however well founded they may be.
It also encompasses ‘negative brainstorming’ in which the group thinks of reasons
why a particular idea would not work. These should be converted into positive
images where appropriate.
The White Hat: The target is neutral and objective. The white hat takes care of objective
facts and numbers. White Hat Thinking excludes ones own opinions, hunches, judgements. It
removes feelings & impressions.
The Yellow Hat: The yellow is glad and positive. The yellow hat is optimist and covers the
hope the positive thought. It is positive thinking, optimism and opportunity. It advocates the
best-case scenarios and benefits.
The Black Hat: The black is sad and negative. The black hat covers negative aspects-why
something cannot be done. Black Hat Thinking incorporates cautious and careful. It separates
logical negative from emotional. Black Hat Thinking focus on errors, evidence, conclusion.
The Red Hat The red one suggests wrath, (to see red), fury and emotions. Red hat gives the
emotional point of view. Emotions come in three ways:
• Background emotions such as fear, anger, hatred, love etc.
• Initial Perceptions (Having insulted by someone etc.)
• Emotions after a map of situations has been put together.
Red Hat Thinking doesn’t have to be logical or consistent and there is no justification,
reasons or basis.
The Green Hat The green one is turf, vegetation and fertile growth, abundant. The green hat
indicates new creativity and ideas. Green Hat Thinking advocates new ideas, concepts and
perceptions and followers are deliberate for creating new ideas. Green Hat Thinking
promotes creative & lateral thinking.
The Blue Hat The blue one is cold, and is also the colour of the sky, that is in favour of upon
everything. The blue hat takes care of the control and the organization of process of the
thought. Also of the use of the other hats. Blue Hat Thinking is used by session leaders.
Benefits if Six Thinking Hats Method
• Decisions seem to make themselves
• Focused Thinking
• Improved Exploration
• Improved creativity & innovation
• Foster collaborative thinking
• Provides a common language
• Helps people work against type, preference
• Removal of ego from decisions
• Allows a switch in thinking without threatening ego
Suspended Judgement:
Suspended judgement is a prerequisite for forward thinking. One has to suspend all
judgement of ideas and concepts. One is allowed to be wrong on the way even though one
must be right in the end.
Our education has mostly taught us vertical/critical thinking. It teaches us to seek correct
facts and make correct deductions from them. One learns to apply judgement at every step
and say “no” or “this would never work” etc. This emphasis on the need to be right all the
time completely shuts out creativity and progress.
In lateral thinking judgement is delayed during the generative state of thinking in order to be
applied during the selective stage. De Bono thinks that a wrong idea at some stage can lead to
a right one later on. He gives the example of Marconi who succeeded in transmitting wireless
waves across the Atlantic ocean through following up the erroneous idea that the waves
would follow the curvature of the earth.
• Some ideas are obviously wrong when no attempt is made to judge them. In such
cases one shifts the attention from why it is wrong to how it can be useful.
• Even if one knows that an idea must eventually be thrown out one delays that moment
in order to extract as much usefulness from the idea as possible.
Fractionation:
This technique is very similar to analysis. Fractionation deals with completely breaking down
of the situation into its components. However, lateral thinking uses this fractionation to
provide material which can be used to stimulate restructuring of the original situation.
Analogy:
Analogies are used in lateral thinking by translating problems into analogies and then develop
the analogy. At the end one translates the analogy back and sees what might have happened
to the original problem. It is probably more useful to develop the two in parallel. The use of
analogies in lateral thinking is completely different. Unlike its use in argument, analogy in
lateral thinking is not to prove anything. They are simply used like all other lateral thinking
techniques; to generate further ideas.
A good example of analogies in lateral thinking comes from the tv show House. In this show
House uses mundane discussions and events as analogies to solve medical problems.
An example:
Suggested Problem: Finding your way in fog.
Suggested Analogies: A short-sighted person finding his way around. A traveller in a strange
country trying to find the railway station. Doing a crossword puzzle. Looking for something
that has been lost in the house.
Choice of Entry Point:
From what I understand, this technique is related quite a bit to the dominant and crucial ideas
explained earlier; since entry point and attention area for a problem depends on ones
perspective. Attention area refers to the part of a situation or problem that is attended to.
Entry point refers to the part of the problem or situation that is first attended to.
The choice of entry point is of huge importance because the historical sequence in which
ideas follow one another can completely determine the final outcome even if the ideas
themselves are same. In practice a different entry point will usually mean a different train of
ideas. For example, a picture of a man with a stick in his hand followed by a picture of a dog
running might suggest that the man is throwing sticks for the dog to retrieve. A picture of a
dog running followed by a picture of the man with a stick in his hand might suggest that the
man is chasing the dog out of his garden.
Attention area. The entry point is the first attention areas. Usually it starts at this point but
eventually covers the whole problem. Sometimes however important parts of the problem are
completely left out. It is only when these parts are brought under attention that the problem
can be solved.
For example, in Sherlock Holmes’ cases there was a large dog. Dr. Watson dismissed the dog
as being of no importance because it had done nothing on the night of the crime. Sherlock
Holmes pointed out that the great significance of the dog was precisely that it had done
nothing. He shifted attention from the significance of the fact that it had done nothing. This
meant that the criminal must have been known to the dog. Therefore, if something is left out
of consideration then it is very unlikely that it will ever come back in later on.
Like the reversal procedure one can deliberately turn away from what one would naturally
pay attention to in order to see what happens if one paid attention to something else. Another
method is to list the different features of the situation (fractionation) and then to proceed
methodically through this list paying attention to each feature in turn.
The important thing to keep in mind is that one should not feel that some features are so
trivial that they do not merit any attention. The difficulty is that in any situation one can pick
out as many features as one likes since the features reside not in the situation but in the way it
is looked at (Perspective).
Random Stimulation
Thus far most techniques discusses so far worked from within the idea. The idea has been
developed according to some routine process with the intention of allowing the information
to snap together again in a new pattern. But, instead of tryting to work form within the idea
one can deliberately generate external stimulation which then acts on the idea from outside.
This is called random stimulation.
The two ways of random stimulation are Exposure and Formal Generation. Exposure is when
one actively puts oneself into a position where one is subjected to random stimulation that is
part of exposure and part of formal generation. For example:
1. Accepting and welcoming random inputs.
2. Exposure to the ideas of others like in brainstorming.
3. Exposure to ideas from completely different fields.
4. Physical exposure to random stimulation. For instance going to an exhibition, zoo,
museum. |
The main point of random stimulation is not to look for anything when exposing oneself to
stimulation. Otherwise, one is exposing oneself with preconceived notions.
Formal Generation is done in multiple ways. One is to use a random word to elicit discussion.
Second, to select a book or journal. Third, select some object from the surroundings.
Random stimulation works because the mind has the ability to connect any two separate
inputs no matter how unconnected they are.
Chapter Three: Innovation Process
Innovation refers to the introduction of a new good or a new quality of a good, method of
production, market, source of supply, and/or organization in an industry. It also refers to
improving on an existing concept or idea using a step-wise process to create a commercially
viable product.
An innovation process is an organisational method that divides the uncertainties within an
innovation project into clearly subdivided steps and decision points in order to drive
development forward efficiently, while at the same time avoiding potential risks.
Innovative Process
• Identify market opportunities
• Develop Ideas
• Putting together teams
• Marketing Ideas
• Rapid Prototyping
• Innovation Culture:
Problem Statement:
A problem statement is important to a Design Thinking project, because it will guide you and
your team and provides a focus on the specific needs that you have uncovered. It also creates
a sense of possibility and optimism that allows team members to spark off ideas in the
Ideation stage. A good problem statement should thus have the following traits. It should be:
• Human-centred. This requires you to frame your problem statement according to
specific users, their needs and the insights that your team has gained in the Empathise
phase. The problem statement should be about the people the team is trying to help,
rather than focussing on technology, monetary returns or product specifications.
• Broad enough for creative freedom. This means that the problem statement should
not focus too narrowly on a specific method regarding the implementation of the
solution. The problem statement should also not list technical requirements, as this
would unnecessarily restrict the team and prevent them from exploring areas that
might bring unexpected value and insight to the project.
• Narrow enough to make it manageable. On the other hand, a problem statement
such as, “Improve the human condition,” is too broad and will likely cause team
members to easily feel daunted. Problem statements should have sufficient constraints
to make the project manageable.
