INNOVATION & ENTREPRENEURSHIP (KMBN 302)

UNIT 1
Meaning of Innovation and Creativity

Creativity is about creation. It’s about harnessing the power of the mind to conceive new ideas, products plans, thought
experiments, tastes, sensations or art. Creativity can be a form of expression or a way of solving problems. Anyone can be
creative, and in any context. There’s creativity in the marketing department, just as there can be creativity on a football
pitch.

Creativity has traditionally been left to those ‘wacky’ companies that are deliberately trying to do things differently, with
the majority of businesses tending to favour a traditional and monotone approach to running their organizations. However,
the changing business landscape means that companies are beginning to consider a more creative approach to working.

Need of creativity

Creativity can help a company manage tasks, improve staff performance and create quality products. It is also vital in
fostering a likeable and aspirational company image. With consumers now able to get a snapshot of what company life is
like, businesses need to be able to depict their inner culture in a way that makes it seem appealing.

As new technologies continue to develop and become available, companies have to be flexible and able to keep up to date.
Creativity allows them to easily identify new ways in which technology can be applied to help their businesses. Likewise,
with social media and other interactive forms of marketing now available, it’s never been more important for companies
to be able to be creative.

Allowing employees to be more creative can inspire them to come up with more interesting ideas as well as improve their
overall output. Many of the world’s leading companies have started to adopt unorthodox methods of encouraging
maximum creativity from their employees, such as sleeping pods and flexible working areas.

Types of Creativity

1. Deliberate and Cognitive creativity

People who possess deliberate and cognitive characteristics are purposeful. They have a great amount of knowledge about
a particular subject and combine their skills and capabilities to prepare a course of action to achieve something. This type
of creativity built when people work for a very long time in a particular area.

People who fall under this type of category of creativity are usually proficient at research, problem- solving, investigation
and experimentation. This type of creativity is located in the brain’s prefrontal cortex, which is at the front part of the
brain. These types of creative people spend a great deal of time every single day testing to develop new solutions.

Thomas Alva Edison is one prominent example of this type of creative people. He ran experiment after experiment before
inventing electricity, the light bulb, and telecommunication. Hence, deliberate and cognitive creativity requires a great
deal of time, dedication and abundance of knowledge about a particular subject.

2. Deliberate and Emotional Creativity

People who are categorized as deliberate and emotional let their work influenced by their state of emotions. These types
of creative people are very emotional and sensitive in nature. These individuals prefer relatively quiet and personal time to
reflect and they usually have a habit of diary writing. However, they are equally logical and rational in decision making.
Their creativity is always a balanced product of deliberate emotional thinking and logical actions. This type of creativity is
found in the amygdala and cingulate cortex parts of the human brain. Amygdala is responsible for human emotions
whereas cingulate cortex helps in learning and information processing. This type of creativity happens to people at
random moments. Those moments are usually referred to as “a-ha!” moments when someone suddenly thinks of a
solution to some problem or think of some innovative idea.

For example, there are situations when you feel low and emotional which distracts you from your work. In those kinds of
situations, you should take 5 minutes and point out the things which are making you sad and keep them aside and focus on
the work in hand. It will help you to get improvised results and you will get work done easily. One should seek “quiet
time” for deliberate and emotional creativity to happen to them.

3. Spontaneous and Cognitive creativity

There are times when you spend a long time to crack a problem but can’t think of any solution. For example, when you
want to make a schedule for a month to get a job done, but you can’t seem to think of any possible way and when you are
watching television and having your relaxed time and suddenly you think of a solution and everything falls in place. The
same case happened with the great scientist Isaac Newton. He got the idea about the law of gravity when an apple hit his
head while he was sitting under a tree and relaxing.

This is the “Eureka!” moments for Newton and an excellent example of a spontaneous and cognitive person. This type of
creativity happens when one has the knowledge to get a particular job done, but he requires inspiration and a hint to walk
towards the right path. This type of creativity usually happens at the most inconvenient time, such as, when you are in bed
with your partner or having a shower. Spontaneous and cognitive creativity takes place when the conscious mind stops
working and go to relax and unconscious mind gets a chance to work.

Mostly, this type of creative person stops conscious thinking when they need to do “out of the box” thinking. By
indulging in different and unrelated activities, the unconscious mind gets a chance to connect information in new ways
which provide solutions to the problems. Therefore, to let this type of creativity happen one should take a break from the
problem and get away to let conscious mind overtake.

4. Spontaneous and Emotional Creativity

Spontaneous and emotional creativity takes place in the “amygdala” part of the human brain. Amygdala is responsible for
all emotional type of thinking in the human brain. Spontaneous ideas and creativity happen when conscious and Prefrontal
brain is resting. This type of creativity is mostly found in a great artist such as musicians, painters, and writers etc. This
type of creativity is also related to “epiphanies”.

Epiphany is a sudden realization of something. Spontaneous and emotional creativity is responsible for a scientific
breakthrough, religious and also philosophical discoveries. This allows the enlightened person to look at a problem or
situation with a different and deeper viewpoint.

Those moments are defined as rare moments when great discoveries take place. There is no need to have specific
knowledge for “spontaneous and emotional” creativity to happen but there should be a skill such as writing, musical or
artistic. This type of creativity can’t be obtained by working on it.

Innovation

Innovation, on the other hand, needs stability and establishment. It’s about changing a common or long-standing process
by improving it. It’s only by having a status quo in existence, that you can develop it in order to innovate. So, while
creativity and innovation share strong links, the processes are entirely different.

Innovation is about taking newly created ideas and developing them into something useful and practical. In many ways,
innovation is the process of converting theory into action.
The most common type of innovation is evolutionary, which means finding ways of making incremental improvements to
your products and services. This type of innovation carries fewer risks, as it’s generally easier to establish demand for
these improvements and to calculate the likely return on investment. However, it still requires a strategic, targeted
approach – there’s little point in improving a product in a way that customers don’t value.

The best way to identify opportunities for evolutionary innovation is to talk to existing customers and find out what they
value most about your products and services, and what aspects they’d like to see improved. If longer battery life is their
number one priority, then it probably should be your number one target for innovation. However, if they also value the
product’s easy portability, it’s probably not a good idea for your new version to be much larger or heavier.

Need of innovation

Innovation is important because it’s the only way that you can differentiate your products and services from those of your
competitors. For customers and clients to choose your business, your offer needs to be distinctive and valuable, and the
only way to achieve this is through innovation.

It can be tempting to let your rivals do all the heavy lifting of creativity and innovation, with all the investment,
experimentation and risks that this entails. Then, when they come up with a dazzling new product or improvement, you
can simply copy what they’ve done at a fraction of the effort. However, there are several pitfalls to this approach.

Most importantly, you’ll always be playing catch-up. However quickly you get your version to market, your rivals will
always have the lead on you and they’ll already be planning their next move. This means customers will go to your rivals
first, who will maintain a reputation for leading the pack. Your business won’t stand out because there’ll always be
someone else who’s already met the needs and desires of your customers. You’ll harm your own brand, and could also
risk infringing on your competitor’s intellectual property rights.

However, innovation doesn’t have to be focused on changing a product or service. If you can find an innovative new
process that enables you to create a product more efficiently without compromising on quality, you’ll be able to stand out
from your rivals by undercutting their prices. Similarly, your innovation could come in the form of a new distribution
system, enabling you to stand out by offering the fastest delivery to customers.

Creativity and innovation in the workplace

Exploiting both creativity and innovation in business can boost performance and the bottom line. But first, you need to
make space for both to happen.

Encouraging creativity can involve lots of different strategies, from enabling employees to work outside the office to
letting people come into and leave the office when they feel ready to, not when they’re expected to. The office itself needs
to be creativity-friendly and there are ways you can adapt the working environment to support employees’ talents.

It’s important to let staff feel free when exploring new ideas – whether it’s tweaking your existing product or developing a
whole new concept. Involve the team, share accountability, reward good work and be ready to respond to market
feedback. Remember, your ideas and innovation, no matter how amazing, still need to fulfill a need among customers.

There’s no guaranteed source of great ideas, but they do tend to be generated by the most engaged, positive employees.
They don’t come from staff who are bored or stressed. Great ideas sometimes come from brainstorming sessions, but
trying to force out ideas can be counterproductive. In reality, great ideas are equally likely to occur when a particular
problem occurs that requires a solution, or even when an employee is on their way home, thinking about their day.

