understand

Innovation
in five minutes

© Gordon Graham 2008

What can you learn from this?
• What innovation is
• Why it’s important
• The types of innovation
• The degrees of innovation

© Gordon Graham 2008

 What is innovation?
Hundreds of similar definitions can be
found in the literature. Here is the one I
use, adapted from various sources:
“Innovation is the profitable
implementation of ideas.”

© Gordon Graham 2008

 A Broad, American Perspective:
"Implementing new ideas that create
value.”
- Innovation Network, U.S.A.

"The intersection of invention and insight,

leading to the creation of social and
economic value."
- U.S. National Innovation Initiative
© Gordon Graham 2008
 What about the Brits?

"The development of new ideas and their

economic application as new products or
processes."
- U.K. Dept. Trade and Industry

© Gordon Graham 2008

An innovation can increase profits
on the value side (customers value
an innovation enough to pay more
for it) . . .

© Gordon Graham 2008

. . . or the cost side (the company
produces a product offering in a
more efficient way).

© Gordon Graham 2008

Either way, value is created for the
firm and the consumer.

$
© Gordon Graham 2008
What are the essential ingredients,
or elements, of an innovation
ecosystem?
*
* * *
** *
* *
*
© Gordon Graham 2008
There are many. They are rooted in national
culture and can take years to develop:
Trust, Curiosity, Tolerance of Diversity,
Faith, Confidence, Lack of Fear, the Will to
a) make the world a better place and b)
wreck the status quo c) take risks and fail.

© Gordon Graham 2008

 Some firm-level elements include: a
written innovation strategy, a filter, an
innovation process, a rewards and
recognition system, humility, respect for
seemingly insignificant
technologies/competitors (healthy
paranoia) etc.

© Gordon Graham 2008

 An invention is different from an
innovation at any particular time in
that it doesn’t have commercial
value but . . .

© Gordon Graham 2008

. . . it may have in future.

© Gordon Graham 2008

Think of invention as the laying of
an egg, innovation as the laying,
incubation and hatching.

© Gordon Graham 2008

There is no shortage of ideas and
inventions in the world. The
challenge is to introduce these
successfully to a market.

© Gordon Graham 2008

Only then can the idea/invention be
called an innovation.

© Gordon Graham 2008

In other words, innovation requires
interplay between a product
offering (technology) and a market
(people).

© Gordon Graham 2008

Hard science + Social science.

© Gordon Graham 2008

A market can be inside or outside
the firm’s physical walls.

© Gordon Graham 2008

Why is innovation important?

© Gordon Graham 2008

Innovation reduces waste and
environmental damage.

© Gordon Graham 2008

Innovation creates growth,
increases productivity, and
economic wealth (avoids
stagnation).

© Gordon Graham 2008

Innovation provides better goods
and services at a cheaper price –
higher standard of living.

© Gordon Graham 2008

More interesting work for
employees.

© Gordon Graham 2008

Old strategies get replicated and,
consequently, margins get
squeezed.

© Gordon Graham 2008

 Survival!
Source: United Kingdom Dept. Trade and
Industry

© Gordon Graham 2008

What are the types of
innovation?

© Gordon Graham 2008

Numerous types . . .

© Gordon Graham 2008

. . . but all these labels just describe
where something new, better or
different occurs.

© Gordon Graham 2008

 BROADLY:

© Gordon Graham 2008

 Product
Process
Service
Business model
Value
Market

© Gordon Graham 2008

. . . and many more, depending on
level of detail. Basically,
innovation can occur anywhere in
the firm’s business by anyone. We
all have great potential!

© Gordon Graham 2008

 Note!
There is another type that needs to be
considered separately. This is “disruptive
innovation,” a term first coined by Clayton
Christensen. Disruptive innovation refers to a
firm’s strategy relative to other firms. Often,
low-cost business models and “good enough”
solutions/products for low-end and/or non-
consumers
© Gordon Graham 2008
The degrees of innovation.

© Gordon Graham 2008

Once again, many labels . . .

© Gordon Graham 2008

 . . . however, they all describe the
degree of change required by the
innovating firm and/or the market.

© Gordon Graham 2008

 Incremental (sometimes called
“continuous” or “evolutionary” or
“small”)

© Gordon Graham 2008

 Semi-radical

© Gordon Graham 2008

 Radical (sometimes called
“discontinuous” or “revolutionary”
or “big”)

© Gordon Graham 2008

 Incremental and radical
innovations need to be managed
differently.

© Gordon Graham 2008

 Here’s a quote:
"He who innovates will have for
his enemies all those who are well
off under the existing order of
things, and only lukewarm
supporters in those who might be
better off under the new."

Niccolo Machiaveli, The Prince

© Gordon Graham 2008
 Thanks!
I completed an MSc dissertation on
Innovation in Taiwanese/Chinese
companies active in multiple
international markets. Please feel
free to get in touch if your firm is
working in China, Taiwan etc., as
I’m interested in these areas.
Gordon@westportwire.com
© Gordon Graham 2008