Innovation and Business, Innovation of Business, Business Innovation Ideas

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In economics, Innovation in Business and government policy - something new must be substantially different, not an insignificant change. In economics the change must increase value, customer value, or producer value. Innovation of Business is intended to make someone better off, and the succession of many innovations grows the whole country's economy.

The term Innovation and Business may refer to both radical and incremental changes to products, processes or services. The often unspoken goal of Business Innovation is to solve a problem.

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Consider the issues on this page when you're in the thinking stage of Business Innovation. Business Innovation is an important topic in the study of economics, business, technology, sociology, and engineering. Since the Innovation of Business is also considered a major driver of the economy, the factors that lead to Business Innovation are also considered to be critical to policy makers.

When prospective customers had a business or had it on their mind, traditionally, Softhard Solutions was able to provide them with accounting software (often also hardware) to run their business the way they do the business.

There were, at many times, Softhard Solutions' customers who did not quite have a clear picture of how to do Innovation in Business they wanted to do or undertake.

This page is dedicated to people wanting to Innovate Business. Its all tips and 'need to know' how to do Innovation in Business and what to do before a beginning.

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Classic Definitions

The classic definitions to how to do Innovation in Business include:

  • The act of introducing something new: something newly introduced (The American Heritage Dictionary.

  • The introduction of something new. (Merriam-Webster Online).

  • A new idea, method or device. (Merriam-Webster Online).

  • The successful exploitation of new ideas (Department of Trade and Industry, UK).

  • Change that creates a new dimension of performance (Peter Drucker Hesselbein, 2002).

  • The process of making improvements by introducing something new.

In economics, Business Innovation and government policy - something new must be substantially different, not an insignificant change. In economics the change must increase value, customer value, or producer value. Innovations are intended to make someone better off, and the succession of many innovations grows the whole economy.

The term innovation may refer to both radical and incremental changes to products, processes or services. The often unspoken goal of innovation is to solve a problem. Innovation is an important topic in the study of economics, business, technology, sociology, and engineering. Since to Innovate Business is also considered a major driver of the economy, the factors that lead to innovation are also considered to be critical to policy makers.

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Getting Started

Before you get started with your Business Innovation, find out if people are interested in buying your products or services. Find out who your competitors are and whether the market can sustain your business. Conduct some research to see whether your idea is really feasible. This will involve gathering, analyzing and evaluating information to help you formulate your Business Innovation goals.

Innovation in Business increases the likelihood of any business succeeding, however most people do not know where to start. People often think of innovating as just invention. Innovation is more than that. It is also about new ideas and responding to new trends and market conditions, or making improvements to products and services that already exist.

As a starting point for Innovation of Business, new ideas are needed. These ideas will form the basis for new products, services or processes which will satisfy a need, be the result of an opportunity or solve a problem. Ideas can be sourced from any number of areas including customers or a problem you may have encountered.

While there are no sure-fire ways to guarantee success in creating great ideas, one of the best ways is to listen to your customers.

Also remember everyone in the business has the potential to be creative. Each employee will have a different viewpoint or may come from a different background. This will help in the variety of ideas created. Even the smallest idea can be the cause of a productivity improvement.

In order to start increasing the flow of ideas required to increase innovation in your business, there are a number of basic organizational characteristics which can be addressed to support an innovative business culture. These include:

  • The internal culture of a business and the external culture in which it operates will influence the ability of a business to innovate. Innovation thrives in a culture that is not afraid of risk-taking, promotes the value of experimenting, is adaptable and rewards enterprise. An Innovation of Business usually needs to be led from the top management of the business.

  • In order for a business to be innovative, it must be flexible and open to new ideas. Managers need to adopt a positive attitude and focus on the potential for enhancing competitiveness through innovation.

  • The allocation of resources for innovation including finance and personnel is dependent on management understanding the benefits of new ideas. Unfortunately business expenditure on innovation is often characterized as expenditure rather than investment, and improvements to operational processes may not be seen as innovation at all. Resources need to be allocated to innovation, even if it is only giving employees time to come up with new ideas.