Idea Generation:
Idea generation is the creative process or procedure that a company uses in order to figure out
solutions to any number of difficult challenges. It involves coming up with many ideas in a
group discussion, selecting the best idea or ideas, working to create a plan to implement the
idea, and then actually taking that idea and putting it into practice. The idea can be tangible,
something you can touch or see, or intangible, something symbolic or cultural.
This is the first step in an innovation process. It is where you decide on the concept
that you want to develop and come up with reasons why you want to improve the idea. It is
important for you to involve your employees and customers. Involving many knowledgeable
people will enable you to get a better understanding of the market. Besides, it will give you
an opportunity to look at the idea in different angles. At this stage also, experts will also
provide many viable ideas. Innovation ideas can be drawn from:
• Customers
• Employees
• Public
• Partners and Suppliers
• Competitors
Idea Generation Techniques
• Brainstorming: This process involves engendering a huge number of solutions for a
specific problem (idea) with emphasis being on the number of ideas. In the course of
brainstorming, there is no assessment of ideas. So, people can speak out their ideas
freely without fear of criticism. Even bizarre/strange ideas are accepted with open
hands. In fact, the crazier the idea, the better. Taming down is easier than thinking up.
• Brain-writing: Brain-writing is easy. Instead of asking the participants to shout out
ideas, they are told to pen down their ideas pertaining to a specific problem or
question on sheets of paper, for a small number of minutes.
• Mind-mapping: Mind-mapping is a graphical technique for imagining connections
between various pieces of information or ideas. Each fact or idea is written down and
then connected by curves or lines to its minor or major (previous or following) fact or
idea, thus building a web of relationships.
• Synectics: Synectics is a creative idea generation and problem solving technique that
arouses thought processes that the subject may not be aware of. It is a manner of
approaching problem-solving and creativity in a rational manner.
• Storyboarding: Storyboarding has to do with developing a visual story to explain or
explore. Storyboards can help creative people represent information they gained
during research. Pictures, quotes from the user, and other pertinent information are
fixed on cork board, or any comparable surface, to stand for a scenario and to assist
with comprehending the relationships between various ideas.
• Role Playing: n the role playing technique, each participant can take on a personality
or role different from his own. As the technique is fun, it can help people reduce their
inhibitions and come out with unexpected ideas.
• Visualization and visual prompts: Visualization is about thinking of challenges
visually so as to better comprehend the issue. It is a process of incubation and
illumination where the participant takes a break from the problem at hand and
concentrates on something wholly different while his mind subconsciously continues
to work on the idea. This grows into a phase of illumination where the participant
suddenly gets a diversity of solutions and he rapidly writes them down, thereby
creating fresh parallel lines of thought.
Incubation
The second step in the innovation process is all about testing and growing ideas. Incubation
demands a trial and error approach and mindset. Business incubation is a unique and highly
flexible combination of business development processes, infrastructure and people designed
to nurture new and small businesses by helping them to survive and grow through the
difficult and vulnerable early stages of development. Business incubation provides a
nurturing, instructive and supportive environment for entrepreneurs during the critical stages
of starting up a new business.
In incubation this is when all the information that you have gathered in the
PREPARATION stage really goes back. It starts to churn in the back of your mind, in the
sub-consciousness. This is an extremely important stage because sometimes it can takes days,
or weeks, or months or sometimes even years. That idea that you’ll think about writing about
a book or piece of music, and you’re writing about it and you just leave it to the side for a
while and then you come back to it. Now the interesting thing about the incubation stages it
that to a certain extent it is not really under your control how long that stage will take.
Level of Process Innovation
Steps to Incubation:
1. Acknowledge that a new idea is too big or different to be put into the traditional pipeline
and that it needs a special approach.
2. Start building prototypes and getting customer feedback as soon as possible to learn and
develop the opportunity.
3. Identify the stakeholders that will need to be involved in a successful implementation of
the idea, and start working with them immediately.
Finding novel solutions to important problems is not only hard, but complex. There are, after
all, a myriad of important problems at any given time and countless potential approaches to
each one of them. Innovation seems like too small a word.
Nevertheless, I think we can move the ball further by breaking it down into three discrete
areas of activity.:
Competency: Every organization has its own history and set of capabilities which determine
its innovation competency. An old-line industrial firm can’t just wake up one day and decide
to operate like a hot Silicon Valley tech startup overnight, nor should they try. However,
every enterprise can improve.
