Chapter 1 Perspectives in Innovation

PERSPECTIVES ON
INNOVATION
LEARNING OUTCOMES
At the end of this chapter, students should be able

to:
 Describe the various definitions of innovation.
 Distinguish between innovation, invention and
creativity.
 Discuss the factors that affect innovation.
 Identify the sources of innovation.
Innovation Management All Rights Reserved

© Oxford Fajar Sdn. Bhd. (008974-T), 2015 1– 3
INTRODUCTION
The word innovation originates from the Latin word

“innovare”, which means ‘to make something new’.

INNOVATION
What is innovation?
“Companies achieve competitive advantage
through acts of innovation. They approach
innovation in its broadest sense, including
both new technologies & ways of doings
things”
A competitive advantage is what makes you better than

the competition in your customers' minds. Businesses were
the first to adopt this method of success.

5
INNOVATION DEFINITION
What is innovation?

6
INNOVATION
Innovation has to be actively

managed:
“Innovation is the specific tool of

entrepreneurs, the means by which they
exploit change as an opportunity for a
different business or service. It is
capable of being presented as a discipline,
capable of being learned, capable of
being practiced”

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INNOVATION IN 21st CENTURY

8
INTRODUCTION
Innovation:
– to be established in an organization for continued enhancement.
 systematic processes that used to develop:
– new
– improved products,
– services and
– processes.
 major part of any organization, essential for growth by
distinguishing the organization from others.
 Success of innovation depends on the future vision of and the
encouragement from the organizational culture.

INTRODUCTION
COMPETITIVE ADVANTAGE
An advantage over competitors gained by offering consumers:
greater value, lower prices, greater benefits and service that justifies
higher prices.
– to describe the advantages and benefits of your product or service.

– to adopt this method of success.
– Target market. Who are your customers? You've got to know exactly who buys
from you, and how you can make them happier.
– Competition. That's not just other similar companies or products. It
includes anything else your customer does to meet that particular need.

INTRODUCTION
Successful organizations know the significance of innovation in business. Apple is a good example of
how effective innovation management can improve your products and scale up your business. After
reaching on the brink of collapse, it achieved new heights of success by implementing effective
innovation management policy. The success of its innovative management strategies once again
brought it in the league of leading organizations.

IMPORTANCE OF INNOVATION
 Innovativeness has become a force in wealth creation
and business success.
 It leads to new business ideas and technological

revolutions.
 Technological revolution is, in general, a relatively

short period in history when one technology (or better
a set of technologies) is replace.
– Social media are computer-mediated technologies
that allow the creating and sharing of information,
ideas, career interests and other forms of expression
via virtual communities and networks.
– Smartphones.

IMPORTANCE OF INNOVATION
 Innovation, apart from products and
services, also includes processes, supply
chain systems, marketing methods and
leadership/management styles.
 With the impact of globalization, coupled

with technological and knowledge
revolutions, organizations and businesses
will have to constantly adapt to an ever
changing business climate.
 Innovation will help add value and propel

organizations forward towards overall
improvement.
INNOVATION, INVENTION AND
CREATIVITY
 Innovation
• introducing something new or doing something in a new way.
• to take an idea from concept to realization and improve business
performance.
• begins with an idea that is transformed into a concept that includes
some new combination of what is already known and can be
implemented to serve a purpose.
• Invention and innovation involve creativity.
• positive change, to make someone or something better.

CREATIVITY
 Invention
• Invent something did not exist.
• Example : Components, assemblies, mechanisms, and various types
of equipment used in daily living
• associated with patents, however many inventions are never
patented.
• Many organizations do not patent their processes but instead treat them
as organization–confidential
• Because once a patent is issued, knowledge of the invention becomes
available to all who choose to search the patent literature.
• To be competitive is to have patents that add significant value.

PATENT
 Legal document issued by the government to encourage technological
progress by giving a limited monopoly to the inventor.
 It requires that the inventor prove to the satisfaction of an examiner that

the device or process claimed to be an invention is novel, useful, and non-
obvious to those skilled in the art.

