Understanding Innovation

  “Innovation distinguishes between a leader and a follower”
– Steve Jobs

In today’s competitive world, the survival of the business depends on being able to respond to changes in the environment by innovating and reinventing the business. Those organizations that are able to crack the innovation code become leaders of their industry. It sees that they have one thing in common- they stand out from the pack by their unique ability to innovate quickly and well.

So, whether they are the Careem, Airlift, Spotify,Daraz or typical businesses like  Engro Foods, Nestle or Unilever – they all stand out by their ability to reinvent and create disruptions to an existing order.In this article,  we shed some light on innovation andits types, innovation management and,innovation adoption lifecycle.

What is Innovation

There are several definitions of what an innovation is. A standard understanding of innovation is:

“The act of introducing a new device, method or material for application to commercial or practical objectives.”

Innovation is often also viewed as the application of better solutions that meet new requirements, unarticulated needs, or existing market needs. Such innovation takes place through the provision of more-effective products, processes, services, technologies, or business models that are made available to markets, governments and society. An innovation is something original and more effective and, as a consequence, new, that “breaks into” the market or society.

Innovation is related to, but not the same as, invention, as innovation is more apt to involve the practical implementation of an invention to make a meaningful impact in the market or society, and not all innovations require an invention. Innovation often manifests itself via the engineering process, when the problem being solved is of a technical or scientific nature.

This could mean:

• coming up with something novel such as a new vaccine for COVID-19 or SARs virus
• A New Model – a newly introduced model like latest model of MacBook Pro with better feature set
• Method – method of assembling models like self-checkouts in supermarkets in 1^st World countries or COD Deliveries in Pakistan.

Types of Innovation

The word “innovation” is an extremely broad term and can be classified into four categories and some of the categories can be further divided into different types. These are:

1. Product Innovation: Improving or introducing new products. For example, Philips introducing new LED bulbs which could be used for agricultural purposes
2. Service Innovation: Services do not have a tangible manifestation and consists of improving the overall customer experience, like food delivery. Both product and service innovation improve the output of the organization. Example of service innovation would be, Phillips providing a recipe book which contains information regarding position and concentration of light for different vegetables
3. Process Innovation: Process innovation which is concerned with the way a firm conducts its activities for example Introduction of barcodesat supermarkets and assembly line introduced by FORD, where different components of a car were added in different parts along an assembly line. Farms in the Netherlands are using this strategy to grow crops.
4. Combined Example which addresses all the elements of this category is usage of Phillip’s LED lights for growth of vegetables and fruits in greenhouse

The second categorisation of innovation is Radical or Incremental Innovation.

Incremental Innovation is a type of innovation in which proposed solutions are slightly different from pre-existing solutions, for example: Gillette razors started life with a single blade but their product has evolved, adding different features and more blades as the company has sought to better meet customer needs. Incremental innovation doesn’t just apply to products, it affects services too likeNaheed Super Market (A Karachi based grocery store) has evolved its delivery service in light of recent COVID-19 crisis so that online shoppers can receive their goods more quickly without having to leave their houses.

Radical Innovation is a type of Innovation is which the proposed solution is completely different from a pre-existing solution. According to the Harvard Business Review:“Radical innovation focuses on long-term impact and may involve displacing current products, altering the relationship between customers and suppliers, and creating completely new product categories.”
The perfect example for radical innovation is the introduction of the Apple’s IPhone which paved the way to the new world of modern smart phones.

The third categorization of innovation includes Modular and ArchitecturalInnovation.

Modular Innovation is changing a component while not changing the configuration of the system. The interaction of components remains unchanged for instance the local fan company “GFC” produces newly designed fans every season though their functioning remains unchanged.

Architectural Innovation deals with changing the configuration of the entire system and the way different components in the system interact.A DSLR being changed into a security camera would be an example of an architectural Innovation. Modular Innovation has more popularity in the eyes of firms’ innovation management departments than architectural innovation as the firm needs to invest a lot of time and effort to reorganize itself to work with a new system.

The fourth category Innovation is Sustainable or Eco-friendly. Sustainable innovation is a process where sustainability considerations (environmental, social, and financial) are integrated into company systems from idea generation. Eco-innovation is any innovation resulting in significant progress towards the goal of sustainable development, by reducing the impacts of our production modes on the environment, enhancing nature’s resilience to environmental pressures, or achieving a more efficient and responsible use of natural resources.
AirCarbon is a new type of plastic made by Newlight Technologies(based in Irvine, California). It is made by combining air with methane-based carbon. These emissions, would otherwise become part of the air we breathe, produce a material that is approximately 40% oxygen and 60% carbon and hydrogen from the air. The life cycle of this new plastic could be the renewable material that cleans the atmosphere, rather than polluting it.

The Innovation Adoption Life Cycle

The adoption life cycle was introduced by American Scholar, Everett Rogers in Fusions of Innovation. It represents number of people that adopt certain innovation overtime, starting at the moment at which innovation is introduced till when it becomes unavailable. These typically represent the consumer or market for a company.

• Innovator: These are the first people to adopt technology who do not have difficulty in dealing with changes. Rather they enjoy being the first people to embrace changes.
• Early adaptors: concerned about potential applications of innovations even if innovation is not fully developed. So they often adopt the changes cautiously and also form part of a cohort of early influencers.
• Chasm: Gap between early adopters and the early majority. If an innovation succeeds in crossing chasm it reflects that the innovative business opportunity is well-positioned for hyper-growth and market success.
• Early majority: need proof on how innovation can be useful to them. They seek inspiration from someone who already has that innovation. They have an analytical approach, support evolution, consult others, manage risks and pursue what is probable.
• Late majority: only adopt it when it becomes prominent in the world.
• Laggards: outdated and not aware of innovations during its initial and growing stages. They only adopt it when it is in its declining phase. The Laggards are those that have the most difficult time adapting to new changes in product, system or process.

So, what is Innovation Management
The next question is how do we systematically manage innovation.

Innovation management is about how organizations and their employees deal with innovation activitiessuch as introducing new methods, devices, or materials. Members of such management projects learn about problems and find solutions to deal with it.

“Innovation management is the systematic promotion of innovations in organizations andincludes tasks of planning, organization, management and control”

Innovation management has two major pillars:

• On the one hand, the shaping of framework conditions, so that ideas are always created in the company and implemented into successful innovations. The focus here is on organizational development activities.
• And, on the other hand, the actual innovation, active search, development, and implementation of ideas. This requires creativity and project management.

Innovation management is very versatile as it includes future management(future opportunities and risks of innovation),development of the innovation strategy, planning of the innovation activitieswith an innovation roadmap,decision-makingstructures,

Innovation process consists of a standard iterative process that includes activities such as development, business planning, solution development, prototyping, implementation, marketing and,designing an innovation culture.

For more information on how to manage innovation read the following:

Innovation & Entrepreneurship by Peter Drucker