• Innovation is the process and outcome of creating something new, which is also of value. Innovation involves the whole process from opportunity identification, ideation or invention to development, prototyping, production marketing and sales, while entrepreneurship only needs to involve commercialization

• Innovation = Invention + exploitation (Ettlie)

• A new way of doing things, which is commercialized. The process of innovation cannot be separated from a firm’s strategic and competetive context (Porter)

• Adoption of ideas that are new to the adopting organization

• Today it is also said to involve the capacity to adaptquickly by adopting new innovations (products, processes, strategies, organization, etc)

• Traditionally the focus has been on new products or processes, but recently new business models have come into focus, i.e. the way a firm delivers value and secures profits.

• Innovation is the application of better solutions that meet new requirements, inarticulated needs, or existing market needs. This is accomplished through more effective products, processes, services, technologies, or ideas that are readily available to markets, governments and society. The term innovation can be defined as something original and, as consequence, new that "breaks in to" the market or into society. One usually associates to new phenomena that are important in some way. A definition of the term, in line with these aspects, would be the following: "An innovation is something original, new, and important - in whatever field - that breaks in to (or obtains a foothold in) a market or society.

• While something novel is often described as an innovation, in economics, management science and other fields of practice and analysis it is generally considered a process that brings together various novel ideas in a way that they have an impact on society.

• Innovation differs from invention in that innovation refers to the use of a better and, as a result, novel idea or method, whereas invention refers more directly to the creation of the idea or method itself.

• Innovation differs from improvement in that innovation refers to the notion of doing something different rather than doing the same thing better.

• Innovate where you differentiate. Most organizations dissipate their energies by not focusing on the opportunities to set yourself apart from the competition. This should trickle down to every department and person. For any activity that is not a differentiator, you should optimize, automate, outsource, replicate or partner with others.

REQUIREMENT OF INNOVATION

• It’s all about the money;unresolved problems = financial losses and lost opportunities

• “Innovation is the most vital factor in shaping a corporation’s success throughout the coming years. For several decades, corporations have optimized products, processes and services for efficiency and quality; without losing control of quality, it is now time to innovate. Today’s corporate challenge is to unshackle its innovation capacity to control growth and profitability while achieving leadership in its targeted markets. Global-economic forces and financial constraints have made innovation-driven growth more essential than at any other time in history. Corporations face an unprecedented need to stay ahead of continuously accelerating global changes, unyielding pressure for rapid results, and fierce competition from corporations that are aggressively pursuing their own innovation-driven futures.”

This is the most often cited reason for needing

innovation. Innovation is the route to economic

growth. Industries are maturing. Products are

maturing. Innovation is the creation and

transformation of new knowledge into new products,

processes, or services that meet market needs. As

such, innovation creates new businesses and is the

fundamental source of growth in business and

industry.

Desire for higher business revenues

On the same side of the profit equation as cost is the revenue term. It is the most often neglected term, but it takes only a little insight to see that profits can be increased by increasing revenue. With costs reaching bottom and few opportunities to reduce them further, companies can turn to increasing sales. Marketing innovations come to mind here and do well to sell more of what you have to sell. But new products and services bring in new revenues too. Innovation sells.

Sony grabbed the recorded music market with the introduction of the compact disc. The Japanese gained advantage over the Swiss with digital watches. • Text processors, now computers, obsoleted Smith Corona's product, the typewriter.

Profit = revenue cost. The profit

equation shows that for profits to

grow, or even be maintained, you've

got to manage cost, even reduce it.

It is the most obvious way to grow

profits. And companies have been

doing this: with technology; by

downsizing; through re-engineering.

While U.S. companies have been

very good at squeezing the last

ounces of efficiency out of their

organizations and work processes,

and while companies have pared

their costs to the bone, many are

looking anorexic. These practices

simply allow you to stay in the

game, to stay in the business. They

alone are not enough.

It is no surprise that surprises,

often disappointing surprises, are

the seeds of innovation. Take the

oil companies. It is no surprise

that some oil companies are

becoming oil-and gas companies.

Why? Because gas is found more

often and in greater abundance

than oil is.

After the surprise and

disappointment of continued gas

finds, oil companies realized that

opportunity might be presenting

itself.

For a more constant flow of innovation

For some companies, it's feast or famine. They find

themselves either scooping up the wealth of new

ideas turned into new products or waiting for one to

arrive. Or pouring money into existing operations

with no visible new output. Or cutting back so hard

that

output is a trickle. Innovation and the deliberate

systematic management thereof can even out the

surges and slumps by providing a continuous stream

of ideas for the innovation pipeline.

FOR BUSINESS SURVIVAL