IM ELearning Module

E LEARNING MODULE
SUBJECT: INNOVATION
MANAGEMENT
DOMAIN: ENTREPRENEURSHIP
DEVELOPED BY
DR. VIRENDER KHANNA
HOD, FDDI BUSINESS SCHOOL
FDDI/ FSBM/IM/2017 Page 1

Draft Qualification Pack Suggested For
MANAGEMENT, ENTREPRENEURSHIP & PROFESSIONAL SKILLS COUNCIL
NOTE: This learning book is compilation of the information from books, journals, website & other research materials. Apart from the other
resources for the students, it's a learning tool meant for the internal circulation only. It's not for sale & does not have any commercial value. The
material is for your own exclusive use. You may not hire out, lend, give, sell, any part of it. You must take care of your material to ensure it is not
used or copied by anyone at any time. Legal action will be taken if these terms are infringed. In addition, we may seek to take disciplinary action
against you. These conditions remain in force after you have finished the course. We are always happy to receive feedback from students,
particularly details of any errors, contradictions or unclear statements in the courses. If you have any comments on this course please email them
to manoj.a@fddiindia.com & ashish.chandra@fddiindia.com

Instruction Sheet
This learning guide is developed to provide you the necessary information regarding
the following content coverage and topics –
1. Innovation : Definition, Types, Scope Importance

2. Innovation Adoption Models
3. Innovation In Organizations
Learning Activities
1. Read the specific objectives of this Learning Guide.
2. Read the information written in the “Information Sheet 1”.
3. Accomplish the “Self-check 1” Request the key answer / key to correction from
your teacher or you can request your teacher to check it for you.
4. If you earned a satisfactory evaluation proceed to “Information Sheet 2”.

However, if your rating is unsatisfactory, see your teacher for further
instructions
5. Accomplish the “Self-check”. Again you can request the key answer / key to
correction from your teacher or you can request your teacher to check it for you.
6. If you earned a satisfactory evaluation proceed to Information Sheet 3.
7. Read the information written in the “Information Sheet 3-7”.
8. Accomplish the respective “Self-check”. Again you can request the key answer /
key to correction from your teacher or you can request your teacher to check it
for you.

9. Do the “SA test” ,if you are ready and show your output to your teacher. Your
teacher will evaluate your output either satisfactory or unsatisfactory. If
unsatisfactory, your teacher shall advice you on additional work.

Course Objectives and Outline
This course provides for an in-depth understanding of advertising , as a specialized

domain within Marketing Management. This would help the students
1) develop an understanding of advertising concepts and strategies, the methods

and tools used in organizations,
2) Develop advertising strategies and plans and to develop the judgment parameters
required in product management, to evaluate advertising and PR strategies

Information Sheet-1 INTRODUCTION TO ADVERTISING
Introduction
Innovation is essential for business survival in highly competitive markets where it is

increasingly difficult to differentiate products and services. Innovation is important for
the following reasons:
• It allows businesses to expand their customer base by refreshing the market

with new and improved products
• It is a key component of competitive advantage and helps companies stay

ahead of competitors before rivals’ innovations take market share
• It supports the ability to charge a premium
• It provides incremental revenue and profit and also increases shareholder

value.
Businesses that are not growing through new product and service introduction are
likely to decline as their existing sales portfolio inevitably matures.
It is not surprising that companies such as Procter & Gamble and General Electric
have actively embraced the management of innovation. Their principal goal is to
drive growth and then to improve shareholder value.
‘Nothing is more central to sustain growth than innovation that leads an industry and
not only product innovations, but innovative design, innovative marketing, innovative
in-store shopping experiences, innovation across the entire business. The
companies and brands that lead innovation are the catalysts for growth.’

1.2 MEANING AND DEFINITIONS OF INNOVATION
The term “Innovation” seems to derive from the Latin novus (Hsu 2005), which
means new or young or novel. For most people “to be innovative” means to be
creative and/or to make something new.
Unfortunately there is no single accepted definition of the term “Innovation”. For

some people it means a new idea, for others it means an invention (a materialized
new idea), for some it means a new product (a developed invention), for some others
it means the act of creating a new product or process, while for others it means to
create a new business.
Innovation is defined simply as a "new idea, device, or method. However, innovation

is often also viewed as the application of better solutions that meet new
requirements, unarticulated needs, or existing market needs. This is accomplished
through more-effective products, processes, services, technologies, or business
models that are readily available to markets, governments and society. The term
"innovation" can be defined as something original and more effective and, as a
consequence, new, that "breaks into" the market or society. It is related to, but not
the same as, invention.
The process of translating an idea or invention into a good or service that creates
value or for which customers will pay.
To be called an innovation, an idea must be replicable at an economical cost and

must satisfy a specific need. Innovation involves deliberate application of
information, imagination and initiative in deriving greater or different values from
resources, and includes all processes by which new ideas are generated and
converted into useful products. In business, innovation often results when ideas are
applied by the company in order to further satisfy the needs and expectations of the
customers.
“Innovation is the introduction of new ideas, goods, services, and practices which are
intended to be useful (though a number of unsuccessful innovations can be found
throughout history). The main driver for innovation is often the courage and energy to
better the world. An essential element for innovation is its application in a
commercially successful way. Innovation has punctuated and changed human
history (consider the development of electricity, steam engines, motor vehicles,
etc.).”
Invention meaning
An object, process, or technique which displays an element of novelty
Innovation is
 The act of introducing something new: something newly introduced
 The successful exploitation of new ideas
 A creative idea that is realized
Innovation is the entire process by which an organization generates creative new

technological ideas (invention) and converts them into novel, useful and viable
commercial products, services, and business practices for (potential) economic gain.
According to Rosabeth Kanter, “Innovation is the generation, acceptance and

implementation of new ideas, processes, products or services”.
Importance of Innovation
Innovation is the process of creating and implementing a new idea. It is the process
of taking useful ideas and converting them into useful products; services or
processes or methods of operation. These useful ideas are the result of creativity,
which is the prerequisite for innovation. Creativity in the ability to combine ideas in a
unique way or to make useful association among ideas. Creativity provides new
ideas for quality improvement in organizations and innovation puts these ideas into
action.
Change and innovation are closely related, even though they are not the same.
Change often involves new and better ideas. The new idea may be the creation of a
new product or process or it can be an idea about how to change completely the way

business is carried out. Successful organizations understand that both innovation
and change are required to satisfy their most important stake holders.
Strategic Importance of Innovation:
For both established organisations as well as new organisations, innovation and

change become important in a dynamic, changing environment. When a company
fails to innovate and change as needed, its customers, employees and the
community at large can all suffer. The ability to manage innovation and change is an
essential part of a manager’s competencies.
Types of Innovation:
Three basic types of innovation are:
(i) Technical,
(ii) Process and
(iii) Administrative.
Technical innovation involves creation of new goods and services. Many technical
innovations occur through research and development efforts intended to satisfy
demanding customers who are always seeking, new, better, faster and/or cheaper
products.
Process innovation involves creating a new way of producing, selling or distributing

an existing good or service.
Administrative innovation occurs when creation of a new organisation design better

supports the creation, production and delivery of goods and services.
The various types of innovation often go hand in hand. For example, the rapid
development of business to business e-commerce represents process innovation.
But this new process requires many technical innovations in computer hardware and
software. Also as firms began to use business to business e-commerce,
administrative innovation soon followed. Further, implementation of process

innovations necessitated organisational change. “Doing something new means doing
something differently”. Thus, innovation and organisational change go hand in hand.
Technology and Innovation:
Technology is defined as the systematic application of scientific knowledge to a new

product, process or service. It is also defined as the methods, processes, systems,
and skills used to transform resources into products. Technology is embedded in
every product, service, process and procedure used or produced.
“Innovation is a change in technology”. When we find a better product, process or

procedure to do our task, we have an innovation. Process innovations are changes
which affect the methods of producing outputs. For example, manufacturing
practices such as just-in-time, mass customerisation, simultaneous or concurrent
engineering – are all innovations.
In contrast, product innovations are changes in the actual outputs themselves.

Technological innovation is daunting in its complexity and pace of change. It is vital
for a firm’s competitive advantage because today’s customers often demand
products that are yet to be designed. As technologies develop, product
obsolescence increases and innovative products will have to be introduced into the
markets.
Managing technology requires that managers understand how technologies emerge,

develop and affect the ways organisations compete and the way people work.
Technology can greatly affect an organisation’s competitiveness and managers have
to integrate technology into their organisation’s competitive strategy. Managers need
to assess the technological needs of their organisations and the means by which
these needs can be met.
Understanding the forces driving technological development and the patterns they
follow can help a manager anticipate, monitor and manage technology more
effectively.

i. First, there must be a need or demand for the technology. The need
acts as a driving force for technological innovation to occur.
ii. Second, it must be theoretically possible to meet the need using the
knowledge available from basic science.
iii. Third, it must be possible to convert the scientific knowledge into

practice in both engineering and economic terms.
iv. Fourth, the necessary resources such as finance, skilled labour, time,
space and other resources must be available to develop the
technology.
v. Finally entrepreneurial initiative is needed to identify and put all the

elements together.
The diffusion of technological innovations:
For successful diffusion of a new technology over a period of time it should

have the following attributes:
• Great advantage over its predecessor.
• Compatible with existing systems, procedures, infrastructures and ways

of thinking.
• Has lesser complexity than its predecessor.
• Can be easily tried and tested without significant cost or commitment.
• Can be easily observed and copied (or adopted).
1.3 PRODUCT AND PROCESS INNOVATION
Product innovation is the creation and subsequent introduction of a good or service

that is either new, or an improved version of previous goods or services.

A product innovation is the introduction of a good or service that is new or
significantly improved with respect to its characteristics or intended uses. These
include significant improvements in technical specifications, components and
materials, incorporated software, user friendliness or other functional characteristics.
Product innovations include both new products and new uses for existing products:
New products. These are goods and services that differ significantly in their
characteristics or intended uses from products previously produced by the firm. The
first microprocessors and digital cameras are examples of new products using new
technologies. The first portable MP3 player, which combined existing software
standards with miniaturised hard-drive technology, was a new product combining
existing technologies.
New uses for products. The development of a new use for a product with only
minor changes to its technical specifications is a product innovation. An example is
the introduction of a new detergent using an existing chemical composition that was
previously used as an intermediary for coating production only.
Provision of service. Product innovations in services can include significant

improvements in how they are provided (for example, in terms of their efficiency or
speed), the addition of new functions or characteristics to existing services, or the
introduction of entirely new services. Examples are significant improvements in
Internet banking services, such as greatly improved speed and ease of use, or the
addition of home pick-up and drop-off services that improve customer access for
rental cars. Providing on-site rather than remote management contact points for
outsourced services is an example of an improvement in service quality.
Design. Design is an integral part of the development and implementation of

product innovations. However, design changes that do not involve a significant
change in a product’s functional characteristics or intended uses are not product
innovations, although they can be marketing innovations. Routine upgrades or
regular seasonal changes are also not product innovations.

