INNOVATION

Innovation

Innovation

Introduction

Innovation can be best defined as the ability to spot and exploit opportunities (businessdictionary, 2013). It is wrongfully perceived that it is just about finding ways to enter new markets. It can also be used to serve the mature and existing markets. Innovation is directly proportional to the technological advancements. With increasing technological developments, more innovative products are being designed and manufactured. Technology plays a key role in the development of innovative products. Technology can not only be used to innovate new products but instead it can be used to further improve an old product by using old technologies in new ways. It is untrue to believe innovation is only possible in the manufacturing sector as there are countless examples where innovation has contributed to growth in service oriented industries. The largest online store Amazon.com is the finest example which has revolutionized the way products are sold (prnewswire, 2013).

Innovation matters the most to those companies whose survival is at stake or to those who are a new market entrants. Innovation is primarily about entrepreneurship. The ability to identify and spot opportunities and finding new ways to exploit them is an integral component of the innovation process. Innovation can result in advantages such as offering products, and by ways no one else can; offering something which complex and difficult to imitate; providing first-mover advantage (Tidd, Beasant, n.p, 2009).

4 P's of innovation (Tidd, Beasant, n.p, 2009):

Product innovation - offering unique product

Process innovation - finding new ways of creating them

Position innovation - finding unique context in which product is offered

Paradigm innovation - implementing unique mental models and organisational culture

The significance of innovation in today's dynamic business environment is immense. As it can single handedly turn around the fate of an organisation.

Discussion

Part A

Closed model of innovation

Many commercial successes and important achievements have been attributed by the closed innovation paradigm. PARC research facility was run by Xerox's management using this mental model. The same model was used by many U.S. corporations to run their labs. Closed innovation paradigm is an inwardly focused approach which fits pretty well with the knowledge environment of the early 20th century. Closed innovation works on the basic assumption and belief that successful innovation requires ownership and control of intellectual property (Chesbrough, 2003, pp.21-39). The management and creation of ideas is seen to be controlled by the company itself. Governments and universities were not allowed to indulge in commercial scientific application in the early parts of the 20th century. This is where the roots of closed innovation originated. This led to in-house research and development where New Product Development (NPD) was confined to “closed” in-house facility. The period between World War II and mid 1980s was the era of internal R&D and closed innovation. This internal R&D created a strong barrier for potential new market entrants and existing competitors. The concept revolves around believing that “everything coming from outside is unreliable and suspicious”.

A relevant case study example of closed innovation is ...