CHAPTER 1

DEFINITIONS OF INNOVATION
‘the implementation of a new or significantly improved product (good or service), or process,
new marketing method, or a new organisational method in business practices, workplace
organisation or external relations’

DIFFERENT FORMS OF “NEWNESS”

THE PROCESS OF INNOVATION

• EXPLORATION
It is where innovation begins and it is the most creative of the 3 phases, where a mix of
qualities are required ranging from originality, openness, creativity, and vision to
inquisitiveness, ingenuity, intuition, and the ability to improvise.

• EXPLOITATION
Is concerned with not with the search for things that are new and different but with the
commercialisation of potential new products and services that have been developed into
inventions as part of the exploration phase.

• DIFFUSION
Does not actually involve innovation directly. It is concerned with the rate at which an
innovation, once launched onto the market, is taken up and adopted by consumers.
 THE PHASES OF INNOVATION: EXPLORATION, EXPLOITATION AND
DIFFUSION

EXPLORATION
THE TRIGGERS TO INNOVATION

SCENARIOS FOR IDEA GENERATION

• Problem-related
• e.g. Ron Hickman and the ‘Workmate’ portable workbench
• Associative
• e.g. Karl Dahlman and the ’Flymo’ lawn mower
• Serendipitous
• e.g. Georges de Mestral and ‘Velcro’

SCIENTIFIC DISCOVERY
Concerned with scientific acquisition of knowledge. Specifically knowledge acquired through
observation and experimentation in order to understand and explain natural phenomena.

TECHNOLOGICAL BREAKTHROUGH
A breakthrough is an advance or improvement resulting in a product or service that enjoys
significantly improved performance. A technical or technological breakthrough is one that
involves the application or development of technology to create something that advances
capability or technique leading to improved performance.

INVENTION
Invention is a key part of the exploration phase. It is where ideas are turned into workable
inventions. This phase is typically characterised by much experimentation.
 EXPLOITATION
• Inventions, whether they are products of ideas, discoveries or breakthroughs, though
they may be of great interest to the technological community and on occasion attract
much public interest are actually of the only value.
• This is because they may be dramatic, they may be exciting, they may be product of
a great deal of hard work, but they only release value when consumers start buying
them.

THE FUNCTION OF BUSINESS MODELS

• Business model is an device that allows inventors to profit from their ideas and
inventions.
• Value creations refers to a series of activities that enable the user to recognise the
benefit and hence the value that they can gain from the invention.
• Value capture involves appropriating value from the activities undertaken by the
innovator (i.e. money).

THREE TYPES OF BUSINESS MODEL

• Incorporating the technology into the current business.
• License the technology to a third party (i.e. another firm).
• Launch a new venture to exploit the technology in new business arenas.
 DIFFUSION
• A key aspects of innovation is the way in which new products and services come into
use, that is to say are adopted by potential users.
• Indeed innovations that fails to catch on effectively fails to be innovations.
• Diffusion describes the rate at which innovations are adopted by consumers and
come into general use.
• Successful innovations are generally judged to be ones where the process of
diffusion is relatively rapid and widespread with the innovation proving popular and
widely used.
• Unsuccessful innovation suffer from very limited diffusion, being slow to catch on and
never gaining a wide following.

POSSIBLE PATHS OF DIFFUSION

FACTORS THAT INFLUENCE THE RATE OF DIFFUSION

• Relative advantage
• Compatibility
• Complexity
• Trialability
• Observability

DIFFERENT TYPES OF USERS THAT AFFECT DIFFUSION

• Innovators
• Early adopters
• Early majority
• Late majority
• Laggards
WHAT DOES INNOVATION INVOLVE? THE ATTRIBUTES OF INNOVATION
• Uncertainty and risk
• Trial and error
• Failure
• Fits and starts
• Perseverance
• Collaboration