Tim Kastelle, who researches innovation, has built a powerful framework based on
competence and commitment that will help you climb the ladder from laggard to world-class
innovator.
Strategy: As a manager knows, resource allocation is critical to strategy and therefore needs
to be an integral part of aligning innovation to strategic objectives.
Again, professor Kastelle provides valuable guidance with his version of the three horizons
model which suggests a 70/20/10 split between improving existing products and processes,
searching out adjacencies and exploring completely new markets.
Management: Even the most competent firm which deploys resources wisely still needs to
manage innovation effectively. This is my primary focus.
Innovation Management Matrix
Basic Research: When you’re aim is to discover something truly new, neither the problem
nor the domain is well defined. While some organizations are willing to invest in large-scale
research divisions, others try to keep on top of cutting edge discoveries through research
grants and academic affiliations. Often, the three approaches are combined into a
comprehensive program.
Breakthrough Innovation: Sometimes, although the problem is well defined, organizations
or even entire fields of endeavour can get stuck. For instance, the need to find the structure of
DNA was a very well defined problem, but the answer eluded even Linus Pauling, the most
talented chemist of the day.
Usually, these types of problems are solved through synthesizing across domains. For
instance, Watson and Crick solved the DNA problem by combining insights from chemistry,
biology and X-ray crystallography. In a similar vein, many companies are learning to
embrace open innovation in order to pull in diverse resources.
Sustaining Innovation: Whatever you do, you always want to get better at it. Every year, our
cameras produce more pixels, our computers get more powerful and our household products
become “new and improved.” Large organizations tend to be very good at this type of
innovation, because conventional R&D labs and outsourcing are well suited for it.
Disruptive Innovation: The most troublesome area is disruptive innovation, because its
value isn’t always immediately apparent. Notably, Yahoo and Blockbuster had the
opportunity to invest in Google and Netflix early on, but missed the opportunity because they
didn’t see the potential.
Performance Measurement
Balance Scorecard
Kaplan and Norton (1996) present the Balanced Scorecard model as a useful tool for the
managers to obtain a competitive advantage. These days, organizations are competing into a
complex environment where understanding the objectives and the way they can be achieved
it’s vital. The Balanced Scorecard translates the mission and the organization strategy into a
set of performance indicators that offers a model for the performance measurement system.
The model assets the organizational performance through four perspectives: financial, clients,
learning and growth and internal processes (Kaplan & Norton, 1996). The indicators
represent a balance between external indicators for stakeholders and the internal indicators of
critical processes, innovation learning and development.
The better we understand innovation processes the better our business model will be
as well as the related system of measuring performance, which will supply better information
for innovation management. This is why it seems best to use Balanced Scorecard (BSC)
process classification, which is based on the value chain and covers all the key company
processes:
• Innovation process – company is studying the development of customers’ needs and based
upon the results it organizes research and development of new products that satisfy these
needs.
• Operational process – ensure production and supply of products and services to customers.
• Post-sale services – can represent an advantage in business competition. It can be e.g. fast
service of sophisticated and expensive systems or training programs supporting efficient use
of these products.
The advantage of this method is that the transition from strategic to process level
achieved through process perspective is very straightforward. Another advantage of this value
chain is that the innovation process stands at its beginning and that it includes the
investigation of current and future needs of the customers, as well as research and
development of new ways how these needs could be satisfied.
The BSC concept transforms company vision and strategy into a comprehensive set of
performance indicators that provides a framework for assessing its strategy and management
system. BSC measures company performance using four balanced perspectives – financial,
customer, internal business processes and potential
Strategic Operational
The Culture of Innovation: Innovation culture is the work environment that leaders
cultivate in order to nurture unorthodox thinking and its application. Workplaces that foster a
culture of innovation generally subscribe to the belief that innovation is not the province of
top leadership but can come from anyone in the organization. Innovation cultures are prized
by organizations that compete in markets defined by rapid change; maintaining the status quo
is insufficient to compete effectively, thus making an innovation culture essential for success.
Innovation cultures often measure employees based on metrics such as value creation
(for customers as well as for shareholders) and competitive differentiation, instead of
traditional metrics such as on-time delivery and revenue generation. Companies that foster
innovative thinking also encourage discovery and find ways to reward time spent on the
research required to generate new products and ideas.