7 February 2018 Slide 16
INVENTION vs. INNOVATION

INVENTION vs. INNOVATION

CREATIVITY
 Creativity
• Is the ability to produce novel ideas or things which are unexpected
• show a high degree of skill and intelligence.
• It applies to contributions in any field of human activity
• mental process involving the generation of new ideas or concepts, or
new associations between existing ideas or concepts.
• allows the entrepreneur to manufacture products that are different
from products manufactured by competitors,
• allows a product to stay in the market and have preference among
customers.

THE INNOVATION CONTINUUM
 Innovation lies on a continuum of events that begins with a raw idea,

which is developed into a concept, which then yields some type of
invention, and which is finally implemented and commercialized.
 Too often words like ‘ideas’, ‘concepts’, ‘inventions’, and ‘innovation’
are used interchangeably.

 Ideas
• Raw ideas provide little value unless someone pursues them.
• Few idea generators take the time to adequately describe the idea, and many
organizations, though not suffering from a lack of raw ideas, suffer from a lack
of interest in pursuing them.
 Transforming Idea to Concept

• Transforming an idea into a workable concept involves taking account of the
system in which the idea will be implemented.
• In the formative stages of the concept, the available information may be limited
but still needs to be considered.
• In addition, new information needs to be gathered and factored into the
decision process.

The work effort in transforming ideas into developing concepts includes
the following tasks:
1.Identifying the available resources—the required resources from either within or outside the
organization.
2.Understanding the organizational infrastructure—the infrastructure that supports innovation.
3.Assessing the competencies and capabilities of the organization—individual, team, and various
group competencies that are required to develop into organizational capability
4.Interpreting economic and global demographic information—information related to the context
of the concept under consideration
5.Evaluating the competencies of all the support functions—the skill levels of the organizational
support functions, noting the deficiencies
6.Managing the interfaces —via effective communication, those involved in bringing any concept
to fruition
7.Integrating individual, team and group competencies into organizational capability—individual
competence that develops into organizational capability.

FOUR FACTORS THAT AFFECT
INNOVATION -RICP
1. Resources
– Organizational resources include people, money, intellectual property, access
to information, capability, time, customers, suppliers, plant and equipment and
financial reserves.
– All the resources mentioned play a vital role in producing innovative products or
services for an organization.
2. Infrastructure
– The organizational infrastructure includes the purpose of the organization, its
objectives, its strategies, management attributes, and its support of innovation.
– The infrastructure of an organization will also provide support for any new
ideas, invention and innovative ideas.
– A strong organization with such strategies will encourage employees to co-
operate in producing new products.

FOUR FACTORS THAT AFFECT
INNOVATION -RICP
3. Culture
– An organizational culture includes shared values, beliefs, legends, rituals,
past history, intellectual and operational traditions, pride in past
accomplishments, policies and practices, rules of conduct, the
organization’s general philosophy of operation, and other artifacts that
define the organization.
– A healthy culture will make employees feel easy to give suggestions to the
organization’s management team.
4. Process
– Consists of an idea from some recognized need that is developed into a
concept, followed by an invention, and then taken through development,
production, diffusion and adoption by end users.

SOURCES OF INNOVATION
 The Unexpected Event

– An unexpected failure, an unexpected success
or an unexpected outside event can be a
platform of a unique opportunity.
– Eg: Tire puncture = tubeless tire
 The Incongruous (inappropriate/not harmonize)

– A discrepancy between reality and what
everyone assumes it to be, or between what is
and what ought to be, can create an innovative
opportunity.
– Eg: Customer complaint about regular post
office delivery = courier service companies

 The Process Need

– This one is task-focused rather than situation-focused. A process is
perfected, redesigned or a weak link replaced.
– Eg: 6 sigma systematically improving process by eliminating defect.

 The Industry and Market Structure Change

– The opportunity for an innovative product, service or business approach
occurs when the underlying foundation of the industry or market shifts.
– Eg: removal regulations and restriction in industries.

