Introduction

(Courtesy of: Paul Trott, Innovation Management and New Product Development, 4th edition, Prentice Hall; 2008.

Invention and innovation: an introduction. http://labspace.open.ac.uk/course/view.php?id=4339&topic=all

Innovation Versus Invention • Innovation is concerned with the commercial and practical

application of ideas or inventions. • It is the creation of business/ecncomic value through

differentiations (technical, business, sales marketing, customer service, product, etc.)

• Invention refers to a scientific discovery with a clear technical advantage over the current state-of-the art, and generally protected by a patent.

• Invention, then, is the conception of the idea, whereas innovation is the subsequent translation of the invention into the economy

• Innovation = theoretical conception + technical invention + commercial exploitation

• Invention has nothing to do with commercial success - whereas innovation has everything to do with it.

Invention vs. Unsuccessful Innovation

An example of an invention• Scientists and development engineers at a household cleaning products

company had been working for many months on developing a new lavatory cleaning product. They had developed a liquid that when sprayed into the toilet pan, on contact with water, would fizz (bubbling sound and sparkle).

• The effect was to give the impression of a tough , active cleaning product. The company applied for a patent and further developments and market research were planned.

• However, initial results both from technical and market specialists led to the abandonment of the project. The preliminary market feedback suggested a fear of such a product on the part of consumers. This was because the fizz and sparkle looked too dramatic and frightening.

• Furthermore, additional technical research revealed a short shelf-life for the mixture. This is a clear example of an invention that did not progress beyond the organization to a commercial product.

Invention vs. Unsuccessful Innovation (Cont.)

An example of unsuccessful Innovation• There is often a great deal of confusion surrounding

innovations that are not commercially successful. • A famous example would be the Sinclair C5, a small,

electrically driven tricycle or car. • Unfortunately for Clive Sinclair, the individual behind the

development of the product, it was not commercially successful.

• Commercial failure, however, does not relegate an innovation to an invention.

• This means that , the fact that the product progressed into the marketplace makes it an innovation – even though it is an unsuccessful one

The Sinclair C5*• The Sinclair C5 is a battery electric vehicle

invented by Sir Clive Sinclair and launched by Sinclair Research in the United Kingdom on 10 January 1985.

• The vehicle is a battery-assisted tricycle steered by a handlebar beneath the driver's knees.

• Powered operation is possible making it unnecessary for the driver to pedal.

• Its top speed of 15 miles per hour (24 km/h), is the fastest allowed in the UK without a driving licence.

• It sold for £399 plus £29 for delivery.• It became an object of media and popular

during 1980s Britain and was a commercial disaster, selling only around 17,000 units,

*http://en.wikipedia.org/wiki/Sinclair_C5

Pause for thought• In 2003 the BBC ran a series of television programs exploring

the innovation route from idea to retail shelf. Viewers were asked to cast their vote on a selection of prototype products; the winning three products would receive financial and technical backing to develop and market their idea. Some of the winning ideas were: evolutionary swimming goggles; a new type of ink pen; a collapsing waste basket. Which of these are inventions and which are innovations?

Innovation vs. Entrepreneurship

• The capacity and willingness to undertake conception, organization, and management of a productive venture with all attendant risks, while seeking profit as a reward.

• Entrepreneurship is a powerful mixture of energy, vision, passion, commitment, judgment and risk-taking that provides the motive power behind the innovation process.

Importance of Innovation• Businesses operate with the knowledge that their competitors will inevitably

come to the market with a product that changes the basis of competition• A decline in product innovation leads to a decline in market share.• The ability to change and adapt is essential to survival.• ‘Companies that do not invest in innovation put their future at risk. Their

business is unlikely to prosper, and they are unlikely to be able to compete if they do not seek innovative solutions to emerging problems’ (Australian government website, 2006).

• Many small and medium-sized enterprises (SMEs) fail because they don’t see or recognize the need for change.

• ‘Innovation is the motor of the modern economy, turning ideas and knowledge into products and services’ (UK Office of Science and Technology, 2000

Importance of Innovation (CONT.)• In Canada, the success of many high-growth, small and

medium-sized enterprises (SMEs) is significantly connected to innovation.

• According to Statistics Canada, the following factors characterize successful small and medium-sized enterprises– Innovation is consistently found to be the most important characteristic

associated with success.– Innovative enterprises typically achieve stronger growth or are more

successful than those that do not innovate.– Enterprises that gain market share and increasing profitability are those

that are innovative.(Government of Manitoba, Canada, 2006)

Importance of Innovation (CONT.)• In every industry from aerospace to pharmaceuticals and from

automobiles to computers, leading companies were able toInnovate

Market leaders in 20007

Importance of Innovation (CONT.)

World’s Most Innovative Companies

Importance of Innovation (CONT.)• Joseph Schumpeter was among the first to emphasize the importance of

new products as stimuli to economic growth• He argued that the competition provided by new products was much

more important than marginal changes in prices of existing products• Economies are more likely to grow due to development of new products

such as new computer software or pharmaceutical drugs than reduction of prices of cars.

• According to Schumpeterian economic theory, sustained economic growth arises from competition among firms.

• Firms try to increase their profits by devoting resources to create new products and developing new ways of making existing products.

