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INNOVATION

Innovation is the development of new values through solutions that


meet new requirements, inarticulate needs, or old customer and market needs in value adding new ways. This is accomplished through more products, effective processes, services, technologies, or ideas that are readily available to markets, governments, and society. Innovation differs from invention in that innovation refers to the use of a better and, as a result, novel idea or method, whereas invention refers more directly to the creation of the idea or method itself. Innovation differs from improvement in that innovation refers to the notion of doing something different rather than doing the same thing better.

ETYMOLOGY

The word innovation derives from the Latin word innovates, which is the noun form of innovare "to renew or change," stemming from in "into" + novus"new".

Why innovate?

Successful businesses are built on the premise of value, differentiation and competitive advantage. As Porter stated, essence of strategy is not doing something better than your competitors but doing something different - choosing a unique and reliable position that is rooted in systems of activity that are difficult for others to match. As definition stated, innovation is about bringing new ideas to market for value: value to the firm and to the customer.

TYPES OF INNOVATION: THE 4PS

Innovation is often in the eye of the beholder - what may be new and radical for one person, may be old news for another. Despite this subjectivity in identifying and classifying innovation, there has been useful work in thinking about the focus of different innovation processes, guided by the question: what is it that innovation processes seek to change and improve? The 4Ps model developed by John Bessant and Joe Tidd provide a powerful tool for such analysis. It builds on the hypothesis that successful innovation is essentially about positive change, and puts forward four broad categories where such change can take place:-

'Product innovation changes in the things (products/services) which an organization offers. 'Process innovation changes in the ways in which products and services are created or delivered 'Position innovation changes in the context in which the products/services are framed and communicated 'Paradigm innovation changes in the underlying mental models which shape what the organization does.

Product innovation:
Perhaps the most commonly understood form of innovation is that which introduces or improves a product or service a change in what is offered to end users. The Bic ballpoint pen is an example of a product innovation, which has also benefited from a range of incremental innovations since its original invention. The emblematic humanitarian product is food, which is the dominant form of assistance. Different forms of food aid might be seen as incremental innovations. There may also be innovative products which help to achieve humanitarian goals. For example, the Life Straw is a portable water filter developed by Vestergaard-Frandsen which enables individuals to drink clean water from almost any source. Another example is Pulpy Nut, a therapeutic food which is both durable and can be dispensed outside of traditional medical settings.

Process innovation:
Innovations can also focus on processes through which products are created or delivered. Because so many of the products used in relief settings are initially developed for non-relief contexts, a natural focus for humanitarian innovation is to consider how an existing product might be used in resource-poor or rapidly changing settings. Examples of process innovations that have had a positive effect on the humanitarian sector are the increasing stockpiling of goods in strategic locations, or the use of pre-made packs and kits.

Position innovation:
The third focus of innovation involves re-positioning the perception of an established product or process in a specific context. Position-based innovations refer to changes in how a specific product or process is perceived symbolically and how they are used. For example, LeviStrauss jeans are a well-established global product line, originally developed as manual workers clothing materials, but then re-branded as a fashion item. In the humanitarian context, position innovations include changes in the signals that are disseminated about a humanitarian organization and its work. This may relate to the way in which aid is marketed and packaged for potential donors. Alternatively, it may involve a repositioning of humanitarian assistance within a particular operational context or for particular users.

Paradigm innovation:
The final P relates to innovation that defines or redefines the dominant paradigms of an organization or entire sector. Paradigmbased innovations relate to the mental models which shape what an organization or business is about. Henry Ford provides a pithy quote, when talking about the development of the Model T motor car: If I asked people what they wanted, they would have asked for a fivelegged horse. Examples of paradigm innovation in the international humanitarian sector include an increasing emphasis on local ownership and leadership of responses to crises as an alternative to internationally dominated responses. A greater and more central role for aid recipients is another example, and finally, perhaps the most radical innovation is the idea of disaster risk reduction approaches, which if successful can negate the need for any kind of response.

LEVELS OF INNOVATION.
Incremental innovation:
Incremental innovation focuses on making modest improvements to existing processes, products or services. This could be anything from tightening up an existing workflow by automating some of the process, to improving your website in order to make self-service easier, thus reducing the number of customers coming to you through more costly and time-consuming channels.

Radical innovation:
Radical innovation involves creating a completely new process or product in response to a market need or opportunity. Radical innovations tend to come about as a result of careful research and development into a specific issue or problem, and frequently make use of new technology to solve them. These kinds of innovations are often seen as 'breakthrough' innovations, some of which can change the entire way an organization operates and, on occasion, can result in a new product or service that impacts an entire market sector.

Breakthrough Innovation:
This is a meaningful change in the way you do business that gives consumers something demonstrably new (beyond "new and improved"). Breakthrough innovation produces a substantial competitive edge for a while, although the length of time anyone can maintain such an advantage is growing increasingly shorter.

