What it is
Innovation is the successful exploration of new ideas.”
The concept of innovation varies significantly, depending mostly on its application. In a succinct way, Inventta considers that innovation is the successful exploration of new ideas. And success for companies, for example, means increase in revenues, access to new markets, increase in profit margins, among other benefits.
Amongst the several possibilities to innovate, those referring to process or product innovation are known as technological innovations. Other types of innovations may be associated to new markets, new business models, new organizational methods and processes. Or even, new source of supplies.
People frequently mistake innovation and innovation processes for ongoing improvement and related processes. In order for innovation to be characterized as such, a significant impact on price structure, market share, company revenue, etc must be caused.
Usually, ongoing improvements are not capable of creating medium- and long-term competitive advantages. Instead, they maintain the competitiveness of the products in terms of cost only.
Types of Innovation
The different forms of innovation can be classified in a number of ways.
We highlight here two of those visions, as to innovation core purpose and its impact.
Innovation core purposes
Product innovation:
- It consists of changes to product attributes – and as a result, a change to the way the product is perceived by consumers.
- Example: automatic vehicles as compared to “conventional” vehicles.
Process innovation:
- It addresses the changes to the service or product production process. Not necessarily generating an impact on the final product, but producing benefits in the production process, usually with increase in productivity and cost reduction.
- Example: vehicles manufactured by robots as compared to human workers.
The different forms of innovation can be classified in a number of ways. We highlight two: as to innovation core purpose and its impact.”
Business model innovation:
- It considers the changes to the business model; that is to say, to the way the product or service is offered to the market. Not necessarily entailing any changes to the product or even the production process, but to the way it is taken to the market.
- Example: a vehicle is rented to a consumer, who then starts to pay a monthly fee for the use of the vehicle, plus insurance, maintenance and the right to change it for the latest model every year as compared to the traditional business model, in which the vehicle is sold.
Innovation impact
Incremental innovation:
- It reflects small ongoing improvements in products or product lines. Usually, they represent small advancements in the benefits perceived by consumers and do not change in a significant way how the product is consumed or the business model.
- Example: evolution from common CD to double CD, with capacity to store twice as many songs as the common CD.
Radical innovation:
- It represents a drastic change to the way the product or service is consumed. Usually, bringing about a new paradigm to the market segment, which modifies the business model in effect.
- Example: evolution from traditional music CDs to digital MP3 files.
The significance of innovating
Considering that innovations are capable of generating medium- and long-term competitive advantages, innovating becomes essential to the sustainability of companies and countries in the near future.
Those which innovate get in a position of significant advantage in relation to others.”
Innovation has the ability to add value to a company’s products – providing it, even though momentarily, with leverage in a competitive environment. Innovation is even more important in commodity markets; that is to say, markets with a high degree of competition and products which are practically equivalent among competitors. In this context, companies that innovate, either in an incremental or radical way, their products, processes or business models, have a competitive edge in relation to others.
Innovations are important because they allow companies to access new markets, increase their revenue, enter into new partnerships, acquire new knowledge and increase the value of their brands.
Obviously, innovation benefits are not limited to companies. For countries and regions, innovations generate an increase in employment and income levels, in addition to access to the globalized world. Innovations offer new products that are in turn capable of providing more benefits.
The dynamics of innovation
In general, companies are the center of innovations. They are the vessel of technologies, inventions, products, and ideas to be taken to the market. The vast majority of major companies have entire departments dedicated to innovation, with research & development (R&D) laboratories with a number of researchers. Regardless of the companies’ central role, interaction among partners is crucial. Without it, innovations are impaired.
Companies are the center of innovations. They are the vessel of technologies, inventions, products, and ideas to be taken to the market.”
These partners have a number of functions, from external research & development of products and processes, to application of investments or funds, to production scaling, market survey and prototype development.
Thus, a number of institutions create what we know as the innovation system: universities, research centers, fomentation agencies, investors, government and companies with their clients, suppliers, competitors or other partners.
A trend in the market which is growing strong is the open innovation model, where the companies go outside their R&D centers in search for ideas and projects which can help them to add competitive edge.
How to innovate
In order for companies to innovate they have (first and foremost) to become aware of the significance of innovating in the competitive scenario we face today. It is not possible to become an innovative company without giving the proper importance to the matter.
It is not possible to become an innovative company without giving the proper importance to the matter.”
Then, the companies must understand what innovation means and its dynamics. From then on, they can define a strategy which must be aligned with the organization’s objectives and its vision of future. Thus, we are able to identify another concept which is essential to companies willing to innovate: attention to the future is a crucial premise for innovation.
The next step is to develop and internalize management tools for the innovation process. These solutions shall be customized for each reality. To this end, the following aspects must be taken into account: company size, area of activity, organizational structure and culture, the system of agents in which the company is inserted, its vision of future and ambitions.
To help companies in the development of Technological Innovation Management models appropriate to their reality, Inventta offers a series of services ranging from seminars focused on the importance of the theme, to complex studies and analyses which help the organizations to structure all of their innovation actions.
The innovation subject is complex. It allows interpretations and also adaptations. Innovating consists of a series of technological, market and managerial competences.
The process of understanding the innovation concept and practicing it demands time, dedication and investments. However, we have noticed that companies which truly become innovation-oriented organizations have no regrets towards taking such road.
Going beyond
In case you are willing to take a deeper look into the subject, we suggest you read a number of articles, cases and news available at Innovation Radar. In addition to informing some of the main events in the innovation environment, the electronic vehicle provides recommendations on books, videos and events related to the area.
If you still have any doubts or wish to have additional clarifications, please contact us through this form.