Types of Innovation

• Innovation does not only involve major (radical) technological advances but also minor (incremental)

Incremental Innovation • Incremental innovation can occur in any

industry where product characteristics are well understood and often standardized

• Unit profit margins are usually low, production technology is efficient

• There is low uncertainty in the product and related technology

• This type of innovation focuses on cost, quality, or feature improvements in products, processes, or services

Examples of Incremental Innovation

• Compact fluorescent lamps – incremental. Incremental in that they didn't involve a major new step in the development of the technology but rather involved technical improvements to an existing product. However these were important improvements as they have gained an increasing share of the domestic lighting market

• Edison's electric light – radical. Radical in terms of its eventual impact if less so in terms of its technology. Its ultimate success was dependent on incremental developments in many related areas of technology, for example vacuum pumps.

Radical Innovation• Radical innovation explores new technologies or

products • Potential profits are high• There is high uncertainty in the product and related

technology• This type of innovation focuses on products,

processes, or services with unprecedented performance features

• Radical innovations create a dramatic change in existing markets or industries or they create new markets/industries

Examples of Radical Innovation• *Edison's phonograph – radical. Radical in that nothing like it

had existed before. It caused quite a stir at the time and since has had a widespread impact on the lives of generations of people. The initial invention made use of existing technology but in a radical way. The next 100 years saw steady incremental improvements in the technology.

• Edison's electric light – radical. Radical in terms of its eventual impact if less so in terms of its technology. Its ultimate success was dependent on incremental developments in many related areas of technology, for example vacuum pumps.

*when first developed, the phonograph was used to both record and reproduce sounds

Different Types of Innovation

*Float glass is a sheet of glass made by floating molten glass on a bed of molten metal, typically tin, although lead and various low melting point alloys were used in the past. This method gives the sheet uniform thickness and very flat surfaces. Modern windows are made from float glass.

*http://en.wikipedia.org/wiki/Float_glass

Both radical and incremental innovations are not exclusivelyassociated with products

Models of InnovationHow innovation occurs

• There are two schools of thought:• On the one hand the social school argued that

innovations were the result of a combination of external social factors and influences, such as demographic changes, economic influences and cultural changes.

• The argument was that when the conditions were ‘right’ innovations would occur.

• On the other hand the individualistic school argued that innovations were the result of unique individual talents and such innovators are born.

Innovation Models

• Linear Models• Simultaneous coupling model

Linear Model

There are two basic variations of this modelfor product innovation.• Technology-push model• Market-pull model

Technology-push Model

• After the Second World War: It is assumed that: – scientists make unexpected discoveries, – technologists apply them to develop product ideas and – engineers and designers turn them into prototypes for testing.– It is left to manufacturing to devise ways of producing the products

efficiently. – Finally, marketing and sales will promote the product to the potential

consumer.• A pushed process is based on existing or newly invented

technology, that the organization has access to, and tries to find profitable applications to use this technology.

• Emphasis on R&D; the market is a recipient of the fruits of R&D

Examples

• Early motor cars. – The invention of the motor car involved technology push

with enthusiasts trying to improve the technology and persuade people of the viability of the invention.

– It was regarded as a toy until improved performance and falling price made it an attractive product and market pull became an important factor encouraging further innovation.

• Laser – push because it arose out of mathematical theory and scientific research and in the early stages of its development had no obvious application.

Market-pull Model

• In the 1970s that new studies of actual innovations suggested that the role of the marketplace was influential in the innovation process.

– The model emphasizes the role of marketing as an initiator of new ideas resulting from close interactions with customers.

– These, in turn, are conveyed to R&D for design and engineering and then to manufacturing for production. In fast-moving

• The managing director of McCain Foods argues that knowing your customer is crucial to turning innovation into profits: He says

“‘Its only by understanding what the customer wants that we can identify the innovative opportunities. Then we see if there’s technology that we can bring to bear on the opportunities that exist”

• A pulled process tries to find areas where customers needs are not met, and then focus development efforts to find solutions to those needs

• Emphasis on Marketing ; the market is the source for directing R&D.

Example

• Car airbags –arising out of the need for greater safety.

• Cellular phone with camera, • Cars w. reduced emission

Simultaneous coupling model• The linear model is only able to

offer an explanation of where the initial stimulus for innovation was born, that is, where the trigger for the idea or need was initiated.

• The simultaneous coupling model suggests that the majority of innovations involve a creative coupling of technological and market factors

• Furthermore, the point of commencement for innovation is not known in advance.

Examples

• High-yielding varieties of wheat and rice – pull and push.

• Pull was from the human need to feed people more efficiently and the economic incentive to capture a share of a steady market.

• Push was from the outcome of scientific research into biotechnology and gene manipulation opening up new possibilities

What is Innovation Management?• Innovation management is the discipline of managing

processes in innovation. • Innovation is not a singular event, but a series of activities

that are linked in some way to the others. This may be described as a process and involves: – a response to either a need or an opportunity that is

context dependent;– a creative effort that if successful results in the

introduction of novelty; the need for further changes.

Innovation in anorganizational context

• Early inventions and innovations were the result of individual effort or an outcome of family business

• In previous centuries, it was easier to mobilize the resources necessary to develop and commercialize a new product – the resources required were minimal in comparison

• Today significant innovations require an organizational effort.

• Recent innovations and scientific developments (ex. cell phones, computers, new drugs, etc.) are associated with organizations not individuals

Innovation in anorganizational context (CONT.)

Role of Individuals in Innovation

• The individual is a key component of the innovation process

• Individuals define problems, come up with new ideas, perform creative linkages and associations that lead to inventions

• Managers play a critical role in deciding what activities should be undertaken, the amount of resources to be deployed, how they should be realized