Role of Innovation in Dynamics of Business

ROLE OF INNOVATION IN DYNAMICS OF BUSINESS:

SYNOPSIS:

I have used secondary sources internet, books of reference and research articles for my project. This paper will try to explain role of innovation in the dynamics of businesses & firms.  This paper is divided into four parts. First of all, its introduction. Secondly, innovation types are discussed. Thirdly, innovation management is stated. And in the last conclusion is given.

INTRODUCTION:

Innovation is the introduction of new idea, product or a service. Innovation & change are most valued components of contemporary industrial societies. Every individual knows that innovation is the crux of business activity & companies that do not want to change & innovate eventually do not survive. An important idea is that innovation must be new to a firm to be considered innovative. Ideally, innovation should help firms stay competitive, or even pull ahead in their respective industries or markets. Innovation is strongly linked with creative minds which are created through good educational institutions. Innovation can be an invention like a new gadget. It can be an innovation of new scientific discovery like theory of relativity. Innovation can be in all aspects of life cultural, social, political, technological.

Types of Innovation:

There are four main types of innovation within a firm: product, process, marketing and organizational. These four main types are defined as

Product Innovation

Product innovation, is the innovation of a product, whether it is new or changes on a pre-existing one with respect to its intended use. Product can refer to an object good or a gadget. A radical product innovation would be something like the Samsung Galaxy S phone when it was first released, a compact stylish flagship android phone by Samsung one of its kind. An incremental product innovation would be something like the Samsung Galaxy S4 which was an updated generation of the parent model.

 Process Innovation

Process innovation is the innovation in operating the business with reference to the production, or product delivery. Ideally, process innovations should be efficient i.e., reduce costs per unit or increase quality of service, speed of delivery, or overall, increase efficiency within a firm. Unlike product innovation, process innovation is more concerned with how manufacturing is done rather than what it manufactures. For example, the shift to Skype video calling was a radical process innovation since it was an improvement in communications and speed.

Marketing Innovation:

Marketing innovation is the innovation of a process of marketing that the company have not used before and can include the product design, packaging, price and overall marketing scheme used to market a specific product. Marketing innovation can be divided into four further categories: product, placement, pricing and promotion.

Marketing product innovation, can involve creative concepts. It should clearly be mind that innovative marketing strategy should not change the products basic use or product itself.

Marketing placement innovation is primarily about the introduction or change of a sales channel, such as an online store.

Marketing price innovation is not about responding to the economy, seasonal changes or pricing competition, although, creating new strategies in pricing to promote a product. Marketing pricing innovation deals primarily with how to attract and retain consumers by using innovative methods, be it a change in pricing methodology by using demand or a package deal offer that was not included previously.

Marketing promotion innovation gives stress to the marketing promotion channel that has not been efficiently used by the company. Making new innovative strategies to market a product more than that of competitors. For example, Billboards, Promotional Concerts, Celebrity Endorsements.

Organizational Innovation

Lastly, organizational innovation is a change in method in how the firm does business, internal or external. This can be a change in how a workplace learns and relates with people internally and externally. For instance, a change in standard operating procedures, such as implementing a new system and training employees to use it, is an organizational innovation since it allows employees to communicate more effectively. Radical organizational innovation is when there is a shift in business practices or relations that affects not just the company’s employees, but also their way of thinking whereas incremental organizational innovation is when there is a shift that affects the organization, but on a more micro level rather than macro, such as the implementation of employee training workshops and activities. [pic 1]

Looking at innovative companies

By looking at real-world examples of companies that have been selected as their innovative strategies. These examples are IKEA (the Swedish firm that revolutionized the furniture industry worldwide) and Apple (the US firm whose i-Pod and i-Tunes developments have represented a major success since the early 2000s).

Innovation Process:

The process of innovation is like evolution because it's a continuous process of improvement and adaptation which makes it difficult for a business or a firm to survive. The following key points will try to explain this process: