Innovation

Innovation means a new way of doing something. This may refer to incremental, radical or revolutionary changes in thinking, products, processes or organisations. Innovation is typically understood as the successful introduction of something new and useful. It occurs when someone uses an invention or an idea to change how the world works, how people organise themselves or how they conduct their lives.

In economics the Change must increase the Value and the goal of innovation is to bring about positive change: that is, one that makes things better. Innovation, leading to increased productivity, is the fundamental source of increased wealth in an economy.

Macro-, Micro-, Sub-Micro and Atomic Levels:

Given the potential to support economic growth and social cohesion, many organisations seek to develop a culture of entrepreneurial thinking.

This follows because, although Schumpeterian Analysis discusses, on the one hand, Global, Institutional, Bloc and National macro-economies it recognises that these are made up from individual elements known as micro-economies, all of which behave differently. These are sectors like the oil and gas industry, which, in turn, is made up of sub-micro-economies, like exploration and production, which are often out of phase. Beyond this the sub-sub-micro-economies are the individual companies whose fortunes can be affected by entrepreneurial intervention at the atomic-level of contribution.

In the organisational context, innovation may be linked to performance improvements and growth through increasing the operating efficiency, productivity, quality, competitive positioning, and market share.

Adding Value and Destructive Tendencies:

While innovation typically adds value, it may also have a destructive effect as new developments tend to clear away old forms and practices: so organisations that do not innovate may be destroyed by those that do: ergo, innovation, and the absence of it, usually involves some risk.

A key challenge is to maintain a balance between process and product innovations. Process innovations involve a business model, which may develop shareholder satisfaction through improved efficiencies; while Product innovations develop customer support, but at the risk of costs in Research and Development, which can erode shareholder returns.

For innovation to occur something more than the generation of a creative idea is required. The insight must be put into action and make a genuine difference and this must result in a new or an altered business process or a change in the products and services provided.

Sources of Innovation:

End-user innovation is, by far, the most valued source because it is a safer route to eventual acceptance. End-user innovation is a Marketing-led Initiative that is discovered when a Supplier maintains regular contact with ear-marked, prospective Customers through Marketing Research Exercises. These are inspired by the Entrepreneur.photo4

It is noted that companies cannot grow through cost reduction and re-engineering alone. Innovation is the key element in providing aggressive top-line growth and for increasing bottom-line results. The same research showed that between fifty and ninety percent of innovation projects are judged to have failed. However, Organizations can learn to avoid failure when it is openly debated and adequately researched.

Sources of Failure in Innovation:

Some of the causes of failure are external to the organisation, and beyond its influence or control, but others are internal, and ultimately within its control;

Failure in the Cultural Infrastructure:

Failure in the Innovation Process:

Innovation is ‘Enacted’: that is, it is recognised, adopted, adapted and applied by Individuals because individuals are the atoms of the organisation. Their gritty appreciation of the small detail combines with a sense of the organisational objectives to inspire an improved product or service. From this perspective innovation succeeds from corporate structures known as Learning Organisations that engage the individual to benefit the organisation because Innovation pivots, intrinsically, on highly motivated Individuals, within a supportive culture.

These individuals are informed by a broad sense of the future and are known as Entrepreneurs.