The key is to use your business’s culture and processes to capture these ideas when they happen, wherever they come
from. Staff suggestion boxes and allocated creative time can work well, but sometimes all that’s required is a clear
message from the boss that all ideas are welcome.
 Difference between innovation and creativity
There’s a lot of confusion surrounding creativity and innovation. “Creative types,” in particular, claim that
creativity and innovation can’t be measured. Performance, however, demands measurement so you can identify
what success looks like. In a world that changes every second, it’s must be imperative that companies figure out
the difference between creativity and innovation.

Creativity and innovation are not one and the same, but they do complement one another. In fact, one can’t
function without the other. The primary difference between creativity and innovation is that the former refers to
conceiving a new idea while the latter involves converting that idea into a marketable commodity.

Creativity is the act of conceiving something new, whether a variation on an existing theme or something wholly
original. Innovation is the act of putting that concept into practice. It’s the difference between suggesting the idea
that an aircraft could fly through space and actually building a rocket that astronauts can use to get to the moon.

Creativity Creativity is the characteristic of a person to generate new ideas, alternatives, solutions, and
possibilities in a unique and different way.

Creativity is the ability to conceive something unpredictable, original and unique. It must be expressive, exciting
and imaginative. It is the mirror of how beautifully a person can think in any given circumstance.

It is not genetic but can be developed if someone keeps on learning and comprehending things with a rare and
exclusive perception. Creativity is a brainstorming and mind-blogging activity in which a person has to think
beyond his imagination for bringing something worthwhile. It is an activity of unveiling something which was
previously hidden.

Innovation

Innovation is an act of application of new ideas to which creates some value for the business organization,
government, and society as well. Better and smarter way of doing anything is innovation. It could be the
introduction of:

 New technology.

 New product line or segment.

 A new method of production.

 An improvement in the existing product.

 Creativity and Innovation

Innovation Creativity

Innovation is the exercise to

Creativity is the capacity to
create something new which
Definition make or think up something
already has a large value to
uncommon or original.
others.

Innovation acts by putting those Creativity acts by delivering

Their actions
new ideas in reality. unique ideas.

Measurable Easy to measure. Hard to measure.

Creativity doesn’t carry

Innovation can cause liability as
Liability liability as it is just a thought
the idea becomes reality.
or idea.

Every innovation is a result of Not every creativity conforms

Expression
creativity. to innovation.

Process Productive Imaginative

Quantifiable Yes No

Related to Introducing something new Thinking something new

Money
Yes No
Consumption

Risk Yes No

INNOVATION TYPES & PLATFORMS

There are many types of innovation that can be applied in your day-to-day in order to optimize results, each with a
different objective. Disruptive, incremental, and drastic innovation are among them.

Every company wants to innovate, stand out in the market, and offer the best to its customers, employees, and partners.
But, aside from a brand’s dreams and ambitions, like fostering the changes it desires: what is innovation, really? What are
the types of innovation? And how do you implement them in a business

That's exactly what we're going to cover in this article. Read on to find out!
What's innovation?

Innovation is anything that proposes an alternative to something that is done in a certain way, brings economic and
behavioral benefits, solves problems, or makes people's daily lives more practical.

It can be related to a product, service, process, market, means of production, technology, or anything else that brings about
a change that becomes sustained and indispensable.

For innovation to take place, people and companies use the countless possibilities technology offers. Technology is the
basis that supports and enables all types of innovation, since without good tools innovation can come at the wrong time
and lose the potential to scale your business.

Remember that to innovate is to go beyond and exceed the expectations of stakeholders and the market. For this to
happen, you need speed, quality, and precision.

What are the advantages of innovation?

When a sector, segment, or brand decides to innovate, it contributes to the development of society as a whole.

But, in practical terms of a commercial organization, a company that innovates, mainly in its processes, gains many
advantages, such as:

 Keeping processes organized: By being innovative in how you perform processes, especially if you use
technology, you create standards and systematize the best work method for your brand. And this is crucial for
strategies to be successful, results to be achieved, and goals to be reached.

 Developing creativity: With innovation, a company shows that it's open to changes and that employees can
contribute with new ideas and see in practice the benefits new things can bring to the day to day.

 Increasing the business’s competitiveness: By adopting strategic resources, a company becomes more attractive
to customers, partners, and talents and gains a competitive advantage in the market.

 Increasing productivity: Innovation proposes more effective processes, more production control, effective
strategy, and more engaged employees.

 Adding value to a product or service: When you innovate, you boost the marketing of products and services,
because you bring something different and unique for your target audience.

 Increasing profits: With more productivity, a more attractive business, and more effective management, your
business will consequently see greater profits.

What are the major types of innovation?

Essentially, there are three types of innovation: radical, incremental, and disruptive. They may vary depending on the
niche, market, brand essence, services, and products offered.

If your company wants to innovate, it's important to know these varieties. Find out what characterizes each of them:
Radical innovation

As the name suggests, a radical innovation really changes the circumstances of a brand, whether in terms of market or
of business dynamics.

It can occur due to a complete change in a company's positioning, work method, processes, services, and products offered,
or how it relates to customers.

An example of radical innovation would be Apple's iPhone. When it was released, smart phones already existed, but
Apple included features that changed the market and made it more popular.

Incremental innovation

Another type of innovation is incremental innovation. It adds new features to a product, brand, or production methods
without promoting a very drastic change.

It's usually an evolution of an innovation already implemented by the brand that complements and offers
improvements, be it to employees, customers, or features of a business.

An example of incremental innovation is Gmail, which was created with the purpose of sending emails quickly – but over
time, different features were added to improve the customer experience and make it more useful and competitive.

Disruptive innovation

Technological and behavioral changes have favored the emergence of disruptive innovation in recent decades.

This type of innovation follows the market more than a specific brand, product, or service. It can be leveraged by
something a company has offered and, as a result, made their name, but, in general, it's a scalable change that reaches
many people at the same time.

Examples of disruptive innovation include Netflix, as the market used to rely on companies like Blockbuster for movies
and TV series. Netflix started offering DVD-by-mail rental services but decided to innovate. It started offering video
streaming services through a monthly subscription and, in doing so, drove Blockbuster out of the market. In addition to
being innovative, this also gave Netflix a predictable monthly revenue.

Examples of innovation
Now that you know the types of innovation, we will show some examples so that you understand the topic in practice.
Let's begin!

Product innovation

Easily noticed, product innovation actually brings something new to the market. Television, for example, was something
innovative when it was invented, bringing image, sound, and entertainment into people's houses.

It was a radical innovation that, with acceptance of the public, became disruptive and over time began to rely on
incremental innovation. The whole world followed the release of different kinds of TV: color, cable, flat-screen, and,
today, smart TV.

Service innovation

A visible example of service innovation is food delivery. For a long time, in order to eat something from a restaurant,
customers needed to walk into the place or order takeout.

That's when the market innovated and offered delivery service so that customers could order whatever they wanted with
just a phone call. Over time, it became possible to order food on websites, and now we can order food on mobile apps at
our fingertips.

Innovation in production processes

Here it is interesting to highlight environmental awareness. Many cosmetic brands, for example, innovate by
implementing cruelty-free processes that don’t involve animals.

Several companies have worked to increase environmental sustainability. NIKE created a mechanism in its Flyknit
sneakers that reduces the volume of material waste used in the cutting and sewing process of shoe manufacturing by 60%.

Innovation in business model

Innovation in the business model is very common in startups. A simple example would be marketplaces. Virtual stores
like Amazon mediate between buyers and sellers.

Another example would be virtual banks. Today, there are many financial institutions with no physical facilities for
customer service and whose transactions are all performed online.

Technological innovation

Technological innovation is the most evident kind of innovation. The advance of technology brings about many
opportunities. Thinking back a few centuries, the Industrial Revolution springs to mind as a good example, since it
changed production methods in companies, work methods, and even workers’ lives.

In a modern context, though, the primary examples are the internet and smartphones, which revolutionized not only
products and services, but also society's behavior.

Technological innovation, as we see in the case of Industry 4.0 technologies, enables us to take steps that would
otherwise be unachievable with human power alone.

Logistical innovation
For a long time, it would take up to a month to receive a letter by mail. For international products, it would take an
average of three months. To change this, companies and distributors innovated in logistics, creating storage points and
strategic distribution centers. Today, there are apps to hire delivery services and even delivery drones!

Marketing innovation

Ways of acquiring new customers have evolved, and we're seeing more and more innovations in marketing.
Sometimes, the way you advertise can be innovative. With the creation of social media, for example, lots of brands
innovated by advertising on those platforms instead of newspapers and television.

Organizational innovation

Organizational innovation brings several other kinds of innovation. They concern structural changes and practices that
improve productivity, services, products, and processes.

Home offices are an example of organizational innovation, as are management software, customer service chatbots, and
trainee programs in which employees get to know all departments of a company before actually working in one of them.

