Innovation is a process of using available information to solve a problem or to create something better. It can be done by using new technology, developing new processes, or altering an existing process. Inventors, developers, product designers, marketing managers, and business owners are all involved in innovation. Innovation can be disruptive or transformative. In practice, innovation refers to both.
Innovation is the actual practical application of new ideas or discoveries, usually with an opportunity to obtain profit from doing so. The idea for innovation can come from many different sources and it often takes time and resources to bring new innovations to market. Innovation can come from within a company, such as from a new idea, new ways of managing a business, or even new methods of doing things. Many businesses also innovate through the use of technology, such as by using the Internet and other emerging technologies to communicate with customers or clients and to perform business tasks. In business innovation, the idea is usually to create new value by applying existing knowledge to problems or to create a new service or product that can improve a product’s performance or quality. Innovation can also come from changing existing practices, such as in a company’s management style or the way it responds to competition and other forces that affect its growth and profitability.
Innovation can occur at all levels of the value chain, from research and development, through production, to sales and service. Some forms of innovation are sometimes considered to be true innovations, because they do add value and make things better. Other innovations are not considered to be true innovations until a substantial amount of time has passed, and a large number of people have used and benefited from them. True innovations may take a long period of time to produce tangible results; however, by applying the same principles that drive innovation, companies can create innovations that create value immediately and that start a virtuous cycle that can eventually increase the company’s profitability for years to come.
The definition of innovation therefore depends largely on the company at hand. While a large company may be able to quickly and effectively implement an innovation process, a small company may be forced to spend many years of testing and refinements before it can take advantage of an innovation. It takes a long time before innovation becomes commonplace in a company, and this requires both large and small companies to carefully define innovation so they can take advantage of the most suitable forms of change and make them work for their benefit.
Value creation in innovation refers to creating new value in markets, increasing competitiveness, creating new market share, or capturing new value Chains are important because markets can move very quickly and innovation can make changes happen much more quickly than traditional strategies. Value chains are connected in such a way that the process does not just depend on one element; instead, each element in the chain has a significant impact on the other elements. For example, if you want to improve customer service in your hotel business, you may need to implement an innovation strategy that focuses on improving the overall customer experience in your facility. Creating a value chain allows companies to think about each piece as an element in a chain and therefore it is easier to identify what actions will create the greatest amount of value. A well thought out and executed value chain strategy can lead to a dramatic increase in productivity, while ensuring that the company stays competitive.
Innovation can also be captured in terms of new value systems. Many businesses believe that an innovation process will allow them to capture enough new value to allow them to realize their profit potential. This allows companies to focus on processes and designs that allow them to capitalize on the creation of new value and not on the creation of value through innovation. Companies that are able to capture new value using an innovation process stand to increase their revenues substantially and keep their competitors from ever capturing that same value.