New knowledge or technologies or new uses. Product innovations can utilise new
knowledge or technologies, or can be based on new uses or combinations of existing
knowledge or technologies. Significant improvements to existing products can occur
through changes in materials, components and other characteristics that enhance
performance. The introduction of ABS braking, GPS (global positioning system)
navigational systems, or other subsystem improvements in vehicles is an example of
a product innovation consisting of partial changes or additions to one of a number of
integrated technical subsystems.
Process innovation is the application or introduction of a new technology or method

for doing something that helps an organization remain competitive and meet
customer demands.
A process innovation is the implementation of a new or significantly improved

production or delivery method. This includes significant changes in techniques,
equipment and/or software. Process innovations can be intended to decrease unit
costs of production or delivery, to increase quality or to produce or deliver new or
significantly improved products.
Process innovations can be distinguished by production methods or delivery

methods, or both:
Production methods. These methods involve the techniques, equipment and

software used to produce goods or services. Examples of new production methods
are the implementation of new automation equipment on a production line or the
implementation of computer-assisted design for product development.
Delivery methods. These concern the logistics of the firm and encompass
equipment, software and techniques to source inputs, allocate supplies within the
firm or deliver final products. An example of a new delivery method is the
introduction of a bar-coded or active RFID (radio frequency identification) goods
tracking system.
Equipment and software changes. Process innovations can involve significant

changes in the equipment and software used in services-oriented firms or in the

procedures or techniques that are employed to deliver services. Examples are the
introduction of GPS tracking devices for transport services, the implementation of a
new reservation system in a travel agency and the development of new techniques
for managing projects in a consultancy firm.
Innovations in support services. Process innovations also cover new or

significantly improved techniques, equipment and software in ancillary support
activities, such as purchasing, accounting, computing and maintenance. The
implementation of new or significantly improved information and communication
technology (ICT) is a process innovation if it is intended to improve the efficiency or
quality of an ancillary support activity.
FACTORS INFLUENCING MANAGEMENT OF INNOVATION
What is Management Innovation?
A management innovation can be defined as a marked departure from traditional

management principles, processes, and practices or a departure from customary
organizational forms that significantly alters the way the work of management is
performed.
Definition of Management of Innovation
With innovation defined, how do we manage it? Successful innovation management

depends on the top management of the organization’s willingness to commit the
resources to allow individuals and groups to recognize “newness” and respond
accordingly. This commitment by the top management to innovation, in turn, requires
their recognition of several realities.
These realities are as follows:
1. Management of technology encompasses the management of innovation.
1. It requires fostering an environment where innovative thought and work are

encouraged.
2. It involves leading a firm from existing processes and products to something
that is “better” and more valuable.
3. It is proactive and encourages creativity and risk taking.
Therefore, we define the management of innovation as a comprehensive approach

to managerial problem solving and action based on an integrative problem solving
framework, and an understanding of the linkages among innovation streams,
organizational teams, and organization evolution. It is about implementation—
managing politics, control, and individual resistance to change. The manager is an
architect/engineer, politician/network builder, and artist/scientist.
Put simply, management innovation changes how managers do what they do. And what do
managers do? Typically, managerial work includes
 Setting goals and laying out plans;
 Motivating and aligning effort;
 Coordinating and controlling activities;

 Accumulating and allocating resources;
 Acquiring and applying knowledge;
 Building and nurturing relationships;
 Identifying and developing talent;
 Understanding and balancing the demands of outside constituencies.
In a big organization, the only way to change how managers work is to reinvent the
processes that govern that work. Management processes such as strategic planning,
capital budgeting, project management, hiring and promotion, employee
assessment, executive development, internal communications, and knowledge
management are the gears that turn management principles into everyday practices.
They establish the recipes and rituals that govern the work of managers. While
operational innovation focuses on a company’s business processes (procurement,
logistics, customer support, and so on), management innovation targets a company’s
management processes.
Innovation management is complex
Innovation projects can be of different sizes, duration, and complexity levels. The risk
of failure in one or more respects - as overdrawn costs and time, low satisfaction
rate, poor performance, burnt-out team members, etc. -is dependent on many
factors. In figure 1-1 some important factors are shown that will influence the risk
factor and the outcome of a project in general and an innovation project in particular.

Figure 1-1 : All projects are dependent on many factors that in turn are time
dependent, making them truly complex/unforeseeable
Factors and sub-factors influencing an organizations ability to manage

innovation
Factor Sub-Factors
Technology Utilization of technology
Technical skills and education
Technology strategy
Innovation process Idea generation

Selection and evaluation Techniques
Implementation mechanism
Corporate strategy Organizational strategy

Innovation strategy
Vision and goals of the organization
Strategic decision making

Organizational structure Organizational differentiation
Centralization
Formality
Organizational culture Communication

Collaboration
Attitude to risk
Attitude to innovation
Employees Motivation to innovate

Employee skills and education
Employee personalities
Training
Resources Utilization of slack resources

Planning and management of resources
Knowledge resources
Technology resources
Financial resources
Knowledge management Organizational learning

Knowledge of external environment
Utilization of knowledge repositories
Management style and leadership Management personalities

Management style
Motivation of employees
1.6 PROCESS OF INNOVATION MANAGEMENT

The innovation management process has become an important part of the
operations of many businesses, as the recognition of the importance of initiatives
towards innovation has become much more common.
That said, while many companies do attempt to have a solid approach to creativity
and innovation, too few actually focus on it as a single function. Instead, they seem
to hold many separate activities in isolation, such as brainstorming sessions, pilot
projects and campaigns, and vague communication with the market, and simply
keep fingers crossed that it will come together in the end. While this has worked for
some in the past, it is far from the ideal way of performing this important task.
Instead, the best way to accomplish this is to have a set innovation activities which
integrates the activity into the regular cycle of your business. The list below shows
the phases in innovation management process, which will help your organization to
put it all together as one process.
The looping arrows indicate feed forward loops to help people working downstream to
anticipate change, and feedback loops from outputs back to inputs, representing lessons
learned now applied to improving results. The arrows are more symbolic than realistic, as
there will ideally be continual interaction between people working in various steps of the
innovation process as they learn and share with others. Although the sequence of steps from

1 to 7 suggests that the innovation process is linear, the arrows moving from left to right
indicate that all aspects of the process actually occur in parallel as multiple projects progress
simultaneously
1. Setting the goals for the process
Innovation always begins with a goal in mind. It is many times based on finding the
solution to a problem. Once you have this goal, it should be discussed among
everyone in the problem solving team. This team may consist of you and another
person, a group of people, or may even be all of your organization’s employees. It
may involve others such as your customers (who can provide suggestions and
feedback based on their own experience with your product or service) or other
stakeholders in the business. When you establish the team for this process, make
sure that you have someone representing all the parts of the process from start to
the end.
2. Cooperation
The innovation team should work together so that instead of trying to come up with
an idea separately, they can bounce ideas off one another and create a collaborative
solution. This can include the use of online tools, attendance of events such as trade
shows that can be inspiring and informative, or simply consist of brainstorming
sessions. You might consider having a trained business coach facilitating the
discussions. There are many online tools available for real-time document sharing
that might help teams that are geographically separated to still have intense
cooperation.
3. Combination of ideas
Once the ideas are in, choose the best ones and then consider whether they can be
combined to create an even greater idea. Often, strong ideas will be complementary
to one another and will join well to create an even better result. As you know, the
whole result can be bigger than its individual parts. And for this combination to work
well, you need representatives of all parties involved in the process, because they for
sure have ideas that people from other departments could not come up with.
Business coaches may be useful here for making sure that all the angles of
innovative aspect are covered.
4. Evaluation of innovation
This is an important and yet all too frequently overlooked aspect of the innovation
management process. When the best ideas have been combined, fine-tuned, and
polished, it is time to subject them to evaluation based on peer reviews. This helps to
ensure that any ideas that have a promising veneer but that are poorly thought out
will be identified before resources, funding and time have been poured into them. It
also helps to select the ideas with the greatest potential from among several that
appear equally capable of being successful. It is cheap to change your innovation at
this stage compared to later stages. Each step you take forward will cost you more…
5. Testing the ideas
Once the ideas with the greatest potential have been identified, they can be tested
so that they can be better developed. One of the most common means of testing a
product or service idea is to create a prototype or test group. This allows the team,
as well as customers and investors to have a better look at how the product will
function and what changes can be made to it so that it will be even further improved.
Make sure that the product or service not only raises interest but is able to generate
orders also. If people say that they are interested in it, then ask them if they give you
the order right away.
6. Execution of innovation implementation
The ideas that survive the testing process can be further developed and altered until
they are ready to be executed as a part of the business offerings. The execution of
implementation is a step that is unique to your business and, unless your new
product causes you to have to drastically alter the typical way that your go-to-market
strategy functions, then this part of the innovation management process should be
relatively commonplace in your organization. It should be easier for you to move

from testing to execution if you were able to generate orders already in testing
phase.
7. Assessment of innovation life-cycle
After the execution of an idea, its implementation needs to be carefully monitored

and assessed in terms of a number of milestones that should be set. Should a
milestone not be reached, then changes will need to be made or the idea will need to
be shut down. Remember to keep always customer in your mind also in execution
phase and design your measuring systems so that they measure added value for the
customer (you get what you measure and customers weight you based on that!).
8. Rethink
The next step in the process is simply to start again, always finding new needs,
inspiration, solutions and taking them through the cycle until they can be offered by
your company. Here are some reflective questions that you can use to evaluate
innovation management process in your organization:
 Do you have a clearly defined innovation management process?
 If yes, is it effective?
 If no, how do you see that clearly defined innovation management process
could help your organization to achieve goals better?
 Are all the people in your organization working together towards great
innovations or do they do things on their own?
 Do you always properly evaluate and test your innovations before taking them
to market?
 Do you measure execution of providing services or products from customer’s

perspective?
And yet despite these limitations, in so me respects it does indeed make

sense to think about the process in a linear fashion because that’s how

projects have to be managed. They’re born in strategic discussions, organized
in portfolios, examined through research, initiated by the ideation phase, and
continue through the subsequent steps until there is
some form of conclusion and validation and economic return, or when they
are abandoned. The map can therefore be a useful, indeed essential tool for
anagers, and throughout this work we have to maintain both concepts in our
minds, the non-linearity of a robust thinking and learning process, and the
linearity of well-run project management process that is one and the same.
The capacity to simultaneously hold two different images of the very same
process is characteristic of the innovation process itself, as we must continue
to hold differing, and perhaps even conflicting interpretations of new and
emerging data, information, and concepts until we gain sufficient knowledge
to be sure of the most effective interpretations.
We will be obliged to hold two, or perhaps many possible interpretations in

our minds until we know, and that may take quite some time. Indeed, it’s one
of the characteristics of good and great organizations that this sort of
ambiguity-laden learning happens at all. Conversely, it’s a debilitating defect
of those that don’t succeed that we would call a learning-impairment.
Developing the capability to learn is a key topic of the next chapter, which
focuses on the people and developing their skills, which is integral to the
innovation culture that they are building together.
Innovation management is critical to long term success. In today's rapidly

changing business environment, managing innovation effectively has become an
essential requirement for staying competitive. Long term sustainability for a business
may be determined by a company's ability to competently direct innovation resources
to address a constantly changing market and economic environment.
Innovation management describes the decisions, activities, and practices that move
an idea to realization for the purpose of generating business value. It is managing
the investment in creating new opportunities for generating customer value that are
needed to sustain and grow the business or company.
Generally, innovation investment focuses on the development of new products,
services, or technologies. However, the types of innovation that can enhance
business results go well beyond these, including changes to a company's business
model. Identifying and making these investments successfully and repeatedly
constitutes the key objective of innovation management.
Decisions critical to successful innovation
Those involved with innovating will generally tell you that generating ideas is not the
difficult part of being successful with creation and change. Numerous decisions will
be made that impact the progression and ultimate success of good ideas. These
good ideas need to be related to solving a real business problem or growing an
opportunity. Questions that hint at these decisions include:
 Is the potential innovation aligned with the business strategy?
 How does the proposed change generate value for the customer?
 What investment is required? Will the needed investment generate an acceptable

return?
 What would be the impact of the innovation on the current business? Could it disrupt
existing profits?
 How long will it take for the new concept to be realized and impact the business?
 How might the innovation change or disrupt current markets?
 Will the new concept generate new revenue or reduce costs?
 How will the innovation enhance existing or create new barriers to competition?
 Is there easy access to the competencies needed to realize the new concept?
Many of the decisions associated with innovation management are common to the
choices associated with a new venture start-up. Conflicts created by some of these
choices points to some of the dilemmas associated with disruptive innovation.

Requirements for managing innovation
Having an innovation framework can be a key component to continuous effective

change that increases the capability of the business to generate customer value. A
critical part of this framework will be the decision making process that is used to
funnel the potentially long list of ideas down to the critical few that will deserve
investment. For large organizations, this is typically accomplished as part of a stage
gate process, but multiple innovation models exist. Often these investments are
considered as part of an overall business investment portfolio decision.
Innovation promotes the need for constant change and renewal, potentially
impacting all areas of a business. Change is often resisted, necessitating appropriate
incentives and rewards to promote needed innovation. Many of the most enduring
innovations have required long term investment and staying power. This must be
addressed as part of the organizational decision making approach if an innovative
environment is to be sustained.
The desire to create long term competitive advantage will often lead to intellectual
property and innovation being closely connected. As a result, innovation processes

will often have requirements for generation of intellectual property that can protect
advantages created by an
Benefits that come from managing innovation
Innovation management is quickly becoming a critical requirement for enabling a

sustainable business. Some of the benefits for doing it well include:
 Improved timing for market introduction
 Ability to maintain or improve business margins
 Enabling access to new customers and markets
 Increased market share
 Improved and longer lasting competitive advantage
 Increased employee engagement and initiative
 Improved customer satisfaction
 Sustainable increase in shareholder returns
1.7 INTEGRATION OF INNOVATION MANAGEMENT WITH

STRATEGIC OBJECTIVES
When both innovation and business objectives are equally valued, broadly promoted
and fully communicated, a culture naturally exists that fosters alignment of the two.
In this culture, top-down business objectives are communicated

throughout the organization so that all levels are focused on addressing the
corporation’s short- and long-term goals. It then becomes the innovators’
responsibility to align their activities in support of the corporate goals.
There are several ways to naturally bring these two camps together. Jointly
developing technology/product and business roadmaps encourages discussion and
debate, forging linkages that guide actions. Internal business and technology fairs
highlight near term successes while raising visibility to long-term opportunities.

