Innovation is one of the key concepts that are involved in business strategies. It can be defined as an ability to do something better or differently. Innovation is one of the key factors that have helped businesses become competitive in today’s market. Innovation is often defined as a “process of producing something new or of discovering something useful”. It has been defined by the Oxford Dictionary as “an innovative product, new invention, or a new approach to an existing problem”.
The first step to innovate is to define innovation. For many managers and business owners in the process of defining innovation can be a long and difficult process. To help them arrive at a common understanding of innovation, it is helpful to consider three different perspectives on innovation. These are formal innovation, functional innovation and disruptive innovation. Focusing on these perspectives can help business executives to determine the best way to achieve the goals of their firm. Here are some examples of forms of innovation that can be considered by a company.
Formal innovation is a radical change in the form or structure of an existing product or service. Examples of formal innovations include new designs for products, new processes for processes, new information technology, and major technological shifts. Examples of radical changes could include revolutionary new television sets, personal computers or communications systems. A disruptive innovation is a significant innovation that causes a significant change and is characterized by an innovation which disrupts an existing customer base, economic model or business practice. Examples of disruptive innovations include novel ways of delivery, microelectronic products or energy consumption systems.
Inventors are perhaps the most famous group that defines innovation. The definition of an inventor is “a person who produces something new or who makes an original contribution to the development of something existing”. Inventors are celebrated because they typically meet two criteria for true innovators – they must be able to show that their invention is unique and that it has particular advantages over earlier designs and that they have taken a risk to develop it. In addition, inventors need to be able to show that their innovation is useful and will produce specific results. Inventors are regularly awarded the Nobel Prize in Literature for their important inventions.
Value extraction and creation are the first two stages of creating new value in an invention. The term ‘value extraction’ refers to the process of bringing together raw materials and services that are needed to make the finished product. A good example of value extraction in engineering is the process by which an engineer designs a component part. Creating value in an invention means that an inventor has taken time and effort to identify a real problem that his or her product can solve and then devoted considerable time, effort and creativity to figuring out how to best solve that problem. It is also necessary for an inventor to bring together all the components of the creation process and to ensure that all the parts work well together.
Creating new value within an invention is sometimes referred to as capturing value. A valuable resource is an idea, product, process or technology that solves a problem but that consumers will pay for in some way. A great example of capturing value is an invention that develops computer chip technology. By providing instructions on how to put a chip into a computer, the inventor has created a valuable resource that people will pay for and they will be willing to spend money to get the chip, because it solves a problem.