What are the stages of the innovation process?

Being innovative may seem like something unusual that requires you to be extremely lucky or a genius. But it can actually
occur in any company, big or small, and in any sector.

The stages of the innovation process are simple, and to innovate you must have a system and repetition. Learn about them
here:

 Generation of new ideas: What are the opportunities in the field? What hasn't been done yet and would actually
change a product, service, or company?

 Evaluation: What's necessary to put this into practice, is it possible, and how do you make it viable?

 Experimentation: It's vital to test your ideas and identify what really works and what needs to be improved.

 Marketing: Has it reached the sweet spot? It's time to offer to customers what before was just an internal project.

 Follow-up: Keeping track of what has been implemented is important to understand public acceptance, audience,
and strategy. To do that, feedback is essential.

All stages need to be based on technology. This makes it possible to speed up processes and document versions prior to
the innovation, monitor results, compare versions, test, and assess overall performance.

How do you implement innovation in a company?

Have you ever heard of "selling an idea"? Implementing innovation is related to this.

It's about showing employees, customers, and partners the reasoning behind the innovation, how it works, and why it's the
best path to follow.

From there, you need to identify what works best for the company, be open to any necessary adaptations, and promote
acceptance of what is new.

Here are some tips on how to effectively bring innovation to your business.

 Involve the whole team

 Treat innovation as a strategic element
  Invest in internal entrepreneurship development
 Empower your employees
 Create an environment that favors innovation
 Develop an innovation process
 Start a high-impact transformation
 Follow the example of large companies
Use technology to support innovation
Along with all the strategies mentioned to realize innovation in your business, it's important to have technological tools
that support its implementation.

With digital transformation, companies can automate all processes and, as a result, have more control over their current
situation and how they perform after innovation. Management software allows you to collect and analyze data so that
innovations are based on consistent information.

INNOVAION PLATFORMS

The world is rapidly changing and those that are going to survive are companies and businesses that have been set up to
change with it. This is one of the reasons why an innovation platform is so important.
Growing your business through innovation is a good idea, but, you should know about the platforms that can help you.
Innovation. It’s on everyone’s minds these days.
So, innovation means looking at reality and rearrange the constituent elements in new value-enhancing configurations.
So, numerous innovative digital platforms change the way ideas are discussed in multiple industries.
For example, the automotive industry with Groupe PSA, or in engineering with the Taiwan Semiconductor Manufacturing
Company (TSMC).
Now you must be wondering what are the 4 types of innovation are important for defining the innovation platforms.
So, you can gain a deep insight through innovation management that will help you in selecting a tool available to
facilitate the formation and curation of ideas.
What is an innovation platform?

An innovation platform is a tool for building and growing ideas. However, an innovation platform also refers to a
technical solution where you can build things fast and prototype tools.

Furthermore, for a business, an innovator’s growth platform means using products, services, and technology in a new way
to reach your goals—preferably more efficient than before.

Let’s discuss the insights about the innovation platform by explaining its types, examples, benefits, and how to choose the
right platform for your workplace.

Types of Innovation Platforms

Technical Open Innovation Platform One of the biggest changes in the way in which companies approach
innovation has been the growth of a technology-based open innovation platform. Let’s go through an example to
understand what is an open innovation platform?

Moreover, one of the biggest open innovation examples is Linux, an operating software that competes with Microsoft and
Apple, which are developed in the closed innovation policy platform.

Therefore, the biggest benefit of open-source software is that the software is continuously tested by programmers with
100 percent transparency.

Idea Management Platform This is an idea-sharing platform where people can come together and share their thoughts
on the idea management process.
So, the goal of an innovation management platform is to help companies come together, gather ideas from their
employees, and evaluate each idea individually. Then, developing good ideas for the market more quickly will allow
them to increase productivity.

Examples of Platform Innovation

Ennomotive – The Hub For Engineering Innovation

Ennomotive is an open innovation platform that specializes in experts and connecting companies of various projects and
win-win partnerships.

So, this platform is perfect for organizations that are looking to solve technical challenges and need fresh ideas from
creative and talented individuals.

Crowdspring – Design Has Done Better

Crowdspring is a platform that facilitates various design projects, such as website logos or a book cover, for
organizations and private individuals.

Hence, this platform is perfect for organizations that need a reimagined or new design and want a very broad spectrum of
ideas that can be molded and discussed in an effortless iterative manner.

Viima – The Best Way To Develop And Collect Ideas

Viima is an idea management platform that can be used for developing and gathering ideas into innovations within an
open or chosen group of stakeholders.

Therefore, this platform is perfect for organizations that are looking for an effortless way of gathering ideas or thoughts.
This is for smaller to larger groups. Furthermore, then to develop them into something that can be implemented.

Kaggle – The Place For Data Science Projects

Kaggle is a platform that hosts a community of data scientists and machine learning engineers who together process raw
data gathered and submitted by organizations.

Furthermore, large organizations use this platform without existing data science environments and access to raw data.

Choosing the Right Workplace Innovation platform

Let’s discuss some tips and tricks to help you understand the many other aspects of which tool you should end up with.

Start With Your Goals

Always remember to start by addressing your goals. If you understand your destination, it’s much easier to choose a
platform that will help you get there.

For example, if a company needs fresh business ideas to solve a technical problem, such as making a manufacturing
process more cost-efficient, Ennomotive is a great candidate for the list. A platform like Maestro is not.

Check Characteristics
Different platforms have different characteristics. For example, if you compare Android with Apple. It includes the idea
that “people know their own needs best”. The other includes a unique package with the idea: “We know what people
want.”

Hence, if a platform has been designed based on a philosophy similar to your own, it’s a good indication that it could
support your ways of working.

Custom Or Off-The-Shelf?

Custom platforms for enterprise customers have the specific features requested by the customer. However, they are
complicated to use, slow, and costly to initiate.

So, off-the-shelf platforms are aimed towards organizations of a more general size. Moreover, many off-the-shelf
platforms are customizable, easy to use, and scalable

Benefits of Innovation Management Platform

 They facilitate understanding and dialogue among stakeholders and provide a space for them to create a common
mutual trust and vision.

 They enable partners to identify the bottlenecks hindering innovation, and develop solutions beyond what
individuals can achieve.

 Innovation advertising platforms create motivation and a feeling of ownership of the solutions that they develop.

 Innovation platforms create opportunities for research to be demand-driven, to disseminate research outputs, and
to find critical issues for investigation.

 By improving ideas, communication, learning, and exposure to new people, innovation platforms help members
to clarify their roles, adapt to unforeseen changes, and organize themselves.

 A Crowd-sourcing innovation platform is the best way to gather, surface ideas, and solutions from your
employees, customers, and partners.

 Social innovation platforms provide new ideas that meet social needs, create social relationships, and form new
collaborations.

Business Model Innovation

Business model innovation is the art of enhancing advantage and value creation by making simultaneous and mutually
supportive changes both to an organization’s value proposition to customers and to its underlying operating model. At the
value proposition level, these changes can address the choice of target segment, product or service offering, and revenue
model.

A business model is nothing more than a model, holistic description of the logical contexts how a company generates
value for its customers and itself. The detailed illustration of this logic makes the business model visible, assessable and
subsequently changeable. At the operating model level, the focus is on how to drive profitability, competitive advantage,
and value creation through these decisions on how to deliver the value proposition:

 What cost model is needed to ensure attractive returns.

 Where to play along the value chain.

 What organizational structure and capabilities are essential to success.

The digital age has become an impetus for business model innovation, as technology has dramatically changed how
companies operate and deliver services to customers. This digital disruption has shortened business model lifecycles and
made innovation key to financial success. The global marketplace has further driven the need for business model
innovations, as companies must react to stiffer international competition and the increased potential for systemic risk.
These factors are forcing companies to turn to business model innovation to stay competitive and foster growth in the
competitive global marketplace.

Pursuing Innovation in Business

In addition to business model innovation, companies could also pursue other types of innovation, including:

Product Innovation: This describes the development of a new product, as well as an improvement in the performance
or features of an existing product. Apple’s continued iteration of its iPhone is an example of this.

Process Innovation: Process innovation is the implementation of new or improved production and delivery methods in
an effort to increase a company’s production levels and reduce costs. One of the most notable examples of this is when
Ford Motor Company introduced the first moving assembly line, which brought the assembly time for a single vehicle
down from 12 hours to roughly 90 minutes.

Business Model Canvas

The “Business Model Canvas” by Alexander Osterwalder and Yves Pigneur. It is somewhat more comprehensive than the
before mentioned 4-dimension concept and therefore also allows a higher degree of complexity with regard to the
description of the functioning of a company.

