3.9.2 - assessing innovation

what is innovation

when a business successfully exploits new ideas that have been developed

how can new ideas be developed

through R&D:

• Scientific and systematic investigation into:

  • New products

  • New manufacturing processes

  • New procedures to improve production or delivery

what is the value of innovation

• Gain access to new markets

• Create new products and new demand

• Develop new ways of doing business

• Gain competitive advantage

• Increase value added

• Improve long-term survival

what are the types of innovation

1. product innovation

2. process innovation

what is product innovation

The development and marketing of a new or significantly redesigned good or service

what would a product redesign include

• More desirable functions

• New materials

• New components

what is process innovation

• Implementing new or improved production, delivery, or communication methods

• Focuses on efficiency and cost reduction

what would process innovation include

• New software

• New equipment

• New techniques

what are the advantages of innovation

• Improved product quality

• Ability to enter new markets

• Increased value added

• Increased product range, spreading risk

• Reduced costs, especially lower unit costs

• Improved flexibility and increased capacity

• Easier to meet regulations

• Reduced environmental impact of production

what are the disadvantages of innovation

• Uncertain demand — high spending with little return

• Operational difficulties, especially during the learning curve

• Productivity may initially fall

• Competition — rivals may enter the market

• Imitation / generic products

examples of innovative organisation

• Apple

• Microsoft

features of a culture of innovation

• Attracts innovative employees

• Encourages creativity

• Supports long-term competitiveness

what are methods of becoming innovative

1. kaizen

2. R&D

3. intrapreneurship

4. benchmarking

what is kaizen

• Philosophy of continuous improvement

• Small, incremental changes over time

• Involves employees at all levels

what is a customer-orientated business

• Customer needs identified first

• Solutions developed to meet them

what is a product orientated business

• Products developed first

• Markets then sought

what is intrapreneurship

• Acting like an entrepreneur within a large organisation

• Employees show initiative and innovate without being instructed

benefits of intrapreneurship

• Encourages creativity

• Transforms ideas into profit

• Retains talented employees

intrapreneurship management styles

• Encourage experimentation

• Learn from failure

• Persist until success is achieved

what is benchmarking

• Comparing performance with best-in-class competitors

• Identifies best practices and areas for improvement

• Low risk but often leads to imitation rather than innovation

ways of protecting Innovation and Intellectual Property

• patent

• copyright

how do patents work

• Legal protection for new inventions or processes

• Prevents copying for a set period

how does copyright work

Protect creative works such as:

• Software

• Designs

• Written material

impact of innovation on finance

• High R&D costs

• Uncertain returns

• Risk management needed

impact of innovation on HR

• Recruitment of skilled workers

• Training and development

• Culture change

impact of innovation on operations

• New technology and processes

• Improved efficiency

• Short-term disruption

impact of innovation on marketing

• Market research

• Product launches

• Promotion and branding