Making Decisions for Strategic Management
Today in this global marketplace, only governments and religious institutions

somehow seem to survive without encouraging and supporting innovation and
creativity. You have no choice.
Everything in business can ultimately be boiled down to “finding a solution to a

problem.” In fact, there’s nothing we do that can’t be rephrased that way. Without a
customer with a problem to be solved, we wouldn’t even be in business. But not
every problem should be solved with an innovation. By taking a portfolio approach to
business, we identify those problems for which we already have solutions, those that
require improvement in an existing solution, and those that require whole new,
differentiating solutions. That’s where we need to focus our innovation efforts.
It was highlighted previously that the organization must make key decisions as it
begins to examine technology and innovation. We believe from our experiences that
the key element in these decisions is whether those processes are focused internally
or externally. For example, if a firm chooses to purchase technology, it must focus on
issues such as the integration of the technology and the nature of the firm that
produced the technology. In contrast, if the focus is on the creation of technology,
then how the firm encourages innovation internally through structure and
compensation becomes more important.
As noted earlier, a strategic model will be employed to analyze the topics. Therefore,
planning, implementation, and evaluation and control will be used to examine
internal innovation and external acquisition of technology.
There has to be an articulated business reason for innovation. In essence, to give

innovation a business purpose, whether it is closing an emerging growth gap that
cannot be closed by the current strategy or by acquisitions, or a specific problem that
requires entirely new and differentiated solutions. Don’t ever forget that innovation is
a means to an end.

Innovation matters and that in order to survive and grow organizations need to pay
attention to managing the process. This is of concern not only to those directly
involved but also to a wider gallery of players – governments, supply chain owners,
trade and sector agencies – who have a concern that innovation happens and
happens effectively. And we have begun to see that there is something – a process
of finding opportunities, choosing projects and implementing them – which is
common to innovation and needs to be managed. We need to learn and develop the
capability to do this.
But innovation takes place in a changing world. New technologies emerge, new
markets appear, financial, legal, social rules change. So organizations not only have
to innovate to survive and grow but also need to innovate in the ways they approach
this problem of managing the process. For example, at the beginning of this century
the Internet was still in its infancy and we had only just begun to see its potential role
in changing the way innovation. happened. Now we are in a world where increasingly
products and services are delivered in virtual space and where markets are
increasingly focused around social networks and communities.
The potential for information flow across this world is huge: Facebook with over one
billion members would qualify as the world’s third largest country by population! All of
these changes have an impact on what we can do in our search, select and
implement process, and so organizations have had to learn new tricks to take on
board these new challenges.
The idea of ‘dynamic capability’ – learning and building capability not just to organize
and manage innovation but also to step back and review.

Self Check 1 Written Test
1. Discuss the definition of technology from a strategic point of view.
2. Discuss the role of innovation in the strategic management process.
3. Define management of technology and give an example based on

your knowledge.
4. Define management of innovation and give an example of how a firm

can manage innovation processes

Unit 2 Innovation Adoption
Sources of innovation
There are several sources of innovation. It can occur as a result of a focus effort by a
range of different agents, by chance, or as a result of a major system failure.
According to Peter F. Drucker, the general sources of innovations are different

changes in industry structure, in market structure, in local and global demographics,
in human perception, mood and meaning, in the amount of already available
scientific knowledge, etc.
In the simplest linear model of innovation the traditionally recognized source

is manufacturer innovation. This is where an agent (person or business) innovates in
order to sell the innovation. Specifically, R&D measurement is the commonly used
input for innovation, in particular in the business sector, named Business
Expenditure on R&D (BERD) that grew over the years on the expenses of the
declining R&D invested by the public sector.[23]
Another source of innovation, only now becoming widely recognized, is end-user

innovation. This is where an agent (person or company) develops an innovation for
their own (personal or in-house) use because existing products do not meet their
needs.
The robotics engineer Joseph F. Engelberger asserts that innovations require only
three things:
1. A recognized need,
2. Competent people with relevant technology, and
3. Financial support

4. However, innovation processes usually involve: identifying customer needs,
macro and meso trends, developing competences, and finding financial
support.
5. The Kline chain-linked model of innovation[26] places emphasis on potential

market needs as drivers of the innovation process, and describes the complex
and often iterative feedback loops between marketing, design, manufacturing,
and R&D.
6. Innovation by businesses is achieved in many ways, with much attention now

given to formal research and development (R&D) for "breakthrough
innovations". R&D help spur on patents and other scientific innovations that
leads to productive growth in such areas as industry, medicine, engineering,
and government. Yet, innovations can be developed by less formal on-the-job
modifications of practice, through exchange and combination of professional
experience and by many other routes. Investigation of relationship between
the concepts of innovation and technology transfer revealed overlap.[28] The
more radical and revolutionary innovations tend to emerge from R&D, while
more incremental innovations may emerge from practice – but there are many
exceptions to each of these trends.
7. Information technology and changing business processes and management

style can produce a work climate favorable to innovation. For example, the
software tool company Atlassian conducts quarterly "ShipIt Days" in which
employees may work on anything related to the company's
products.[30] Google employees work on self-directed projects for 20% of their
time (known as Innovation Time Off). Both companies cite these bottom-up
processes as major sources for new products and features.
8. An important innovation factor includes customers buying products or using

services. As a result, firms may incorporate users in focus groups (user
centred approach), work closely with so called lead users (lead user
approach) or users might adapt their products themselves. The lead user
method focuses on idea generation based on leading users to develop
breakthrough innovations. U-STIR, a project to innovate Europe’s
surface transportation system, employs such workshops.[31] Regarding
this user innovation, a great deal of innovation is done by those actually
implementing and using technologies and products as part of their normal
activities. In most of the times user innovators have some personal record
motivating them. Sometimes user-innovators may become entrepreneurs,
selling their product, they may choose to trade their innovation in exchange
for other innovations, or they may be adopted by their suppliers. Nowadays,
they may also choose to freely reveal their innovations, using methods
like open source. In such networks of innovation the users or communities of
users can further develop technologies and reinvent their social meaning
Innovation is a diverse activity. In laboratories and factory floors, universities and

coffee shops, or even over a beer after work, people are sussing out better ways to
do things. There is no monopoly on creative thought.
However, we do need to be careful, because there is a big difference between a

random brainstorm and a concerted effort. Innovation as an organized practice falls
into four categories:
Basic Research: This is the type of work done at universities and some R&D labs.
There isn’t a clearly defined outcome. The point is to discover more about how things
work.
It would be tough to argue that people like Einstein or Watson and Crick weren’t
innovative. They revolutionized their fields. Moreover, basic research pays huge
dividends in the long term and it’s difficult to imagine our modern world without
discoveries which seemed useless at the time.
Sustaining Innovation: This is the type of innovation that Apple excels at, where
there is a clearly defined problem and a reasonably good understanding of how to
solve it.
When Steve Jobs first envisioned the iPod, it was simply a device that allowed you to
put “1000 songs in your pocket.” That meant you needed to have a certain amount
of memory fit into certain dimensions. Those were difficult problems that took a few
years to solve, but it was pretty clear what was involved and who was capable of
solving them.
Disruptive Innovation: Clayton Christensen introduced the concept of disruptive

innovation in his classic book The Innovator’s Dilemma. These tend to be new
approaches to old products and services.
Disruptive innovation tends to perform poorly on previously defined parameters (like

early digital cameras that took lousy pictures), but outperform on a different
parameter, such as price or convenience or compatibility.
Breakthrough Innovation: Thomas Kuhn called this “revolutionary science”

because it involves a paradigm shift. In this case, the problem is well defined, but
the path to the solution is unclear, usually because those involved in the domain
have hit a wall.
Transistors and the discovery of the structure of DNA are both good examples of
breakthrough innovation.

While basic research rarely leads directly to new products or services, many
corporations invest serious money into it. Some companies, like IBM, have internal
labs doing primary research, while others invest by way of research grants to outside
scientists and academic affiliations.
Sustaining Innovation: Sustaining innovation is probably the most common in the

corporate world and is often referred to as engineering rather than science. Like
basic research, much of this is done by internal R&D labs, but many firms outsource
it as well.
For instance, when Steve Jobs wanted a mouse for the Macintosh computer,
he went to IDEO with clear technical specifications knowing that they had the right
skills to produce what he wanted.

Disruptive Innovation: Disruptive innovation is particularly tricky because you don’t
know it until you see it and sometimes its value isn’t immediately clear. That’s why
venture capital firms expect the vast majority of their investments to fail.
There is also a growing trend toward corporate innovation labs, which work closely
with start-ups to perform ongoing “test and learn” programs that help identify
promising new technologies before they are fully mature.
Breakthrough Innovation: Often, a particular field has trouble moving forward

because they need a new approach. That’s why breakthroughs often come from
newcomers. Einstein and Newton were both in their 20’s when they came up with
their major discoveries. The problem is, of course, waiting for a maverick genius to
come along isn’t an efficient solution.
One way companies have started to attack the problem is through open innovation,
either through internal programs like P&G’s connect and develop or through external
platforms such as Innocentive. As Jonah Lehrer points out in his book Imagine ,
answers to tough questions often come from professionals working outside their
chosen field.
Finally, some companies build multidisciplinary teams and set them up in a separate
unit to pursue a particular innovation, like IBM did when they created the PC. This is
rare, but can be the only viable option when breakthrough innovation is crucial to the
future of a business.

Orbit-shifting innovation happens when an area that needs transformation meets
an innovator with the will and the desire to create, and not follow, history. At the
heart of every orbit-shifting innovation is the breakthrough that achieves a
transformative impact.
Business, social enterprises and even governments need orbit-shifting ideas to

create a transformative impact. But how does that groundbreaking idea come about,
and what translates it into actuality? Charting the vast global landscape of orbit-
shifting innovation and using unique examples from prominent businesses, the social
sector, entrepreneurs and public services -- spread across the United States, the
United Kingdom, Europe, Africa and Asia -- the authors build insight into the key
drivers behind taking on a transformative challenge and provide a unique framework
to navigate the pitfalls and challenges in making it happen.
Orbit-Shifting Innovation empowers everyone to overcome the obstacles to

innovation and provides the tools to maximize the impact of transformative change.
The inspirational examples and tools for success compel leaders and entrepreneurs

not only to pursue impossible challenges but to lead the successful journey from
conception of an orbit-shifting idea to actually creating history.
Most organizations (sometimes even whole industries) have a tendency to settle into
an orbit that has been successful in the past, that is fairly predictable and one that
minimizes uncertainties. The more settled an orbit, the greater the desire to cling on
to it – the greater is the gravity – gravity that will prevent a move into the next orbit.
Traditional methods of stimulating innovation like introducing new ways of Ideation or

building diversity usually don’t overcome deep-rooted gravity. This often leads to
more and more initiatives and many innovations hit the wall of diminishing returns.
When the intent is an innovation that has an ecosystem/industry-wide impact, the

approach required is Orbit-shifting innovation.
How is Orbit-shifting Innovation different
Orbit-Shift approach to innovation works ‘Ideal Future Ecosystem Back’. This is very
different from the usual ‘Current Ecosystem Forward’ approach. Working ecosystem
back involves much more than just tweaking the current ecosystem. It involves

anchoring oneself on to a desirable but seemingly impossible future reality, working
back to identify unique Orbit-shift Keystones – high leverage areas where a small
shift could lead to a disproportionate ecosystem wide impact, generating
breakthrough propositions around the Keystones and nurturing the propositions to
grow into successful impact-creating ventures. It has well developed innovation
concepts, processes, methodologies and tools to lead organisations or consortiums
to aim for and achieve Orbit-shifts.

Diffusion of innovations is a theory that seeks to explain how, why, and at what
rate new ideas and technology spread. Everett Rogers, a professor
of communication studies, popularized the theory in his book Diffusion of
Innovations; the book was first published in 1962, and is now in its fifth edition
(2003).[1]Rogers argues that diffusion is the process by which an innovation is
communicated over time among the participants in a social system. The origins of
the diffusion of innovations theory are varied and span multiple disciplines.
Rogers proposes that four main elements influence the spread of a new idea: the
innovation itself, communication channels, time, and a social system. This process
relies heavily on human capital. The innovation must be widely adopted in order to
self-sustain. Within the rate of adoption, there is a point at which an innovation
reaches critical mass.
The categories of adopters are innovators, early adopters, early majority, late
majority, and laggards.[2]Diffusion manifests itself in different ways and is highly
subject to the type of adopters and innovation-decision process. The criterion for the
adopter categorization is innovativeness, defined as the degree to which an
individual adopts a new idea.

Diffusion occurs through a five–step decision-making process. It occurs through a
series of communication channels over a period of time among the members of a
similar social system. Ryan and Gross first identified adoption as a process in
1943.[36] Rogers' five stages (steps): awareness, interest, evaluation, trial, and
adoption are integral to this theory. An individual might reject an innovation at any
time during or after the adoption process. Abrahamson examined this process
critically by posing questions such as: How do technically inefficient innovations
diffuse and what impedes technically efficient innovations from catching on?
Abrahamson makes suggestions for how organizational scientists can more
comprehensively evaluate the spread of innovations. In later editions of Diffusion of
Innovation, Rogers changes his terminology of the five stages to: knowledge,
persuasion, decision, implementation, and confirmation. However, the descriptions of
the categories have remained similar throughout the editions.