The canvas concept is based on nine basic building blocks that cover the four most important areas of the company
(customer, offer, infrastructure, finance):

Customer segments People or organizations to be reached.

Value propositions products and services that solve a problem for a customer segment or meet a need and thus value.

Channels sales channels through which the company reaches and responds to its customers to convey the
values offered.

Customer relations The company’s different relationships with its customers (customer acquisition, customer care,
sales promotion, personal or automated) Sources of income: Income from a company from the various customer
segments.
Key resources Basic resources needed to operate the business model (physical, intellectual, human, financial).

Key Activities The key business model processes that provide the key resources described above.

Key partnerships The main partners of the business model (suppliers, strategic alliances and partnerships, joint
ventures)

Cost structure The most important of the costs incurred in the business model.

Four Approaches to Business Model Innovation:

 The adventurer approach aggressively expands the footprint of a business by exploring or venturing into new or
adjacent territories. This approach requires an understanding of the company’s competitive advantage and placing
careful bets on novel applications of that advantage in order to succeed in new markets.

 The maverick approach deploys business model innovation to scale up a potentially more successful core
business. Mavericks which can be either startups or insurgent established companies employ their core advantage
to revolutionize their industry and set new standards. This requires an ability to continually evolve the competitive
edge or advantage of the business to drive growth.

 The adapter approach is used when the current core business, even if reinvented, is unlikely to combat
fundamental disruption. Adapters explore adjacent businesses or markets, in some cases exiting their core
business entirely. Adapters must build an innovation engine to persistently drive experimentation to find a
successful “new core” space with the right business model.

 The reinventor approach is deployed in light of a fundamental industry challenge, such as commoditization or
new regulation, in which a business model is deteriorating slowly and growth prospects are uncertain. In this
situation, the company must reinvent its customer-value proposition and realign its operations to profitably deliver
on the new superior offering.

Service Innovation
Service innovation as “a new or significantly improved service concept that is taken into practice. It can be for example a
new customer interaction channel, a distribution system or a technological concept or a combination of them. A service
innovation always includes replicable elements that can be identified and systematically reproduced in other cases or
environments. The replicable element can be the service outcome or the service process as such or a part of them. A
service innovation benefits both the service producer and customers and it improves its developer’s competitive edge. A
service innovation is a service product or service process that is based on some technology or systematic method. In
services however, the innovation does not necessarily relate to the novelty of the technology itself but the innovation often
lies in the non-technological areas. Service innovations can for instance be new solutions in the customer interface, new
distribution methods, novel application of technology in the service process, new forms of operation with the supply chain
or new ways to organize and manage services.”

Another definition proposed by Van Ark states it as a “new or considerably changed service concept, client interaction
channel, service delivery system or technological concept that individually, but most likely in combination, leads to one or
more renewed service functions that are new to the firm and do change the service/good offered on the market and do
require structurally new technological, human or organizational capabilities of the service organization.” This definition
covers the notions of technological and non-technological innovation. Non-technological innovations in services mainly
arise from investment in intangible inputs.

Service innovation is used to refer to many things. These include but not limited to:
Innovation in services, in service products: New or improved service products (commodities or public services).
Often this is contrasted with “technological innovation”, though service products can have technological elements. This
sense of service innovation is closely related to service design and “new service development”.

Innovation in service processes: New or improved ways of designing and producing services. This may include
innovation in service delivery systems, though often this will be regarded instead as a service product innovation.
Innovation of this sort may be technological, technique- or expertise-based, or a matter of work organization (e.g.
restructuring work between professionals and paraprofessionals).

Innovation in service firms, organizations, and industries: Organizational innovations, as well as service product and
process innovations, and the management of innovation processes, within service organizations.

Areas of innovation: Den Hertog’s model

Den Hertog who identifies four “dimensions” of service innovation, takes quite a different direction to much standard
innovation theorizing.

The Service Concept refers to a service concept that is new to its particular market a new service in effect, or
terminology, a “new value proposition”. Many service innovations involve fairly intangible characteristics of the service,
and others involve new ways of organizing solutions to problems (be these new or familiar ones). Examples might include
new types of bank account or information service. In some service sectors, such as retail, there is much talk about
“formats”, such as the organization of shops in different ways (more or less specialized, more or less focused on quality or
cost-saving, etc.).

The Client Interface refers to innovation in the interface between the service provider and its customers. Clients are often
highly involved in service production, and changes in the way in which they play their roles and are related to suppliers
can be major innovations for many services. Examples might include a greater amount of self-service for clients visiting
service organizations. There is a French literature on service innovation that focuses especially on this type of innovation,
identifying it as innovation in “servuction”.

The Service Delivery System also often relates to the linkage between the service provider and its client, since delivery
does involve an interaction across this interface. However, there are also internal organizational arrangements that relate
to the ways in which service workers perform their job so as to deliver the critical services. Much innovation concerns the
electronic delivery of services, but we can also think of, for instance, transport and packaging innovations (e.g. pizza
delivery). An emerging concept of SDP is the idea of taking a “factory” approach to Service Innovation. A “service
factory” approach is a standardized and industrialized environment for more effective service innovation, development
and operations for the IP era.

Technological Options resemble most familiar process innovation in manufacturing sectors. New information technology
is especially important to services, since it allows for greater efficiency and effectiveness in the information-processing
elements that are, as we have seen, prevalent to a great extent in services sectors. We also often see physical products
accompanying services, such as customer loyalty cards and “smart” RFID cards for transactions, and a wide range of
devices for communication services.

Features of services associated with service production

 Technology and Plant (Low levels of capital equipment; heavy investment in buildings >>> Reduce costs of
buildings by use of teleservices, toll-free phone numbers, etc.)

 Labor (Some services highly professional, esp. requiring interpersonal skills); others relatively unskilled, often
involving casual or part-time labor. Specialist knowledge may be important, but rarely technological skills (other
than Information Technology) >>> Reduce reliance on expensive and scarce skills by use of expert systems and
 related innovations; Relocation of key operations to areas of low labor costs (using telecommunications to
maintain coordination).

 Organization of Labor Process (Workforce often engaged in craft-like production with limited management
control of details of work. >>> Use IT to monitor workforce (e.g. tachometers and mobile communications for
transport staff; Aim for ‘flatter’ organizational structures, with data from field and front-office workers directly
entering databases and thence Management Information Systems.)

 Features of Production (Production is often non-continuous and economies of scale are limited >>> Standardize
production (e.g. ‘fast-food’ chains), reorganize in more assembly-line-like feature with more standard components
and higher division of labor.)

 Organization of Industry (Some services state-run public services; Others often small-scale with high
preponderance of family firms and self-employed >>> Externalization and privatization of public services;
combination of small firms using network technologies; IT-based service management systems.)

Features of services associated with service product

 Nature of Product (Immaterial, often information-intensive; Hard to store or transport; Process and product hard
to distinguish. >>> Add material components (e.g. client cards, membership cards). Use telematics for ordering,
reservation, and if possible delivery. Maintain elements of familiar ‘user-interfaces’.)

 Features of Product (Often customized to consumer requirements.>>> Use of Electronic Data Interchange or
Internet for remote input of client details; use software to record client requirements and match to service product.

Features of services associated with services consumption

 Delivery of Product (Production and consumption coterminous in time and space; often client or supplier has to
move to meet the other party. >>> Telematics; Automated Teller Machines and equivalent information services.)

 Role of Consumer (Services are consumer-intensive, requiring inputs from consumer into design/production
process. >>> Consumer use of standardized menus and new modes of delivering orders.)

 Organization of Consumption (Often hard to separate production from consumption; Self-service in formal and
informal economies commonplace.>>> Increased use of self-service, utilizing existing consumer (or intermediate
producer) technology e.g. telephones, PCs and user-friendly software interfaces.)

Features of services associated with services markets

 Organization of Markets (Some services delivered via public sector bureaucratic provision; Some costs are
invisibly bundled with goods (e.g. retail sector).>>> Introduction of quasi-markets and/or privatization of
services; New modes of charging (pay per society), new reservation systems; more volatility in pricing using
features of EPOS and related systems.)

 Regulation (Professional regulation common in some services. >>> Use of databases by regulatory institutions
and service providers to supply and examine performance indicators and diagnostic evidence.)

