UNIT II: INNOVATION AND IDEA GENERATION

Innovation
Innovation is the process of developing new ideas, products, services or even
methods that can bring improvements and solve problems. It involves creativity,
invention and application of ideas.
Innovation can involve creating something entirely new, or modifying and
improving upon existing ideas, products, or services to meet new needs or
opportunities. Its goal is to drive progress, create opportunities, and deliver tangible
benefits to individuals, businesses, and society as a whole.

Types of Innovation

● Sustaining Innovation - is also known as routine innovation happens on an

incremental basis, is often a response to customer and market demands or
improvements in technology. The company obtained feedback from the
customers about the product and services rendered to improve and provide
greater value to the customers. Most companies that use the sustaining
innovation have been successful in building their businesses and continue
improving their offerings to their customers and they have the awareness of the
market needs.
● Disruptive Innovation - In this type of innovation, most companies did not pay
too much attention to the smaller business because they are most likely focused
on how they will improve their products and services. A classic example of
disruptive innovation is the boost of cellular phones or mobile phones that
competed with the fixed line telephony. When mobile phones hit the market,
people decided to buy it for their own purpose because it is more convenient to
use anywhere.
● Breakthrough Innovation - is defined as an innovation from inside a company
that pushes something to the next level. It is innovation that opens the company
to new markets or changes the way customers interact with the market or the
industry. One great example of breakthrough innovation is the Apple iPhone,
which generated various units of mobile phones from 2007 to present.
● Basic Research - This type of innovation begins with the discovery of some new
phenomenon. Basic Research is a key-driver to innovation as it provides
information about a certain problem and derives it with possible solutions. Basic
Research is often described as research without any clear goals, or science to
 satisfy the curiosity of a lone scientist without anyone else even realizing that it
exists. Thus, Basic Research can be defined as a process of conducting a study
about a specific problem and finding out solutions that will benefit companies and
industries in lieu of innovation. Basic research in innovation is practically a basis
that will improve a product or a service that will gratify the consumers.

The Principles of Innovation

Faster
The faster principle emphasizes the importance of speed and agility in the innovation
process. In order to succeed, innovators must be able to move quickly and adapt to
changing market conditions, customer needs, and technological advancements.

Better
The better principle emphasizes the importance of quality and excellence in the
innovation process. Innovators must create products and services that not only meet
customer needs, but exceed their expectations in terms of performance, reliability, and
value.

Simpler
The simpler principle emphasizes the importance of simplicity and ease of use in the
innovation process. Innovators must create products and services that are easy to
understand, easy to use, and easy to maintain.

Cheaper
The cheaper principle emphasizes the importance of affordability and cost effectiveness
in the innovation process. Innovators must create products and services that are priced
competitively and offer a high value proposition to customers.

Smarter
The smarter principle emphasizes the importance of innovation and creativity in the
innovation process. Innovators must create products and services that are smarter,
more intelligent, and more innovative than the competition.

Idea Selection

An innovative leader will encounter challenges in selecting the best ideas among the list
of different innovative processes. What are the criteria for choosing the best ideas?
What will be the purpose of those ideas? There are usually different methods that can
be used in the process of selecting ideas. Below are the steps introduced by Michael
Putz for Lead innovation management:

Step 1- Rough Selection

In the first step, the chaff has to be separated from the wheat, i.e., the ideas without
potential have to be selected quickly. For this purpose, an “ABC analysis” can be used,
where ideas are divided into three classes:

A are those ideas that are absolutely necessary for further processing.

B ideas are those where you disagree about good or bad and are certain.

C ideas that have no value and are to be rejected.

The A-ideas are definitely going into the next round, the B-ideas are discussed and it is
decided together per idea whether the idea will be adopted. C-ideas are no longer
considered

Step 2- Fine Selection

In the next step, the sifted ideas are further selected. The method of "dots gluing" has
proven its worth. Each participant receives five sticky points and can distribute them to
their own favorites. If you count the points together you get a ranking.

If there are less than ten ideas, the "rating" method can also be used. Each participant
gives each idea between 0 and 5 points. The points are also added up and you get a
ranking and a priority.

Step 3- Detailed Analysis

In the detailed analysis, ideas are qualitatively analyzed and evaluated on the basis of
criteria. For product ideas, for example, these are:

Customer benefit

Differentiation potential and competitive factor

Technical and economic feasibility

In this process step, additional information is collected on the ideas, which is then
analyzed and concretized in detail. A canvas, such as that of Osterwalder, can be used
as a method for new business models. On the basis of the findings from the analyses, a
decision is made as to whether the idea will be pursued further or not.

Customer Needs
One of the top priorities in business is to meet the demands and needs of
customers. An innovative leader undergoes thorough research and identifies the
specific requirements or needs of the customer to produce a useful product.

Four needs that a customer desires:

1. Fair Price
2. Quality Product or Service
3. Choice
4. Convenience

Top 5 Myths about customer needs:

1. Customers have latent needs; needs they don’t even know they have
2. Customers struggle to articulate their needs
3. Customers’ needs change quickly over time.
4. Customers’ won’t know what they want until they see it
5. It is impossible to ever know all the customers' needs.

Market Research and Validation

An innovative leader should conduct market research and validation to justify the
needs of customers. Quality measurement that demands the data gathered during
surveys, interviews and market research.

Market Validation is the process of determining whether your product is of

interest to a given target market. Market validation involves a series of customer
interviews with people in your target market, and it almost always takes place before
you’ve made significant investment in your product/concept (Semick, 2016).

The Decision - Making Process

Decision-Making is an enormous task because the success of the business relies
on its process to come up with a great solution. Various methods, models and
processes can be considered to make a decision.

Problem or Need Recognition

 As an innovative leader you must identify the different problems or need
recognition of the consumer. The needs of the consumers are the basis or foundation of
creating or producing a new product or services in the market. By assessing the needs
of the consumer, an innovative leader can generate excellent ideas for innovation.

Information Search
When the problem occurs, there should have a solution. And to develop a
solution an innovative leader should be resourceful in such a way that he or she can
think or have bright ideas. Information search of products and services that will satisfy
the needs and wants of the customer.

Evaluation of Alternatives
In determining the needs and wants of the consumer, the innovative leader
should provide different choices of products. Customers will begin to seek out the best
deal as they will compare the details of the product, read many reviews if the product is
poor or excellent and probably compare prices of which is more affordable.

Selection Stage
After a thorough research and evaluation of the alternatives, an innovative leader
should select the best ideas that will be used in the decision-making. They may have
had prior experience with this exact decision or maybe they succumbed to advertising
about the new product or service and they want to give it a try. (Flekel, 2013).

Evaluation of Decision
The goal of every marketer is not for a one-time customer but a repeating lifetime
customer. One bad experience of buyer’s remorse and your branding perception could
be tarnished forever (Flekel, 2013). This process depends on the evaluation of the
various assessments done for decision-making. Whatever the company decided is
considered the best idea.