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Innovation and its relevance

Innovation and its relevance

The world is progressively becoming more competitive and Darwin’s theory of “Survival of the fittest” is more relevant today than ever. Changes are becoming rapid and frequent. Business must keep pace with the changes in their respective industry, lest they fall by the wayside in the race. They must create the differentiators that set them apart in order to stay relevant in the competition.

The various kinds of differentiators can be classified into three categories, namely:

  1. Differentiation through pricing,
  2. Differentiation through services,
  3. Differentiation through product (or, features, quality, and processes).

Differentiation through pricing leaves one with limited choice and cannot be long-lasting. Cost could be reduced to a point until the margins become so low that it affects the profit-and-loss equation and the business closes at some point.

Differentiation through service is meaningful, but like pricing, cannot last long. It does not provide a protection from the competition; in other words, competition can catch up with the resources with the right combination of attitude and competence. Employing the best resources can be expensive which again impacts the margins. Over time, the business may lose its people to those competitors with deeper pockets.

For both these strategies, it is the depth of the pockets of the business that determines their ability to outlast the competition. This works only for a limited period. One category that can provide a long-term impact is the product (or feature) differentiation. This differentiation is achieved by investing in innovation and making continuous innovation a part of the culture in the organization.

What is Innovation?

What is really innovation? How is Innovation different from Invention or Discovery? Or are they the same? These are terms that are often mis-construed and used interchangeably.

It is obvious that discovery is not innovation. Discovery is the act of finding something that already exists but is unknown to humankind. Discovery is often associated with geographical findings, scientific principles, archaeological facts, etc. For example, Columbus’ discovery of the Americas; or Newton’s discovery of the Gravitational force. The Americas and the force of gravity have been in existence for ages. It is just that the knowledge did not exist.

Invention, in contrast to discovery, involves creating something new, something that has not existed before. Invention is often associated with new products, features and so on. For example, Edison’s invention of the Gramophone, or of the Telephone by Graham Bell.

Where does Innovation fit in? Innovation is closely related to Invention. Innovation is an invention of a product, feature, or a new process that results in some benefits, mostly commercial in nature. In short, innovation is invention in the context of commercialization. It is important that the invention results in a product that has significant use in society, and it has the right technology to make it commercially viable. It solves some significant problems or results in significant gains for society.

Innovation has three key elements:

(1) novelty, or something that is new;

(2) value to the user; and

(3) significance economically and socially.

Innovation could be in a process or its outcomes (products and services).

Innovation is the practical implementation of new ideas that aid the introduction of new products, features and services to the customers which are more effective and valuable to the end user in some manner. Clearly, innovation is not a one-off process or activity. On the other hand, there are multiple stages in the process that come together to transform a new idea into a viable product.

Innovation, like Invention, is an intellectual property which can be protected in diverse ways. It can be patented (so as to not be copied or reproduced without explicit permission), published in journals (so that it becomes common knowledge and no one else can claim rights to the idea).

Innovation and Creativity

Creativity is the generation of new ideas, by an individual or a group of people. In strong contrast to creativity, innovation takes these ideas, refines and implements them. During implementation, the technology is merged with the idea to give life to the idea.

Once the idea is implemented, the business model determines the means of revenue generation from the implemented idea. This brings in the economic perspective of innovation. In summary, an innovation consists of one or more novel idea(s), the implementation (technology) and the business model (commercialization of the idea).

Why is innovation important?

As discussed earlier, innovation is one of the differentiating strategies for any organization. It is crucial for the continued success of the organization and often, for being relevant in the industry.

For continued differentiation and keeping ahead of the competition, continuous innovation is important. In fact, it is inevitable for organizations to invest in innovation to stay competitive in the marketplace. We have the opportunity to study innumerable examples of organizations that have constantly reinvented themselves through innovation as well as those that failed to innovate and got pushed aside by competition.

The importance of innovation is highlighted in many books and articles. One such example from an international bestseller is, “The Blue Ocean Strategy,’ by W. Chan Kim and Renee Mauborgne. In this book, the authors use the metaphor of the ocean to indicate the marketplace and divide the ocean into two – the red ocean (where a cut-throat competition exists) and the blue ocean (that is free from competition, resulting from innovative ideas and product being positioned in the market and the business moves away from competition). In the absence of innovation, competition results in making compromises on the cost and ends up being overshadowed by the falling margins.

Innovation and career

Innovation is relevant and important to individuals too. Digital transformation of the workplace is resulting in rapid automation of routine tasks and repetitive activities. In this scenario, it is particularly important to keep reinventing oneself, or in other words, learning about recent technologies, tools and processes pertaining to the domain of focus. At an individual level too, competition exists and is becoming more intense with time.

Where competition exists, differentiation becomes relevant and important. For a sustainable long-term career, reinventing and innovating oneself becomes crucial. In the years to come, adaptation to change and keeping ahead of the competition is going to determine how long one can remain employed and relevant in the industry.

In Summary

Innovation is important for long-term survival and relevance, be it for organizations or for individuals. It is crucial to continuously innovate and adapt to the changing face of the market and the consumers.

To be able to effectively build an organization with a strong innovation framework imbibed into its culture, certain practices are important. What are the key ingredients for a strong innovative culture? We shall see it in the next part of this article.

About the Author

Dr. Anand Lakshmanan is a Senior-Member of IEEE, a Technologist and an Organization builder. He is currently pursuing advisory and consulting roles for EdTech companies, and member of curriculum committee and Senate in Institutes of National repute.