 Marketing (Difficult to demonstrate products in advance.>>> Guarantees; demonstration packages (e.g. demo
software, shareware, trial periods of use).)
 Design-led innovation, Improvisation

Design-led innovation

Design-led innovation is a process that shifts the role of a designer to work across an organization to radically
change a company’s view of the value proposition offered to customers to co-design, and to generate a unique and
sustainable competitive advantage. With the relative newness of design-led innovation, case study research into
the complexities faced by companies with the implementation and integration of this process is quite sparse. To
add a new perspective, this research presents a case study of one Australian manufacturing company operating in
the mining equipment, technology, and services (METS) sector, and how design-led innovation fits within their
family-owned and engineering-driven organizational and cultural framework.

All businesses treat design differently so it is in sync with their brand identity. There is no set formula for design.
As Nathan Sinsabaugh wrote in his wired article, “Design is about understanding people in the context and culture
they live in to develop genuine empathy, and testing and iterating solutions with customers to explore the validity
of decisions.” This way of thinking doesn’t suit the mathematical mindset of traditional business innovation, so
you’ll need innovative people working in a creative environment that encourages out-of-the-box ideas and
intuition.

Design is about creating solutions and providing what users need. That’s the essence of design-led innovation:
being user-friendly. If your clients and customers like engaging with you, that’s good news for everyone. So if
you’re interested in the advantages of design-led innovation, then perhaps it’s time to change the way your
company thinks.

Design-led innovation is broadly defined as a method that allows a company to consider and evaluate radically
new propositions from multiple perspectives, typically spanning user needs, business requirements, and
technology demands.

Key to this process is that design is core to a company’s vision, strategy, culture, leadership, and development
processes. The design-led innovation framework outlined below Figure, provides a conceptual structure to assist
the development of innovation through collaboration across the entire organization; it integrates the operational
functions with the strategic vision by combining internal and external sources.

Design thinking uses a method of prototyping to reduce the risk in a business model concept by testing it with the
marketplace; it allows for the creative development of an idea. By taking a holistic systems perspective, design
thinking creates strong value propositions that interweave through business model development so the value
received is greater than the sum of the parts. Design as an innovation mechanism is an iterative.
Process that can assist in both uncovering problems with stakeholders, analyzing some possibilities, and then
synthesizing multiple elements to form new solutions. During this process, the practitioner moves between the
concrete and abstract worlds of understanding (Beckman & Barry, 2009) to build new value propositions.

Design-led innovation builds on this theory by internally aligning the solution with the company’s strategy,
resources, and brand. Design and innovation as organizational processes work with the staff who deliver the
resultant innovation, not in isolation from organizational systems. Design-led innovation can also align corporate
ideologies to fit and potentially leverage the company’s internal capabilities, resources, and brand (business
model) in order to generate an innovative solution that creates a competitive advantage.

Design thinking is a foundational activity within design-led innovation, by leveraging a creative systems
perspective that integrates the design of the business models. Design-led innovation is a philosophy that
“examines every core facet of the business, to realign business strategy with customer needs and possible market
futures” (Pozzey et al., 2012). Design-led innovation is derived through a creative interrelationship between these
fundamental business elements to generate true value for the customer and to capture profits for growth, as shown
in Figure 2.

Improvisation

Improvisation is the ability to create and implement a new or an unplanned solution in the face of an unexpected
problem or change. It is often seen as a spontaneous, intuitive, creative problem-solving behavior that mostly
happens “on the fly.”

Improvisation has also been studied in organizational strategy and product development. Studies have found
positive correlations between improvisation in product development and team performance. It is considered a
spontaneous behavior (collectively or individually), and therefore dependent on team members’ attitudes,
experience, motivation, intuition, and individual skills. Despite a number of studies on improvisation in the
management context, there is no consensus on the most effective approach to develop this competence in project
teams.

Improvisation may seem incompatible with the well-defined processes that govern most mature business
practices. Hiring teams don’t often screen for improvisation skills, and most employee training programs focus on
developing leadership or technical skills rather than helping employees to become better improvisers. However,
improvisation is in fact key to organizational agility. Managers and employees who are capable improvisers will
steer their companies through crises and paradigm shifts, from technological breakthroughs and changing trade
regulations to environmental disasters and the myriad challenges associated with the Covid-19 pandemic.
 Types:

 Imitative improvisation, exhibited by the least-experienced players, consists of observing what more-experienced
people are doing and matching their responses with minimal variation. For example, in one scenario, we observed
a new player whose character was entering a coven for the first time. Unsure of what to do, he looked at the more-
experienced players and adjusted his costume and make-up on the spot to be more in line with their styles. While
this is the simplest type of improvisation, it is an effective starting point that enables newcomers with limited
experience to get involved.

 Reactive improvisation: using inputs from both the environment and other players to develop your own original
reaction to an unexpected situation, without relying on others’ actions as a guide. For instance, when players
faced an enemy attack and had to defend a fort, they spontaneously reacted to the threat by moving their troops
and continuously reorganizing their defenses, demonstrating a novel reaction to both their fellow players’ actions
and those of their enemies. We found that this type of improvisation was generally developed after players had
already mastered imitative improvisation, as it required players to build on their existing experience to extrapolate
new, original courses of action.

 Generative improvisation is about probing into the future and proactively trying new things in an attempt to
anticipate and even catalyze (rather than react to) what could happen. Because it is fundamentally speculative,
generative improvisation is inherently the riskiest but it’s also often the most effective for developing truly
unique, innovative ideas. This type of improvisation was exemplified by a moment when two players decided on
the spot to embark on a dangerous mission aimed at retrieving a powerful artifact in order to avoid potential
problems in the future, without any specific external event triggering that decision.

Steps:

1. Build awareness of how different types of improvisation skills are developed

As a first step, simply educating yourself and your team about the different types of improvisation skills and how
an emphasis on competition or collaboration can impact their development is crucial. Greater awareness of these
skills can inform team composition, ensuring that newcomers are paired with more experienced improvisors from
whom they can begin to learn imitative improvisation skills. It can also inform team allocation, enabling
organizations to identify teams or individuals with strong improvisational skills and assign them to the projects
that are the most unstructured and uncertain.

2. Balance collaboration and competition

Managers need to carefully manage this tension, pushing their employees to develop collaborative skills without
hampering the competitive instincts of ambitious newcomers. An emphasis on collaboration is ultimately
necessary to foster generative improvisation, but without a strong competitive drive, employees may struggle to
develop the reactive improvisation skills that they’ll need as a foundation for further growth.

3. Nurture social structures; especially when working remotely

Finally, the importance of strong social structures cannot be overstated. To foster true, generative improvisation
skills among their employees, managers must create a psychologically safe environment of rich social interactions
that engenders trust and collaboration, enabling employees to gain inspiration from each other’s subtle cues and
work together to come up with new ideas without excessive fear of rejection. And of course, this sort of
environment can be challenging to maintain in the best of times, but it’s even harder virtually. As such, especially
in the face of limited in-person interaction, managers should pay extra attention to supporting both formal and
informal mechanisms for building strong social connections between team members.
 Large firm Vs. Start-up innovation
Startup Culture A startup environment is typically a fast-paced culture in which creativity and communication
are valued. Startups tend to be smaller than large corporations, especially in the early stages of growth, enabling
employees to build strong relationships and freely exchange thoughts and ideas. They’re also capable of acting
nimbly to adjust business practices and hit shifting goals.

Corporate Culture A corporate environment, on the other hand, is often characterized by a more structured,
formal approach to company culture. Because many corporations employ thousands of workers, it’s not
uncommon for employees to be unfamiliar with colleagues outside of their immediate teams or departments.

Startup point of view As they confront numerous challenges in their early life, startups need to work with
large groups if they want to increase their chances of survival. The large companies in the CAC40 seem to be the
ideal partners to tackle some of the issues that the startups might face: the lack of financing, the lack of
accompaniment, the poor market knowledge.

Moreover, most entrepreneurs see partnerships as the cornerstone for the adaptation and the evolution of their
business. It is a way to challenge their ideas with a real client that offers a leverage over their ongoing
development without a heavy financial compensation. Additionally, having a big firm that shows a strong interest
in your solution can prove useful when it comes to reaching out to new clients and investors.

Corporation point of view Driven by the digital revolution, startups were first seen as fierce competitors that
corporations have long found hard to face.

Nowadays, this vision has changed, and some major groups have managed to turn this challenge into an asset.
Risk has been transformed into opportunity, and innovation has been set as a goal for each company: It is now
firmly integrated into corporate strategies as a major goal for the large firms.

Former French Tech director, David Monteau, has confirmed this tendency stating that “[…] for about 4 to 5
years, big French groups have communicated and invested a lot into startups.” Many corporations are now
chasing after startups, hoping to accelerate or even save their activities.

