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2017-2019
ABOUT INNOVATION
The process of translating an idea or invention into a good or service that creates value or for
which customers will pay. To be called an innovation, an idea must be replicable at an
economical cost and must satisfy a specific need. Innovation involves deliberate application of
information, imagination and initiative in deriving greater or different values from resources, and
includes all processes by which new ideas are generated and converted into useful products. In
business, innovation often results when ideas are applied by the company in order to further
satisfy the needs and expectations of the customers. In a social context, innovation helps create
new methods for alliance creation, joint venturing, flexible work hours, and creation of buyers'
purchasing power.
TYPES OF INNOVATION
Process innovation: is the adoption of new or significantly improved production methods. These
methods may involve changes in equipment or production organization or both. The methods
may be intended to produce new or improved products which cannot be produced using
conventional plants or production methods, or essentially to increase the production efficiency of
existing products.
Marketing innovation
It is an innovation that satisfies customer needs and develops a competitive advantage through
differentiation along one or more of the following Desired Product Features and Design, Size,
Usability, Quality, Time, Price ,Cost savings/ Incremental Revenues… in other words is the
implementation of new marketing method involving significant changes in product design or
packaging, product placement, product promotion or pricing.
Organizational innovation
It is the implementation of a new organizational method in the firm's business practices,
workplace organization or external relations. It can be intended European Scientific Journal June
to increase a firm's performance by reducing administrative costs or transaction costs, improving
workplace satisfaction
Incremental Innovation
Incremental Innovation is the most common form of innovation. It utilizes your existing
technology and increases value to the customer (features, design changes, etc.) within your
existing market. Almost all companies engage in incremental innovation in one form or another.
Examples include adding new features to existing products or services or even removing features
(value through simplification). Even small updates to user experience can add value, for
example below is an older version of Constant Contact’s email schedule page:
Disruptive Innovation
Disruptive innovation, also known as stealth innovation, involves applying new technology or
processes to your company’s current market. It is stealthy in nature since newer tech will often
be inferior to existing market technology. This newer technology is often more expensive, has
fewer features, is harder to use, and is not as aesthetically pleasing. It is only after a few
iterations that the newer tech surpasses the old and disrupts all existing companies. By then, it
might be too late for the established companies to quickly compete with the newer technology.
There are quite a few examples of disruptive innovation, one of the more prominent being
Apple’s iPhone disruption of the mobile phone market. Prior to the iPhone, most popular
phones relied on buttons, keypads or scroll wheels for user input. The iPhone was the result of a
technological movement that was years in making, mostly iterated by Palm Treo phones and
personal digital assistants (PDAs).
Architectural Innovation
Architectural innovation is simply taking the lessons, skills and overall technology and applying
them within a different market. This innovation is amazing at increasing new customers as long
as the new market is receptive. Most of the time, the risk involved in architectural innovation is
low due to the reliance and reintroduction of proven technology. Though most of the time it
requires tweaking to match the requirements of the new market.
In 1966, NASA’s Ames Research Center attempted to improve the safety of aircraft cushions.
They succeeded by creating a new type of foam, which reacts to the pressure applied to it, yet
magically form back to its original shape. Originally it was commercially marketed as medical
equipment table pads and sports equipment, before having larger success as use in mattresses.
This “slow spring back foam” technology falls under architectural innovation. It is commonly
known as memory foam.
Radical innovation
Radical innovation is what all of us think of mostly when considering innovation. It gives birth
to new industries (or swallows existing ones) and involves creating revolutionary technology.
The airplane, for example, was not the first mode of transportation, but it is revolutionary as it
allowed commercialized air travel to develop and prosper.
The four different types of innovation mentioned here – Incremental, Disruptive, Architectural
and Radical – help illustrate the various ways that companies can innovate. There are more ways
to innovate than these four. The important thing is to find the type(s) that suit your company
and turn those into success.
PRODUCT INNOVATION
A product innovation is the introduction of a good or service that is new or significantly
improved with respect to its characteristics or intended uses. These include significant
improvements in technical specifications, components and materials, incorporated software, user
friendliness or other functional characteristics. Product innovations include both new products
and new uses for existing products:
New products. These are goods and services that differ significantly in their characteristics
or intended uses from products previously produced by the firm. The first microprocessors
and digital cameras are examples of new products using new technologies. The first portable
MP3 player, which combined existing software standards with miniaturized hard-drive
technology, was a new product combining existing technologies.