Behavior Driven Innovation


Bridging the innovation gap between brands and consumers:
Step into an aisle of any supermarket and youll understand the scope of the problem. Consumers have too many choices. Theyre faced with a growing number of SKUs (stock keeping units) that lack differentiation, in product categories that lack excitement. Coupled

with too many competitors and choices, consumers become disconnected. This leads to commoditization, in which consumers make choices based only on pricing. Its time to solve this endemic problem. We can bridge the gap by changing the focus of CPG (consumer packaged goods) innovation from incremental feature and attribute development to Behavior-Driven Innovation (BDI). With BDI, the innovation focus is on changing behavior with products that elicit the emotive connections that drive behavior and make products successful.

Consumer science and behavioral frameworks:


InsightsNows proven approach to research is grounded in the science of consumer behavior, uniquely applied using behavioral frameworks. The insights generated through these frameworks illuminate consumer choices based not just on functionality, but also on how products fit into consumers' lives emotionally and socially. BDI also enables researchers to better understand how consumers differentiate products based on emotional expectations, such as how they think the product will make them feel, or social expectations, such as how a product supports a social identity.

Exploring the science of behavior:


As behavior-driven product researchers, InsightsNow strives towards a broader understanding of how product qualities and features contribute to and fit with functional, emotional and social expectations. Exploring how brand messaging impacts these expectations and how product design lives up to them, we find innovative ways to achieve market differentiation. New opportunities to deliver a differentiated product experience emerge when we understand what experiential

qualities elicit specific feelings. By incorporating behavioral insights into the innovation and development process, companies build the bridge to the consumer. InsightsNow recognizes that to help companies reach consumers, researchers need to become more strategic in the innovation process. They need to bring a wealth of consumer information to the table earlier and open it up to the entire team. Researchers must identify emotive outcomes, the different ways emotive connections drive consumer behavior. Consumers seek and repeatedly use products to which they feel most connected. InsightsNow can identify the emotions driving these behaviors by integrating science and innovation. This can propel innovation by focusing marketing and product development around common feelings that elicit behavior.

Consumer Behavior Framework


InsightsNow has developed a structured approach for innovation guidance called the Consumer Behavior Framework. It guides the innovation process by linking marketing and product development decisions to specific emotive drivers of behavior. Moving from consumer qualities to situation context to experience to behavior levels, it identifies how functional, emotional and self-social identity expectations lead to or evolve from product experiences. This leads to a more strategic innovation approach by shifting the focus from learning needs, wants, benefits and desires to discovering how to elicit emotions that drive behavior.

Approaching innovation using a behavior-driven strategy:


InsightsNow believes that in order to increase new product success rates and accelerate time to market, CPG manufacturers need to invest more time upfront in a structured strategic development approach to product innovation. This approach, called Behavior-Driven Innovation (BDI), provides a structured framework for strategy development that is easily integrated into traditional innovation and development processes, such as Stage-Gate.

Integrating BDI with the Discovery Phase:


The BDI strategy is defined by linking business and innovation goals and focusing on areas most attractive and fitting with corporate strengths. It also establishes which consumer behaviors the innovation will strive to elicit.

Using BDI in Scoping Phase:


Here, BDI is used to develop insights into the consumer strategy through marketing research. Researchers locate unfulfilled and important jobs-to-be-done for the product, and segment consumers based on how and why products are used and the emotions that impact those experiences. These insights drive the innovation process, identifying product opportunities to elicit specific emotions that make consumers ready to act.

Business Case Phase and BDI:


During this stage, BDI helps define a behavior-driven product strategy and a matching research strategy. Brand owners characterize the consumer target, define the opportunity, determine product positioning, and establish success criteria. Behavior-driven methods apply marketing research to define targets and focus on eliciting the biggest emotional impact with the widest emotional REACH. The research strategy includes effort, timelines and costs expected for the product build stage. It outlines the development of a refined product concept and the translation of consumer language into technical requirements. This translation also informs research tactics, using relevant behavioral insights to guide developers rapidly through the product build stage.

Using BDI during the Development Phase:


BDI's structured approach to strategy development pays off through a process of rapid, iterative development. Early investment in strategy creates huge efficiencies, shortening timelines, reducing costly rework and minimizing the number of research iterations. By applying Behavior-Driven Innovation, CPG companies dramatically increase the odds for success. They can extend the competitive landscape, offering new opportunities for market differentiation. BDI helps companies better connect with consumers, bridging the gap between consumer and brand.

Diffusion of Innovation
Products tend to go through a life cycle. Initially, a product is introduced. Since the product is not well known and is usually expensive (e.g., as microwave ovens were in the late 1970s), sales are usually limited. Eventually, however, many products reach a growth phasesales increase dramatically. More firms enter with their models of the product. Frequently, unfortunately, the product will reach a maturity stage where little growth will be seen. For example, in the United States, almost every household has at least one color TV set. Some products may also reach a decline stage, usually because the product category is being replaced by something better. For example, typewriters experienced declining sales as more consumers switched to computers or other word processing equipment. The product life cycle is tied to the phenomenon of diffusion of innovation. When a new product comes out, it is likely to first be adopted by consumers who are more innovative than othersthey are willing to pay a premium price for the new product and take a risk on unproven technology. It is important to be on the good side of innovators since many other later adopters will tend to rely for advice on the innovators who are thought to be more knowledgeable about new products for advice.