Indeed, S&P 500 companies’ lifespan has decreased from 67 years a century ago to 15 years today. According to
a study conducted by the John M. Olin School of Business at the University of Washington, 40% of the Fortune
500 companies will no longer exist in a decade as they desperately need new ideas and solutions to remain
competitive.

These numbers show the importance of partnering with a startup. It is a strategic choice for corporations as it is a
way to change their internal processes and disrupt their market to avoid the decline of their activities.

Startups:

Huge risks with huge returns: According to Forbes and other sources like Wamda, 90% of all tech startups fail.
Whether it’s the lack of funding, being pushed out by competitions, poor management, or not adapting to users in
time and evolve to something better. There are many reasons that can lead to the failures of startups because of
their immaturity as a whole. However, what comes with this high risk is a high return after success. Every startup
company today dreams of being the next Uber or the next Snapchat because of their fast and rapid success.

Small team: The reason why you feel impactful in a startup is often because you’re part of a very small team. The
average startup team can very well be within 10 people. So when you’re part of that team, you are going to be
tasked with tasks that are very core to the survival of the entire team. It’s great to be impactful in a startup, but
that also means that it can go both ways. For example, Breezi, a website building tool, once hired a customer
service manager that couldn’t keep up with the pace. Though the bullet was dodged at the end, it was still a close
call for the team as a whole.

More than just a job: People often hear about the differences between working in a startup and working in a big
company. So what is it like working in a startup? Easily put everyday is a battle. Startups are often working on
tight schedules whether it’s to meet product deadlines or meeting a different investor. Working in a startup also
means that you’re most likely going to have an active role in the growth of the company. People who join to work
in a startup often believe that they are part of something bigger and it’s a valuable experience to watch a company
they’re part of grow and mature.

Always pivoting: One thing you hear all the time about startups is that they are always pivoting, and that’s true.
Pivoting correctly is crucial to the survival and growth of a startup. Instagram isn’t always the photo sharing
application you see today. It started off as a check in application that allows you to show people where you are.
Through a series of pivots and edits Instagram became what it is today. This is why it’s important to know that the
final products of startups isn’t always what they set off to create at the very start. There will be new challenges
and opportunities that will either evolve or destroy the startups.

Low cash flow: Another important but saddening fact about startups is their low cash flow. One thing you hear
most about startups is that they are always fundraising. If you imagine a startup as a plane preparing to take off
and its funds as the runway. The longer the runway is the more likely it is for a startup to take off successfully.
That is why you often hear startups actively going through series of fundraising. Startups won’t take off without
the funds necessary. It’s great to have a dream of solving problems, but there are also harsh realities that one must
face when doing so.

Offering innovation: Startups normally set of their journey as an entity that is trying to solve problems through
innovation. Coursera and Udemy allows people to learn anytime and anywhere via their platforms. Venmo allows
people to pay each other conveniently via their phones. Discord allows people to talk to each other as a team
when gaming. Point is, startups always have their eyes set on a problem and they firmly believe that their products
are the keys to solving these problems.

Big Corporations

Regular Jobs: Working in a big corporation means you’re the one out of thousand people they hired this year.
You feel more invisible in a big corporation, meaning you hold less responsibility but less accountability as well.
You will receive standard pay and have high security in hold your job, but in exchange for that is probably a less
interesting life style.

Huge Team: According to CNN money, the total number of employees among all Fortune 500 companies is
26,405,144 people. This makes the average number of employees per firm 52,810 people. Big corporations offer
more job security to people because of how big they are. Big corporations aren not as likely to fail and go
bankrupt compared to small startups because of their solid foundations, well established relationships with the
government and people, and board of executives that makes decisions together.

Emphasis on profits over risks: Once a company increases in size, it starts becoming more risk adverse.
Corporations know that for every success they get, there is more failures coming their way. When a corporation
get larger in size, there are more things to consider such as the well being of its workers, its public images, and its
constant growth. With so many people’s well being as risk, corporations can no longer take big leaps of faith.
Instead, they have to focus on what they’ve been doing and continuing that success.

Huge Pools of Funds: The biggest difference between startups and corporations is probably their amount of
funds. Startups are always tight in cash flow and always looking for more. Corporations are always looking for
profit, but a week without sales will not have as much of an impact to the company’s well being compared to a
startup. Corporations also have more funds to spend on things like advertisements, talent hiring, and opening up
additional locations. Startups probably have to pick between hiring a sufficient engineer and running online ads
for 2 months. That is the main different. Startups have to be careful in every step they take while big corporations
and more rebound for mistakes.

Doing similar things: Like previously stated, big corporations tend to be more risk adverse. They won’t make
huge pivots and conduct large scale company restructuring like what some startups may do. They focus on doing
what they do best and substantially increasing profit. Companies like Walmart are still innovating, but what keeps
it alive is the everyday process of selling household goods to customers.

Co-creation and Open innovation

Co-creation

Co-creation is a shared process by which customers, suppliers, retailers, designers and other relevant third-parties
work together with the company to generate ideas towards a mutually valued endpoint. Each party represents their
unique perspective in the product relationship ranging from buyer to developer and, via the process, is encouraged
to communicate their thoughts around things that work, things that don’t, areas of need, opportunities for
improvement and more. These discussions continue from product inception through launch. Co-creation sessions
are typically lively with each party fully engaged as each party is regarded as equally invested and equally
important. This is a hallmark of co-creation.

While open innovation suggests active collaboration between different organisations and the sharing of
intellectual property, co-creation relates more specifically to the relationship between an organisation and a
defined group of its stakeholders, usually its customers. The most common definition is: “An active, creative and
social process, based on collaboration between producers and users that is initiated by the firm to generate value
for customers.” (C.K. Prahalad and Venkat Ramaswamy, Co-Opting Customer Competence, 2000). Co-creation
means working with the end users of your product or service to exchange knowledge and resources, in order to
deliver a personalised experience using the company’s value proposition. While crowdsourcing is people creating
a great idea for you, co-creation is about people working with you to make a good idea even better. Co-creation is
also a way of enhancing customer engagement by directly involving them in the company’s value creation and
product development processes.

Co-creation can be executed as a simple process of gathering around a table for a discussion with a group of
internal and external experts, including customers, who have an opinion on the product or product need being
discussed. Co-creation can be as elaborate as having product designers and marketers do double-duty as furniture
delivery people so that they can go into consumers’ homes. For IKEA, this clever process allowed them to make
observations and engage homeowners to understand why they purchased and what product they wish they could
buy but can’t yet find. In a similar fashion, Lego® encourages its customers to engage and develop new designs
and upload them to the website where customers vote on the designs. Once a design gets 10,000 votes, Lego®
brings the design, and designer, internally through its stage-gate co-creation product development process.

Corporations with successful product track records, such as Siemens™, Apple®, GE®, P&G®, J&J® and so
many others, apply open innovation daily, in every aspect of product development. At J&J, the
philosophy/process is so entrenched that it is actually called out in the company’s credo which is the essence of
the brand. GE literally hangs a sign in every building lobby professing open innovation as its manifesto, “We
believe openness leads to inventiveness and usefulness”. Today, companies commercialize combinations of
internal and external ideas together with in-house and third-party pathways to the market.

Open innovation
As the name implies, open innovation is about letting everyone in, whether they’re a twenty-year employee or
somebody who just wonders why your industry does things this way when this other way seems so much easier.
The boundaries are much broader and it’s often a public process think the difference between an internal pitch of
a project to the board versus taking that project to Kickstarter.

Open innovation means creating and innovating with external stakeholders: customers, suppliers, partners and
your wider community. Companies are increasingly seeking to work and source knowledge beyond their
boundaries. Henry Chesbrough defines open innovation as “the use of purposive inflows and outflows of
knowledge to accelerate innovation. With knowledge now widely distributed, companies cannot rely entirely on
their own research, but should acquire inventions or intellectual property from other companies when it advances
the business model. Competitive advantage now often comes from leveraging the discoveries of others. An
“open” approach to innovation leverages internal and external source of ideas.”

Open innovation creates an environment where individuals and organisations can actively get involved in the
creation of mutually beneficial solutions. Through open innovation decision making is becoming a truly
democratic process. It allows for a bolder, wider approach to problem solving. It suggests interacting with broader
groups of stakeholders and it builds collaborative community engagement around specific challenges and issues:
ideas and input flow into organisations from outside and smart, innovative solutions are easily generated and
processed using idea management software. Open innovation is an inclusive, social way of solving complex
issues and improving processes.

Implementing the process in driving innovation

Innovation Capabilities

We have identified four key capabilities that truly innovative organisations do well.

Strategy: A clearly defined innovation strategy which guides decisions, and an explicit innovation ambition
from the Board and Top Management.

