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The term innovation may refer to incremental, emergent, or radical and revolutionary
changes in thinking, products, processes, or organizations. Following the OECD manual, which
adopts the notion of innovation inspired by Schumpeter in 1930, contributors to the scholarly
literature on innovation typically distinguish between invention, an idea made manifest, and
innovation, ideas applied successfully in practice. In many fields, such as the arts, economics
and government policy, something better must be substantially different to be innovative.
In economics the change must increase value, customer value, or producer value. Innovation
is an important topic in the study of economics, business, entrepreneurship, design,
technology, sociology, and engineering.

Invention is the embodiment of something better and, as a consequence, new. While both
invention and innovation have "uniqueness" implications, innovation is related to acceptance
in society, profitability and market performance expectation. An improvement on an existing
form or embodiment, composition or processes might be an invention, an innovation, both or
neither if it is not substantial enough. According to certain business literature, an idea, a
change or an improvement is only an innovation when it is put to use, is accepted by users
and effectively causes a social or commercial reorganization.

In business, innovation can be easily distinguished from invention. Invention is the conversion
of business into ideas. Innovation is the conversion of ideas into business. Therefore, any
innovative activity has to take into consideration the underlying interdependencies as well as
the company´s competitive strategy. At any stage of development innovative decisions have
to be consistent with business strategy. Central factor of competitive strategy is the choice of
the market position and its realization.

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Depending on the degree of the internal “newness” of a particular innovation, and its degree
of external “newness”, we typically distinguish among the four different innovation types
shown in the figure in the slide. It becomes evident that radical innovations are in general the
most challenging, as they require new skills and competencies to be introduced into an
existing organization, as well as the building and/or conquest of new markets.

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In marketing, value, also known as customer-perceived value, is the difference between a
prospective customer's evaluation of the benefits and costs of one product when compared
with others. Value may also be expressed as a straightforward relationship between
perceived benefits and perceived costs:
Value = Benefits / Cost.
The customers get benefits and assume costs. Value is thus subjective (i.e., a function of
consumers' estimation) and relational (i.e., both benefits and cost must be positive values).
For a firm to deliver value to its customers, they must consider what is known as the "total
market offering." This includes the reputation of the organization, staff representation,
product benefits, and technological characteristics as compared to competitors' market
offerings and prices. Value can thus be defined as the relationship of a firm's market offerings
to those of its competitors.
Value in marketing can be defined by both qualitative and quantitative measures. On the
qualitative side, value is the perceived gain composed of individual's emotional, mental and
physical condition plus various social, economic, cultural and environmental factors. On the
quantitative side, value is the actual gain measured in terms of financial numbers,
percentages, and money.

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A value chain is a set of activities that an organization carries out to create value for its customers. Porter proposed a general-
purpose value chain that companies can use to examine all of their activities, and see how they're connected. The way in which
value chain activities are performed determines costs and affects profits, so this tool can help you understand the sources of
value for your organization.
Porter's Value Chain focuses on systems, and how inputs are changed into the outputs purchased by consumers. Using this
viewpoint, Porter described a chain of activities common to all businesses, and he divided them into primary and support
activities, as shown in the slide.
Primary activities relate directly to the physical creation, sale, maintenance and support of a product or service. They consist of
the following:
1. Inbound logistics – These are all the processes related to receiving, storing, and distributing inputs internally. Your supplier
relationships are a key factor in creating value here.
2. Operations – These are the transformation activities that change inputs into outputs that are sold to customers. Here, your
operational systems create value.
3. Outbound logistics – These activities deliver your product or service to your customer. These are things like collection,
storage, and distribution systems, and they may be internal or external to your organization.
4. Marketing and sales – These are the processes you use to persuade clients to purchase from you instead of your
competitors. The benefits you offer, and how well you communicate them, are sources of value here.
5. Service – These are the activities related to maintaining the value of your product or service to your customers, once it's
been purchased.
Support Activities support the primary functions above. In the diagram, the dotted lines show that each support, or secondary,
activity can play a role in each primary activity. For example, procurement supports operations with certain activities, but it also
supports marketing and sales with other activities.
1. Procurement (purchasing) – This is what the organization does to get the resources it needs to operate. This includes
finding vendors and negotiating best prices.
2. Human resource management – This is how well a company recruits, hires, trains, motivates, rewards, and retains its
workers. People are a significant source of value, so businesses can create a clear advantage with good HR practices.
3. Technological development – These activities relate to managing and processing information, as well as protecting a
company's knowledge base. Minimizing information technology costs, staying current with technological advances, and
maintaining technical excellence are sources of value creation.
4. Infrastructure – These are a company's support systems, and the functions that allow it to maintain daily operations.
Accounting, legal, administrative, and general management are examples of necessary infrastructure that businesses can
use to their advantage.
Companies use these primary and support activities as "building blocks" to create a valuable product or service.

