Introduction to Innovation Management Course

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Introduction to Innovation This short book introduces the complex subject of innovation to people new to the topic. It presents key concepts, definitions, and real-life examples of the different types of innovation. It also presents a “vocabulary� of innovation. Throughout the book, short quizzes help you check your learning of the subject matter. By the end of the book, you will be well on the road to mastering this very important subject.

Introduction to Innovation Gordon Graham

Telephone: 052 922 3352 (UAE).

Copyright © Gordon Graham, 2014 INTRODUCTION Imagine the following scenario: You are attending a meeting at very short notice about innovation at your company. The problem: you know very little about innovation and you do not want to embarrass yourself. This is where this course can help. You will learn the basics of innovation without having to read through thousands of pages of text.

LEARNING OUTCOMES After this short introductory course, you should be able to:    

present a succinct, practical Definition of Innovation name the two main Stages of the Innovation Process identify the two main Types of Innovation discuss the two main Degrees of Innovation

INNOVATION DEFINITION There are numerous, different definitions of innovation. These reflect different perspectives and contexts to which the various authors are referring. For practical purposes, innovation is defined here as: The successful implementation of ideas that create value.

The ideas can be in the way a product/service is made or in the features or performance of the product/service itself.

EXTRA INFORMATION A good definition of innovation contains three main elements: the idea, successful implementation (execution), and value (profit).

You can see here now the difference between an invention and innovation. An invention is yet to be fully valued by people, so they are unwilling to pay money for it. Without the profit, the invention will be unsustainable for the inventor.

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Copyright Š Gordon Graham, 2014 DEFINITIONS Below is a list of various definitions of innovation: 1. "So what is innovation . . . those other dots. The ones others miss and having the certainty to know that the dots you see are not only valid but necessary if the world is to move forward."

(David Brier, 2013) 2. " . . . introducing new commodities or qualitatively better versions of existing ones; finding new markets; new methods of production and distribution; or new sources of production for existing commodities; or introducing new forms of economic organization." (Schumpeter, 1942) 3. "An innovation is an idea, practice or object that is perceived as new by an individual or other unit of adoption."

(Rogers, 1995) 4. "An innovation is anything new that is actually used (enters the market place) - whether major or minor." (von Hippel, 2005) 5. "The adoption of an internally generated or purchased device, system, policy, program, process, product, or service that is new to the adopting organization." (Damanpour, 1991) 6.

"Creating new and better ways of doing things that your customers value and that create value for your shareholders." (George et al., 2005)

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"A new way of doing things . . . that is commercialized." (Porter, 1990)

8. "The successful exploitation of new ideas." (U.K. Department of Trade and Industry, 2003) 9. "The intersection of invention and insight, leading to the creation of economic value." (U.S. National Innovation Initiative, 2005)

THE INNOVATION PROCESS "Anything new in the world is history you haven't learned, yet." - Harry S. Truman The innovation process is all about taking an idea and bringing it successfully to a market. In other words, the idea is valued by a society enough that people pay for it. So, for most businesses, the process of innovation is basically taking an idea and turning it into dollars, with a lot of effort and stumbles along the way.

"The myth of innovation is that brilliant ideas leap from the minds of geniuses. In reality, most innovations are borne from rigor, discipline and collaboration." - Tim Brown, CEO of IDEO

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Copyright Š Gordon Graham, 2014 TWO MAIN STAGES It is useful to look a bit more closely at the whole innovation process and divide it into two main phases: The Initiation Phase (the thinking stage) and the Implementation Phase (the execution, or doing stage).

Initiation

THE BASIC STAGES OF THE INNOVATION PROCESS

Implementation LEARNING CHECK 1. Which of these is the best definition for innovation? a. b. c. d.

Something new that has never been seen before.

The process of executing value-creating ideas.

New gadgets that have been developed for fun.

Being able to be creative and think differently.

Answer: b

2. What's the difference between an invention and an innovation? a. b. c. d.

An invention is used frequently by many people.

An invention is more useful than an innovation.

An invention costs less than an innovation.

An innovation has been accepted by a market.

Answer: d

TWO MAIN TYPES OF INNOVATION There are two main types of innovation: Process Innovation and Product Innovation.

Process Innovation.

This is innovation in the way a product is made or distributed (accessed by the customer). E.g. Amazon changed the way we bought books. And Netflix changed the way we borrowed DVDs. In terms of the manufacturing of a product, an Apple iPhone would be much more expensive than it is - without the likes of Foxconn, who specialize in manufacturing 3

Copyright Š Gordon Graham, 2014 massive quantities of electronic items at a high quality and at a low price. The innovation could also be a company opening a factory in a low-wage country that offers tax incentives. Process Innovation makes things cheaper while, hopefully, maintaining quality.

