The Innovation Concept Product innovation: a new product or a new service.
Process innovation: a new production method or process.
Organizational innovation: a new form of organization or management.
Delivery innovation: a new form of delivery or distribution. The Innovation Concept (Contd)
Market Innovation: a new form of marketing a general market behavior, including a different relationship with the state and the other parts of the public regularity system, or other of societys organizations or specific consumers.
Raw material innovation: use of a new raw material. The Innovation Concept (Contd) The types of innovation result in:
1. Creation of a new product.
2. Establishing a new delivery system.
3. Giving advantage over the competition.
4. Increasing productivity The Innovation Concept (Contd) Why innovation?
1. Market Saturation
Many markets have become saturated because people and firms have had most of their needs fulfilled. This makes it more difficult to introduce innovations in the market, and firms are forced to focus on many factors to develop more advanced innovations that have a chance of acceptance in the market. The Innovation Concept (Contd) 2. Customer orientation The customer has become a central actor and more sophisticated than ever before.
3. Increased importance of service Many firms add services to their products/services that they provide to their customers.
The Innovation Concept (Contd) 4. Flexibility and modularization: Production today has to be more flexible and modularized. This further means that process and organization innovations are becoming increasingly necessary.
5. Changes in society New political and ethical waves in society affect the consumers preferences.
The Innovation Concept (Contd) 6. Knowledge is more important
Innovation are becoming more knowledge- based even in services.
7. Technology is more important
In services, technology, in particular information and communication technology, has become more important as an innovation determinant. The Innovation Concept (Contd) The driving forces behind service Innovation
A. Trajectories 1.Technology trajectories Using technology which generally influence products and production processes. Examples are information and communication technology the wave and more specifically the internet, or the freezer and microwave oven which together have created a new distribution system within catering. The Innovation Concept (Contd) 2. Service profession trajectories Methods, general knowledge and behavioral rules (for example, ethics) that exist in the various service professions (for example, law, nursing, catering).
3. General management ideas or ideas for new organizational forms such as motivational systems, business process, reengineering, service management and so on.
The Innovation Concept (Contd) B. Actors Persons, firms, or organizations whose behavior is important to the firms ability to sell products and services and thus to their innovation activities.
The actors define market possibilities and are sometimes involved in the development of innovations. They may also be obstacles to innovation. The Innovation Concept (Contd)
Actors are:
1. Shareholders 2. Competitors 3. Customers 4. Public sector 5. Suppliers The Innovation Concept (Contd) The decision to innovate strategy as a modifying factor
The driving forces dont produce innovations. They produce the conditions for innovations and put pressure on the firm to innovate; but the firm itself must decide to innovate before innovations can be carried. The Innovation Concept (Contd) Strategy has two aspects:
1. The market guides the firms development
2. Management must make the decision whether to innovate or not and when to do it. The Innovation Concept (Contd) In the decision-making situation, management must look externally to see the nature of the market, and it must look internally to see the resources and capabilities that the firm possesses.
The Innovation Concept (Contd) A. External
1. External aspects of strategy The strategy expresses the market position that the management wants the firm to have in the future. The management does so on the basis of knowledge of its environment: a)Customers needs, preferences and problems b)Competitors behavior
The Innovation Concept (Contd) 2. Forms of strategy:
1. Offensive strategy Used when the firm decides to take a step forward in growth and development such as:
a. Product renewal, radical product innovations and the introduction of new quality standards. b. Professionalization, recruitment of new professionals c. Opening new markets, finding markets that never existed before. The Innovation Concept (Contd) 2. Defensive strategy: Used when the firm is in a good market position: it sells well, but the competition is increasing. In that situation, the firm will attempt to maintain its market position in the following way: a. Minor improvements of products, processes, organizationsetc, b. Price leadership, reducing costs and profits to sell. c. Merger and acquisition to create larger and more efficient units.
The Innovation Concept (Contd) B. Internal
The principal internal factors related to innovation management and constitute the scope of the firms innovation behavior. They are the basis for the managements decision as whether or not to innovate.