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In marketing, value is restricted to value in exchange and is mainly expressed in monetary terms. Creation of value means
exchanging products or services for money.

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In the emergent Service-Dominant logic described by Vargo and Lusch (2004), the value
concept moves on and centres on usage. Value is thus driven by “value-in-use” instead of
“value-in-exchange” (Vargo et al., 2004). What is put on the market by companies
corresponds to a “value proposition” built in a supply network. Value exists only as
“potential” until the user experiments this potential; and then value is created. In this theory
of value considered as “value-in-use”, the customer is always the value creator and creates
value in his own sphere, before, during and after his “experience” and independently of the
provider (Grönroos, 2011).
Sustainable customer value puts the emphasis on the fulfilment of the final user’s needs
moving away from the focus on the means to the results. The “experience” or “satisfaction”
provided by the integrated offering prevails over ownership. The responsibility of the
provider moves to the satisfaction of the customer all along his use process because he is the
value co-creator. The revenue of the provider is dependent on customer satisfaction, which
becomes a major point to integrate in design considerations.

See : Trevisan et al, 2012 “Service Delivery and Co-Creation to support Value and
Sustainability in PSS design”, TES Conference, Cranfield 2012

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A value proposition is built by a supply network. Value is potential and will become real value during
the customer experience. The provider can join the customer in the process of value creation and then
value is co-created by both the customer and the provider. The co-creation process is defined as a
value creation sequence involving different stakeholders, such as supplier networks, customers, etc.
The supplier’s role in value generation is to facilitate the customer’s process of value creation and to
join it in a co-creation process (Grönroos, 2011).
Interactions between the supplier and the customer occur during usage and must be well-designed.
Value co-creation is a participative process where the supplier and the customer benefit from one
another. This means that the provider can receive value from the customer, which could be, for
instance, new knowledge. The customer perceives more value in use or gets better satisfaction. This is
often linked to the perception of a relationship during delivery and depends on the completeness of
the offer. Therefore, value co-creation is dependent on the quality of resource and management
competences within a network and also on the ability to learn from the users. Being connected to a
global network that includes resources, suppliers and customers enhances innovation and value
creation in the global knowledge economy (Johannessen and Olsen, 2010).
Efficient design enhances the co-creation process, so that they combine to meet issues of sustainable
value creation. Indeed, correct design will help organize the offer in a closed-loop approach supported
by learning and co-creation. It will also help to efficiently manage resources during usage. During
interaction with the customer the potential of the value proposition will be confronted with the reality
of value creation by facing the complexity of human behaviour. Success depends on the ability of the
provider to co-create value with the customer. This co-creation process corresponds to a win-win
relationship where customer behaviour must be understood and guided in a process where actors are
voluntarily involved and satisfied. Finally, sustainable value emerges from a life cycle perspective of a
production network and consumption activity.

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See : Trevisan et al, 2012 “Service Delivery and Co-Creation to support Value and Sustainability in PSS
design”, TES Conference, Cranfield 2012

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The Porter’s model for value creation is useful for identification of the different stages and
activities which can be targeted all along the value chain in order to add value to operations
and the final process outcome.
In step 1, for each primary activity we determine which specific subactivities create
sustainable value:
• Direct activities create value by themselves. For example, in a book publisher's marketing
and sales activity, direct subactivities include organizing promotional circles, alternative
book-sharing solutions and optimization of distribution.
• Indirect activities allow direct activities to run smoothly. For the book publisher's sales and
marketing activity, indirect subactivities include forming and managing the sales force and
collecting customer feedback and needs.
• Quality assurance activities ensure that direct and indirect activities meet the necessary
standards. For the book publisher's sales and marketing activity, this might include
proofreading and using recycled paper.

Sustainability must be assured for all these activities in the company in order to achieve
sustainable value creation.

Adapted from http://www.mindtools.com/pages/article/newSTR_66.htm

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In step 2, for each Human Resource Management, Technology Development and
Procurement support activities, determine the subactivities that create value within each
primary activity.
• For example, consider how human resource management improves enthusiasm and
professional consciousness while adding value to different activities like inbound and
outbound logistics, operations, …
• Keep check on stakeholder and societal values.
• As before, look for direct, indirect, and quality assurance subactivities.

Then identify the various value-creating subactivities in your company's infrastructure.

• These will generally be cross-functional in nature, rather than specific to each primary
activity. For example, waste collection and sorting, water and energy management, …
• Again, look for direct, indirect, and quality assurance activities.

Adapted from http://www.mindtools.com/pages/article/newSTR_66.htm

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In step 3 we have to identify links. Find the connections between all of the value activities
that you have identified.
• This will take time, but links are the key to enhance and promote sustainable advantages
in the value chain framework.
• For example, there is a link between managing the sales force (Human Resources) and an
efficient sale policy respecting the customer.
• There is another link between correctly organized distribution and the satisfaction of
customers waiting for delivery.
• Especially, identify links with all the stakeholders.

