Research Paper on Importance of Innovation for Business

Introduction

Innovation has several important definitions. Innovation is the process of translating an invention or idea into a good or service that will create value and customers are willing to pay for that value (Edison & Torkar, 2013). Innovation is also defined as the application of ideas that are novel and useful. This means that innovation is creativity and the ability to generate useful ideas that must be applied. If the ideas are not applied they remain an idea and not innovation. Another important definition of innovation is that it is a feasible relevant offering that may be a service, product, experience, or process that has a viable business model that is seen as new and is adopted by consumers. Innovation can also be described as adoption, exploitation, and assimilation of novelty in social and economic spheres; development of such new forms and methods of production; enlargement and renewal of services, markets, and products as well as the establishment of unique management styles (Bank, 2017).

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Why Is There a Lack of Common Definition?

There lacks a common definition for the word innovation and they are at least three compelling reasons which are: The emergence of innovation as part of a corporate focus, the intense focus on efficiency over innovation, the increasing specialization in corporate silos. Getting a common definition of innovation is also a challenge because most of the words associated with innovation carry several meanings whose context is not shared. For example, the word innovation itself has some uncertainty. It is an activity, a strategy, or the desired outcome depending on the context (Inventta+bgi, 2017).

10 Types of Innovation Frameworks

Fig 1. Frameworks of Innovation (Deloitte, 2015)

Profit Model-This type of innovation deals with ways in which firms make money. An example is how Netflix changed the video rental industry significantly by innovating and implementing a subscription model (Deloitte, 2015).

Network- The network framework determines the partnerships one develops with others towards creating more value (Deloitte, 2015). Being in a connected world, it becomes quite essential for companies to actually work together towards gaining technology, process and brand credibility. An example of the network innovation model is when target works with renowned external designers to uniquely differentiate itself.

Structure - The structure framework aligns one's talent and assets. This involves such famous organizational structure which is driven mainly by commitments instead of management orders. An example of structure innovation framework is like how Whole Foods built a robust feedback system for internal teams (Deloitte, 2015).

Fig 2. Offering in Innovation Frameworks (Deloitte, 2015)

Process - The process framework determines the superior or signature methods for doing one work. This is sometimes a breakthrough methodology or a patent approach such as Toyota's production which has risen to such prominence. An example is how Zara's "fast fashion" strategy helps to transform clothing from sketch to shelf in a short period. (Bank, 2017).

Product Performance- Product Performance innovation framework distinguishes various elements of the core program such as the feature set, quality and the capability of the company's products. This is usually the sum of various innovations and revolves mainly around research and development. An example of product performance innovation framework is like Oxo Good Grips cost a premium and its "universal design" that has a loyal following (Doblin, 2015)

Product system- The product system of innovation represents complementary services or programs. Its value addition through combining other services and products to one's product to create more value. An example is how Nike made shoe products and enhanced it with apps, sensors to suit a sport lifestyle.

Fig 3. Experience in Innovation Frameworks (Deloitte, 2015)

Service- The service innovation framework represents enhancements and support which complement your business offering. An example is like "Deliver WOW through service" is Zappos number 1 internal core value.

Channel- The channel innovation framework represents how offerings such as products and services are delivered to consumers. An example is how Nespresso locks in its clients with a useful members' only club.

Brand- The brand innovation framework is a representation of one's business and offerings. For instance the Coca-cola brands represent the firm's products. Coca-cola products have become global brands that represent the organizations innovation.

Customer engagement- Customer engagement innovation framework describes the distinctive interactions that firms foster. An example is how Wii's experience draws from the engagements in the room than on-screen (Deloitte, 2015).

Fig 5: 10 Types of Innovation (Satell, 2013)

4 Types of Innovation and the Problems They Solve

Evolutionary or sustaining innovation is based on an iterative improvement of the product which is already in existence or a market by applying same innovation model especially throughout its entire process (Satell, 2013). The problems faced as well as skills required to handle them are clearly defined. Such right tools for continuous or sustaining innovation include design thinking and traditional R &D.

Disruptive innovation is a kind of innovation which anticipates and understands a change of cycle especially in the market and varies its production or business model to adapt to the new changes (3datx.com, 2017).This kind of innovation is differential and hence capable of leading firms in their market niche.

Groundbreaking/ Breakthrough innovation is a type of innovation based on solving a unique or clearly defined problem with a more complex solution by adopting knowledge which is unrelated or with little correlation with the field which is in question (Satell, 2013). Open innovation models represent a clear example.

Continous and basic research over time is executed in the background although its responsibility for such significant innovations. In this type, the skill nor the problem is defined, and tools which are useful in pursuing this basic research include dedicated research labs and academic partners (Satell, 2013).

Fig 4: 4 Types of innovation (Satell, 2013)

Why is Innovation Important for Companies?

Innovation is essential for firms since it helps in creating, maintaining and improving the organizational and economic competitiveness while securing the company's sustainability and growth (Satell, 2013). Due to increased demand and new requirements in products, most organizations seek to adopt innovative techniques to achieve strategic advantages over competitors (Nortonrosefulbright.com, 2017). Innovation assist organizations to identify and exploit new market opportunities while building a sustainable and competitive business (Economist, 2007). Innovation thus acts as a tool for securing competitive advantage and a secure approach to defending the firm's success and strategic positions.

What is The Difference in Between Innovation in Companies and Startups?

Innovation is different between start-ups and existing companies. For startups, innovation may include creating products and services from ideas. Existing companies already have services and products in the market, and thus it does not need innovation that involves transforming an idea into a product or service. The innovation for companies concentrates more on processes. Startup's develop the least version of their goods focusing on its core and release in the market as they wait for consumer feedback to innovate once more. Big companies nonetheless invest much at the start of product development through innovation and invention to make the products much better (Forbes, 2018). They invest their resources mainly in the current market studies towards understanding big market niches and demographics.

For startups, coming up with a viable and sustainable business model is always a primary challenge. This is because sustaining any success in any organization relies on the investment in innovation with a durable and robust business model. However huge companies design their business model to evolve or change to reflect the changing social, economic, regulative, economic and technical environment (Krigsman, 2015). This is because without innovation and failing to adapt to such changing circumstances; these big businesses can have a negative and dramatic result. This business model should address all elements from sources of revenue, customers, costs, resources and channels (Colin, 2016).

Startups are able to empower innovations which make the costly products available to the client (Hisrich, 2011). Business such as Ford Model T was such an example of empowering innovation as they create more jobs but demands a lot of cash. Big companies, on the other hand, are concerned with efficiency innovations where they try to make a lot with less probably destroying jobs (Alfred & Guillebaud, 1969). Large companies hence tend to favor efficiency and sustainability innovations as they shy away from empowering ones.

What is The Innovator's Dilemma?

Innovator's dilemma is a situation where in order to compete with a given disruptive competitor, the company that initially dominated or pioneered the market would be forced to cannibalize its business (Thrasyvoulou, 2016). This is because one is forced either to cannibalize his fat profits and business or get mulled from the low end. A disruptive product is always cheaper yet not as good, but it's good enough to actually replace one's product on the other low end (Wired, 2017). Often this disruptive good or product is provided or created using different process or technology than the one used by established businesses.

What Are Some Ethics Considerations When Innovating?

They are various ethical considerations to be considered during innovation. Innovation will result to change in a firm, society, and the world. Economic factors should be made during innovation. Innovation should not be disruptive and should be for the benefit of the economy. It should improve the economy by creating jobs, saving costs and not cause unemployment and increase costs. Innovations should have a positive impact on economic factors like cost of production, and this should be considered during innovation (Tidd & Bessant 2014).

Innovation should also consider political factors. Innovation should be done within the laws and regulations that are instituted by the government. Ethical considerations during innovation should consider the law. If it is against the law, such innovation should be stopped as it is unethical and illegal. Technological considerations should be made during innovation. Digital companies should respect user privacy. They should handle user information with care from unauthorized access.

Social considerations should be made during innovation. Ethical behavior towards the employees and the community will build a stronger organization during change brought by innovation. Therefore, innovation should not be negative towards the community. Innovation should consider its ethical impact on society. The products, services or programs that are implemented should benefit everyone. Communication is an ethical consideration during innovation. Innovation should be done honestly and openly with employees, employers, society, consumers and other stakeholders. Communication should be transparent during innovation and change. Companies that are not upfront about innovation strategies loose the trust of their employees, consumers and other stakeholders (Tidd & Bessant 2014).

Models of How Innovation Is Nurtured

Business Model Canvas

The busin...