 Demographics
– Changes in the population’s age structure, size, income, level of education and
employment can create opportunities for innovation.
– Eg: Working mother = healthy microwave, 3 in 1 food and drinks
 Changes in Perception, Meaning, and Mood
– Innovative opportunities can develop when a society’s beliefs, attitudes and
general assumptions change.
– Eg: Beauty trend down aging = medical and cosmetic industries changes
 New Knowledge
– Advances in scientific and non-scientific knowledge can create new products and
new markets.
– Eg: information age= bionic brain and exchanging ideas

INNOVATION CULTURE AND MYTHS
Myths Reality
Individuals drive innovation. Innovation is a team sport.
Innovation begins with brainstorming. Innovation begins with understanding
the customer.
Innovation requires creative people. Innovation requires effective problem

solvers rather than creative people.
An innovation process will give the The innovation process is only one tool
results you need. for successful innovation.

SUMMARY
 Innovation encompasses four major components: culture,

resources, process and infrastructure.
 An organization needs to be innovative in order to survive in the
marketplace.
 Innovation involves ideas developing into concepts, materializing
into invention, ending with innovation.
 Innovation happens when an invention matches implementation
and is finally commercialized.
 Innovation effort must be nourished by a supportive organization
culture.

World most innovative companies

31
The most Innovative Companies in
Malaysia 2016
Digi provides mobile voice, internet, and digital services to 11.3 million customers in Malaysia. It is
known as a game-changer for the Malaysian telecommunications industry with a solid history of
product and service innovation. Over the years Digi has built a solid mobile internet business that
enables true connectivity for all Malaysians, creates socio-economic development, helps
businesses to grow through use of technology, and in doing help accelerate Malaysia’s growth.
Since it's inception in 2001, Asia's dream team have been making flying dreams come true. With a
route network that expands to over 78 destinations across Asia and Australia, we continue to
break business conventions with a passionate approach to flying. Together with our siblings,
AirAsia X, Thailand AirAsia, Indonesia AirAsia, Philippines' AirAsia and AirAsia Japan, we're set
on charting courses to new horizons with the staunch belief that "Now Everyone Can Fly".
Maybank Group is the leading financial services provider in Malaysia catering to the needs of
consumers, investors, entrepreneurs, non-profit organisations and corporations. The Group, which
has expanded internationally, has the largest network among Malaysian banks of over 1,750
branches and offices in 17 countries, employing over 42,000 Maybankers and serving over 18
million customers. It also has the distinction of holding the largest asset base – of more than
USD100 billion; and market capitalisation – of USD18.6 billion; with total equity and total net profit
of USD9.1 billion and USD1.2 billion respectively. (as of August 2011)

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Chapter 1 Perspectives in Innovation

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PERSPECTIVES ON

At the end of this chapter, students should be able

Innovation Management All Rights Reserved

The word innovation originates from the Latin word

Innovation Management All Rights Reserved

A competitive advantage is what makes you better than

Innovation Management All Rights Reserved

Innovation Management All Rights Reserved

Innovation has to be actively

“Innovation is the specific tool of

Innovation Management All Rights Reserved

Innovation Management All Rights Reserved

Innovation Management All Rights Reserved

– to describe the advantages and benefits of your product or service.

Innovation Management All Rights Reserved

Innovation Management All Rights Reserved

 It leads to new business ideas and technological

 Technological revolution is, in general, a relatively

Innovation Management All Rights Reserved

 With the impact of globalization, coupled

 Innovation will help add value and propel

Innovation Management All Rights Reserved

Innovation Management All Rights Reserved

 It requires that the inventor prove to the satisfaction of an examiner that

Innovation Management All Rights Reserved

Innovation Management All Rights Reserved

Innovation Management All Rights Reserved

Innovation Management All Rights Reserved

 Innovation lies on a continuum of events that begins with a raw idea,

Innovation Management All Rights Reserved

 Transforming Idea to Concept

Innovation Management All Rights Reserved

Innovation Management All Rights Reserved

Innovation Management All Rights Reserved

Innovation Management All Rights Reserved

 The Unexpected Event

 The Incongruous (inappropriate/not harmonize)

Innovation Management All Rights Reserved

 The Process Need

Innovation Management All Rights Reserved

 The Industry and Market Structure Change

Innovation Management All Rights Reserved

Innovation Management All Rights Reserved

Innovation requires creative people. Innovation requires effective problem

Innovation Management All Rights Reserved

 Innovation encompasses four major components: culture,

Innovation Management All Rights Reserved

Innovation Management All Rights Reserved

Innovation Management All Rights Reserved

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