The rate of adoption is defined as the relative speed at which participants adopt an
innovation. Rate is usually measured by the length of time required for a certain
percentage of the members of a social system to adopt an innovation
The rates of adoption for innovations are determined by an individual’s adopter

category. In general, individuals who first adopt an innovation require a shorter
adoption period (adoption process) when compared to late adopters.
Within the adoption curve at some point the innovation reaches critical mass. This is
when the number of individual adopters ensures that the innovation is self-
sustaining.
Adoption is an individual process detailing the series of stages one undergoes from
first hearing about a product to finally adopting it. Diffusion signifies a group
phenomenon, which suggests how an innovation spreads.
Failed diffusion does not mean that the technology was adopted by no one. Rather,
failed diffusion often refers to diffusion that does not reach or approach 100%
adoption due to its own weaknesses, competition from other innovations, or simply a
lack of awareness
For example, Rogers discussed a situation in Peru involving the implementation of

boiling drinking water to improve health and wellness levels in the village of Los
Molinas. The residents had no knowledge of the link between sanitation and illness.
The campaign worked with the villagers to try to teach them to boil water, burn their
garbage, install latrines and report cases of illness to local health agencies. In Los
Molinas, a stigma was linked to boiled water as something that only the "unwell"
consumed, and thus, the idea of healthy residents boiling water prior to consumption
was frowned upon. The two-year educational campaign was considered to be largely
unsuccessful. This failure exemplified the importance of the roles of the

communication channels that are involved in such a campaign for social change. An
examination of diffusion in determined that there can be more than one social
network at play as innovations are communicated. One network carries information
and the other carries influence.
Both positive and negative outcomes are possible when an individual or organization
chooses to adopt a particular innovation. Rogers states that this area needs further
research because of the biased positive attitude that is associated with innovation
Rogers lists three categories for consequences: desirable vs. undesirable, direct vs.
indirect, and anticipated vs. unanticipated.
In contrast Wejnert details two categories: public vs. private and benefits vs. costs.
Public versus private
Public consequences comprise the impact of an innovation on those other than the
actor, while private consequences refer to the impact on the actor. Public
consequences usually involve collective actors, such as countries, states,
organizations or social movements. The results are usually concerned with issues of
societal well-being. Private consequences usually involve individuals or small
collective entities, such as a community. The innovations are usually concerned with
the improvement of quality of life or the reform of organizational or social structures
Benefits versus costs
Benefits of an innovation obviously are the positive consequences, while the costs
are the negative. Costs may be monetary or nonmonetary, direct or indirect. Direct
costs are usually related to financial uncertainty and the economic state of the actor.

Indirect costs are more difficult to identify. An example would be the need to buy a
new kind of pesticide to use innovative seeds. Indirect costs may also be social,
such as social conflict caused by innovation.[75] Marketers are particularly interested
in the diffusion process as it determines the success or failure of a new product. It is
quite important for a marketer to understand the diffusion process so as to ensure
proper management of the spread of a new product or service.

Self Check 2 Written test
1. List Various Types of Innovations

2. Describe the innovation diffusion model
3. What are orbit shifting innovations
4. Link Innovation Diffusion Model to Product Life Cycle

UNIT 3 INNOVATION IN ORGANIZATIONS
STRATEGY FOR INNOVATION
On average, companies never implement 50% to 70% of their strategic plans

because they are not adopted or implemented in the organization, and/or fail to
achieve the desired results in the time expected.
The primary reason for this dismal record of implementing strategic plans is the lack
of processes and systems that connect the strategic business plans to the objectives
and execution in functional areas across the entire organization. Many strategic
plans require new ideas, innovation planning, and portfolio optimization for
implementation to achieve the desired results.
Additionally, the definition and management of the strategic plans is usually a once-
a-year event, making it difficult to adapt to changes in business, market or
competitive conditions. What business leaders and planners need is a way to
collaboratively define, align and maintain innovation targets, strategies, and
initiatives to support sustained business success.
That’s why, the tools and capabilities to develop and define coherent strategic plans
that are connected through and across your organization. And when things change,
you can easily make adjustments that are systematically communicated through your
organizational structure, either top-down, or bottom-up. Innovation planning drives
your strategic business objectives into strategic operational and execution plans in
your organization.
STRATEGIC INNOVATION
Strategic innovation is all about identifying key strategies to take care of the
following:
 Develop a better business model.

 Explore newer markets and business opportunities.
 Assure better value to both the customer and the company.
Unlike management innovation, which takes care of all external factors and
implications (e.g. impact on stakeholders), strategic innovation only has internal
implications.
Innovation Management: strategy and implementation
Innovation management is all about eliminating the obstacles to innovation. To

formulate the perfect innovation management strategy is to identify a strategy that
engages all stakeholders, and that accomplishes the desired results.
The innovation management strategy is nothing without proper implementation.

Before an idea can be implemented, it needs to be tested. In many instances, testing
an idea throws undesirable results, so it becomes necessary to reject the idea and
start afresh. However, circumstances may arise where the results cannot be
predicted. In those cases, it is best to develop a stronger communication channel
with the stakeholders for the idea to be accepted.
Proper strategizing and implementation will ensure that the product or service is
successful, and the company brings in profits.
THE THREE PILLARS OF INNOVATION
Innovation has three pillars – competency, strategy, and management.
Pillar 1: Competency
Every organization has a finite set of core competencies – its strengths. However,
these core competencies may not always be in tune with market requirements. At
this juncture, it is important to differentiate between employee competency and
organizational competency. While employee competency is the skill sets that
employees of an organization possess, organizational competency takes on a much
broader meaning. Organizational competency is the capability of the organization as
a whole to perform in core areas. Organizational competency takes into account the
capability of the organization, not only to coordinate the activities of its various
divisions and departments, but also to perform the following tasks:
 Coordinating work with external entities and stakeholders.
 Optimizing the use of the resources at hand.
 Setting long-term and short-term goals for itself.
 Strategizing policies to achieve set goals.
Pillar 2: Strategy
Organizational strategy is a set of accepted rules regarding how the organization

should change over time in order to meet its new business objectives. The change
can be either evolutionary or revolutionary. In either case, the focus should be to
compare the present state of affairs with the desired outcome and the differences
observed should be noted down. This should be followed up with a requirement
analysis of the steps needed to be undertaken to effect the change.
The central focus of any organizational strategy should be to optimize resource

allocation. At the same time, a balance must be achieved between modifying existing
products and services, exploring adjacencies and exploring new horizons.
Pillar 3: Management
Managing innovation is central to any organization’s competence. Innovation

management calls for meticulous problem-solving skills.
To solve a problem, two basic steps have to be taken:
 Defining the problem.
 Delegating the problem.

When we “define a problem”, we seek to visualize what we want in the end product
or service. When Henry Ford designed the legendary Model T, he was effectively
putting his vision into practice – a vision of a no-frills automobile accessible to the
masses. Ford’s vision was revolutionary. In an age when the affordability of motor
cars was limited to the highly affluent, Ford wanted to create a car for the common
man. Effective innovation management resulted in a car that sold more than fifteen
million units in its lifetime – a feat that was never accomplished before.
The efficient delegation is the other important step to solving a problem. It is not
always possible for an organization to solve all its problems internally. It then
becomes essential to approach another entity that is well-placed to solve that
problem. A classic example is Dell Inc. The company is much different from its
competitors in that it assembles computers instead of manufacturing them. As such,
to mold itself into one of the major players in its segment over a short period of time,
Dell has successfully forged strong business relationships with a wide array of
reputed component manufacturers.
Innovation processes also force us to think of ways that innovation opportunities

would, and should, come to core innovation teams. There is not one single widely
accepted process for innovation. Various companies have evolved their innovation
processes over time. Some have many detailed steps. Others are high-level
guidelines. But regardless of the chosen process, it must be repeatable and
disciplined.
There are many innovation processes out there, but all encompass the following
steps:
1. Understand and scope opportunities to identify your most critical

assumptions, usually around what problem you are trying to solve.
2. Capture ideas to develop the minimum product and service concepts to

deliver value (desired, sought, identified, anticipated outcome) that will allow
you to learn about those assumptions and deliver the needed outcomes.

3. Evaluate and select by testing ideas in the ecosystem of partners, suppliers,
and customers to find out if what you believe is shared.
4. Develop and experiment as quickly and efficiently as possible until you

discover the right answers to delivering the outcomes.
5. Implement quickly and then scale iteratively, openly, and collaboratively to the
right product and market fit.
6. Champion innovative products and services in order to minimize the time the
ecosystem has to climb the learning curve to understand the benefit. This isn’t
about sales; it includes the internal organization, suppliers, partners, and
customers—the entire ecosystem.
MODELS OF INNOVATION
The Linear Model of Innovation is an early model of innovation that suggests

technical change happens in a linear fashion from Invention to Innovation to
Diffusion.
Invention Innovation Diffusion
Original model of three phases of the process of Technological Change: It

prioritizes scientific research as the basis of innovation, and plays down the role of
later players in the innovation process.
Current models of innovation: It derives from approaches such as Actor-Network

Theory or social shaping of technology and provides a much richer picture of the way
innovation works. current ideas in Open Innovation and User innovation derive from
these later ideas.
Traditional Phase Gate Model: Under this model, product or services concept is
frozen at early stage so as to minimize risk. Also innovation process in enterprise
involves series of sequential phases/steps arranged in such a manner that the
preceding phase must be cleared before moving to next phase. Thus a project must
pass through a gate with the permission of gatekeeper before moving to the next
succeeding phase.
Criteria for passing through each gate, and the person at each gate are defined
beforehand. The gatekeeper examines whether the stated objectives for preceding
phase have been properly met or not and whether desired development has taken
place at the preceding phase or not?
VERSIONS OF LINEAR MODEL OF INNOVATION
Two versions of the linear model of innovation are given below:
1. "Technology push" model
2. "Market pull" model.
In the period 1950s-Mid-1960s the industrial innovation process was generally

perceived as a linear progression from scientific discovery, through technological
development in firms, to the marketplace, Rothwell (1994)
The stages of the "Technology Push" model are:
Basic science→ Design and engineering→ Manufacturing→ Marketing→ Sales
MARKET PULL “MODEL OF INNOVATION
In the period mid 1960s- Early 1970s emerges the second-generation Innovation
model, referred to as the” market pull “model of innovation. According to this simple
sequential model, the market was the source of new ideas for directing R&D, which
had a reactive role in the process. The stages of the "market pull” model are: Market
need—Development—Manufacturing—Sales. The linear models of innovation
supported numerous criticisms concerning the linearity of the models. These models
ignore the many feedbacks and loops that occur between the different "stages" of
the process Shortcomings and failures that occur at various stages may lead to a
reconsideration of earlier steps and this may result in an innovation.