Product Innovation.

Improvements to the product/service itself. This could be by making the product perform better, or by removing unnecessary features (many products are over designed for some markets, such as smart phones). Examples of product innovation are: improvements to a cell phone's battery life. Or lower fuel consumption along with increased performance in a car.

You will come across many other types of innovation in the literature. What is common with all of these names is that they just describe where the innovation occurs.

LEARNING CHECK Are the following Process Innovations or Product Innovations?

1. A fast food restaurant uses coffee machines that remove human error and make a perfect brew - every time.

2. A hotel calls new guests once they have checked in to the room to make sure the room is OK. 3. A manufacturer has developed a power pack for cell phones that is lighter, thinner and has 30% better performance.

4. A construction company has developed a new sliding formwork system that allows for consistent, seamless concrete columns at a rate that is 10% faster than its competitors.

5. A car manufacturer cuts its operating costs by utilizing robots across all its factories.

Answers: 1) 2) 3) 4) 5)

Process - the restaurant is improving the way it makes the coffee and is reducing mistakes.

Product - the guest's experience of the hotel is improved.

Product - clearly a much better performance from this essential product.

Product - an improved product experience.

Process - the manufacturer is improving all aspects of the way it makes the cars. It is saving money and reducing quality problems.

DEGREES OF INNOVATION Another way of distinguishing between different types of innovation is by degree. Basically, an innovation will be incremental or radical.

Incremental Innovation Small improvements in the product, the making of the product, and distribution of the product. This is the most common type of innovation. Examples, gradual improvements to the way a restaurant prepares and delivers burgers, or new improvements to the camera on a smart phone. Incremental Innovation is sometimes called small, continuous, and evolutionary.

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Copyright Š Gordon Graham, 2014 Radical Innovation Radical innovation is also known as large, discontinuous, or revolutionary innovation. This type of innovation occurs rarely but results in dramatic changes to an industry. Examples include: steam power, artificial light, refrigeration, the ICT revolution and, recently, biotech.

Radical innovations often result in dramatic changes in the way people live. Some would even go so far as saying that radical innovations change the course of history.

"Large companies welcome innovation and individualism in the same way dinosaurs welcomed large meteors." - Dilbert comic strip EXTRA INFORMATION It is important to note that most companies are structured so that only incremental innovation is managed or noticed.

This type of set up means that companies often miss the approach of seemingly harmless, radical innovations. For example. Blockbuster (a DVD rental store) no longer exists. Now it's all about Netflix and Amazon. Another one: Tower Records (a retailer of CDs and records) is history. It failed to respond to the arrival of the downloadable MP3 files.

Because of their structure, incentives, and constraints, existing players are often paralyzed and cannot respond to these radical new things. It is this failure to adapt that causes companies to come and go at an increasingly fast rate.

An understanding of innovation can help organizations, regions and nations thrive, it can also help them avoid extinction, like the dinosaurs in the Dilbert comic strip.

READY TO TEST YOUR UNDERSTANDING OF INNOVATION?

Turn to the next page to access the assessment!

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Copyright Š Gordon Graham, 2014 QUIZ 1. An airline manufacturer has started to use new, lighter materials in its wings and fuselage. This has resulted in lower fuel consumption and the aircraft can also fly longer distances. What type of innovation is this? a. Radical Innovation b. Incremental Innovation 2. What are the two main stages of the innovation process? a. Initiation and Implementation b. Execution and Implementation c. Thinking and Initiation 3.

Which type of innovation is the most common?

a. Incremental b. Radical 4. What type of innovations were the Internet and refrigeration? a. Incremental b. Radical 5. If an engineer develops a personal heater that boils water in a cup, but nobody wants to use it, is this an innovation or an invention? a. Innovation b. Invention 6. The process of innovation is: a. Unpredictable, messy and requires a lot of effort. b. Easy and often requires a magical moment or epiphany.

If you would like a course or a workshop on Innovation at your organization, please don’t hesitate to contact me. Gordon Graham: +971 52 922 3352. If am so confident that you will be satisfied with what you will learn that I offer a 100%, no-questions-asked guarantee. About me: I have completed an MSc with Distinction in International Marketing with a specialization in Innovation Management at the University of Strathclyde in the UK. I have been living and working in the UAE since 2010. I have over twenty years of training experience.

Answers to final quiz/assessment:

1) b 2) a 3) a 4) b 5) b 6) a

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