What is  Innovation

Jun 14, 2020

What is Innovation


Innovation is the concept that is often heard in business, schools, universities, and even in various social environments. But what is innovation and how it could be related to concepts such as creativity, technology, invention, and the knowledge-based economy? How can innovation be disseminated and promoted within communities, businesses, and...?

In the following article, we will try to give a brief overview of these questions and the most important aspects and dimensions of innovation.

What is innovation?

The nature of innovation refers to the introduction of a new good or a new service, method of production, market, source of supply aimed at responding to the new market, and changing customer needs. Making these changes in the right way and future success is dependent on seeing the links, discovering and taking proper advantage of opportunities.

In almost all academic texts, the speeches and opinions of successful entrepreneurs and experiences of technology development have been emphasized the role of technological knowledge and skills, as well as creativity and innovation in business success. However efficient innovation management depends on proper and in-depth knowledge of the concept of innovation. In other words, one of the key issues in innovation management is people's different understanding of the term, which is often confused with the concept of the invention.

Innovation—from the Latin innovare—literally means to “make new". "Companies achieve competitive advantage through acts of innovation including both new technologies and new ways of doing things", said Michael Porter, an expert on technology, innovation, and management.


It should be noted that innovation is not only to cover products but also includes services as a large part of the societies’ economy. Today, the term "service innovation" is a hugely important topic for innovation in business. Examples of services innovation and their role include new services in the banking and insurance industries, changing transformation in the food industry, online retailers, and web services through the Internet and new technologies such as the internet of things (IoT) and artificial intelligence.

There are four dimensions of innovation space including:

·       ‘Product innovation’ – changes in the things (products/services) means that a new product or service is provided by an entrepreneur;

·       ‘process innovation’ – changes in the ways in which the products are produced (aiming at enhancement productivity);

·       ‘position innovation’ – changes in the context in which the products/services are introduced;

·       ‘paradigm innovation’ – changes in the underlying mental models which frame what the organization does.

It should be noted that innovation does not necessarily fit into one of these categories.  In other words, there is no clear demarcation here and sometimes the dividing line is somewhat blurred.


Innovation process

The innovation process involves several key stages, each of which has its own challenge.  Obviously, the potential success of innovation would depend on the optimal management of the four stages. The first stage is called "exploring", which, is like finding an idea among a pool, full of different ideas. This diversity is made possible by the injection of new ideas. The famous quote "I found, I found" from Archimedes (sudden insight of a pure idea), imitation and copying, market signals, and even the study of competitors' behavior, can be examples of a long list of ideas to generate ideas.


Diversity alone is not enough; a “selection” should take place among numerous explored ideas. This stage could result in increasing the probability of growth and development and, success on a larger scale.  Selection is not a random process, instead, it is based on a strategic choice (among all available options, which ones and why?). So make your choice based on current capabilities and competitive differentiation.


After generation and selecting an idea, there is a challenging stage, "idea implementation". Limited resources (including money, knowledge, individuals, etc.)  must come together to fulfill the implementation of ideas. in contrast to the conventional projects, the difficulty of this stage is in carrying out work, in a way that has not been done before, and it can lead to unforeseen events.


The innovation process can be seen as a funnel that first provides various opportunities for innovation, searches, and selection, and then, the appropriate opportunities are implemented, and finally, the issue of "how to benefit" from the values of innovation arises. Innovation output can be a product, service, process, or social innovation.


Types of innovation

In order to better understand the innovation and its types, a two-dimensional matrix based on "business model change" and "technology change" can be considered. A fundamental shift in the business model or technology is indicative of "breakthrough innovation". In this case, either the business model is fundamentally changed and the technology is simply improved, or the technology is improved fundamentally and the business model is gradually changed.


Another highly popular type of innovation is “radical innovation” (or revolutionary innovation), which represents fundamental and simultaneous changes in the business model and technology. Radical innovations have unforeseen consequences that can either waste resources or completely change the structure of an industry and market.


The last type is "incremental innovation", which is the opposite of radical innovation and refers to incremental changes and continuous reforms in the business model and technology. Lack of a good understanding of incremental innovation is one of the most common problems of most organizations, where summarize innovation only in a major technological breakthrough. As a result, the cost of innovation increases significantly, and the organization ignores small influential innovation.


Innovation models

Resources and the innovation process can be viewed from a different perspective. Each model of innovation seeks to explain in some way how innovation is realized.

Innovation models, however, have not been stable over time and are gradually changing under the influence of economic, social, and knowledge conditions. Innovation models evolution in historical perspective developed by Rothwell as follows:


1.     The technology push model:

Science and technology push can lead to many technological development and innovations. In other words, technological breakthroughs are based on scientific discoveries and technological advances that have already being done. Innovation was understood as a linear process, with research, development, and the outputs of new successful products standing on the same level.


2.     The market pull model:

"Market pull," as opposed to "technology push" often leads to innovation; that is, new technology or product was developed to meet the needs and demands of the market. Innovation was still understood as a linear process and the need for market-determined the work of research and development departments.


3.      The coupling model: 

A new model combined technology push and market pull models. In this model, the innovation process improved with feedback and was a sequential process. It strongly emphasized the interactions between "research and development" and "market needs".

4.     The integrated model

This generation was characterized by the involvement of the suppliers and important customers; the integration of "research and development" and "production" is considered to increase design capacity and enhance cooperation. Horizontal cooperation and joint ventures are keywords in this model of innovation.


5.     Integration and networking model

this model, as an evolved model of the previous ones, referred to parallel and fully integrated development. The features of this model include close interaction with customers, strategic integration with suppliers, and horizontal networks, especially joint ventures, group research, cooperation in market regulation, etc.

Unlike previous models, the integrated and networking innovation model emphasized on business flexibility and development speed, and customer focus at the forefront of strategy. Unlike previous models, the integrated and networking innovation model emphasized on business flexibility and development speed, and customer focus at the forefront of strategy.


One of the most important aspects of the current competitive environment is intensified competition, which puts companies and businesses in a position of uncertainty and constant concern about losing market share. Meanwhile, rapid technological change, the growing costs in innovation, increased competition in developing new products and services, has led to a sharp increase in organizations' interactions with the environment.

These characteristics have caused a gradual shift from "closed innovation" to the new concept, "open innovation." The definition of open innovation as proposed by Chesbrough in 2003, means using useful internal flows (internal knowledge and ideas) and combination with external knowledge, in order to accelerate internal innovation.  This new model of innovation advises companies to pay as much attention to the external idea as they do to the internal ideas.

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