KNOWLEDGE MANAGEMENT FOR INNOVATION
Knowledge management can be described as indispensable and that KM must help

increase an organization’s profit margins. The corollary is that if KM doesn. It lead to
organization’s profit margins, it is dispensable .This dichotomy can be explained
hare. In the post-modern industrial era of today when knowledge has been
universally deemed a critical wealth for sustained growth of all the business systems,
an organization’s top executives are somewhat duty bound to admit KM’s
indispensability, or they (and their companies in turn) will look antediluvian to their
customers and stakeholders. But at the same time their old world vestiges force
them to look for profitable returns under every dime they have to invest on KM. And
indeed, why not? After all a business organization is not a social welfare state. KM
theorists, practitioners, and dabblers can‟t stay unaffected by these capitalistic
concerns of corporate oligarchy. When we have repeatedly averred from high
pedestals that knowledge is a wealth and a prized resource, then it‟s only fair to
assume that calls will be made to make good of this wealth and demands will arise to
use KM to make a positive, and more importantly, a tangible—a showcase able—
difference in the organization. we can say that knowledge management can be made
to play a significant role in increasing an organization‟s capacity to innovate and use
innovative practices to gain or retain, as may be the case, the cutting edge against
thriving competition and fluctuating markets. Innovation, as it is widely recognized, is
the only master key to unlock an organization‟s successful future. Organizations that
innovate and adopt innovation sustain and prosper while those who do not wither
away. All of the three types of innovations, viz. sustaining, disruptive, and
breakthrough, result from the process of intensive research which implies plodding
through existing store-houses of information and sifting, weighing, and balancing the
information pieces to move ahead. These pieces of information are primarily
published and catalogued works like books, research papers, white-papers,
correspondences, spread sheets, analytical reports etc; but they are also
unpublished and uncategorized stuff like wisdom, perception, thoughts, ideas, verbal
conversations, hidden best practices and informal chats, to name a few.
Whereas the first part has drawn the attention of researchers and innovation experts,
it is the later aspect that presents real challenges and risks. Things like wisdom,
perceptions, ideas etc. are often transacted in an unstructured environment. They
flow freely from one person to another, transcending minds, geographies and time. If
not tapped at right opportunity, they diminish or disperse and are lost. For example
an exciting conversation among a group of technology enthusiasts might contain
seeds of an innovation, but if not captured in time, the conversation may die down
and never reoccur or the people may move to different companies and not meet
again.
KM strategies and approaches of knowledge capture, knowledge organization,

knowledge dissemination, and knowledge application can be intermixed and used to
provide a smart structure where all the potentially useful knowledge transactions can
be recorded, viewed, analyzed and processed by decision makers.
By providing this structure KM does two important things.
Identify the information channels, thereby increasing the interaction and re-use of
knowledge. Note that this is different from identifying information per se. Capturing
information channels implies recognizing and enlisting all the possible channels
through which information flows within the organization. For example, discussion
forums, group email aliases, workshops, chatting networks etc.
Increase the information flow, thereby increasing the intellectual capital; As more
information channels are identified and brought to surface, more and more
employees will use them to converse, exchange information, seek and learn, share
ideas and work in close collaboration (there is empirical evidence to show that
sharing and creating information increases an organization‟s capacity to innovate).
All the mature organizations today face challenges in managing innovation.
The conventional approach of managing innovation through passionate individuals

(an innovation manager and a sponsor for example) is not sufficient anymore to
nurture, develop, commercialize, integrate and protect an innovation. In this context
as we saw, knowledge management emerges as the overarching process that can

help organizations to create and sustain a culture of innovation in its operational and
commercial strategies.
KNOWLEDGE CONVERSION AND THE KNOWLEDGE SPIRAL
As noted in the Essence of Knowledge Management, managing knowledge means

dealing with both tacit and explicit knowledge. One of the challenges is deciding how
best to share tacit knowledge: what to share through tacit-to-tacit (person-to-person)
processes, and what to convert to explicit knowledge, so that it more easily
transferable. The enunciated two key concepts - that of knowledge conversion
processes and the knowledge spiral.
Knowledge Conversion Processes

1. Tacit-to-tacit (socialization) - Individuals acquire knowledge from others through
dialogue and observation
2. Tacit-to-explicit (externalization) - The articulation of knowledge into tangible

form through elicitation and documentation
3. Explicit-to-explicit (combination) - Combining different forms of explicit

knowledge, such as that in documents or databases
4. Explicit-to-tacit (internalization) - Such as learning by doing, where individuals

internalize knowledge into their own mental models from documents.
It indicates that the conversion from one type to the other (i.e. tacit-to-explicit and
vice versa) gives the most added value. Thus, knowledge once in explicit form can
be more easily distributed, but then it does need converting and assimilating into
another person's tacit knowledge for application in a different context.
The Knowledge Spiral
The key to knowledge creation lies in the mobilization and conversion of tacit
knowledge". How organizational knowledge is created through processes in the
knowledge spiral shown below:
Organizational knowledge starts at the individual level with thoughts or

understanding (internalization). It then moves upwards through socialization, where
individuals dialogue with their team colleagues. The ideas are then articulated
(externalization) and become more widespread through diffusion of explicit
knowledge (combination). As knowledge moves up the spiral knowledge is more

widely spread and the spiral gets wider. What also happens is that as individuals
access organizational knowledge, they apply it and internalize new knowledge, thus
setting the stage for an enhanced piece of knowledge to work it’s up the spiral.
INNOVATION PLANNING
To maintain leadership position companies need to be continuously proactive in

exploring new opportunities for innovation & focusing on core offerings customer
support and relationship management is a safe way to sustain business and
maintain continued revenue flows. But complacency with the successes of core
offerings and eagerness to serve the core customer base frequently leads to inaction
in the search for new opportunities. Companies deliberately need to be in an active
sensing mode during which new opportunities are continuously sought in active
innovation culture needs to evolve within organizations. This should be
predominantly characterized by continuous exploration and search for opportunities
that may not be central to their business objectives. It the core of the emergence of
such an innovation culture is the ‘planning processes’ that innovators systematically
and collaboratively use to uncover unexplored opportunities.
Robust planning processes that are commonly understood continuously practiced

and collaboratively applied by innovation teams are likely to increase the success
rate of innovations. ‘Innovation planning’ although it may seem like an oxymoron is
really not as the current growth of the industry providing sophisticated tools for
research analysis and ideation tells us. Innovations can be planned to ensure their
successful uptake. To plan innovations it is possible to benefit from well developed
processes to foresee people’s needs and the nature of contexts within which those
innovations fit. Powerful innovation tools are needed to empower this planning
process.
Scholars who have studied factors contributing to the success of innovations have
emphasized the need for a high degree of ‘discipline’ during the innovation planning
process. Successful innovations are the result of well informed purposeful disciplined

hard work. Comprehensive frameworks structured methods and rigorous tools are
needed to support the planning process in a disciplined way.
Innovation planning needs to accommodate inputs from various specialty areas such
as market research, engineering, design, business management, branding, finance
and strategy. Tools that can be used across specialty areas and commonly
understood by diverse specialist team members should take precedence.
In short, to innovate successfully companies need a disciplined innovation planning

process supported by structured methods, tools and frameworks that can integrate
multidisciplinary teams and multiple specialty areas.
Research objective and approach: The first objective of this research is to model a
disciplined ‘innovation planning process’ that could be commonly understood by
team members belonging to various specialty areas. The Second objective is to
model an innovation planning toolkit consisting of a set of tools that teams can
collaboratively use during the innovation planning process.
The research approach included a study of a number of innovation planning projects

that companies, consulting firms and academia carried out the analysis uncovered
common patterns in the underlying processes these projects used. Building on these
pat terns a generic model for innovation planning process was developed.
Analysis also resulted in an understanding of the man y activities teams engaged in

at various stages of innovation planning process. These findings pointed out several
tools teams could effectively use to plan innovations. Some of these tools are tried
and tested but some are newly developed to help unsupported but crucial activities
teams engage in. All these tools organized under the innovation planning process
model form the innovation planning toolkit.
Innovation Planning Process and Toolkit:
The model generated for the innovation planning process has eight modes

1.) sense intent
2.) know people
3.) know context
4.) frame insights
5.) explore concepts
6.) make plans
7.) realize offerings (prototype pilot and launch)
8.) foster uptake
These m odes are briefly described below and are shown on the map in figure1.
Pertinent characteristics of each of these modes are included in the descriptions
below:
Even though these modes are numbered, it should not suggest strict linearity. This is
because, in real life team members move from mode to mode frequently in no
particular order depending on the specific goals at any given time.

It is only for convenience that these modes are explained in the order shown.
1. Sense Intent: See Changes Diagnose Conditions and Form Intent
Innovation planning activities start with an initial intent, a rough goal, a hypothesis, a
gut feeling, or some form of initial prompt. For example, a product innovation such as
a portable MP3 player starts with the initial intent of supporting people’s desires to
have control over their music collection and listen to digital quality music anywhere.
Trends in digital music technologies, people’s changing preferences in interacting
with media and companies’ evolving business focus on music market segments, all
contribute to establishing the innovation intent here. In this mode, innovators need to
be in an active sensing mode to focus on opportunities and thereby pragmatically
generate their initial innovation intent. Three primary activities characterize this mode
-see changes, diagnose conditions, and form initial strategies. Innovation team’s
primary focus is to see the ‘changes’ impacting people’s lives and understand how
companies respond to these changes. They see comprehensive views of trends in
areas such as business technology, culture and policy and try to uncover potential
opportunities for innovation. Continuous diagnosis of conditions both internal and
external to the company is another key activity in this mode. Just as doctors
diagnose patients, here innovation teams determine the conditions of the company,
its competitors, partners and industry through a series of inquiries measurements
and evaluations. Initial strategies are then formed that reinforce the innovation intent.
Some key tools that support the activities in this mode are described below
Trend map Mapping tools to visualize broad emerging trends in

culture, business and technology
Diagnostic system Tools to visualize results of diagnostics performed on

companies and industries.
Concept space Diagrammatic tools to organize problems issues and

opportunities and frame up the concept space
2. Know People, look for people’s un-met needs

In this mode the primary focus is to understand ‘people’ within the broad scope of
innovation intent. Traditional market research produces valuable insights about
user’s needs when the products and services provided to them are known and well
defined. But, going beyond this innovators need to uncover new innovation
opportunities by exploring people’s unmet and unarticulated needs. Ethnographic
observational research prevalently used in social sciences supports this type of
inquiry well.
Observing people in their own environments during their normal routines and
settings reveals a richer set of insights about their needs, especially their unmet
needs, than what can be gained from traditional market research such as focus
groups, questionnaires, or interviews. Truly novel innovations emerge from
uncovering needs people did not even know they had and questions researchers did
not even knowhow to ask. Developing a deep understanding of people’s unmet and
unexplored needs can challenge industry assumptions and lead to major shifts in
companies’ innovation strategies.
Research plan Tools to help plan research subjects, tools, time

frame and resources.
Video/ Photo research Tools to capture peoples’ activities in their real

environments, review them, recognize unmet needs and
extract insights that can drive innovations.
User camera study Tools to help people capture on their own, their
activities, environments and objects and share their
subjective experiences with researchers.
Ethnographic interview Protocols to support conversational Interviews (not pre-

prepared) with people in their own environments.
User insights database Sharable database to organize observations about

peoples’ daily activities and help find insights.

Five human factors Frameworks to understand the five human factors
related to peoples’ interactions
-physical, cognitive, social, cultural and emotional
Experience map Tools to map out and tell stories about peoples’
holistic experiences with products, environments,
messages and services.
3. Know context, look at the big picture and learn about opportunities
While in this mode, innovation teams study the contexts within which innovations
need to fit. Contextual research usually looks at entities like companies, competitors,
industries, networks, markets, financial models, technologies, processes, products,
services, brands and channels. Focusing on the ‘state of the art’ knowledge about
each of these entities is valuable in this mode. To promote collaboration, innovators
organize their research findings under commonly understood categories like
business, technology and design. The overall goal is to focus on the most relevant
information, recognize possible opportunity areas and determine the right principles
on which to reliably build innovations.
Here, innovation teams commonly face the challenge of navigating through

complexity, particularly caused by the abundance of available information. For
efficiency, it is often beneficial to use comprehensive frameworks to selectively direct
inquiries into specifics while still maintaining an overall connection. Data mining
techniques applied to large data-bases are usually good for narrowing down vast
amounts of information in to usable chunks. For better collaboration among
innovation team members, ‘overview visualizations’ that show relations among the
parts of the context at a high level are found to be very valuable.
Context map Tools to organize contextual elements such as users,

products, services, messages, companies, and create
overviews

Eras map Diagrammatic tools to track the distinct changes that
occur to context elements and show them under major eras on
a time scale
Value web Entity relation diagram tools to illustrate the value

exchanged among the context elements.
Innovation map Mapping tools to create overviews of Innovation occurrences,

types, numbers, rates and, uptake both at company and
industry levels.
4. Frame Insights: Find patterns in research data and extract insights
The main focus in this mode is to analyze the research data generated from the
previously described three modes-Sense Intent, Know People and Know Context.
Innovators look at the research data in multiple ways so that important relationships,
patterns and insights can be evolved. They use a variety of data-organizing and
sorting tools to uncover defensible general patterns. For example, analysis of
peoples’ daily activities using sorting tools reveals activity grouping patterns and the
priorities people assign to them. By analyzing the ‘problems’ faced by people in their
daily lives patterns about their unmet needs emerge. Similarly, analyses of
contextual data would show patterns that are important to consider about
companies, their offerings or any other contextual aspect. High level framing-up of all
the insights and patterns that emerge from multiple analyses of data is at the core of
this mode.
Equally valuable as the insights themselves, is the ‘link’ that can be established
between insights and concepts. To make this link, insights are often turned into
‘principles’. Principles are pre-determined policies or modes of action that are used
to drive concepts. A second option is to turn insights into ‘criteria’, standards or rules
on which ideas can be based. Sometimes the insights are simply stated as needs
that are to be fulfilled, as ‘need statements’. A more powerful way to create this link
is through new ‘frameworks’ a set of assumptions that supports a way of viewing

possible reality that are comprehensively built from the research data to drive
concept generation.
User Data Analysis Tools to help sort, organize and analyze the
data derived from user research
Context data analysis Tools to structure contextual data and create

overview patterns of relations mows historical
developments and value exchanges.
List Sorting Tools to sort lists based on relations, create clusters and
show patterns in diagrams like matrix, Venn, map, net,
tree or profile.
Flow/ Experience Model Tools to show flows of information, materials,

transactions and experiences as people interact with the
context elements.
System Simulation Tools to visualize context as a system of inter-connected

