Chapter 1: What Is Innovation – And Why Does It Matter? Flashcards
What is the origin of the word “innovation”?
The word “innovation” comes from the Latin word “innovare,” meaning change.
How is innovation defined in terms of management?
In management terms, innovation is defined as the process of creating value from ideas.
How does the case of Inditex exemplify innovation in the retail sector?
Inditex, through its retail outlets like Zara, pioneered a highly flexible and fast-turnaround clothing operation. It emphasizes close linkage between design, manufacture, and retailing, constantly gathering feedback from stores to generate new designs and experiment with new ideas directly on the public.
How does innovation vary in terms of novelty?
Innovation varies in terms of novelty, ranging from minor incremental improvements to radical changes that transform the way we think and use products or services.
Examples include updating car styling versus introducing a completely new concept car with electric engines and new materials, or increasing lathe speed versus replacing it with a computer-controlled laser forming process.
What is the analogy used to describe innovation’s impact on systems?
Innovation is likened to Russian dolls, where changes can occur at the level of components or the entire system.
For instance, changes in higher-level systems, like the shift from metal to plastic in car manufacturing, can have implications for lower-level components and processes.
How is value defined in the context of innovation?
In the context of innovation, value is defined as creating a product or service that others find useful and are willing to pay for.
This economic underpinning provides the basis for innovation, where entrepreneurs use new ideas to create “value propositions” that customers in the marketplace find valuable enough to purchase.
What are some examples of value propositions entrepreneurs use to drive innovation?
Entrepreneurs use value propositions such as cost-effectiveness, faster delivery, higher quality, and additional features to drive innovation and appeal to customers in the marketplace.
How does innovation contribute to social value?
Innovation can contribute to social value by addressing societal needs and challenges.
For example, Dr. Venkataswamy, an eye surgeon in India, focused on bringing quality eye care, specifically cataract surgery, to millions of Indians who couldn’t afford it.
By developing alternative methods and reducing costs significantly, his efforts through the Aravind Eye Clinics transformed the lives of millions, illustrating social innovation.
How does competition drive innovation in different sectors?
Competition drives innovation in various sectors by creating rivalry for markets or resources.
In the business sector, competition focuses on making products faster, cheaper, or with more features to gain a competitive edge.
In the public sector, competition involves challenges like providing high-quality healthcare or education without raising taxes.
Even in the third sector, including charities and humanitarian agencies, innovation is needed to address challenges like natural disasters or fundraising.
How does the pattern of innovation typically unfold in a particular sector?
In a particular sector, innovation typically consists of a mixture of occasional radical changes and long periods of incremental improvements.
Radical changes involve doing something different, while incremental changes involve improving existing processes or products.
This pattern includes periods of high-risk experimentation followed by stabilized and improved variations.
What is the significance of deliberate variation in innovation?
Innovation involves deliberate variation rather than random changes.
Organizations consciously experiment to cope with competitive and hostile environments, seeking opportunities or responding to threats.
This deliberate variation distinguishes innovation from random adaptation and is essential for driving progress and adaptation in various sectors.
What is an entrepreneur, and what role do they play in innovation?
An entrepreneur is an individual or group that identifies an opportunity and takes the risk of exploiting it.
They play a crucial role in innovation by driving change, creating value, and pioneering new ideas or technologies.
Joseph Schumpeter emphasized the importance of entrepreneurship in driving innovation.
How do entrepreneurs contribute to large established organizations?
Entrepreneurs within large established organizations propose and introduce changes to renew products, services, or operating processes.
While their names may not be as familiar, they work internally to innovate and rejuvenate the organization’s offerings.
What is the central idea regarding entrepreneurship and innovation according to the book?
The central idea is that entrepreneurship drives innovation to create both social and commercial value across the lifecycle of organizations.
This involves individuals or groups exploiting new opportunities, growing businesses, sustaining innovation, and ultimately leading to radical innovation to move forward as something different.
How does entrepreneurship vary in terms of motivation?
Entrepreneurial motivation varies, ranging from those primarily focused on creating commercial value to those driven by social concerns.
Social entrepreneurs, for example, are passionately concerned with improving or changing something in their immediate environment, while others may focus on exploiting new technologies or market opportunities for wealth creation.
What is one indicator of the importance of knowledge in innovation?
One indicator of the importance of knowledge in innovation is the significant investment in research and development (R&D), which currently amounts to approximately $1500 billion per year.
This underscores the value organizations place on acquiring and leveraging knowledge for innovation.
What is the challenge posed by the knowledge-rich world in terms of innovation?
In a knowledge-rich world, the challenge in innovation increasingly revolves around managing flows of knowledge within an increasingly global and networked space.
This challenge is often referred to as “open innovation,” highlighting the importance of collaboration and knowledge sharing across diverse networks for driving innovation.