New uses for products. The development of a new use for a product with only minor
changes to its technical specifications is a product innovation. An example is the introduction
of a new detergent using an existing chemical composition that was previously used as an
intermediary for coating production only.
Importance of product innovation
Increased Market Share: Innovation of a product that alleviates customer "pain points"
and disrupts the target market can greatly improve market share, which can enable
economies of scale and increase a company’s market power.
Increased Profit: Developing an innovative product that’s unique and superior to what
the competition offers can lead to profit growth. In fact, more than 90% of the world’s
100 most innovative companies have experienced positive sales growth due to
innovation, according to a recent Forbes report.
Success in Failure: The "failed" result of innovation for one target market can end up
being a disruptive and profitable innovation that can be applied to other markets.
Penicillin, plastic, saccharin, WD-40, and the pacemaker are key examples of
“successful” innovation failures/mistakes.
OBJECTIVE
1. To know the challenges and importance of product innovation in the present scenario
2. To show how product innovation can lead to competitive advantage
Literature review
Doherty .D(1992) reveals that new product development requires that technological and market
possibilities are linked effectively in the product design . The innovators in large firms face many
problems when these things are linked together. Also the organizational routines can be used to
solve these problems by innovative ideas and experiments.
Dannels .E (2002) study examines how product innovation contributes to the renewal of the firm
through its dynamic and reciprocal relation with the firm's competences. New products are
created by linking competences relating to technologies and customers, a typology is derived that
classifies new product projects based on whether a new product can draw on existing
competences, or whether it requires competences the firm does not yet have.
Utterback.J (2004) study examines how Entrepreneur-inventors and innovative firms tend to
become conservative and defensive in their approach as the market expands beyond their
imagination this is the point at which it becomes difficult for the firm, originally innovative, to
keep up with market shifts. Organic firms operate in an uncertain environment, so that
individuals must collaborate on frequent adjustments in a limited hierarchy with a rich flow of
communication. Mechanistic organizations, on the other hand, are characterized by rigid
coordination that establishes consistent routines, especially following the advent of a successful
corporate innovation. Firms must accept the inevitability of change by valuing innovation even
above past success, one of management's most essential roles is to find a balance between
supporting new and established innovations.
Cooper R. G. and Kleinschmidt E. J. (2003) this study shows how Management of the 1980s and
1990s faces a dilemma in product innovation. On the one hand, there is increasing pressure to
develop and launch more new products companies like Booz-Allen and Hamilton report that
firms expect new products to grow from 33% of corporate sales to 40% in the 198Os, and that
the number of new products introduced will double. On the other hand, product innovation
remains a very high-risk thing, fraught. New product failure rates remain high while almost half
the resources that U.S. industry devotes to product innovation is spent on innovation of products
that fail commercially or never make it to the marketplace.
Sawhney.M, Gianmario.V and Prandelli.E (2006) this study shows how In the world of
networking , firms are recognizing the power of the Internet as a platform for creating value with
customers. Firms are focusing on how the Internet has impacted the process of collaborative
innovation a key process in value co-creation. Study outline the distinctive capabilities of the
Internet as a platform for customer engagement, including interactivity, enhanced reach,
persistence, speed, and flexibility, and suggest that firms can use these capabilities to engage
customers in collaborative product innovation through a variety of Internet-based mechanisms.
Lukas B.A, Ferrell O.C(2000) On the basis of a sample of U.S. manufacturing companies, the
authors’ analysis shows that product innovation varies with market orientation. Specifically,
customer orientation increases the introduction of new to-the-world products and reduces the
launching of me too products, competitor orientation increases the introduction of me-too
products and reduces the launching of line extensions and new-to-the-world products, and
interfunctional coordination increases the launching of line extensions and reduces the
introduction of me-too products.
REASEARCH DESIGN
The research design is descriptive in nature.
The data and the information is going to be collected from primary and secondary sources.
How product innovation can help the company to gain the competitive advantage in the market
from its competitors.
What is the perception of the customers regarding the product innovation done by the company
and what is their response.
REFRENNCES
Doherty,D .(1992). Interpretive barriers to successful product innovation in large firms
Lukas. A.B, Ferrell .O.C (2000) , the effect of market orientation of product innovation