13 Business External Flashcards - Innovation

Innovation - EXTERNAL

Product innovation - Definition (2 sentences)

Product innovation is what is made and how value is added to make a unique selling point that differentiates the product or brand from its competitors. Product innovation refers to new creations or the development and improvement of existing products, and leads to substitutes for existing products.

What are the two focuses of innovation?

Product innovation can be product focused (make a product and try to find a market on the assumption that it is known what the customer will buy) or customer focused (research customer needs and design a product to meet those needs).

Advantages of product innovation

1) First mover advantage - first in the market and therefore can command a higher price (price skimming strategy) due to lack of competition

2) Added value can build customer loyalty and generate repeat purchase behaviour as the business gains a reputation as being innovative (brand switching).

3) Producing innovative products can attract and retain creative and innovative employees who are motivated to work at the leading edge of their industry (like Weta Workshop)

Process innovation - Definition (sentences)

Process innovation is making changes to how a product is made, or a service is carried out. It is looking for ways to improve the production process to increase efficiency by minimising inputs (time, skills, resources) or increase its effectiveness by maximising outputs (quantity and quality). Process innovation can be cost-reducing innovation, especially with the investment in technology.

Advantages of process innovation

1) Reducing costs per unit, especially when utilising new production techniques

2) Improved quality of the final output

3) Greater employee satisfaction as their tasks become easier or quicker, or new jobs may be created.

Overall benefits of innovation:

1) Improved productivity & reduced unit costs

2) Better quality - more likely to meet customer needs

3) Building a product range

4) To handle legal and environmental issues - might enable the business to reduce it carbon emissions, produce less waste, or perhaps comply with changing product legislation.

5) More added value - unique selling proposition for a product (customers are willing to pay more, which helps a business differentiate from its competitors).

6) Improved staff retention, motivation and easier recruitment

Overall risks of innovation

1) Competition - An innovation confers a competitive advantage if competitors are not able to replicate it in their own business '

2) Uncertain commercial returns - Much research is speculative and there is no guarantee of future revenues and profit. The longer the development timescale the greater the risk that research is overtaken by competitors too.

3) Ability of finance - Like other business, R&D has to compete for scarce cash.

What is research?

Research is the investigation and discovery of new ideas in order to solve a problem or create an opportunity.

What is development?

Development involves changing ideas into products, materials, systems, or processes.

Process Innovation could involve:

• Sustainability innovation - reducing environmental impacts

• Marketing Innovation - new and better ways of promoting product and communication with customers

• Systems innovation - improving efficiency of operations within the firm

Disruptive Technology or Marketing

A disruptive innovation is an innovation that helps create a new market and value network, and eventually disrupts an existing market and value network (over a few years or decades), displacing an earlier technology.

How to sustain competitive advantage:

To sustain competitive advantage, companies must institutionalize their innovation process by creating an environment in which creative thinking is central to their values, assumptions, and actions.

What is Corporate Culture?

Corporate culture is the shared values, attitudes, beliefs and behaviours that contribute to the environment of an organisation. 

“It’s the way we do things around here”

The culture is developed over time and is based on actual perceptions and experiences of people within the organisation. There has to be “Walking the Talk”

Why is corporate culture important

When employees truly share the same values, goals and beliefs they are more likely to work together as a team, have increased loyalty and motivation.

Case study (main) - Sanford - PSH - Process and Tiaki product

Product: Tiaki brand seafood - Sustainable seafood & PSH

Process: PSH

Risk and Benefits: Competitive advantage, sustainability, Kaitakitanga

Innovative culture - Sanford Case Study (Example 1)

Sanford have CCI program (culture for continuous improvement) - effectively quality circles under a TQM (total quality management) system. This is an example of Kaizen principles in action.

Sanford in the first year implementing their program at their Timirau division had implemented 50 ideas in a year which had resulted in significant improvements in operational efficiency and cost reductions.

Innovative culture - Sanford Case Study (Example 2)

Through this program they have consistently recognised staff contributions - e.g. JW1 in Tauranga, naming a small change to a production line for the staff member who suggest the change.

Case study (Back up) - Moana - Oyster (Tio) Spat Farming

One of the most significant contributions to the improvement in Oysters is Moana’s selective breeding programme at their Tio Spat Farm. Flip Farming and Spat farming is helping Moana to achieve their goals, improve working conditions and helping them to achieve their commercial and sustainability goals.