In step 4 we look for opportunities to increase value for society.

• Review each subactivity and link previously identified, and think about how you can
change or enhance them to optimize the value you offer to customers (customers of
support activities can be internal as well as external) and society.
• Balance internal values with customer and societal values in both short and long terms.

Adapted from http://www.mindtools.com/pages/article/newSTR_66.htm

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Efforts for introducing sustainability are often considered an “additional burden”, as they do
not translate into customer-perceived value
And the customer is therefore not ready to pay for them.
Therefore, Sustainable Management and Design must take into account:
• How to implement sustainable measures (e.g. in design, supply chain, management,
workforce) that translate into added value somewhere in the value chain?
• How can this added value be transferred to customers and society in a way that they
perceive and value it?
• This transfer can take several different forms, e.g.:
• Services, functional delivery,
• Internal and external image, self-esteem,
• Sustainable functions, acceptability, usage (appreciated by customers, society),
• Better future, social equity
In this sense, Sustainable Design will be the engine of innovation!

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It is widely known and accepted that preferring local food suppliers in supermarkets,
restaurants, caterings, etc. over distal suppliers can help reduce significantly environmental
footprint of food supply. This measure, however, is also an enabler for added value to
customers and society in general: it boosts local economy and ecology, leverages the direct
contact to food producers, and leads to fresher products with less chemical treatment and
thus lower contamination levels. Based on these added values we can envisage innovative
services that leverage the actual deployment of local food supply.

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If automatic detergent dispensing is selected, the washing machine helps to select the correct
dispensing container and detergent dosage. The washing machine calculates the required
amount of detergent with the help of the entered dosage, the laundry load detected, and the
specified level of soiling. The amount of detergent will be dispensed automatically during the
washing process. This measure, introduced mainly in order to reduce environmental impact
and improve the machine’s energy efficiency labelling, gives rise to numerous added-value
functions such as the automatic optimal dosing of the washing agent, no agent handling, and
of course lower energy consumption and cost.

BACKGROUND INFORMATION ON THE PROPOSED GREEN SEAL™ STANDARD FOR LAUNDRY

CARE PRODUCTS (2012)
Although the detergent industry can control impacts associated with the product formula,
manufacture, and packaging of detergents, it has no direct control on how the product is
used. LCA studies clearly indicate that the largest environmental damages are linked to the
products’ use and disposal – namely the wash temperature and the amount of detergent
used. Companies are doing what they can to indirectly reduce these impacts, with
demonstrated progress (formulas that can work effectively at low temperatures,
compact/concentrated formulas). The use of enzymes and bleach activators have made it
possible to wash at lower temperatures. Additionally, unit–dose packaging reduces the
consumer’s tendency to overdose. However, consumers have been resistant to adopt these
new innovations (cold water washing and unit dosing).
Unit-dose products or products in metered dispensing systems are important in reducing the
total chemicals used during washing. Institutional products offer a range of dilution control
systems (e.g., tablets, closed dosing) and are more advanced than household products.

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More and more cars (starting from the lower middle class nowadays) have an electric
steering system support. In this setup, the steering power support normally delivered by a
hydraulic pump driven by the combustion engine is provided by an electric engine. Initially,
the main driver for this was the fact that by eliminating the need for driving the hydraulic
pump permanently (even if steering support is not needed) by the combustion engine, a fuel
saving of up to 0,7 l/100 km can be achieved, which is highly significant both from the OEM’s
point of view (for meeting fleet fuel consumption limits) and from the end users’ point of
view.
Replacing the (passive) hydraulic pump by an (active) electric engine, however, enables
numerous new added-value functionality to be associated with the steering, e.g.:
• Active steering support with support torque depending on the vehicle speed and driving
situation;
• Parking support (semi-automatic to automatic parking function);
• Lane-assistant;
• Side-wind assistant;
• etc.

Further added values are in improved safety of the car, as well as in the provision of
fundamental functionalities to support future safety improvements.

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The drilling of deep holes (with typical applications in automotive and defense) with small
diameters poses the problem of the evacuation of the chip, which necessitates the drilling to
be done under high pressure lubrication leading both to pollution and productivity problems.
Vibratory drilling is characterized by the fact that instead of drilling in a stable area of the
Lobe diagram, the instable area is used in a very controlled way. The controlled vibration of
the drilling head leads to cutting the metal chip into small chips automatically, as well as
throwing these chips out of the hole as part of the drilling operation itself and without the
need of any additional actions, devices, or substances.
While this measure considerably reduces the environmental impact, it delivers significant
added value to customers and thereby acts as an enabler for innovation. The main levers for
adding value are the increased drilling speed (translating into higher productivity) and the
longer lifetime of the drilling head.

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