9.2 Assessing innovation Flashcards
What are the two ways innovation can be approached
- product innovation
- process innovation
What is innovation
The development of a new idea which leads to the production of a new product or service
Pressures for innovation
- social changes : increase the demand for innovative and advanced products to replace current products
- competition : increase a business’ focus on innovation as competitors seek to develop new products and services which will attract customers
What is product innovation
The development of new products which will be offered for sale
An example of product development
The development of new camera technology which improves the iPhone
What is process innovation
Improving the process of manufacturing or offering a product / service for sale to customers to add value, decrease costs or improve efficency
An example of process innovation
The development of a new factory production line which improves the production of cars
Advantages of innovation
- Improves portfolio, increasing market share, sales revenue and profit
- Improves processes, increases efficiency and competitiveness
- Develop a USP, improves competitiveness and customer loyalty
Ways to become innovative
- Kaizen
- Intrapeneurship
- Benchmarking
- R&D
What is a Kaizen approach
An approach to innovation:
- continuous improvements being made to a process so that over time it continues to evolve and develop
- requires the support of employees however they must feel passionate about helping the business improve
What is intrapreneurship
Individuals who have the characteristics of entrepreneurs but work within and contribute their entrepreneurial ideas to their employer instead of pursuing these on their own
- only lead to improvements if there is an accepting culture of employee contributions
- can motivate employees which supports engagement and retention
What is benchmarking
Identifying an area of expertise or specialism within the industry and using this as a foundation to inform and improve the business’ own process
- adopts industry best-practice
- assumes a business is able to implement processes from other businesses and this may be a challenge depending on the business, its expertise, and the wider industry
How does R&D help with innovation
Update and introduce products and services which are reactive to changes in customer demands and technological advancements
Benefits of benchmarking
- a firm can gauge what it is possible to achieve and compare this with its own level of performance : helps to recognise the potential for innovation
- data from other firms can provide ideas and inspiration for innovation
- identifies areas of a firm that are not keeping pace with innovation in competitors
- cost advantages through process innovation (more efficient methods and reduced waste) can improve competitiveness
Problems of benchmarking
- may encourage firms just to copy ideas for other firms
- may not be possible to introduce an innovation that has been successful
- lack of belief from staff who may be demoralised by the challenge of achieving a level of innovation they consider to be unrealistic
- difficulties in gathering reliable information: innovative firms can be very secretive