  • A free flow of information and ideas up, down and across the business encourages the development of new ways of performing tasks and can also lead to the development of new products. Processes which allow employees to suggest improvements and ideas, circulate these ideas and be rewarded for their entrepreneurial behavior can be implemented.

  • A culture of continuous learning can be encouraged by supporting training programs and on the job training to enhance innovation skills.

There is also a range of support available to help your business to be more innovative. You can obtain information from your local, State or Australian governments, industry associations, chambers of commerce, business enterprise centres or a range of private sector business advisers. For a list of some of these contacts see Australian Governments - Innovation assistance and advice.

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In the organizational context, Innovation of Business may be linked to performance and growth through improvements in efficiency, productivity, quality, competitive positioning, market share, etc. All organizations can innovate, including for example hospitals, universities, and local governments.

While Innovation of Business typically adds value, innovation may also have a negative or destructive effect as new developments clear away or change old organizational forms and practices. Organizations that do not innovate effectively may be destroyed by those that do. Hence Business Innovation typically involves risk.

A key challenge in Business Innovation is maintaining a balance between process and product innovations where process innovations tend to involve a business model which may develop shareholder satisfaction through improved efficiencies while product innovations develop customer support however at the risk of costly R & D that can erode shareholder returns.

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Conceptualizing Innovation

Innovation and Business has been studied in a variety of contexts, including in relation to technology, commerce, social systems, economic development, and policy construction. There are, therefore, naturally a wide range of approaches to conceptualizing innovation in the scholarly literature.

Fortunately, however, a consistent theme may be identified: innovation is typically understood as the introduction of something new and useful, for example introducing new methods, techniques, or practices or new or altered products and services.

Distinguishing from Invention and Other Concepts

"An important distinction is normally made between invention and innovation. Invention is the first occurrence of an idea for a new product or process, while innovation is the first attempt to carry it out into practice" (Fagerberg, 2004: 4).

It is useful, when conceptualizing innovation, to consider whether other words suffice. Recent authors point out that invention - the creation of new tools or the novel compilation of existing tools - is often confused with innovation.

Many product and service enhancements may fall more rigorously under the term improvement. Change and creativity are also words that may often be substituted for innovation. What, then, is innovation that makes it necessary to have a different word from these others, or is it a catch-all word, a loose synonym?

Much of the current business literature blurs the concept of innovation with value creation, value extraction and operational execution. In this view, an innovation is not an innovation until someone successfully implements and makes money on an idea. Extracting the essential concept of innovation from these other closely linked notions is no easy thing.

One emerging approach is to use these other notions as the constituent elements of innovation as an action: Innovation occurs when someone uses an invention - or uses existing tools in a new way - to change how the world works, how people organize themselves, and how they conduct their lives.

Note in this view inventions may be concepts, physical devices or any other set of things that facilitate an action. An innovation in this light occurs whether or not the act of innovating succeeds in generating value for its champions.

Innovation is distinct from improvement in that it causes society to reorganize. It is distinct from problem solving and is perhaps more rigorously seen as new problem creation. And in this view, innovation applies whether the act generates positive or negative results.

Innovation in Organizations

A convenient definition of innovation from an organizational perspective is given by Luecke and Katz (2003), who wrote:

"Innovation . . . is generally understood as the introduction of a new thing or method . . . Innovation is the embodiment, combination, or synthesis of knowledge in original, relevant, valued new products, processes, or services." .

Don Sheelen also placed innovation at the pinnacle of modern business stating that:

"Innovation is the lifeblood of any organization." Sheelan emphasizes that "without it, not only is there no growth, but, inevitably, a slow death".

Innovation of Business typically involves creativity, but is not identical to it: innovation involves acting on the creative ideas to make some specific and tangible difference in the domain in which the innovation occurs. For example, Amabile et al (1996) propose:

"All innovation begins with creative ideas . . . We define innovation as the successful implementation of creative ideas within an organization. In this view, creativity by individuals and teams is a starting point for innovation; the first is necessary but not sufficient condition for the second".

