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Assessing Innovation

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Business Studies

Starting and growing a business is as much about the innovation, drive and determination of the people who do it as it is about the product they sell."

- Elon Musk

Innovation is an important process for all businesses to adopt. Without innovation, businesses might eventually lose customers and market share to more innovative competitors. So how can businesses implement innovation into their overall strategy? Let's find out.

Types of Innovation

There are a couple of different types of innovation a business can pursue.

Innovation is a process. It is not something that a business does once or twice when innovation is necessary, rather, innovation is a continual process within the organisation. Innovation is a creative process that is undertaken by a firm to create new or develop existing ideas, processes and products - to add value.

Disruptive innovation is a form of innovation that makes very expensive or complex products accessible to a larger number of people. This type of innovation disrupts the market completely by making the business environment more competitive

Important Note: it is essential for all businesses to pursue innovation, as it can result in a sustained competitive advantage - helping the business stay competitive.

There are two main types of innovation:

  • Product innovation: when a business develops new products or services that were previously unavailable or did not exist. Completely new products are often developed in order to meet changing consumer wants and needs. Product innovation can also take form as the development of existing products - when existing products are modified (i.e. Better performance, easier to use, etc) in a way that adds value. Product innovation is useful for differentiating products from competitors' products.

  • Process innovation: includes improving existing processes to improve the efficiency of the business. An example of process innovation would be implementing a new system or equipment that increases the capacity and speed of production.

Innovation Assessment Strategy

Innovation can come from either inside or outside of the organisation.

Intrapreneurship

Intrapreneurship is a type of internal innovation - coming from within the organisation.

An intrapreneur is an individual (i.e an employee or manager) that acts like an entrepreneur, the only difference being that intrapreneurship comes from within an established organisation. The way intrapreneurship differs from entrepreneurship is that risks and rewards are taken and received by the established company rather than the entrepreneur.

De Jong (2016) argues that there are three main characteristics associated with intrapreneurship: risk-taking, innovation and proactiveness. A company can encourage risk-taking and innovation by allowing employees to work on personal projects that are unrelated to their current work projects and by creating smaller subunits or cross-functional teams that allow for a wider range of ideas and perspectives on tasks or projects.

Kaizen

Kaizen is a Japanese approach to business philosophy in which continuous improvement is implemented in order to facilitate efficiency and innovation.

The approach assumes that since employees are the most familiar with the day-to-day processes of the firm, they are most likely to notice issues. Therefore, the Kaizen method encourages employees to be creative in how to fix existing problems and come up with new ideas and processes. These changes tend to be small and do not require major investment to implement. This is where the idea of continuous improvement comes from - the innovation is incremental rather than disruptive.

The Kaizen cycle for innovation is as follows:

  1. Get all employees of the organisation involved.

  2. Outline and identify specific problems.

  3. Encourage solutions and choose a set of ideas.

  4. Test whether the ideas work as a solution to the problem.

  5. Continuously analyse the results of the test.

  6. If the results are positive, adopt the solution.

  7. Repeat each step continuously.

Research and Development

Research and development (R&D) is often used for product development. This is a process companies undertake to promote innovation. R&D can be an internal function of the company, where the company has a separate functional department set up specifically for R&D, or it can be external to the company. Research and development usually take place through the following process:

  • Market research: to assess and analyze the needs and wants of consumers. Has there been a change in demand? Are there any opportunities in the market that have not been addressed by current product offerings?

  • Development: During this stage, the initial product and prototypes are being developed.

  • Testing is when the prototype has been made and is being evaluated. Products can be tested by giving access to the prototype to a sample group of customers. The sample group then provides feedback on their experiences with using the product.

  • Place and promotion: finally, if the product is successful it will be distributed through specified channels and consumers will be informed about the product through promotional activities.

Protecting innovation

Innovation is intellectual property (IP) and can be protected through patents, trademarks and copyright.

Intellectual property refers to intangible assets or the creativity of the company (like ideas, processes, a brand name, etc). These can be legally protected to stay more competitive and reduce the threat of competitors.

Patents

A patent is granted to the inventor of an idea, process, design or invention for a period of time in exchange for the full disclosure of the invention. Patents are quite difficult to obtain as the invention has to be new and applicable.

Trademark

A trademark is any symbol, word or phrase registered to be representative of a company, brand or product. When a trademark is registered, it is legally recognized as representing the company or brand. A trademark has to be recognizable and distinguishable - to differentiate it from other competitor companies and brands.

The Apple or McDonald's logos are examples of a trademark.

Copyright

Copyright is used to protect artistic creations like music, videos, photography, writing, etc. Copyright is not something that an individual has to specifically apply for - it is granted automatically.