parts, simulate its behavior, and analyze evolving
patterns.
Analytic Frameworks Tool set that uses numerous existing frameworks to

organize contextual information and analyze the resulting
patterns.
5. Explore Concepts –Explore point concepts to systems to platforms
Relating analysis to ideation in a disciplined and collaborative way is a big

challenge for innovation teams. Here, teams need to focus intensely on concepts
that emerge directly from the insights and identified opportunities. There should be

a logical transition from insights to concepts. Concept exploration should be
purposefully based on the defined criteria, principles, need statements or other
frameworks that come from research and analysis.
There are four main activities teams engage in - concept exploration, organization,
evaluation and systemization. During concept exploration, focusing on the right
ideas is key – ideas that are driven by the insights-- even if there are only a few,
unlike the large quantities of ideas that traditional brainstorming processes seek.
Keeping concepts organized under useful categories and hierarchies adds to the
efficiency of the exploration. More iteration of concepts with frequent evaluations
makes the concepts more robust. Moreover, exploring concepts happens at many
levels. There is ‘micro’ exploration to conceive point concepts that solve specific
functions, such as ‘pushing a button’. There is ‘macro’ exploration that builds
system level concepts by integrating point concepts into a whole Switching back
and forth between micro and macro explorations is beneficial for integrating
concepts as a system.
Concept definition: Tools to define point and system concepts as

statements, diagrams or sketches.
Concept matrix map: Tools to explore concepts in a matrix or map, space with
two dimensions defining the concept space.
Concept systemizer: Tools to synthesize systematic solutions by integrating

point concepts.
Scenario plan: Tools to create future scenarios and build stories using
the explored concepts.
Concept manager: Database tools to manage the large number of concepts

innovation teams produce.
6. Make Plans- Make road-maps for the future through actionable plans
To make the concepts actionable, innovation teams develop a working plan. These
plans ensure that the concepts are in alignment with the research findings and the

innovation intent. In this mode, teams focus on speculating how concepts that add
new value to people, can also add value to companies. The actionable plans
developed chart out innovations that not only offer high quality experience for people
and fit well with the context of use but also provide a strategic advantage to the
companies that produce the offerings.
Teams apply principles learned in the previous modes to make strategic plans that
include innovations like products, communications, services, systems, organizational
processes, environments and brands. Compelling stories are made part of these
plans to clearly explain to stakeholders, both the initiatives and the effects.
Teams also create implementation plans that communicate to the stakeholders the
necessary steps to implement the concepts, the required resources, and the returns.
The plan along with the concepts that the teams propose clearly identifies the
changes needed in the company to create new offerings. Plans also include
roadmaps that show the speculated progression of innovations in distinct phases.
Strategic Roadmap: Planning tools to track the strategic evolution of

concepts over distinct phases.
Innovation Brief: Story telling tools to logically present the key

findings and concepts to internal and external audiences.
Strategic Plan: Tools to build the company’s innovation strategies

using the explored concepts.
Tactical Plan: Tools to plan the tactical steps needed to realize the
concepts
Business Case: Tools to transform the concepts into a viable

business plan.
7. Realize Offerings realize concepts through iterations, prototypes to

pilots to launch

The success of concepts depends much on their adoption by users and their
fit with the context of use. An effective way to ensure this success is to test
the concepts in real situations early on and iteratively before investing too
much on the first introduction. In the early stages of concept planning, when
the ideas are still fresh and not fully meshed out there is great value in
prototypes in their raw form to study user’s behaviors. Problems and issues
with concepts can be identified early on in order to take the prototype to its
next level of refinement. After a few iterations a pilot offering is created for
evaluation in a selected real situation. Based on the feedback the offerings
are refined again for launch and continued implementation. A re-iterated
planning process this way increases the chances for success.
In this mode, the major focus is on the conceptual design of the prototype.
Teams also focus on meaningful evaluation criteria for each of the iteration
cycles. These evaluation criteria are created based on the innovation intent
and the insights framed earlier.
Behavioral prototype: Tools to build faster, cheaper prototypes to test the

functions of the concept early on and identify problems.
Concept prototype: Tools to build look like prototypes with or without

simulated functions, and evaluate physical features.
Pilot and launch plan: Tools to plan pilots and launches based on
feedback from earlier prototype iterations.
Change plan: Tools to plan possible organizational changes

brought about by new innovations.
8. Foster uptake: foster an environment for successful adoption
This mode is the overlap between innovation planning and innovation

implementation here we move from the planning mode discussed above to a series

of modes that ensures the successful implementation of new offerings-management
teams’ use various implementation tools to ensure continued success of an
innovation over its lifespan. Since the focus of this research is on innovation
‘planning’ implementation tools are out of scope of this unit thus are not discussed
here.
Conclusion
The immediate next steps planned for continued research include refining the
prescribed model testing tools on different types of innovation planning projects,
conceiving new tools as additions to the tool kit, evaluating the effects these tools
have on teamwork, and ultimately measuring the resultant innovation success rates.
The innovation planning process, supported by structured methods, tools, and

frameworks described above offers a strong formalized model for companies to
successfully plan innovations. The rigor and discipline these tools bring to the
innovation planning process is a key benefit. The process model and the tools are
built on knowledge and inspiration from a wide range of disciplines such as social
sciences, anthropology, behavioral sciences, design, engineering, business
statistics, library sciences and economics. The tools and processes are conceived
holistically to enhance the work processes of multi-disciplinary innovation teams and
to integrate the multiple drivers that contribute to the successful adoption of
innovations.
2.6 PLANNING THE INNOVATION PROCESS SCENARIO
Perhaps one of the biggest myths about innovation is the idea of the "lone"
innovator, who works on ideas in the lab or office, without assistance or support. In
this myth the innovator or inventor has a flash of insight, generates and manages
ideas completely on his or her own, and fights the bureaucracy to overcome all odds
to produce a commercially viable product. While these stories about individual
innovators overcoming all odds are enjoyable, they are rarely true. In fact, most, if
not all, ideas that become new products or services require the involvement of a
significant number of people from a wide array of business functions—sales,
marketing, legal, manufacturing, and distribution, to name a few. The complexity
inherent in developing, testing, and commercializing a new product demands a broad
perspective and a diverse set of skills.
Likewise, innovators need strong, consistent processes and frameworks in order to

manage, develop, and test ideas. Few firms succeed using ad hoc or "on the fly"
innovation processes. A well-defined idea management and development process
assists an innovator by reducing complexity, defining evaluation criteria, establishing
"gates" and reviews for the ideas, and communicating workflow and tasks for the
people who are involved in developing and managing ideas. A common, consistent
process increases effectiveness, reduces bias in idea consideration, and encourages
the development of institutional capabilities over time. When many teams or
individuals attempt innovation using the same processes and methods, learning
benefits become evident, reducing risks, costs, and timeframes associated with
innovation and producing better results than in organizations that fail to define and
sustain an innovation process.
A well-defined innovation process will encompass an entire "end to end" innovation

capability, including these phases:
• Trend spotting and scenario planning

• Gathering customer needs and market insights
• Generating ideas using the scenarios and needs as guideposts
• Evaluating, prioritizing, and selecting ideas for further development
• Prototyping and piloting ideas
• Transitioning ideas into product or service development
• Launching new products and services
In each of these phases, there are a number of steps to complete the phase
successfully. Further, each phase has a number of tools and techniques that must
be mastered in order to produce effective results. To implement those tools and

techniques and to complete this process, clearly defined workflow must exist, and
the people who are expected to do this work must be trained. The innovation
process is similar to other business processes within your firm. There must be a
clear definition of the work, who does the work in each step, and a carefully defined
workflow so that teams in each phase or activity understand the results of the work
upstream and they can use that input to accomplish their tasks.
While innovation is consistently ranked as one of the most important capabilities, few
firms have well-defined innovation processes or capabilities. Other important
business processes, such as receiving customer orders or accepting payment for
customer orders, are well-defined processes honed over years or decades. Yet
innovation is still relegated in many firms to an ad hoc process developed by the
innovator or innovation team, purpose-built for the task at hand, and rarely reused or
repeated. No other important process is conducted in such an ad hoc manner.
Innovation needs and deserves the same definition and process that other important
functions benefit from.
When a Process Is Valuable
Defining and developing an innovation process, however, only makes sense if the
process will be repeated. If an innovation initiative is a "once and done" event,
developing a new innovation process specifically for a discrete, one-time initiative will
not be worth the effort. Since few firms think of innovation as a business discipline
that can be sustained over time, it doesn’t seem useful to construct a consistent,
repeatable innovation process, especially one that encompasses all of the tasks and
phases identified above.
Further, defining a new process requires identifying roles and responsibilities to

support and sustain the process, meaning that roles are created and education and
training is required. Building an innovation process and staffing it effectively, though,
isn’t valuable if it is not repeated frequently.
Defining the Core Team

While firms pour thousands of dollars each year into improving processes for
purchasing or order entry, and optimize these processes using process definition,
Six Sigma, and Lean, most companies never define an innovation process,
conducting innovation efforts in an ad hoc manner. While companies would never
allow each business unit to define its own purchasing parameters and identify its
own approved vendors and purchasing processes, they do allow each product group
or line of business to adopt its own innovation methods and tools, and deploy people
with little training and no centralized methods to create new products and services.
There is a better way. Just as purchasing is centralized to ensure that every

acquisition in every product group or line of business is conducted in a similar and
effective manner, a core innovation team can be defined to create and manage a
common innovation method or process, while providing innovation capabilities and
tools to anyone undertaking an innovation project. In this approach, a central team is
responsible for managing and maintaining innovation methods, processes, tools, and
capabilities and assisting product groups or lines of business when they need help
on innovation tasks. A small core team can assist many different groups and ensure
a more consistent, effective approach to innovation. Note that the core innovation
team recommended isn’t responsible for innovation, but for defining the common
methods and processes for the organization to use.
Transition Points
Further, many innovation programs falter at important transition points within defined
processes. Perhaps the most important transition point is between idea selection and
product development. History is replete with examples of organizations that
generated hundreds of great ideas that were never developed or implemented.
Ideas that are valuable to an innovation team and solve customers’ needs may not
receive the appropriate ranking or prioritization from an overworked product manager
with a long list of priorities. This issue must be solved by integrating the product

development team into the idea development, so the product managers understand
the value and opportunity the idea presents. Also, sponsors need to be identified
who can support, fund, and ensure achievement of the idea, placing correct
prioritization on the product manager’s to do list. It’s not enough to document a
process to generate and manage ideas, the process must consider key "gates" and
decision points like funding and important "gaps" or chasms like the transition from
idea to new product or service development.
Reactive versus Proactive Philosophy
While some factors (compensation, metrics, and processes, for example) are the
outcome of intentional, careful decisions and specific actions, other factors
influencing innovation are often derived over time or they are an artifact of the history
of the organization, its position in the market, and its strategic focus. For example,
many firms adopt the strategic position of "fast follower," discussed earlier, intending
to enter new markets or create new products once those markets or product spaces
have been validated by a competitor.
Far too frequently, many firms settle for such a "reactive" approach to innovation,
using it as a tool to respond to changes in market conditions and in response to new
entrants or new offerings, rather than using innovation in a proactive way to open
new markets or address unmet opportunities.
Firefighting
Most entrepreneurial and smaller firms want to change the world, and they are
constantly trying to influence the dynamics of the market in significant ways. Over
time, as the firms age and settle into a comfortable zone and the expectations shift.
As firms mature they seek to protect their markets and drive out costs and
inefficiencies. Companies also become more defensive about their markets and
prefer to react to changes rather than create changes. In fact, many firms in an
industry try to codify the status quo, locking in existing rules and expectations and
locking out new entrants. When the market inevitably shifts, most of these firms are

caught off- guard, and resort to "firefighting." Firefighting is a term I use to describe
the urgent demand and rapid response to a new product introduction by a competitor
or a significant change in the marketplace. Middle managers are often asked to drop
everything they are working on and respond to events in the marketplace.
In many firms it is hard to distinguish middle management from firefighters since