For innovation to occur, something more than the generation of a creative idea or insight is required: the insight must be put into action to make a genuine difference, resulting for example in new or altered business processes within the organization, or changes in the products and services provided.

A further characterization of innovation is as an organizational or management process. For example, Davila et al (2006), write:

"Innovation, like many business functions, is a management process that requires specific tools, rules, and discipline" .

From this point of view the emphasis is moved from the introduction of specific novel and useful ideas to the general organizational processes and procedures for generating, considering, and acting on such insights leading to significant organizational improvements in terms of improved or new business products, services, or internal processes.

Through these varieties of viewpoints, creativity is typically seen as the basis for innovation, and innovation as the successful implementation of creative ideas within an organization. From this point of view, creativity may be displayed by individuals, but innovation occurs in the organizational context only.

It should be noted, however, that the term 'innovation' is used by many authors rather interchangeably with the term 'creativity' when discussing individual and organizational creative activity. As Davila et al (2006) comment:

"Often, in common parlance, the words creativity and innovation are used interchangeably. They shouldn't be, because while creativity implies coming up with ideas, it's the "bringing ideas to life" . . . that makes innovation the distinct undertaking it is".

The distinctions between creativity and innovation discussed above are by no means fixed or universal in the innovation literature. They are however observed by a considerable number of scholars in innovation studies.

Economic Conceptions of Innovation

Joseph Schumpeter defined economic innovation in 1934:

  • The introduction of a new good —that is one with which consumers are not yet familiar—or of a new quality of a good.

  • The introduction of a new method of production, which need by no means be founded upon a discovery scientifically new, and can also exist in a new way of handling a commodity commercially.

  • The opening of a new market, that is a market into which the particular branch of manufacture of the country in question has not previously entered, whether or not this market has existed before.

  • The conquest of a new source of supply of raw materials or half-manufactured goods, again irrespective of whether this source already exists or whether it has first to be created.

  • The carrying out of the new organization of any industry, like the creation of a monopoly position (for example through trustification) or the breaking up of a monopoly position.

Schumpeter's focus on Innovation and Business is reflected in Neo-Schumpeterian economics.

Innovation is also studied by economists in a variety of contexts, for example in theories of entrepreneurship or in Paul Romer's New Growth Theory.

Transaction Cost and Network Theory Perspectives

According to Regis Cabral (1998, 2003):

"Innovation is a new element introduced in the network which changes, even if momentarily, the costs of transactions between at least two actors, elements or nodes, in the network".

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Types of Innovation

Scholars have identified at a variety of classifications for types innovations. Here is an unordered ad-hoc list of examples:

Business model innovation

involves changing the way business is done in terms of capturing value.

Marketing innovation

is the development of new marketing methods with improvement in product design or packaging, product promotion or pricing.

Organizational innovation

involves the creation or alteration of business structures, practices, and models, and may therefore include process, marketing and business model innovation.

Process innovation

involves the implementation of a new or significantly improved production or delivery method.

Product innovation

involves the introduction of a new good or service that is new or substantially improved. This might include improvements in functional characteristics, technical abilities, ease of use, or any other dimension.

Service innovation

refers to service product innovation which might be, compared to goods product innovation or process innovation, relatively less involving technological advance but more interactive and information-intensive.

Supply chain innovation

where innovations occur in the sourcing of input products from suppliers and the delivery of output products to customers.

Substantial innovation

introduces a different product or service within the same line, such as the movement of a candle company into marketing the electric light bulb.

Financial innovation

through which new financial services and products are developed, by combining basic financial attributes (ownership, risk-sharing, liquidity, credit) in progressive innovative ways, as well as reactive exploration of borders and strength of tax law.

Through a cycle of development, directive compliance is being sharpened on opportunities, so new financial services and products are continuously shaped and progressed to be adopted. The dynamic spectrum of financial innovation, where business processes, services and products are adapted and improved so new valuable chains emerge, therefore may be seen to involve most of the above mentioned types of innovation.

