Thus innovation is an invention that has been improved for the use of public. It is a process of transforming organizations ideas into new or improved products, service or processes, in order to advance, compete and differentiate themselves successfully in their marketplace. An innovation can be big or small, new or improvised, complex or seemingly simple. Innovations can not only be technical achievement, but can also be a design. It is not the type, industry and style of innovation that matters, what important is the innovation's impact on public or user.
Both invention and innovation have "uniqueness" implications, however, innovation is considered to be linked with profitability and market performance expectation. Innovation is about a renaissance, a clash of new ideas, new goals, new technologies, new opportunities and diversity. Innovation is very important for any organization to gain the competitive advantage. In order to remain in the market and reap the benefit of the globalization and trade liberalization.
SMEs play a significant role in the economic development on the country, and in turn, SMEs contribution to the economic development is attributed to its innovative ability. SMEs are widely acknowledged as the source of innovation.
Their ability to exploit new technologies, and to respond quickly to changing market needs, gives SMEs a pivotal role in the success of the any economy. SMEs are more creative than Large Enterprises because of the indomitable spirit of the entrepreneur and creativity. However, scale of research and variety of customizable services vary. SMEs are more adaptable to evolving trends; tend to create smaller, more practical systems because of their limited people power.
SMEs can maximize their profitability by focusing on innovation and licensing or selling their innovations to large corporations for production and development. Innovation will help SMEs in improving performance, growth efficiency, productivity, quality, competitive positioning and market share.
Further, smart innovation helps in reducing the cost of product that an organization bring to market thus enhance the reach and prospects of the product along with best message for buyers. Innovation can result in a lower cost product, lower cost promotion and more sales.
Innovation shall be the foray of everyone in the organization; however the key driver of the innovation is the chief executive or senior management. The actions of the senior management to initiate innovation processes, to sponsor innovative endeavours, to foster a sense of empowerment, to encourage and facilitate collaboration on innovation with other organisations helps the organization to lead a successful path of innovation and success. Without the interest and commitment of senior management, attempts at innovation are most likely to fail. Innovation is most likely with an entrepreneurial spirit.
There are no fixed and defined techniques for innovation; the use of particular technique depends on the situation, time and technology implication. Some of the techniques are brainstorming, lateral thinking, skunk works and creativity exercises etc.
You must create an innovation strategy that is aligned with not only your firm's core mission and values, but with your future technology, supplier, and manufacturing strategies. Lack of alignment between product and process architectures rapidly increases cost and risk. If your development process and organization structure are not matched to each other and your firm's strategy, you're in even deeper trouble.
Though innovation is very important for organization in gaining competitive edge, however, it is not always successful. The causes of failure can vary considerably from external to the organisation and as well as internal.
The external causes are difficult to control, whereas internal causes are within the control of the organisation. Internal causes of failure may arise from cultural infrastructure that includes poor leadership, poor organization, poor communication, poor empowerment, and Poor knowledge management.
The another cause of failure is the innovation process itself that may arise due to poor goal definition, poor alignment of actions to goals, poor participation in teams, poor monitoring of results and poor communication and access to information. Effective goal definition is very important in the innovation process and requires the goals are understood by everyone involved in process.
Innovation can fail if seen as an organisational process whose success stems from a mechanistic approach i.e. 'pull lever obtain result'. While 'driving' change has an emphasis on control, enforcement and structures it is only a partial truth in achieving innovation. Organisational gatekeepers frame the organisational environment that "Enables" innovation; however innovation is "Enacted" – recognised, developed, applied and adopted – through individuals.
Innovation, implies transformation, and can be counter to an organisation's orthodoxy. Some the challenges faced by SMEs that are core and demanding, to change to an innovative organisation include creation of an executive steering group, invoking the assistance of internal change agent departments such as HR and IT and R&D, creating a culture for change and creativity, facilitating creativity workshops, suggestion scheme, capture of new ideas in a repository.
The innovation may be considered important both at organization level and at product or service production level. At the product level innovation may be categorised into following.
Product Innovation - new products or improvements on products. E.g. new range of mobile, scooter etc.
Process Innovation - where some part of the process is improved to bring benefit, this may introduction or up gradation of technology. E.g. on time delivery, customer feedback etc,
Positioning Innovation – when the same product is positioned with diversification. E.g. Lucozade is medicinal drink but it was repositioned as a sports drink.
Supply Chain Innovation - where innovations occur in the sourcing of input products from suppliers and the delivery of output products to customers.
Transformational Innovation: it is the most difficult as it changes the way we live and often makes big companies, even whole industries, obsolete in a short period of time. Most organizations are unwilling to pursue ideas that will make themselves obsolete.
Unfortunately, this is one of the reasons that they die. In most cases transformational innovation starts in someone's "garage;" by a visionary outsider. It rarely happens within the walls of an organizational structure.
This can also occur with the change in present technology, demand and supply pattern. E.g. Lufthansa transforms frequent flier service with Business Process Management to enhance the customer satisfaction.
Incremental Innovation: it is the most widely used by companies. It focuses on improvement in product, brand or company. This can be done through brand extension, new packaging, improved ingredients and even improvised advertising as well. This type of innovation that requires:
Multi-disciplined, cross-functional collaboration
Consensus-based decision making between multiple stakeholder functions.
Internal competition for people, money, and operational resources, such as: R&D, packaging development, qualitative and quantitative market research, distribution channel support, promotional and advertising development etc.
Breakthrough innovation: this comes between incremental and transformational innovation spectrum. It requires significant change in terms of both cultural and systems support. It helps organization in attaining true competitive advantage. It requires support from the top management.
Some of the top sources of new ideas and innovation include: