3.9.2 Flashcards
What does innovation involve?
a business developing new products and processes to create products or distribute them to customers.
What are the 2 types of innovation:
Innovation through product development creates benefits for customers.
Process innovation can also help a business become more efficient.
What do both types of innovation increase?
competitiveness and this is why many businesses have to continually innovate.
There are significant pressures for a business to continually innovate:
- Political change - may alter regulations around products which open up new opportunities or force businesses to amend current products to meet the new requirements.
- Economic change - in an economic downturn there is pressure for businesses to improve efficiency and lower costs.
- Social change - trends and tastes are continually developing, meaning businesses have to keep up with consumer expectations.
- Technological change - as new technologies are developed, businesses face the challenge of keeping up to date in order to compete.
- Competitive change - as competitors innovate, businesses must be able to match this innovation if they are going to maintain market share.
A business must have a
culture of innovation. These issues must be accepted and encouraged within the company.
The leadership within a business must set
innovation as a priority, link innovation to the corporate objectives and make resources available to support it.
What is Kaizen in terms of innovation?
(continuous improvement) - Kaizen groups meet regularly to discuss and develop incremental improvements that can be applied across the organisation
- Kaizen brings together workers from across the organisation to work together on improvement.
What is intrapreneurship?
- Individuals are given time within their working week to develop their own ideas and work on innovative projects.
- ‘Intrapreneurs’ are then given support and authority to implement their ideas
- This encourages the development of intellectual property.
What is benchmarking?
- Managers may set a target based on best practice or a shining example from a similar business
- This is then set as the standard that the business must aim to achieve
- Benchmarking works well where there is collaboration between businesses or within an industry.
What is research and development?
In innovative organisations a considerable amount of money will be invested in research and development. Indeed, research and development may be built into an employee’s working week.
4 techniques to encourage innovative practices
- Kaizen
- Intrapreneurship
- Benchmarking
- R&D
It is possible for a business to spend too much time focused on innovation. Potential issues include:
- Innovation is constant change - sometimes a business might need to get good at what it does instead of going through a constant cycle of change.
- Innovation is no guarantee of success - time and resources can be wasted if innovation is not successful.
- First mover advantage - innovation can be expensive and other businesses can sometimes copy and reap similar benefits
The value of innovation:
Without innovation a business will lose ground on its competitors, leading to a loss of market share and possible failure.
Innovation may provide a business with a competitive advantage, but may also be a threshold requirement for it simply to maintain its place.
A business may improve competitiveness through
better quality, faster delivery, lower costs or improved service- innovation can influence these
A number of options are open to a business when trying to protect its innovations such as
designs, inventions, intellectual property and creative content.
4 ways to protect innovation
patent
copyright
trademark
design rights
What is a patent?
protects inventions and products if registration is successful
What is copyright?
literary work and creative content - no need for registration
What is a trademark?
product name, logo and jingles - registration required
What is design rights?
on styles, shapes and objects - no need for registration.
Disruptive innovation occurs where
innovation considerably alters a market. For example, digital photography or music downloads.
Disruptive innovation can cause significant problems for businesses
as they have to make the choice between adopting new technology, processes
and products or sticking with what they know. At these times disruptive innovation can result in some big questions being asked and major change within businesses.
Impact of innovation on marketing
Marketing must provide the drive for innovation within a business by identifying the needs of customers.
Impact on of innovation on operations
Operations managers may be responsible for developing new products or implementing process innovation to improve efficiency and reduce costs.
Impact of innovation on finance
Finance must make a long-term commitment to innovation through investment in R&D. Profits may also need to be retained in order to finance growth through innovation.
Impact of innovation on HR
Job design and working practices must encourage employees to be innovative. e.g. giving employees the opportunity for job enrichment and rewarding innovative ideas put forward by employees.