Incremental innovations

is a step forward along a technology trajectory, or from the known to the unknown, with little uncertainty about outcomes and success and is generally minor improvements made by those working day to day with existing methods and technology (both process and product), responding to short term goals.

Most innovations are incremental innovations. A value-added business process, this involves making minor changes over time to sustain the growth of a company without making sweeping changes to product lines, services, or markets in which competition currently exists.

Breakthrough, disruptive or radical innovations

involves launching an entirely novel product or service rather than providing improved products & services along the same lines as currently. The uncertainty of breakthrough innovations means that seldom do companies achieve their breakthrough goals this way, but those times that breakthrough innovation does work, the rewards can be tremendous. Involves larger leaps of understanding, perhaps demanding a new way of seeing the whole problem, probably taking a much larger risk than many people involved are happy about. There is often considerable uncertainty about future outcomes.

There may be considerable opposition to the proposal and questions about the ethics, practicality or cost of the proposal may be raised. People may question if this is, or is not, an advancement of a technology or process. Radical innovation involves considerable change in basic technologies and methods, created by those working outside mainstream industry and outside existing paradigms. Sometimes it is very hard to draw a line between both.

New technological systems (systemic innovations)

that may give rise to new industrial sectors, and induce major change across several branches of the economy.

Social innovations

a number of different definitions, but predominantly refers to either innovations that aim to meet a societal need or the social processes used to develop an innovation.

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Innovation and Market Outcome

Market outcome from Innovation in Business can be studied from different lenses. The industrial organizational approach of market characterization according to the degree of competitive pressure and the consequent modeling of firm behaviour often using sophisticated game theoretic tools, while permitting mathematical modeling, has shifted the ground away from an intuitive understanding of markets.

The earlier visual framework in economics, of market demand and supply along price and quantity dimensions, has given way to powerful mathematical models which though intellectually satisfying has led policy makers and managers groping for more intuitive and less theoretical analyses to which they can relate to at a practical level.

Non quantifiable variables find little place in these models, and when they do, mathematical gymnastics (such as the use of different demand elasticities for differentiated products) embrace many of these qualitative variables, but in an intuitively unsatisfactory way.

In the management (strategy) literature on the other hand, there is a vast array of relatively simple and intuitive models for both managers and consultants to choose from. Most of these models provide insights to the manager which help in crafting a strategic plan consistent with the desired aims. Indeed most strategy models are generally simple, wherein lie their virtue.

In the process however, these models often fail to offer insights into situations beyond that for which they are designed, often due to the adoption of frameworks seldom analytical, seldom rigorous. The situational analyses of these models often tend to be descriptive and seldom robust and rarely present behavioral relationship between variables under study.

From an academic point of view, there is often a divorce between industrial organization theory and strategic management models. While many economists view management models as being too simplistic, strategic management consultants perceive academic economists as being too theoretical, and the analytical tools that they devise as too complex for managers to understand.

Innovation in Business literature while rich in typologies and descriptions of innovation dynamics is mostly technology focused. Most research on innovation has been devoted to the process (technological) of innovation, or has otherwise taken a how to (innovate) approach.

The integrated Innovation of Business model of Soumodip Sarkar goes some way to providing the academic, the manager and the consultant an intuitive understanding of the innovation – market linkages in a simple yet rigorous framework in his book , Innovation, Market Archetypes and Outcome - An Integrated Framework.

The integrated model presents a new framework for understanding firm and market dynamics, as it relates to innovation. The model is enriched by the different strands of literature - industrial organization, management and innovation.

The integrated approach that allows the academic, the management consultant and the manager alike to understand where a product (or a single product firm) is located in an integrated innovation space, why it is so located and which then provides valuable clues as to what to do while designing strategy.

The integration of the important determinant variables in one visual framework with a robust and an internally consistent theoretical basis is an important step towards devising comprehensive firm strategy.

