Innovation is one of the buzzwords of modern times. It can be loosely defined as the “emergent adoption of previously unknown or unutilized procedures, processes, materials, techniques, etc., for the improvement of an existing product, service, or process”. These processes and objects are considered as innovations in the given field. Thus, when we talk of innovation, we refer to anything that introduces something fresh, original, or new into the field of activity. Innovation can therefore be regarded as that which adds new elements and values to an existing object or activity.
Innovation is necessary and very much needed for the market economy to be able to survive and create a competitive edge over other businesses. Innovation helps the market economy to respond quickly and effectively to changing circumstances by introducing new products, processes, materials, and techniques. Therefore, businesses are always on the lookout for new opportunities in which they can apply their expertise and creative ideas. They are constantly looking for new markets, new processes, new products, and new value chains.
The challenge however is always to define innovation in relation to specific activities. Unfortunately, there are very few activities or objects that can be sufficiently innovative in relation to all the other activities of a business or company. In order to specify innovation in these circumstances it is important for us to think in terms of concrete products, processes, and objects rather than in terms of generalized terms like ‘innovation’, ‘new product’, ‘cutting-edge technology’, etc. Moreover, in order to correctly define innovation in business terms, it is important to look at the costs involved in implementing the innovations and to assess whether the benefits derived from the innovations would be worth the associated costs.
There are four main ways of capturing innovation. Closest to the idea behind the definition of innovation, capturing value is the process whereby an original product or idea is transformed into something that is new to that particular industry or to that business itself. For example, if you look at innovation as a process that involves creating a new value capture opportunity, you will find that it usually involves transforming an original idea or concept into a product or service that has some value to the user. The way that this transformation takes place is usually through the creation of some new value channels for the service or product. By capturing value there are two associated processes. The first involves identifying the new value channel that is to be captured; and, the second involves developing the process or system by which the new channel is established and sustained over time.
A key consideration in capturing innovation is how senior management views the value chains and how those views may evolve over time. It is important for innovation to have a solid underlying framework in place in which to build on innovation. That framework must take into account the nature of the business, its product line, the culture that exists within it and the range of consumers who actually buy its products or services. In addition, it is critically important for innovation to have a plan for succession in the event that the current leader, or a successor, is unable to continue to drive the innovation process forward.
Another key consideration when it comes to the definition of innovation is whether it is necessary to have an Innovation Strategy in place before the company begins to engage in innovation activities. If not, then it is suggested that senior management develop one. At the very least, the Innovation Strategy should include a description of the intended purposes and mission of the company, a description of its current set of business goals and activities, and a description of the plans that will be required to accomplish those goals. The Innovation Strategy should be updated on a regular basis as company objectives change, to allow for new innovation projects, but in all cases it should be reviewed periodically to ensure that the company is executing its strategy effectively to create new ideas and make money.