Assessing Innovation - Key takeaways

  • Innovation is a process. It is not something that a business does once or twice when innovation is necessary, rather, innovation is a continual process within the organisation.
  • Innovation is implemented to create and add value.
  • Disruptive innovation is a form of innovation that makes very expensive or sophisticated products accessible to a larger number of people.
  • Product innovation happens when a business develops new products or services that were previously unavailable or did not exist.
  • Process innovation includes improving existing processes to improve the efficiency of the business.
  • Intrapreneurship is a type of internal innovation.
  • Kaizen is a Japanese approach to business philosophy in which continuous improvement is implemented to facilitate efficiency and innovation.
  • Research and development (R&D) is often used for product development.
  • Innovation is intellectual property (IP) and can be protected through patents, trademarks and copyright.
  • A patent is granted to the inventor of an idea, process, design or invention for a period of time in exchange for the full disclosure of the invention.
  • A trademark is any symbol, word or phrase registered to be representative of a company, brand or product.
  • Copyright is used to protect artistic creations like music, videos, photography, writing, etc.

Assessing Innovation

Innovation in a business can be assessed through different methods like intrapreneurship, Kaizen and Research and Development (R&D).

Businesses may use the Kaizen cycle for innovation assessment. The steps include:


  1. Get all employees of the organisation involved.

  2. Outline and identify specific problems.

  3. Encourage solutions and choose a set of ideas.

  4. Test whether the ideas work as a solution to the problem.

  5. Continuously analyse the results of the test.

  6. If the results are positive, adopt the solution.

  7. Repeat each step continuously. 

Businesses should assess and pursue innovation as it can result in a sustained competitive advantage. It helps the business stay competitive and prevents the loss of customers and market share to more innovative competitors.

Final Assessing Innovation Quiz

Question

Innovation is: 

Show answer

Answer

All the above answers are correct.

Show question

Question

What is innovation?


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Answer

Innovation is a creative process that is undertaken by a firm to create new or develop existing ideas, processes and products - to add value.

Show question

Question

What is disruptive innovation?

Show answer

Answer

Disruptive innovation is a form of innovation that makes very expensive or sophisticated products accessible to a larger number of people.

Show question

Question

What are the two types of innovation?


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Answer

Product and process innovation.

Show question

Question

What is process innovation?


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Answer

Process innovation includes improving existing processes to improve the efficiency of the business.

Show question

Question

What is product innovation?


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Answer

When a company develops a completely new product or improves an existing product by adding value.

Show question

Question

What is intrapreneurship?


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Answer

Intrapreneurship is a type of internal innovation - coming from within the organization.

Show question

Question

Which of the following methods encourages incremental innovation?

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Answer

Kaizen

Show question

Question

What is the process behind the Kaizen approach to innovation?


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Answer

The approach assumes that since employees are the most familiar with the day-to-day processes of the firm, they are most likely to notice issues. Therefore Kaizen method encourages employees to be creative in how to fix existing problems and come up with new ideas and processes.

Show question

Question

What type of innovation is R&D most often associated with?


Show answer

Answer

Product development and innovation.

Show question

Question

Describe the process behind R&D innovation.


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Answer

  1. Market research

  2. Development

  3. Testing

  4. Place and promotion

Show question

Question

Name two ways in which intellectual property can be protected.


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Answer

Patents and trademarks.

Show question

Question

What is a patent?


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Answer

A patent is granted to the inventor of an idea, process, design or invention for a period of time in exchange for the full disclosure of the invention.

Show question

Question

Name an example of a trademark.


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Answer

A logo or a phrase representative of a company (example: Apple logo).

Show question

Question

What is copyright?


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Answer

Copyright is used to protect artistic creations like music, videos, photography, writing, etc. 

Show question

Question

What do we call a form of innovation that makes very expensive or complex products accessible to a larger number of people?

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Answer

Disruptive innovation

Show question

Question

It is essential for all businesses to pursue innovation, as it can result in a sustained ___ advantage - helping the business stay competitive.

Show answer

Answer

competitive 

Show question

Question

This type of innovation is when a business develops new products or services that were previously unavailable or did not exist. What type of innovation is it?

Show answer

Answer

Product innovation

Show question

Question

This type of innovation includes improving existing processes to improve the efficiency of the business. What type of innovation is it?

Show answer

Answer

Process innovation

Show question

Question

Implementing a new system or equipment that increases the capacity and speed of production is an example of...

Show answer

Answer

process innovation.

Show question

Question

A Japanese approach to business philosophy in which continuous improvement is implemented in order to facilitate efficiency and innovation is called...

Show answer

Answer

Kaizen

Show question

Question

What does R&D stand for?

Show answer

Answer

Research and Development

Show question

Question

What does IP stand for?

Show answer

Answer

intellectual property

Show question

Question

The Apple or McDonald's logos are examples of...


Show answer

Answer

a trademark.

Show question

Question

___ is used to protect artistic creations like music, videos, photography, writing, etc.

Show answer

Answer

Copyright

Show question

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What is the first step of the Kaizen cycle for innovation?

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Answer

Get all employees of the organisation involved.

Show question

Question

Intrapreneurship is a type of internal innovation - coming from outside the organisation.


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Answer

False

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Copyright is not something that an individual has to specifically apply for - it is granted automatically. 


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Answer

True

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Question

What is a general term for intangible assets or the creativity of the company (like ideas, processes, a brand name, etc.)?

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Answer

Intellectual property

Show question

Question

A ___ has to be recognizable and distinguishable - to differentiate it from other competitor companies and brands. 

Show answer

Answer

trademark 

Show question

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