The integrated framework provides vital clues towards framing a what to guide for managers and consultants. Furthermore, the model permits metrics and consequently diagnostics of both the firm and the sector and this set of assessment tools provide a valuable guide for devising strategy.

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Sources of Innovation

There are several sources of Business Innovation. In the linear model the traditionally recognized source is manufacturer innovation. This is where an agent (person or business) innovates in order to sell the innovation. Another source of innovation, only now becoming widely recognized, is end-user innovation.

This is where an agent (person or company) develops an innovation for their own (personal or in-house) use because existing products do not meet their needs. Eric von Hippel has identified end-user innovation as, by far, the most important and critical in his classic book on the subject, Sources of Innovation.

Innovation by businesses is achieved in many ways, with much attention now given to formal research and development for "breakthrough innovations." But innovations may be developed by less formal on-the-job modifications of practice, through exchange and combination of professional experience and by many other routes. The more radical and revolutionary innovations tend to emerge from R & D, while more incremental innovations may emerge from practice - but there are many exceptions to each of these trends.

Regarding user innovation, rarely user innovators may become entrepreneurs, selling their product, or more often they may choose to trade their innovation in exchange for other innovations. Nowadays, they may also choose to freely reveal their innovations, using methods like open source. In such networks of innovation the creativity of the users or communities of users can further develop technologies and their use.

Whether innovation is mainly supply-pushed (based on new technological possibilities) or demand-led (based on social needs and market requirements) has been a hotly debated topic. Similarly, what exactly drives innovation in organizations and economies remains an open question.

More recent theoretical work moves beyond this simple dualistic problem, and through empirical work shows that innovation does not just happen within the industrial supply-side, or as a result of the articulation of user demand, but though a complex processes that links many different players together - not only developers and users, but a wide variety of intermediary organizations such as consultancies, standards bodies etc.

Work on social networks suggests that much of the most successful innovation occurs at the boundaries of organizations and industries where the problems and needs of users, and the potential of technologies can be linked together in a creative process that challenges both.

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Value of Experimentation in Innovation

When an innovative idea requires a new business model, or radically redesigns the delivery of value to focus on the customer, a real world experimentation approach increases the chances of market success. New business models and customer experiences can't be tested through traditional market research methods. Pilot programs for new innovations set the path in stone too early thus increasing the costs of failure.

Stefan Thomke of Harvard Business School has written a definitive book on the importance of experimentation. Experimentation Matters argues that every company's ability to innovate depends on a series of experiments [successful or not], that help create new products and services or improve old ones.

That period between the earliest point in the design cycle and the final release should be filled with experimentation, failure, analysis, and yet another round of experimentation. “Lather, rinse, repeat,” Thomke says. Unfortunately, uncertainty often causes the most able innovators to bypass the experimental stage.

In his book, Thomke outlines six principles companies can follow to unlock their innovative potential:

  • Anticipate and Exploit Early Information Through 'Front-Loaded' Innovation Processes.

  • Experiment Frequently but Do Not Overload Your Organization.

  • Integrate New and Traditional Technologies to Unlock Performance.

  • Organize for Rapid Experimentation.

  • Fail Early and Often but Avoid 'Mistakes'.

  • Manage Projects as Experiments.

Thomke further explores what would happen if the principles outlined above were used beyond the confines of the individual organization. For instance, in the state of Rhode Island, innovators are collaboratively leveraging the state's compact geography, economic and demographic diversity and close-knit networks to quickly and cost-effectively test new business models through a real-world experimentation lab.

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Diffusion of Innovations

Once innovation occurs, innovations may be spread from the innovator to other individuals and groups.

This process has been studied extensively in the scholarly literature from a variety of viewpoints, most notably in Everett Rogers' classic book, The Diffusion of Innovations.
Growth and Time of new Technology
Growth and Time of new Technology.

However, this 'linear model' of innovation has been substantially challenged by scholars in the last 25 years, and much research has shown that the simple invention-innovation-diffusion model does not do justice to the multilevel, non-linear processes that firms, entrepreneurs and users participate in to create successful and sustainable innovations.

