1. Defining and Understanding Innovation

An innovation is the creation (invention), introduction (launch), and successful difussion (adoptation) of services, goods, systems, processes, or business models that are new from the prespective of particular organization and or user. (not necessarily to the world)

Innovation is an invention that is succesfully adopted by the major

new, created through social process -> risky & complex -> conflicts and opportunities.

• The systematic management of innovation processes.

• It referes to product, process, and organizational innovation.

• It include a set of tools that allow the managers and engineers to cooperate with a common understanding of processes and goals.

• Product innovation: tangible output (a new product offering or variant)

• Service innovation: intangible output ( a new service offering)

• Process innovation: A way of company conduts new business (production, marketing)

• Performance-improving (sustaining) innovation: Replacement of obselecent/outdated products by a new generation (“improvements of merit”)

• Efficiency-improving innovation: Offering the same soultion for the same customers but with lower price (“low-end disruptions”)

• Market-creating innovation: Transformation of existing solutions in such a radical manner that new market is created (“disruptive business model innovation”)

The innovativeness of an innovation process is characterized by the number of elements in a system affected by the innovation and the resulting uncertainty in performing the innovation project and diffusing its outcome.

-> This can be seen as a result or objective of an innovation process.

• Product newness (from a functional perspective)

• Meaningfulness (Does the new product create a meaningful value)

• Requires rethinking of common norms and wisdoms

• Looking at something (products/services, processes, the way of doing things in everyday life) with a fresh perspective and questioning operating principles behind that.

• Coping potential: Will people adopt the innovation?

• Innovation always comes with gains and losses for customer

o   Gains: Time savings and flexibility, (presumably) safety

o   Losses: Reduced control over vehicle, lack of driving experience, lack of driving skills.

Sweet spot at moderate incongruity → moderate coping potential and motivation. At the sweet spot the consumer response is at the highest. Here, the new product is perceived as interesting and on the other hand not overwhelming. So, this the middle ground for the consumer to response to the new product at its best.

o   Gains: Time savings and flexibility, (presumably) safety

o   Losses: Reduced control over vehicle, lack of driving experience, lack of driving skills.

• Demand: Saturation of basic needs, increasing individualization

• Competition: Increasing liberlization, increasing globalization, Need for differentiation

• Input efficiency: Increasing supply scarcity, shifting price relation, changing values of employees.

• Technological progress: Nanotechnology, laser technologies, additive manufacturing

• Social demands: environment, social needs, consumer safety

1. Innovation resulted from a frustrated user which is not a systematic process.

   • The innovation is happening anyway, the companies need to capture the external input.

   • Focus on managing this inflow of external input

   • User innovators profit from using their innovation.

2. Innovation is a dedicated firm activity which is a systematic process of different stages.

   • Managing the risks of innovation uncertainty

   • Focus on internal creativity and problem solving

   • Manufacturer innovators profit from selling the innovation

   • Create concepts internally, managed process run by innovation team (Market research → Voice of the customer, Creativity techniques)

Atypicat design features will take longer time to realize the benefits but may result in higher profit in the long-term.

• Needs & preferences of users and customers.

• Which benefits shall the innovation provide?

• Which problem shall it solve?

• Explicit latent information

• Access to right information affects “fit to market”

• Technical knowledge. How can a need be a transferred into a product/service?

• What is the principle behind the need?

• Information is often available, but needs to be located.

• Access to right solution information affects time-to-market and cost-to-market

Knowledge and creativity are imporant for successful innovation.

Creativity alone is not enough. Engaging in Search (based on prior experience) to gain the knowledge to come up with an idea. Experimenation (tria-and-error learning) is needed to test that idea. And go back to engage in search to gain the knowledge. and so on.