What is Innovation

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Innovation is the process of carrying out an idea or invention.

Innovation versus Invention

Innovation should not be confused with the invention. The invention refers to the creation of a new idea or method. Innovation not only refers to the creation of an idea but also to its application in a production process that affects a good or service offered.

The invention does not include the application of the new idea in the productive field, while the innovation results in a new product or form of production.

Innovation versus Improvement

Innovation includes an improvement, but improvement is not necessarily innovation. An improvement is an incremental process, that is, it changes something that already exists, while innovation is revolutionary. Some examples of enhancements that are not innovations are:

– A change is a reaction to a competitor’s innovation.
– A change is a reaction to a change in consumer tastes.
– A change to adapt to the new prices of inputs.

With this, we do not want to belittle improvements in favor of innovation. An improvement can result in significant price changes and significant value-added improvements. In the same way, innovations can stop being validated by the market in a very short time and even be surpassed or copied by the competition very easily.

Continuous process

Once an innovation has been applied, there is still room for further improvement. The control of the results allows us to observe the performance of the innovation and look for possibilities of improvement. It is a continuous process of permanent improvement.

Similarly, you need to know when it is better to seek an innovation rather than continue to improve an existing innovation.

The innovation process

Idea

Innovations are born with ideas. It is not known to science some ideas where they come from, but we can say that in general, at the individual level, certain patterns favor creativity and imagination.

– Innovation may or may not be market-driven.
– Innovation can be an individual process or be carried out in a group.
– Many ideas arise when people are not carrying out their main work activity, but when they are in other situations, such as doing a hobby, on vacation, or traveling to work. Large innovative companies seek to generate an environment and work times that allow their employees to generate ideas and can pour them into organizations.
– Ideas do not come out of anywhere, but new ideas are the combination of existing elements. For this reason, many ideas emerge simultaneously in various parts of the world.

How to carry out that idea?

Many ideas fall by the wayside without being carried out. It may happen that an individual who has a brilliant idea cannot carry it out due to lack of resources or due to lack of a support team that has the human, material, and intellectual resources to carry it out. We have already mentioned some requirements to be able to carry out many innovations:

– Material resources: Many innovations require a large number of resources to carry them out. Having the appropriate material resources can mean an idea is transformed into innovation or not.

– Human resources: working as a team and taking advantage of the specialization of work, is key to carrying out many innovations. Innovations can be too complex for only one individual to carry out.

– Knowledge: we are not referring to the idea itself, but to the knowledge necessary to carry out this idea. For example, knowledge of production processes or knowledge of the operation of the market.

– Environment: An innovation can be successful in one country while in another it can be a failure, according to the tastes of consumers, their purchasing power, competitors in the market, the culture of the country and the organization, etc. Furthermore, intellectual property laws and the support of institutions can make it more feasible to innovate in some countries while in others there is a low level of innovation.

Market validation

The innovation results in products or services that have an effective demand by the market. In the case of companies, for-profit organizations, innovation has a measurable result, such as a higher profit margin or a greater market share.

By definition, the innovative process is high risk. The results are uncertain since the market may or may not validate an innovation. The risk inherent in innovations and their failure must be taken into account when planning organizational. The opportunity cost of not innovating must also be taken into account, as well as the risk of losing market share due to an innovation carried out outside the organization.

Summary and Conclusions

Innovation is a fundamental process in organizations. It is defined as the process of implementing new ideas and has the result of generating greater added value to existing production processes, reducing production costs, or offering new products or services.

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