Rogers proposed that the life cycle of innovations can be described using the 's-curve' or diffusion curve. The s-curve maps growth of revenue or productivity against time. In the early stage of a particular innovation, growth is relatively slow as the new product establishes itself.

At some point customers begin to demand and the product growth increases more rapidly. New incremental innovations or changes to the product allow growth to continue. Towards the end of its life cycle growth slows and may even begin to decline. In the later stages, no amount of new investment in that product will yield a normal rate of return.

The s-curve is derived from half of a normal distribution curve. There is an assumption that new products are likely to have "product Life". i.e. a start-up phase, a rapid increase in revenue and eventual decline. In fact the great majority of innovations never get off the bottom of the curve, and never produce normal returns.

Innovative companies will typically be working on new innovations that will eventually replace older ones. Successive s-curves will come along to replace older ones and continue to drive growth upwards. In the figure above the first curve shows a current technology. The second shows an emerging technology that current yields lower growth but will eventually overtake current technology and lead to even greater levels of growth. The length of life will depend on many factors.

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Goals of Innovation

Programs of organizational innovation are typically tightly linked to organizational goals and objectives, to the business plan, and to market competitive positioning.

For example, one driver for innovation programs in corporations is to achieve growth objectives. As Davila et al (2006) note,

"Companies cannot grow through cost reduction and re-engineering alone . . . Innovation is the key element in providing aggressive top-line growth, and for increasing bottom-line results".

In general, business organizations spend a significant amount of their turnover on innovation i.e. making changes to their established products, processes and services. The amount of investment can vary from as low as a half a percent of turnover for organizations with a low rate of change to anything over twenty percent of turnover for organizations with a high rate of change.

The average investment across all types of organizations is four percent. For an organization with a turnover of say one billion currency units, this represents an investment of forty million units. This budget will typically be spread across various functions including marketing, product design, information systems, manufacturing systems and quality assurance.

The investment may vary by industry and by market positioning.

One survey across a large number of manufacturing and services organizations found, ranked in decreasing order of popularity, that systematic programs of organizational innovation are most frequently driven by:

  • Improved quality

  • Creation of new markets

  • Extension of the product range

  • Reduced labour costs

  • Improved production processes

  • Reduced materials

  • Reduced environmental damage

  • Replacement of products/services

  • Reduced energy consumption

  • Conformance to regulations

These goals vary between improvements to products, processes and services and dispel a popular myth that innovation deals mainly with new product development. Most of the goals could apply to any organization be it a manufacturing facility, marketing firm, hospital or local government.

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Failure of Innovation

Attaining goals must be the ultimate objective of the Business Innovation process. Unfortunately, most innovation fails to meet organizational goals.

Figures vary considerably depending on the research. Some research quotes failure rates of fifty percent while other research quotes as high as ninety percent of innovation has no impact on organizational goals. One survey regarding product innovation quotes that out of three thousand ideas for new products, only one becomes a success in the marketplace.

Failure is an inevitable part of the Business Innovation process, and most successful organizations factor in an appropriate level of risk. Perhaps it is because all organizations experience failure that many choose not to monitor the level of failure very closely. The impact of failure goes beyond the simple loss of investment. Failure can also lead to loss of morale among employees, an increase in cynicism and even higher resistance to change in the future.

Innovations that fail are often potentially 'good' ideas but have been rejected or 'shelved' due to budgetary constraints, lack of skills or poor fit with current goals. Failures should be identified and screened out as early in the process as possible. Early screening avoids unsuitable ideas devouring scarce resources that are needed to progress more beneficial ones.

Organizations can learn how to avoid failure when it is openly discussed and debated. The lessons learned from failure often reside longer in the organizational consciousness than lessons learned from success. While learning is important, high failure rates throughout the innovation process are wasteful and a threat to the organization's future.