middle managers are typically stuck with rushing from one fire to another. These
fires are caused by unanticipated changes in the market through new regulations or
entrants. Because the firm has settled on a reactive posture, and isn’t actively
attempting to influence the market or understand the future, every new change is a
significant hurdle that must be addressed. Most firms reward "firefighters" who rush
to handle these issues, though in hindsight these problems could have been avoided
by a little foresight or proactive efforts.
"Firms need to downplay the "heroism" of fighting fires and instead reward managers
who spot problems before they occur."
A true innovator will identify these emerging issues and create new products or
services to forestall change or to influence the change to favor their products or
solution. Innovators are proactive, establishing new markets, identifying and meeting
emerging needs well before the "fast followers" or laggards. Innovators force their
competitors to become firefighters, which expend their energy and resources to stay
abreast of the latest products, simply hoping to keep pace with the innovators. Trend
Spotting. Any firm can invest a small amount of money and resources into trend
spotting. Trend spotting involves identifying changes that are occurring in
technologies, economies, demographics, and other fields that will influence future
markets. Trends may suggest that the demographic nature of a country is shifting,
becoming older and more homogeneous; that economic growth is slowing; or that
new technologies will dramatically change the way people interact with each other.
Trends are easily spotted if people are alert to what happens in their markets and
economies.
INNOVATION-IMPLEMENTATION
The implementation stage
When the performance gap has been detected and initiation has taken place – that
is, a concrete plan has been made of how to bridge the gap – then the more tangible
part of the innovation process will start; this is the major part of the innovation
process. We do note that a proper and well thought-out initiation stage will speed up
the implementation stage considerably. The ideas generated in the initiation stage
have to be implemented and therefore ‘important others’ need to be convinced. This
stage involves ‘a process of organizational change which directly affects the
technical and social systems of an organization.
During the implementation stage a new process, product or idea will be implemented
within the organization. Thus, at this point in the innovation process the innovation
can be seen as coming from outside and it is implemented in the organization. In
fact, the implementation stage is what discriminates invention from innovation.
Whereas invention does not involve the actual use of the new product or idea,
innovation does. The applicability and actual application of the new concept is
essential to the innovation process. Thus, innovation is partly defined in terms of its
actual use and application for the target group or market. Elaboration on this thought
can cause confusion, as at the starting point of the innovation process, it is not clear
whether the process will be successful or not. However, it is perfectly well accepted
to talk about an innovation process that resulted in failure, thus without actual
adoption.
Technology often plays an essential part in the implementation stage of the

innovation process. Even though technology such as a software tool may be
characterized as standardized, the implementation of a standardized software tool
remains a custom made process and it is often characterized by problems. The
degree to which a software tool is standardized does vary; for example ERP
[enterprise resource planning], a software tool widely used, can be implemented in
three different variations, generic, preconfigured and installed underline the
importance of a clear plan with goals and strategy for the implementation of a
technological software tool such as ERP. They argue that an implementation is

rather a journey than a single action. Furthermore, an implementation triggers
different kinds of learning, exploitative and explorative; this ‘results in radical and
incremental changes and outcomes that are partly predictable and partly
unpredictable’. The success of the implementation process [and consequently the
innovation process as a whole] will be determined by the people who will be working
with the new technique [the end-users or the adoption unit in more technical terms].
Therefore, it is essential that these end-users are given enough time and space to
adjust to the new way of working. Typical problems occur when a software tool
implemented in one part of the organization generates information for other parts of
that organization.
Without proper communication between these parties a chain reaction can be set, in
particular when a sequential party has to rely on the information supply generated by
a first party to which that information is seemingly worthless. So end users do not
necessarily directly benefit from the innovation tool even though they might
acknowledge that the implementation of this software tool has great benefits for
other units within the organization, for instance the personnel department that save a
great amount of time when information is supplied digitally. One of the ways to aid
the end-users is to offer them training to learn to work in a new way. However, the
relationship between training and learning is not always that clear. There is a tension
field between the individual and the organization as a crucial factor in the relation
between learning and training. “Training cannot be assumed to produce learning, nor
is learning always an integral part of training, partly because even when training may
result in some learning, the organization may not provide the necessary
infrastructure to support such learning after the training has been completed. ...
individuals have different expectations from training interventions ... and are
frequently unable to utilize the knowledge gained from training courses due to factors
such as the relevance to their current job, the extent to which training is perceived to
be relevant or practical, and whether it is provided at the right time and through the
right methods.”
So the effect of training is dependent on a number of factors, among which are

expectations, relevancy and timing of the training. Particularly important is a situation
that supports the use of the knowledge acquired at the training to enable and
facilitate learning. This tension between training and learning shows parallels to the
oxymoron that senses in the term organizational learning; they point out that
organizing focuses on control and learning focuses on the opposite, to unravel and
disorganize.
The final part of the implementation stage can be characterized as routinization.

Routines are a vital part of an organization. Routines are important to sustain diverse
organizational structures. A good part of explaining why apparently 'superior'
organizational forms diffuse very slowly lies in the fact that organizations are crucial
[although not exclusive] repositories of knowledge; this is where the routines come
in. Organizations are modified through time by their 'higher level' rules of behavior
and strategies. Thus, routinization could be seen as a marker point that the
innovation process has been completed in that the innovation has ‘conquered’ a
place in the organizational structure.
Although of a somewhat different nature, we do want to mention the research on the

diffusion of innovation as related to the implementation stage of innovation.
Research on the diffusion of innovation concerns differences in success of
innovations in terms of their diffusion within a population. What distinguishes
successful innovations from the innovations that are forgotten and thus diffuse
badly? The importance of diffusion for innovations; is argued to be one can invest
great sums of money in developing innovation, but still the overall goal is for the
intended audience to actually use the innovation. Therefore, ‘the purpose of many
diffusion studies has been to determine methods by which diffusion can be
hastened’. Typical subjects to be studied within this field of research include that of
the adopter, the environment, and the process by which the innovation is
communicated. The above shows that innovation research focuses on many and
different factors. It furthermore shows that the area of innovation research is not
precisely defined. It shows parallels to and overlap with other fields of research,
because of change, newness and improvement. We therefore briefly elaborate on
three related research areas, namely organizational change, organizational learning
and absorptive capacity.
2.8 EVALUATION & CONTROL
CONCURRENT ENGINEERING
Concurrent Engineering - which is sometimes called Simultaneous Engineering or

Integrated Product Development (IPD) - was defined by the Institute for Defense
Analysis (IDA) in its December 1988 report 'The Role of Concurrent Engineering in
Weapons System Acquisition' as a systematic approach to the integrated, concurrent
design of products and their related processes, including manufacture and support.
This approach is intended to cause the developers, from the outset, to consider all
elements of the product life cycle from conception through disposal, including quality,
cost, schedule, and user requirements.
Concurrent Engineering is not a quick fix for a company's problems and it's not just a
way to improve Engineering performance. It's a business strategy that addresses
important company resources. The major objective this business strategy aims to
achieve is improved product development performance. Concurrent Engineering is a

long-term strategy, and it should be considered only by organizations willing to make
up front investments and then wait several years for long-term benefits. It involves
major organizational and cultural change.
The problems with product development performance that Concurrent Engineering

aims to overcome are those of the traditional serial product development process in
which people from different departments work one after the other on successive
phases of development.
In traditional serial development, the product is first completely defined by the design
engineering department, after which the manufacturing process is defined by the
manufacturing engineering department, etc. Usually this is a slow, costly and low-
quality approach, leading to a lot of engineering changes, production problems,
product introduction delays, and a product that is less competitive than desired.
Concurrent Engineering brings together multidisciplinary teams, in which product

developers from different functions work together and in parallel from the start of a
project with the intention of getting things right as quickly as possible, and as early
as possible.
A cross-functional team might contain representatives of different functions such as

systems engineering, mechanical engineering, electrical engineering, systems
producibility, fabrication producibility, quality, reliability and maintainability, testability,
manufacturing, drafting and layout, and program management.
Sometimes, only design engineers and manufacturing engineers are involved in

Concurrent Engineering. In other cases, the cross-functional teams include
representatives from purchasing, marketing, production, quality assurance, the field
and other functional groups. Sometimes customers and suppliers are also included
in the team.

In the Concurrent Engineering approach to development, input is obtained from as
many functional areas as possible before the specifications are finalized. This results
in the product development team clearly understanding what the product requires in
terms of mission performance, environmental conditions during operation, budget,
and scheduling.
Multidisciplinary groups acting together early in the workflow can take informed and
agreed decisions relating to product, process, cost and quality issues. They can
make trade-offs between design features, part manufacturability, assembly
requirements, material needs, reliability issues, serviceability requirements, and cost
and time constraints. Differences are more easily reconciled early in design.
Getting the design correct at the start of the development process will reduce
downstream difficulties in the workflow. The need for expensive engineering changes
later in the cycle will be reduced. Concurrent Engineering aims to reduce the number
of redesigns, especially those resulting from post-design input from support groups.
By involving these groups in the initial design, fewer iterations will be needed. The
major iterations that do occur will occur before the design becomes final. The overall
time taken to design and manufacture a new product can be substantially reduced if
the two activities are carried out together rather than in series. The reductions in
design cycle time that result from Concurrent Engineering invariably reduce total
product cost.
Concurrent Engineering provides benefits such as reduced product development

time, reduced design rework, reduced product development cost and improved
communications. Examples from companies using Concurrent Engineering

techniques show significant increases in overall quality, 30-40% reduction in project
times and costs, and 60-80% reductions in design changes after release.
The implementation of Concurrent Engineering addresses three main areas: people,

process, and technology. It involves major organizational changes because it
requires the integration of people, business methods, and technology and is
dependent on cross-functional working and teamwork rather than the traditional
hierarchical organization. One of the primary people issues is the formation of teams.
Collaboration rather than individual effort is standard, and shared information is the
key to success. Team members must commit to working cross-functionally, be
collaborative, and constantly think and learn. The role of the leader is to supply the
basic foundation and support for change, rather than to tell the other team members
what to do. Training addressed at getting people to work together in teams plays an
important role in the successful implementation of Concurrent Engineering.
 An example of the use of Concurrent Engineering can be found in General

Electric's Aircraft Engines Division's approach for the development of the
engine for the new F/A-18E/F. It used several collocated, multi-functional
design and development teams to merge the design and manufacturing
process. The teams achieved 20% to 60% reductions in design and
procurement cycle times during the full-scale component tests which
preceded full engine testing. Problems surfaced earlier and were dealt with
more efficiently than they would have been with the traditional development
process. Cycle times in the design and fabrication of some components have
dropped from an estimated 22 weeks to 3 weeks.
 Another example concerns Boeing's Ballistic Systems Division where

Concurrent Engineering was used in 1988 to develop a mobile launcher for
the MX missile and was able to reduce design time by 40% and cost by 10%
in building the prototype.
 Polaroid Corp.'s Captiva instant camera is also the result of a Concurrent

Engineering approach, as a result of which Polaroid was able to make literally
hundreds of working prototypes. Throughout the process, development was
handled by cross-functional teams.
To be successful with Concurrent Engineering, companies should initially:
 Compare themselves to their best competitors (i.e. Benchmark)
 Develop metrics
 Identify potential performance improvements and targets
 Develop a clear vision of the future environment
 Get top management support
 Get cross-functional endorsement
 Develop a clear strategy to attain the envisioned environment
 Develop a detailed implementation plan
Concurrent Engineering is a business strategy, not a quick fix. It will take many years
to implement. If management doesn't have the time or budget to go through the
above steps, then it is unlikely that Concurrent Engineering will be implemented.
Many companies have problems introducing Concurrent Engineering. Warning signs

include:
 Unwillingness to institutionalize Concurrent Engineering
 Maintenance of traditional functional reward systems
 Maintenance of traditional reporting lines
 No training in teamwork

 Unrealistic schedules
 No changes in relationships with vendors
 A focus on computerization rather than process improvement
To make Concurrent Engineering a real success, all the necessary information

concerning products, parts and processes, has to be available at the right time. A lot
of partially-released information has to be exchanged under tightly controlled
conditions.
Innovation is widely regarded as the single most important ingredient in today’s

economy. But innovation as a destination isn’t enough.
Sustained innovation is a high-productivity state in which an organization strives to

innovate in all aspects of its business, including management, divisions, operations,
customers, and suppliers. It requires a seamless, structured management approach
that begins with board- and CEO-level leadership and connects all the way through
technology investment and implementation. Above all, sustained innovation is a
journey, not a destination. The enterprise doesn’t stop innovating after attaining one
goal; it’s engaged in a continual process of reinvention, invention, and discovery.
3 Principles for Sustained Innovation
Sustained innovation is powered by people who come together to share ideas,

compare observations, and brainstorm solutions to complex problems. Enterprises
with a strong focus on sustained innovation share three common principles that act
as the glue binding people together in productive collaboration. They are:
Converged disciplines: Ideas aren’t isolated; they’re celebrated in groups that

enable the entire organization to act as one entity. Of particular importance is the
convergence of business and technology management to ensure that no one unit or
division is missing the opportunity to capitalize on new ideas and possibilities.
Cross-boundary collaboration: No enterprise operates in a vacuum. Every

manager, employee, and contractor potentially has a piece of the puzzle to create a
new breakthrough business opportunity. Suppliers, partners, distributors, and

customers are an equally valuable source of information and ideas.
Innovative business structure: Not every organization can empower an

unstructured development culture like the Lunatic Fringe who led innovation at
groundbreaking tech pioneer Texas Instruments; most require structure that compels
convergence of disciplines, management, and operational units.
To bring these principles to life, enterprises operating with sustained innovation

focus on three distinct, intimately related practices that require
business/technology/management convergence to perform at a high level of
organizational maturity.
Building an innovation capability
Believing innovation is critical to your business is not equal to being innovative. Too
often, organizations under invest in developing a robust innovation capability that
lasts for decades and transforms the organization. Within each organization, there
are levers that can be pulled to institutionalize innovation, change mind sets and
combine with the appropriate tools to create innovation success.
Unfortunately, there is no standard blueprint for innovation that can be simply

adopted. Each company has different goals and objectives for innovation, different
systems, processes and constraints. Developing the right capabilities that match
(and possibly change) an organization’s aspirations, values and culture is critical for
delivering innovation results.
Implementing this capability includes removing the barriers and instilling new
behaviors that change the culture and embeds innovation in the organizational
fabric. Creating change comes from innovating in new ways and communicating the
results, not the other way round.
Outcomes
 Visibility of barriers to innovation
 Assessment of your current “innovation system”
 Engaged employees and innovation teams who have the skills to innovate

 Metrics and incentives to allow this capability to function and develop over
time
 Innovation practices and approaches that are based on proven principles
 Processes, systems and organizational structures that support innovation

results
Figure 3-1: The process of birth of innovation until it is removed from sales
Life is complex and machines are complicated. By “Complex” we mean un-linear

systems while “complicated” systems are linear.

