What is innovation? Definition and meaning
Innovation means thinking of and creating new ways of doing things – it is an important part of many successful businesses. Bringing innovation into your company can help save money and time, and can give the business a competitive edge in the marketplace.
According to business.gov.au, part of the Australian Government, innovation may refer to creating new products and ideas, or improving or creating more effective processes.
For a commercial enterprise, this might mean implementing new ideas, improving existing services, or creating dynamic products.
The innovations of these inventors dramatically changed the behaviour and lifestyles of most of the world’s population. Thomas Edison with the light bulb, Steve Jobs with the Mac, iPod, iPhone & iPad, the Wright brothers brought flight, Alexander Graham Bell invented the telephone, and John Logie Baird created the first television.
It can help trigger growth and make the business more successful, as well as making the business better able to adapt and thrive in the changing marketplace.
There is more to being innovative than just inventing, although it is a major feature. Somebody who changes his company’s business model is innovative, as is a management team that successfully adapts its firm to its environment so that it can better deliver products and services, or generate revenue.
All companies that innovate have some things in common – they have more efficient work processes, superior performance, and better productivity, compared to their non-innovative competitors.
According to the Financial Times Lexicon, innovation..:
“..involves producing new products and services, new business models, and new or improved methods for producing goods or services. Innovation is more than invention. It feeds commercial success, normally boosting efficiency and/or profits.”
Marie Skłodowska Curie (1867-1934) was a Polish-born, French physicist and chemist who was awarded the Nobel Prize twice. She is remembered for her discovery of radium and polonium, and her enormous contribution to the fight against cancer. She also defined the theory of radioactivity, a discovery that eventually killed her. She died from aplastic anemia believed to have been contracted from her long-term exposure to radiation. (Image: mariecurie.org.uk/who)
To qualify as innovation
Innovation refers to the process of turning an idea or invention into a product or service that creates value and for which consumers are willing to pay.
For something to qualify as an innovation, an idea must be replicable, economically viable, and satisfy a specific need.
In the world of business, innovation typically results when ideas are applied by the commercial enterprise in response to customer needs and expectations – the aim being to further satisfy them.
Sometimes getting rid of something may be classed as innovation. For example, discontinuing an out-of-date or inefficient service, process or service.
Goods that replace or build on current offerings, provide new features or other advantages that allow users to operate less expensively or more efficiently are innovative products.
Examples include the computer mouse, GPS navigation systems, the iPod, the motor car, and the electric light bulb.
The American Society for Quality says that these innovative products introduced radically new choices for customers – demand for them in the global marketplace grew dramatically, and made sizeable profits for their makers.
Having an innovation system within a company is crucial if it wants ideas to make it to the market. According to markproffitt.com: “The reason 88% of ideas fail to make it to market is companies have no system to turn ideas into marketable innovations. Even though 87% of CEOs list innovation as a Top 5 priority 78% of companies have no innovation system.”
The product might be a staple with a long product life cycle, or a commodity. It might be something we all consume such as milk, flour, or bread.
As far as competitiveness and long-term success are concerned, innovation is still crucial. Improving the processes related to their manufacture or delivery, and thus offering greater value to customers and stakeholders would be considered as innovation.
Half a century ago, there was usually someone at home during the daytime, so delivering milk door-to-door worked fine. There are too many households today with nobody in them during typical working hours, so, door-to-door delivery is an out-of-date system for people who want milk that has not turned sour or got stolen.
Winston Churchill once said: “Without tradition, art is a flock of sheep without a shepherd. Without innovation, it is a corpse.” (Image: churchillcentral.com)
Distributors of milk made their product available at grocers and quick-shop stores, which allowed consumers to pick up the milk in a way that suited their lifestyles. Today people can order their milk online and have it delivered when they are at home.
French chemist and microbiologist Louis Pasteur (1822-1895) invented the process for pasteurization, which made milk last longer. Pasteur’s process innovation, and some others, such as making milk available in powdered form, benefited customers and retailers.
Process innovation looks at how an existing product is made and delivered.
Bill Gates, co-founder of Microsoft, once said: “The tool that’s most associated with the recent progress against malaria is the long-lasting bed net. Bed nets are a fantastic innovation. But we can do even better. We can invent new ways to control the mosquitoes that carry the malaria parasite.” (Image: twitter.com/billgates)
Business model innovation
Sometimes, the way a company is set up so that it can make money – the business model – becomes obsolete, and new ideas are needed.
Innovation may involve radical changes to the whole structure of a business. Organizations and businesses that provide care are having to change and adapt rapidly as the use of home care grows and hospitalized care shrinks.
In a rapidly-changing market, companies without business model innovation do not survive, while those that have it are more likely to prevail and even thrive.
In the past, newspapers were delivered to shops and door-to-door – they existed in printed paper form. People paid money for a newspaper and businesses, individuals and other organizations advertised in them – that was how they generated revenue.
Today, printed-paper newspapers still exist, but a rapidly-growing number of people no longer read them. They get all their news from the Internet.
Online newspapers can charge for access, and can generate income from advertisers. However, advertisers want much more information today than simply how many readers a newspaper has. They want metrics – how many people each day saw their ads, how many clicked on them, where these people are, what socioeconomic groups they belong, to, etc.
Modern newspapers that do not adapt to these customer needs rapidly lose out to competitors that do.
Video – What is innovation?
This National Science Foundation video explains what innovation is. Whether it occurs among a team of students in a classroom or engineers in a lab, it is a process, a series of steps that starts with imagination, and results in the creation of something of value to society.