Innovation innovate new products/services for the customer.

Innovation is an important tool in entrepreneurship. It
helps provide resources with a new capacity to create wealth.

2.1.1 Seven Sources of Innovation

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When we talk about innovation in a
systematic manner, we need to monitor the areas where we can innovate. These
areas are known as the sources of innovation. The first four sources lie within
the business or the industry. And the last three are sources from outside the
industry. These are

·        
The Unexpected Source

o   This
could be an unexpected success or failure of a product/service that leads to
innovation

·        
The Incongruity Source

o   This
comes from a difference between what a product/service actually is and what
everybody else assumes it to be.

·        
Innovation based on
process need

o   This
comes by redesigning the weak spots within the process of a business.

·        
Changes in industry
structure or market structure

o   Innovation
can also come from changes in the industry which push a business to find a new
way to make them successful.

·        
Changing Demographics

o   A
change in the demographics of the target customer can lead a business to
innovate new products/services for the customer.

·        
Changing perceptions,
mood or meaning

o   Over
time the people & population changes and so do their perceptions.
Innovations can arise from these changing ideas in the customer group

·        
New Knowledge

o   Any
new knowledge, scientific or non-scientific, can lead to a oath of innovation

2.1.2 Types of Innovation

Depending on the type of technology & market – existing
& new, we can categories four types of innovations.

Figure 1: Types of
Innovation

2.1.2.1 Incremental Innovation

This is the most common form of innovation. When innovation
takes place in an existing market with an existing technology, the innovation
is referred to as incremental innovation. It uses existing technologies to
improve a product/service being offered to the customers in an existing market.
Today, all companies utilize incremental innovation to improve their
business.  It can be a small change in
just the way the product is viewed by the customer. For example, it can be
introducing a new feature on an existing website.

2.1.2.2 Disruptive Innovation

Also known as Stealth Innovation, disruptive innovation is
when business uses a new technology to provide the customer with something new
in an existing market. It takes time for disruptive innovation to get
recognized by the market as the new technology is often difficult to
understand. Generally, disruptive innovation starts at the bottom of the market
& slowly captures the customers in the market. A great example of
disruptive innovation is the Apple iPhone.

2.1.2.3 Architectural Innovation

Taking existing technological knowledge and incorporating it
into new markets is called Architectural Innovation. The risk involved with
architectural innovation is very less as it relies on proven technology &
its benefits. The technology is then made to adapt to the expectations of the
new market.

2.1.2.4 
Radical Innovation

Radical innovation gives birth to new
markets and new technology. It creates something revolutionary. For example,
the creation of the airline industry involved the use of a new technology to
create a new market segment.

 

2.2        
Innovation Management

Innovation Management refers to managing every process that
leads to an innovation. It is used to develop innovation at all stages and in
all forms. It helps managers understand the progression of innovation & how
it will impact the business. It requires the use of various tools &
procedures to achieve innovation. It requires the managers to provide the
employees the resources need for gaining additional knowledge and for idea
generation.

Innovation management requires managers to depart from
traditional practices, principles & procedures. It changes the managers
view point regarding

·        
Goals

·        
Motivation

·        
Coordination

·        
Control

·        
Relationships

 

2.2.1 Importance of Innovation Management

When appropriate tools are used by managers, it can help generate
new ideas that can further help in the development of the business. Innovation
management can also help a business identify its strength and give the company
its competitive advantage in the industry. It can also help create a shift in
the industry and help the company in becoming an industry leader. A successful management
innovation can create a long term advantage for the company. 

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