Figure 3-2: An innovation project transforms into a business process when it has
passed the Un-ordered domain in figure 3-1
Discoveries in figure 3-1 are often the result of research in physics, medicine,
chemistry and biology. Such discoveries transformed into possible technological
solutions are in general seen as a technology push. The origin of a new product can
also be the result of development done by an inventor. Independent of source,
innovative development is needed to make a commercial product. From when the
products have been sold and taken in use, reengineering takes place to ensure that
the market need for the products is cultivated as long as the products are not
regarded as old-fashioned by the market. Reengineering is, in general, easy to plan
and the returns on investments can be calculated, which is often the opposite to the
situation where innovative development is concerned. The PLC varies from about 6
months for games to 20 or more years for some mechanical products.
When the innovation push results in sales taking off and the establishment of a
market need, it is important in the production process to develop and follow strict
rules in order to minimize uncertainty, and to avoid disturbances and negative
chaotic situations. However a strong market tendency is to get ever more individually
designed/composed products. Thus the market pushes the industrial process to be
increasingly flexible, which means an unstable and heterogeneous situation for the
industry.

To cope with the situation of flexibility and stability, chaos and order, revolution and
evolution, two organizations living side by side are needed. For unique activities –
such as new product development, production development, and new business
development - the project organization is required for “drawing up the map”. To draw
up the map means to reflect on and to learn from what is experienced from different
tests as one has to deal with complex (unforeseeable) situations until a stable
situation is reached. On the other hand, for repetitive work, such as mass production,
one has to deal instead with foreseeable situations, which can be complicated but
which seldom are complex. Thus, for stable/plannable situations a process
organization is required symbolized by “following the map”. While it is natural how to
integrate the result of a change project into a process it is quite a tricky thing, to
know how and when to integrate an innovation into the process of a company.
Sometimes the business would be better off if innovations were to result in a
separate company rather than trying to get them accepted in the process
organization. Figure 3-3 shows in principle how a sustainable enterprise should deal
with the activities for the future – projects - and the daily bread and butter activities –
the process.
Figure 3-3: In a sustainable enterprise, processes and innovation projects live side
by side with each other while change projects and improvement projects live totally
or partly inside the process

Organization Learning and Knowledge Management
Figure 3-4: Knowledge and know-how is generated due to many factors of which
some important ones are shown in the figure. Solutions in the figure are e.g. models,
prototypes, manufactured products, etc.
The nature of artifacts & solutions is often difficult to understand as it is quite

complex. The knowledge we acquire and the simplified theories we develop are
normally stored in different ways, as in books, on files available on the web, etc.
Depending on our own knowledge some stored information can be difficult to
understand and evaluate. Other information is difficult or impossible to access as it
can be qualified as secret material.
Every development process is both an iterative knowledge generation process and

an iterative never ending information generation process. By going through stored
information over and over again and by communicating with other people we can
iteratively improve our knowledge.
As figure 3-4 shows, one important way to extend ones own knowledge is to collect
and process information from other people through communication with them.
Common for all information is that it can – and is – manipulated to be what is should
be - for good or bad reasons - wants it to be. Also reality is constructed from our
thoughts of reality and there is no reality until that reality is perceived. Instead, reality
depends upon our choices of what and how we choose to observe. These choices,
in turn, depend upon our minds or, more specifically, the content of our thoughts and
our mood, intentions, interest, our expectations, our desire for continuity, etc.
To deepen our understanding and knowledge of a “signaling” object or phenomena

we also can - and must often - manipulate it or the environment around the object to
see what kind of reactions we get from our different manipulative actions. To help us
notice and evaluate e.g. weak signals we can also take help from “machines” that
have been programmed to give us wanted information. We prefer often to call such
information “artificial” implying that machines can think in a similar way as human
beings do, which is not possible.
Knowledge management has become a well known term. But the real challenge
facing most companies is that of faster innovation. Creating the system within which
ideas are created and applied is more than management. It is a matter of strategy
and leadership. That's where Knowledge Innovation comes to the force. Innovation
embodies the concept that innovation is the one competence needed for the future. It
addresses all the fundamental management dimensions in the process of innovation
- the creation and conversion of ideas into viable commercial products in addition to
building a foundation for future sustainable growth. It recognizes that knowledge is
the core component of innovation - not technology or finances per se. Nurturing and
managing the flow of knowledge may be the most distinctive competence of the
decade. Knowledge and creativity are now the major driving forces behind
pioneering companies that are achieving competitive edge crucial to competing in
today‟s economy. Innovative Knowledge Management: Concepts for Organizational
Creativity and Collaborative Design provides a valuable resource for promoting
current academic discourse on Innovation in knowledge-intensive organizations and
contexts. A defining collection of field advancements, this Premier Reference Source
creatively showcases wide-ranging issues relevant to the use of knowledge
management. This paper explore about the links between knowledge management
and innovation.
Diffusion of innovation:
Diffusion of innovation research was first started in 1903 by seminal researcher

Gabriel Tarde, who first plotted the S-shaped diffusion curve. Tarde (1903) defined
the innovation-decision process as a series of steps that includes the following:
1. First knowledge
2. Forming an attitude
3. A decision to adopt or reject
4. Implementation and use
5. Confirmation of the decision
Once innovation occurs, innovations may be spread from the innovator to other
individuals and groups. This process has been proposed that the life cycle of
innovations can be described using the‟s-curve' or diffusion curve. The s-curve maps
growth of revenue or productivity against time. In the early stage of a particular
innovation, growth is relatively slow as the new product establishes itself. At some
point customers begin to demand and the product growth increases more rapidly.
New incremental innovations or changes to the product allow growth to continue.
Towards the end of its lifecycle, growth slows and may even begin to decline. In the
later stages, no amount of new investment in that product will yield a normal rate of
return The s-curve derives from an assumption that new products are likely to have
"product life"—i.e., a start-up phase, a rapid increase in revenue and eventual
decline. In fact the great majority of innovations never gets off the bottom of the
curve, and never produces normal returns.
Innovative companies will typically be working on new innovations that will eventually
replace older ones. Successive s-curves will come along to replace older ones and
continue to drive growth upwards. In the figure above the first curve shows a current
technology. The second shows an emerging technology that currently yields lower
growth but will eventually overtake current technology and lead to even greater
levels of growth. The length of life will depend on many factors.
Innovation and Enterprise
Companies have a fairly predictable life cycle. They start with an innovation, search
for a repeatable business model, build the infrastructure for a company, then grow by
efficiently executing the model. Over time, innovations outside the company
(demographic, cultural, new technologies, etc.) outpace an existing company’s
business model. The company loses customers, then revenues and profits decline
and it eventually gets acquired or goes out of business.
Over 15 years ago, Clayton Christensen observed that there are two types of
innovative strategies for a large company – sustaining and disruptive innovation. He
believed that large companies handle sustaining innovation – evolutionary changes
in their markets, products, etc. valued by their existing customers – fairly well. But
most large companies find it hard to deal with disruptive innovation – radical shifts in
technology, customers, regulatory changes, etc, that create new markets.
If we use our “startup to large company,” diagram, we can see that sustaining
innovations occur within a large company’s existing management structures.

Yet most research has shown that disruptive innovation, that is innovations that go
after new markets, new customers, new technologies, etc. are best built outside a
large company’s existing organization.
This type of organization is best for finding new niches in existing markets or creating
entirely new markets. Why? Disruptive innovation in a large company is attempting
to solve two simultaneous unknowns: the customer/market is unknown, and the
product feature set is unknown. Just like a startup.

SELF CHECK 3 WRITTEN TEST
Q1. Explain the importance of planning the innovation process?
Q2. Elaborate on the different models of innovation? Briefly mention on the three
pillars?
Q3. Write a note on concurrent engineering?
Q4. What is the importance of innovation implementation to a organisation.
Q5. What do you understand by strategic innovation?

SUMMATIVE ASSESMENT
Answer all questions. Each question carries 100 marks
1. What is innovation?
2. How is innovation different from invention?
3. What role does basic research play in innovation
4. What role do managers play in nurturing innovations within organizations?
5. What are the sources of innovation as per Peter Drucker?
6. List the most disruptive innovations seen in the last 5 years
7. Illustrate with examples how companies build products and brands through
sustainable innovations?
8. What is innovation Planning Process
9. Chart the course of an invention of the 20th century – and illustrate how
innovations around this invention helped in consumer adoption
10. Discuss the role that innovation plays in entrepreneurship

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E LEARNING MODULE

FDDI/ FSBM/IM/2017 Page 1

MANAGEMENT, ENTREPRENEURSHIP & PROFESSIONAL SKILLS COUNCIL

FDDI/ FSBM/IM/2017 Page 2

1. Innovation : Definition, Types, Scope Importance

1. Read the specific objectives of this Learning Guide.

2. Read the information written in the “Information Sheet 1”.

4. If you earned a satisfactory evaluation proceed to “Information Sheet 2”.

6. If you earned a satisfactory evaluation proceed to Information Sheet 3.

7. Read the information written in the “Information Sheet 3-7”.

FDDI/ FSBM/IM/2017 Page 3

FDDI/ FSBM/IM/2017 Page 4

This course provides for an in-depth understanding of advertising , as a specialized

1) develop an understanding of advertising concepts and strategies, the methods

FDDI/ FSBM/IM/2017 Page 5

Innovation is essential for business survival in highly competitive markets where it is

• It allows businesses to expand their customer base by refreshing the market

• It is a key component of competitive advantage and helps companies stay

• It supports the ability to charge a premium

• It provides incremental revenue and profit and also increases shareholder

FDDI/ FSBM/IM/2017 Page 6

Unfortunately there is no single accepted definition of the term “Innovation”. For

Innovation is defined simply as a "new idea, device, or method. However, innovation

To be called an innovation, an idea must be replicable at an economical cost and

An object, process, or technique which displays an element of novelty

 The act of introducing something new: something newly introduced

 The successful exploitation of new ideas

 A creative idea that is realized

Innovation is the entire process by which an organization generates creative new

According to Rosabeth Kanter, “Innovation is the generation, acceptance and

FDDI/ FSBM/IM/2017 Page 8

Strategic Importance of Innovation:

For both established organisations as well as new organisations, innovation and

Three basic types of innovation are:

(ii) Process and

Process innovation involves creating a new way of producing, selling or distributing

Administrative innovation occurs when creation of a new organisation design better

FDDI/ FSBM/IM/2017 Page 9

Technology and Innovation:

Technology is defined as the systematic application of scientific knowledge to a new

“Innovation is a change in technology”. When we find a better product, process or

In contrast, product innovations are changes in the actual outputs themselves.

Managing technology requires that managers understand how technologies emerge,

FDDI/ FSBM/IM/2017 Page 10

iii. Third, it must be possible to convert the scientific knowledge into

v. Finally entrepreneurial initiative is needed to identify and put all the

The diffusion of technological innovations:

For successful diffusion of a new technology over a period of time it should

• Great advantage over its predecessor.

• Compatible with existing systems, procedures, infrastructures and ways

• Has lesser complexity than its predecessor.

• Can be easily tried and tested without significant cost or commitment.

• Can be easily observed and copied (or adopted).

1.3 PRODUCT AND PROCESS INNOVATION

Product innovation is the creation and subsequent introduction of a good or service

FDDI/ FSBM/IM/2017 Page 11

Provision of service. Product innovations in services can include significant

Design. Design is an integral part of the development and implementation of

FDDI/ FSBM/IM/2017 Page 12

Process innovation is the application or introduction of a new technology or method

A process innovation is the implementation of a new or significantly improved

Process innovations can be distinguished by production methods or delivery

Production methods. These methods involve the techniques, equipment and

Equipment and software changes. Process innovations can involve significant