People: People are innovative, have a strong capability to innovate, and have innovation tools and innovation
metrics.

Process: Deep market and customer insights, constantly uncovering and understanding today’s and tomorrow’s
customer needs, collaborate well with partners and leading-edge customers.

Culture: Encouraged to think big, dream big and take calculated strategic risks. Great at making innovation
investments, funding is easily available for new innovative projects, and have the time and freedom to innovate.

Innovation as a Strategy

Innovation means different things to different people and is industry and sector context specific. For example, an
innovation in the health sector will differ from an innovation that relates to the use of solar technology. In the
former, people’s health is at risk if the innovation’s downstream impacts are poorly understood, while in the
latter, failure would be an inconvenience, or even seen as a major political issue in the rapidly evolving industry.

People

Innovation requires individuals who have a mindset which is comfortable dealing with uncertainty and ambiguity.
These individuals love to explore, learn, create and test opportunities. They view roadblocks as learning
opportunities to reshape or pivot their innovation.
 Highly-innovative organisations are encouraging their people to innovation, without implementing disruptive
change programs. The practical starting point to improve an organisation’s chances of stimulating and sustaining
innovation is amongst the organisation’s people.

The leadership team is ultimately responsible for driving innovation and manage it formally as part of the
organisation’s strategy. Holding the leadership team accountable for encouraging innovation makes a big
difference through formal innovation targets or metrics. In this way, innovation can be not only be encouraged but
can also be managed, tracked and measured as a core element in an organisation’s strategic initiatives.

The four Innovation Phases are:

 Opportunity Identification: Ideation, finding great ideas, concept development;

 Opportunity Development: Market research, strategy development, developing, testing and piloting those ideas
into the new product, service, program or business;

 Scaling Up: Launching the innovation, testing and validating that systems and processes are ready to scale;

 Growth: Delivering the innovation at scale, driving growth so that the innovation is sustainable and merges
successfully into the organisation.

Culture

The cultural part of innovation is key. Innovation results from iterative experimental learning. Innovation requires
an empowering work environment. To facilitate increased innovation, one needs to enable and drive innovative
behaviours by aligning culture, structure, leadership behaviours, measurements and rewards.

Implementation Process

1. Create dedicated innovation teams

It is important to remember that there may be employees in your company who have the best ideas but are not
good at communicating them. Therefore, it is important to have a team to help support and encourage idea
sharing. If your company does not have the resource for a dedicated team this can be made up of members from
different areas in your business.

2. Introduce an idea sharing platform

You need to bring employees together to share and collaboratively generate ideas, whether in-person or virtually,
the right platform is important.

For example, Dell Idea Storm (www.ideastorm.com) provides a platform for anyone to submit their ideas, and to
comment and vote on ideas from other people whereas HP organizes brown bag lunches for their employees to
encourage them to discuss their ideas.

3. Create a screening process for all the ideas

You need to have an idea screening processes in place so your employees know that their ideas are being
considered. This can be done in different ways.

At Electrolux, cross-functional team consisting of design, research and development, and marketing professionals
are involved in the screening process which involves ideas being tested with focus groups. Any design failing to
achieve a 70% approval rating from the focus group is eliminated automatically. Whereas Google simply collects
 ideas from employees through emails at a company-wide suggestion box, and make the ideas available for all
other employees to rate and comment on.

4. Employ innovation advocates

Have a team of advocates on board who support the idea generation and innovation process. This group will
inspire change throughout the organization by asking questions, supporting ideas, and demanding radical changes.

For example, at Boeing, a ‘Phantom Works’ group was created which supported the idea generation and
innovation process by communicating between departments and sought ideas and technologies that could be
applied in newly identified areas of the organization.

5. Encourage collaborative experimentation

Organizations should employ collaborative experimentation to improve the chance of success at innovation.
Communicating with stakeholders brings new ideas, corrects problems, addresses market needs, and speeds up the
innovation process.

An example of this is when Google made prototypes of products such as Gmail and Google Earth available for
existing users which helped with developments.

6. Communicate with your employees

It is important for your employees to ‘buy in’ to your ideas and know as much as they can about the development
of them.

For example, HP Labs uses electronic newsletters, informal coffee talks, and peer reviews to convey its latest
innovation developments to employees. Having several venues for sharing information increases the likelihood
that every employee will find a useful source for information about innovation and new ideas in the organization.
This decreases uncertainty and negativity and helps people to be open to new ideas.

7. Be specific with your communication

Beyond communicating to your employees, you need to let them know how the innovation affects them and the
positive outcomes it could bring. For example, at PNC Bank, online learning courses for employees were tied to
specific job skills so each employee could tailor their online learning to meet their objectives. In this way,
employees could see how the innovative course offerings applied directly to their situation and could then decide
how to invest their time.

Sources of innovation
The 7 sources of innovative opportunity were listed by Peter Drucker in his book “Innovation and
Entrepreneurship. Peter Drucker refers to innovation as the effort to create purposeful focused change in an
enterprise’s economic or social potential. Innovation must begin with an analysis of opportunities, in a systematic
and organized way. The starting point in innovation is identifying the scope for improvement with respect to
customers, suppliers and internal processes. Innovations must be market focused. Opportunities to innovate are
provided by new customer segments which are just emerging; customer segments that existing competitors are
neglecting or not serving well, new customer needs which are emerging and new ways of producing and
delivering products to customers.
New Knowledge, Both Scientific and Non-scientific

Every year new ideas are discovered and developed and a lot is added to the existing knowledge base. Knowledge
has always been a source of innovation yet knowledge-based innovation has long lead time and convergence of
knowledge. Technological and scientific breakthrough are the source of innovation that can’t be neglected. New
knowledge can be applied in every aspect of the organization, starting from learning more about emerging trends,
customer expectations, knowing how to use new technology, to improving customer service and supply chain.

Demographics

Changes in demographics are defined as changes in population, size, age structure, employment, educational
status and income. They are the most reliable indicators of future trends and offer diverse opportunities for
innovation. Each new generation demands new and unique products and services. These changes affect the market
as they determine the need for products, the target population who are buying those products, as well as the
number of products being distributed.

Innovation Based on Process Needs

The weak spots in your organization workflows, processes and systems provide practical opportunities for
innovation. Innovation based on process needs is a task-focused rather than situation-focused. It improves the
process that already exists, redesigns existing, old processes and reinforces the weak links.

The Unexpected

The ever-changing business world is full of surprises. Yet, not only the unexpected failures but also the
unexpected success, or even events that occur in the organization can trigger innovative ideas and become the
creative sources of innovation. Unexpected situations can have a very powerful influence and can inspire an
organization to gain another, new, perspective on the situation.

Changes in Perception, Mood and meaning

With the growth of technology, there are significant changes in the way people perceive the world. People change
their perception about a certain product, brand or even industry. This is basically the question “Is the glass half
full or half empty?”. Changes in perception are based on the mood rather than on the facts. Changing your
perception from “half empty“ to “half full” opens up incredible innovation opportunities.

Changes In Industry Structure or Market Structure

As the business landscape evolves, every organization has to adapt. Changes in industry shake-up businesses, yet
they can inspire people to explore and create new ideas as well. Generally, industry or market structure is ever-
changing and it can create great opportunities for innovation in order for organizations to adapt and adjust
quickly.

The Incongruity

When our reality doesn’t meet our expectations we can discover new insights and gain new perspectives.
Incongruity is a dissonance between what is and what it is supposed to be. It can be a great source of innovative
ideas as it compares what is and what everybody else assumes it to be. Of all incongruities, the dissonance
between perceived and actual customers’ expectations is maybe the most common one.
 Innovation Environment
Management and its people that have a mutual dependency. Culture can enhance or inhibit the tendencies to
innovate, it certainly has a profound influence on the innovative capacity and provides the rich nutrients to nurture
innovation or kill it. Culture has always been regarded as a primary determinant of innovation.

To foster innovation and its environment, key levels of management and individuals must be committed to
creating an environment and culture that promotes creativity, be engaged and promote the ability to promote
change in nimble, agile and flexible ways to meet changing conditions in the market place and with customers. It
is this creativity through the innovations that are flowing through the organization that often needs a critical focal
point to create a change that has impact.

Steps To Creating an Innovative Environment:

 Role Model: Ask powerful questions, engage in creative thinking and use tools and exercises to get people “out
of the box”.

 Dish Out Recognition: Recognize the right things including when mistakes move you to another level.

 Make it Safe to Explore: Let it be okay to explore new or even crazy ideas. Talk about what is “beyond”
possible and what you can see or the resources you currently have.

 Provide Time & Resources: Give people the time and space to be innovative and they will. Provide spaces,
technology or outside resources for people to innovate.