At later phases of the PLC, the firm may need to modify its market strategy. For example, facing a saturated market for baking soda in its traditional use, Arm Hammer launched a major campaign to get consumers to use the product to deodorize refrigerators. Deodorizing powders to be used before vacuuming were also created. It is sometimes useful to think of products as being either new or existing. Many firms today rely increasingly on new products for a large part of their sales. New products can be new in several ways. They can be new to the marketno one else ever made a product like this before. For example, Chrysler invented the minivan. Products can also be new to the firmanother firm invented the product, but the firm is now making its own version. For example, IBM did not invent the personal computer, but entered after other firms showed the market to have a high potential. Products can be new to the segmente.g., cellular phones and pagers were first aimed at physicians and other priceinsensitive segments. Later, firms decided to target the more pricesensitive mass market. A product can be new for legal purposes. Because consumers tend to be attracted to new and improved products. The diffusion of innovation refers to the tendency of new products, practices, or ideas to spread among people. Usually, when new products or ideas come about, they are only adopted by a small group of people initially; later, many innovations spread to other people.

The bell shaped curve frequently illustrates the rate of adoption of a new product. Cumulative adoptions are reflected by the S-shaped curve. The saturation point is the maximum proportion of consumers likely to adopt a product.

In the case of refrigerators in the U.S., the saturation level is nearly one hundred percent of households; it well below that for video games that, even when spread out to a large part of the population, will be of interest to far from everyone. Several specific product categories have case histories that illustrate important issues in adoption. ATM cards spread relatively quickly. Since the cards were used in public, others who did not yet hold the cards could see how convenient they were. Although some people were concerned about security, the convenience factors seemed to be a decisive factor in the tug-of-war for and against adoption. Rap music initially spread quickly among urban youths in large part because of the low costs of recording. Later, rap music became popular among a very different segment, suburban youths, because of its apparently authentic depiction of an exotic urban lifestyle. Several forces often work against innovation. For example, birth control is incompatible with strong religious influences in countries heavily influenced by Islam or Catholicism, and a computer database is incompatible with a large, established card file.

Innovations come in different degrees. A continuous innovation includes slight improvements over time. Very little usually changes from year to year in automobiles, and even automobiles of the 1990s are driven much the same way that automobiles of the 1950 were driven. A dynamically continuous innovation involves some change in technology, although the product is used much the same way that its predecessors were usede.g., jet vs. propeller aircraft. A discontinous innovation involves a product that fundamentally changes the way that things are donee.g., the fax and photocopiers. In general, discontinuous innovations are more difficult to market since greater changes are required in the way things are done, but the rewards are also often significant. Some cultures tend to adopt new products more quickly than others, based on several factors:

Modernity: The extent to which the culture is receptive to new things. In some countries, such as Britain and Saudi Arabia, tradition is greatly valuedthus, new products often dont fare too well. The United States, in contrast, tends to value progress. Homophily: The more similar to each other that members of a culture are, the more likely an innovation is to spreadpeople are more likely to imitate similar than different models. The two most rapidly adopting countries in the World are the U.S. and Japan. While the U.S. interestingly scores very low, Japan scores high. Physical distance: The greater the distance between people, the less likely innovation is to spread. Opinion leadership: The more opinion leaders are valued and respected, the more likely an innovation is to spread. The style of opinion leaders moderates this influence, however. In less innovative countries, opinion leaders tend to be more conservative, i.e., to reflect the local norms of resistance.

It should be noted that innovation is not always an unqualifiedly good thing. Some innovations, such as infant formula adopted in developing countries, may do more harm than good. Individuals may also become dependent on the innovations. For example, travel agents who get used to booking online may be unable to process manual reservations.Sometimes innovations are disadopted. For example, many individuals disadopt cellular phones if they find out that they dont end up using them much.

Common Barriers to Innovation


There are many reasons that stand on the way to our ability to innovate. Here are some of the more frequently cited challenges and barriers to innovation. Organization and environment not supportive of innovation Traditional top-down management discourages front line empowerment and innovation Short term focus on execution with no time to think for the future Lack of resources, leadership and inadequate funding Organizational focus and value is on risk avoidance Lack of systemic innovation process Lack of end-to-end processes for bringing ideas to fruition Focus on immediate and unreasonable financial returns No incentives to innovate

Inappropriate measures for managing innovations No common definition of innovation and how to measure success Lack of effective communication between individuals, managers, various disciplines Lack of understanding and interaction with the customers, market and industry Too much specialization, and lack the ability to cross-pollinate ideas or make connections Lack of focus, vision and direction from management and leadership ranks Lack of focus and support on innovation by senior management No infusion of new ideas, new problems or learning opportunities Resistance to change

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