The causes of failure have been widely researched and can vary considerably. Some causes will be external to the organization and outside its influence of control. Others will be internal and ultimately within the control of the organization. Internal causes of failure can be divided into causes associated with the cultural infrastructure and causes associated with the innovation process itself.

Failure in the cultural infrastructure varies between organizations but the following are common across all organizations at some stage in their life cycle (O'Sullivan, 2002):

  • Poor Leadership

  • Poor Organization

  • Poor Communication

  • Poor Empowerment

  • Poor Knowledge Management

Common causes of failure within the innovation process in most organizations can be distilled into five types:

  • Poor goal definition

  • Poor alignment of actions to goals

  • Poor participation in teams

  • Poor monitoring of results

  • Poor communication and access to information

Effective goal definition requires that organizations state explicitly what their goals are in terms understandable to everyone involved in the innovation process. This often involves stating goals in a number of ways. Effective alignment of actions to goals should link explicit actions such as ideas and projects to specific goals. It also implies effective management of action portfolios.

Participation in teams refers to the behavior of individuals in and of teams, and each individual should have an explicitly allocated responsibility regarding their role in goals and actions and the payment and rewards systems that link them to goal attainment. Finally, effective monitoring of results requires the monitoring of all goals, actions and teams involved in the innovation process.

Business Innovation can fail if seen as an organizational process whose success stems from a mechanistic approach i.e. 'pull lever obtain result'. While 'driving' change has an emphasis on control, enforcement and structure it is only a partial truth in achieving innovation. Organizational gatekeepers frame the organizational environment that "Enables" innovation; however innovation is "Enacted" - recognized, developed, applied and adopted - through individuals.

Individuals are the 'atom' of the organization close to the minutiae of daily activities. Within individuals gritty appreciation of the small detail combines with a sense of desired organizational objectives to deliver (and innovate for) a product/service offer.

From this perspective Business Innovation succeeds from strategic structures that engage the individual to the organization's benefit. Innovation pivots on intrinsically motivated individuals, within a supportive culture, informed by a broad sense of the future.

Innovation in Business implies change and can be counter to an organization's orthodoxy. Space for fair hearing of innovative ideas is required to balance the potential autoimmune exclusion that quells an infant innovative culture.

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Measures of Innovation

Individual and team-level assessment can be conducted by surveys and workshops. Business measures related to finances, processes, employees and customers in balanced scorecards can be viewed from the innovation perspective (e.g. new product revenue, time to market, customer and employee perception & satisfaction). Organizational capabilities can be evaluated through various evaluation frameworks e.g. efqm (European foundation for quality management) -model.

The OECD Oslo Manual from 1995 suggests standard guidelines on measuring technological product and process innovation. Some people consider the Oslo Manual complementary to the Frascati Manual from 1963. The new Oslo manual from 2005 takes a wider perspective to innovation, and includes marketing and organizational innovation. Other ways of measuring innovation have traditionally been expenditure, for example, investment in R&D (Research and Development) as percentage of GNP (Gross National Product).

Whether this is a good measurement of Innovation has been widely discussed and the Oslo Manual has incorporated some of the critique against earlier methods of measuring. This being said, the traditional methods of measuring still inform many policy decisions. The EU Lisbon Strategy has set as a goal that their average expenditure on R & D should be 3% of GNP.

The Oslo Manual is focused on North America, Europe, and other rich economies. In 2001 for Latin America and the Caribbean countries it was created the Bogota Manual.

Many scholars claim that there is a great bias towards the "science and technology mode" (S & T-mode or STI-mode), while the "learning by doing, using and interacting mode" (DUI-mode) is widely ignored. For an example, that means you can have the better high tech or software, but there are also crucial learning tasks important for innovation. But these measurements and research are rarely done.

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Business Tips

Some tips on how to avoid business failure:

  • Don't underestimate the capital you need to start up the business.

  • Understand and keep control of your finances - income earned is not the same as cash in hand.

  • More volume does not automatically mean more profit - you need to get your pricing right.

  • Make sure you have good software for your business , software that provides you with a good reporting picture of all aspects of your business operations.

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