 Always Search for the Second Right Answer: Get in the habit of always searching for the 2nd and 3rd right
answer. Never stop at the first right answer. This is what limits innovative thinking.

 Make it a Goal or Strategy: Make innovation an expectation or a way that you do business.

Ekvalls Model

Ekvall’s model was divided into two halves, each comprising five factors. This also allowed Ekvall’s model to be
split over two pages, with the first entitled ‘atmosphere for work’, and the second entitled ‘attitude to work.’
Maybe this is why I like it for this defining split for deepening the conversation.

Again, to use this you attribute 100 points per section to gauge relative importance using a simple Likert-type
scale with anchor phrases at each extreme.
Organizational Climate for Creativity and Innovation (1996) is the article that sums up all of Ekvall’s research
within organizational climate and creativity throughout the second half of the 20th Century.

This was where Ekvall formalized his ten dimensions of creative climate (challenge, freedom, idea support, trust /
openness, dynamism / liveliness, playfulness / humor, debates, conflicts, risk-taking, and idea time) as well as
described the implications of the Creative Climate Questionnaire (CCQ).

The ten dimension factors from Ekvall’s creative climate questionnaire.

Attitude to Work dimensions

Idea Time: Amount of time people can use (and do use) for elaborating new ideas. In the high idea-time situation,
possibilities exist to discuss and test suggestions not included in the task assignment. There are opportunities to
take the time to explore and develop new ideas. Flexible timelines permit people to explore new avenues and
alternatives. In the reverse case, every minute is booked and specified. The time pressure makes thinking outside
the instructions and planned routines impossible.

Risk-Taking: Tolerance of uncertainty and ambiguity in the workplace. In the high risk-taking case, bold
initiatives can be taken even when the outcomes are unknown. People feel as though they can “take a gamble” on
their ideas. People will often “go out on a limb” to put an idea forward. In a risk-avoiding climate there is a
cautious, hesitant mentality. People try to be on the “safe side” and often “sleep on the matter.” They set up
committees and they cover themselves in many ways.

Challenge and Involvement: Degree to which people are involved in daily operations, long-term goals, and
visions. When there is a high degree of challenge and involvement people feel motivated and committed to
making contributions. The climate is dynamic, electric, and inspiring. People find joy and meaningfulness in their
work. In the opposite situation, people are not engaged and feelings of alienation and apathy are present.
Individuals lack interest in their work and interpersonal interactions are dull and listless.

Freedom: independence in behaviour exerted by the people in the organization. In a climate with much freedom,
people are given the autonomy and resources to define much of their work. They exercise discretion in their day-
to-day activities. Individuals are provided the opportunity and take the initiative to acquire and share information
about their work. In the opposite climate people work within strict guidelines and roles. They carry out their work
in prescribed ways with little room to redefine their tasks.

Idea Time Support: ways new ideas are treated. In the supportive climate, ideas and suggestions are received in
an attentive and professional way by bosses, peers, and subordinates. People listen to each other and encourage
initiatives. Possibilities for trying out new ideas are created. The atmosphere is constructive and positive when
considering new ideas. When idea support is low, the automatic “no” is prevailing. Fault-finding and obstacle-
raising are the usual styles of responding to ideas.

Work Atmosphere dimensions.

Conflict: Presence of personal and emotional tensions in the organization. When the level of conflict is high,
groups and individuals dislike and may even hate each other. The climate can be characterized by “interpersonal
warfare.” Plots, traps, power and territory struggles are usual elements of organizational life. Personal differences
yield gossip and slander. In the opposite case, people behave in a more mature manner; they have psychological
insight and control of impulses. People accept and deal effectively with diversity.

Debate: Occurrence of encounters and disagreements between viewpoints, ideas, and differing experiences and
knowledge. In the debating organization many voices are heard and people are keen on putting forward their ideas
for consideration and review. People can often be seen discussing opposing opinions and sharing a diversity of
perspectives. Where debate is missing, people follow authoritarian patterns without questioning them.
Playfulness/Humor: Spontaneity and ease displayed within the workplace. A professional, yet relaxed
atmosphere where good-natured jokes and laughter occur often is indicative of this dimension. People can be seen
having fun at work. The climate is seen as easy-going and light-hearted. The opposite climate is characterized by
gravity and seriousness. The atmosphere is stiff, gloomy and cumbrous. Jokes and laughter are regarded as
improper and intolerable.

Trust/Openness: emotional safety in relationships. When there is a high degree of trust, individuals can be
genuinely open and frank with one another. People count on each other for professional and personal support.
People have a sincere respect for one another and give credit where credit is due. Where trust is missing, people
are suspicious of each other, and therefore, they closely guard themselves, their plans, and their ideas. In these
situations people find it extremely difficult to openly communicate with each other.

Dynamism/Liveliness: The eventfulness of life in the organization. In the highly dynamic situation, new things
are happening all the time and new ways of thinking about and handling issues often occur. The atmosphere is
lively and full of positive energy. There is a kind of psychological turbulence that is described by people in those
organizations as “full speed”, “go,” “breakneck,” “maelstrom,” “and the like. People get caught up in the
excitement and energy. The opposite situation could be compared to a slow jog-trot with no surprises. There are
no new projects; no different plans. Everything goes its usual way.

Creative Destruction
Creative destruction, sometimes known as Schumpeter’s gale, is a concept in economics which since the 1950s is
the most readily identified with the Austrian-born economist Joseph Schumpeter who derived it from the work of
Karl Marx and popularized it as a theory of economic innovation and the business cycle.

According to Schumpeter, the “gale of creative destruction” describes the “process of industrial mutation that
continuously revolutionizes the economic structure from within, incessantly destroying the old one, incessantly
creating a new one”.

In Marxian economic theory the concept refers more broadly to the linked processes of the accumulation and
annihilation of wealth under capitalism.

The German sociologist Werner Sombart has been credited with the first use of these terms in his work Krieg und
Kapitalismus. In the earlier work of Marx, however, the idea of creative destruction or annihilation implies not
only that capitalism destroys and reconfigures previous economic orders, but also that it must ceaselessly devalue
existing wealth (whether through war, dereliction, or regular and periodic economic crises) in order to clear the
ground for the creation of new wealth.

In Capitalism, Socialism and Democracy, Joseph Schumpeter developed the concept out of a careful reading of
Marx’s thought (to which the whole of Part I of the book is devoted), arguing (in Part II) that the creative-
destructive forces unleashed by capitalism would eventually lead to its demise as a system (see below). Despite
this, the term subsequently gained popularity within mainstream economics as a description of processes such as
downsizing in order to increase the efficiency and dynamism of a company. The Marxian usage has, however,
been retained and further developed in the work of social scientists such as David Harvey, Marshall Berman,
Manuel Castells and Daniele Archibugi.

Entrepreneurs introduce new products and technologies with an eye toward making themselves better off the
profit motive. New goods and services, new firms, and new industries compete with existing ones in the
marketplace, taking customers by offering lower prices, better performance, new features, catchier styling, faster
service, more convenient locations, higher status, more aggressive marketing, or more attractive packaging. In
another seemingly contradictory aspect of creative destruction, the pursuit of self-interest ignites the progress that
makes others better off.

Producers survive by streamlining production with newer and better tools that make workers more productive.
Companies that no longer deliver what consumers want at competitive prices lose customers, and eventually
wither and die. The market’s “invisible hand” a phrase owing not to Schumpeter but to Adam Smith shifts
resources from declining sectors to more valuable uses as workers, inputs, and financial capital seek their highest
returns.

Through this constant roiling of the status quo, creative destruction provides a powerful force for making societies
wealthier. It does so by making scarce resources more productive. The telephone industry employed 421,000
switchboard operators in 1970, when Americans made 9.8 billion long-distance calls. With advances in switching
technology over the next three decades, the telecommunications sector could reduce the number of operators to
156,000 but still ring up 106 billion calls. An average operator handled only 64 calls a day in 1970. By 2000, that
figure had increased to 1,861, a staggering gain in productivity. If they had to handle today’s volume of calls with
1970s technology, the telephone companies would need more than 4.5 million operators, or 3 percent of the labor
force. Without the productivity gains, a long-distance call would cost six times as much.

The telephone industry is not an isolated example of creative destruction at work. In 1900, nearly forty of every
hundred Americans worked in farming to feed a country of ninety million people. A century later, it takes just two
out of every hundred workers. Despite one of history’s most thorough downsizings, the country has not gone
hungry. The United States enjoys agricultural plenty, producing more meat, grain, vegetables, and dairy products
than ever, thanks largely to huge advances in agricultural productivity.