A BRIEF EXPLANATION OF INNOVATION IN BUSINESS

1. INNOVATION

2. Meaning
 Innovation is the implementation of new ideas at the
individual, group or organizational level.
 A process of intentional change made to create value
by meeting opportunity and seeking advantage.
• Process: Innovation is a process (implying, among other
things, that it can be learned and managed).
• Intentional: That process is carried out on purpose.
• Change: It results in some kind of change.
• Value: The whole point of the change is to create value in
our economy, society and/or individual lives.
• Opportunity: Entrepreneurial individuals enable
tomorrow's value creation by exploring for it today: having
ideas, turning ideas into marketable insights and seeking
ways to meet opportunities.
• Advantage: At the same time, they also create value by
exploiting the opportunities they have at hand.

3. Definition
 According to Oxford English Dictionary – Innovation
means introduction of something new. Thus Innovation
can be defined as the introduction of a new product,
service or process into the market place.
 The National Innovation Initiative (NII) of USA defines
- innovation as the intersection of invention and
insight, leading to the creation of social and economic
value.
 ‘Innovation is celebration of creativity’, pronounced
Dr A.P.J. Abdul Kalam, the President of India
at Third Award Function of NIF (National Innovation
Foundation).
 Many definitions of Innovation
 To sum up…
Innovation = Invention + Commercial Exploitation

4. TYPES OF INNOVATIONS
There are four distinct types of innovation, these are as
follows:
 Invention - Described as the creation of a new product,
service or process. Something that has not been tried
before.
 Extension - The expansion of an existing product,
service or process. This would mean that the
entrepreneur takes an existing idea and applies it
differently.
 Duplication - Copying (replicating) an existing product
or service and then adding the entrepreneurs own
creative touch. In order to improve it.
 Synthesis - A combination of more than one existing

5. SOURCES AND TRANSFER OF
INNOVATION
 Unexpected occurrences : sometimes
unexpected success or failure prove to be a
major innovative surprise for the enterprise.
These happenings are normally anticipated and
unplanned.
 Incongruities : these occurs whenever a gap or
difference exists between the expectations and
reality. The gap motivates the entrepreneur to
innovate with all the more vigour.
 Process needs : these needs are created
whenever situation and surrounding
circumstances generate demand for the
innovation. Entrepreneurs are prompted to
innovate to satisfy the requirement of process
needs.

6.  Industry and market changes :changes in
consumer tastes, fashions, advancement in
technology result in change in structure and
design of product. These changes generate
tremendous opportunities for innovation and
improvements.
 Demographic changes : like changes in
population, education, occupation, urbanisation
etc, create entrepreneurial opportunities.
 Perceptual change : it is reflected in the change
in peoples attitude, feelings, interpretation.
Change in perception does not change, the object
or fact, but changes the meaning or attitude
towards the particular concept.
 Knowledge based concept : these are basis for
the development and creation of new products and
market. These are time consuming as these need
testing and modifications.

7. HOW TO INNOVATE
 Organise for paid experimentation : examine,
revamp entrenched routines, organizational
boundaries and incentives to encourage rapid
experimentation.
 Fail early and often but avoid mistakes :
embrace failures that occur early in the
development process and advance knowledge
significantly.
 Anticipate exploit early information :recognize
the full value of front loading, identifying
problems up stream, where they are easier and
cheaper to solve.
 Combine new and traditional technologies :
do not assume that new technology will
necessarily replace and established one. New
and traditional technologies are best used in
concept.

8. WHO INNOVATES
Educated individuals
Better equipped to deal with abstraction
More receptive to risk in general
Higher in achievement motivation
Higher in social participation
More often engaged in interpersonal
communication
Active information seeker