Innovation often takes place through the development of more-effective products, processes, services, technologies, art works or business models that innovators make available to markets, governments, and society.
Innovation is related to, but not the same as, invention: innovation is more apt to involve the practical implementation of an invention (i.e. new / improved ability) to make a meaningful impact in a market or society. Not all innovations require a new invention.
Technical innovation often manifests itself through the engineering process when the problem being solved is of a technical or scientific nature. The opposite of innovation is exnovation.
Definition
Surveys of the literature on innovation have found a variety of definitions. In 2009, Baregheh et al. found around 60 definitions in different scientific papers, while a 2014 survey found over 40. Based on their survey, Baragheh et al. attempted to formulate a multidisciplinary definition and arrived at the following:
"Innovation is the multi-stage process whereby organizations transform ideas into new/improved products, service or processes, in order to advance, compete and differentiate themselves successfully in their marketplace"
In a study of how the software industry considers innovation, the following definition given by Crossan and Apaydin was considered to be the most complete. Crossan and Apaydin built on the definition given in the Organisation for Economic Co-operation and Development (OECD) Oslo Manual:
Innovation is production or adoption, assimilation, and exploitation of a value-added novelty in economic and social spheres; renewal and enlargement of products, services, and markets; development of new methods of production; and the establishment of new management systems. It is both a process and an outcome.
American sociologist Everett Rogers, defined it as follows:
"An idea, practice, or object that is perceived as new by an individual or other unit of adoption"
According to Alan Altshuler and Robert D. Behn, innovation includes original invention and creative use. These writers define innovation as generation, admission and realization of new ideas, products, services and processes.
Two main dimensions of innovation are degree of novelty (i.e. whether an innovation is new to the firm, new to the market, new to the industry, or new to the world) and kind of innovation (i.e. whether it is process or product-service system innovation). Organizational researchers have also distinguished innovation separately from creativity, by providing an updated definition of these two related constructs:
Workplace creativity concerns the cognitive and behavioral processes applied when attempting to generate novel ideas. Workplace innovation concerns the processes applied when attempting to implement new ideas. Specifically, innovation involves some combination of problem/opportunity identification, the introduction, adoption or modification of new ideas germane to organizational needs, the promotion of these ideas, and the practical implementation of these ideas.
Peter Drucker wrote:
Innovation is the specific function of entrepreneurship, whether in an existing business, a public service institution, or a new venture started by a lone individual in the family kitchen. It is the means by which the entrepreneur either creates new wealth-producing resources or endows existing resources with enhanced potential for creating wealth.
Creativity and innovation
In general, innovation is distinguished from creativity by its emphasis on the implementation of creative ideas in an economic setting. Amabile and Pratt in 2016, drawing on the literature, distinguish between creativity ("the production of novel and useful ideas by an individual or small group of individuals working together") and innovation ("the successful implementation of creative ideas within an organization").
Economics and innovation
In 1957 the economist Robert Solow was able to demonstrate that economic growth had two components. The first component could be attributed to growth in production including wage labour and capital. The second component was found to be productivity. Ever since, economic historians have tried to explain the process of innovation itself, rather than assuming that technological inventions and technological progress result in productivity growth.
The concept of innovation emerged after the Second World War, mostly thanks to the works of Joseph Schumpeter (1883โ1950) who described the economic effects of innovation processes as Creative destruction. Today, consistent neo-Schumpeterian scholars see innovation not as neutral or apolitical processes. Rather, innovation can be seen as socially constructed processes.
Therefore, its conception depends on the political and societal context in which innovation is taking place. According to Shannon Walsh, "innovation today is best understood as innovation under capital" (p. 346). This means that the current hegemonic purpose for innovation is capital valorisation and profit maximization, exemplified by the appropriation of knowledge (e.g., through patenting), the widespread practice of Planned obsolescence (incl. lack of repairability by design), and the Jevons paradox, that describes negative consequences of eco-efficiency as energy-reducing effects tend to trigger mechanisms leading to energy-increasing effects.
A 2018 study, published in the Marketing Science journal, found that 73% of innovations examined during the 19th and 20th centuries were linked to economic bubbles. It also found that the scale of these bubbles were positively correlated with how radical and publicly visible the innovations were, and with whether they had generated indirect network effects.
Types
Several frameworks have been proposed for defining types of innovation.
Sustaining vs disruptive innovation
One framework proposed by Clayton Christensen draws a distinction between sustaining and disruptive innovations. Sustaining innovation is the improvement of a product or service based on the known needs of current customers (e.g. faster microprocessors, flat screen televisions). Disruptive innovation in contrast refers to a process by which a new product or service creates a new market (e.g. transistor radio, free crowdsourced encyclopedia, etc.), eventually displacing established competitors. According to Christensen, disruptive innovations are critical to long-term success in business.
Disruptive innovation is often enabled by disruptive technology. Marco Iansiti and Karim R. Lakhani define foundational technology as having the potential to create new foundations for global technology systems over the longer term. Foundational technology tends to transform business operating models as entirely new business models emerge over many years, with gradual and steady adoption of the innovation leading to waves of technological and institutional change that gain momentum more slowly.[additional citation(s) needed] The advent of the packet-switched communication protocol TCP/IPโoriginally introduced in 1972 to support a single use case for United States Department of Defense electronic communication (email), and which gained widespread adoption only in the mid-1990s with the advent of the World Wide Webโis a foundational technology.
Four types of innovation model
Another framework was suggested by Henderson and Clark. They divide innovation into four types;
- Radical innovation: "establishes a new dominant design and, hence, a new set of core design concepts embodied in components that are linked together in a new architecture." (p. 11)
- Incremental innovation: "refines and extends an established design. Improvement occurs in individual components, but the underlying core design concepts, and the links between them, remain the same." (p. 11)
- Architectural innovation: "innovation that changes only the relationships between them [the core design concepts]" (p. 12)
- Modular Innovation: "innovation that changes only the core design concepts of a technology" (p. 12)
While Henderson and Clark as well as Christensen talk about technical innovation there are other kinds of innovation as well, such as service innovation and organizational innovation.
Non-economic innovation
As distinct from business-centric views of innovation concentrating on generating profit for a firm, other types of innovation include: social innovation, religious innovation, sustainable innovation (or green innovation), and responsible innovation.
Open innovation
One type of innovation that has been the focus of recent literature is open innovation or "crowd sourcing." Open innovation refers to the use of individuals outside of an organizational context who have no expertise in a given area to solve complex problems.
User innovation
Similar to open innovation, user innovation occurs when companies rely on users of their goods and services to come up with, help to develop, and even help to implement new ideas.
History
Innovation must be understood in the historical setting in which its processes were and are taking place.
Ancient world
The first full-length discussion about innovation was published by the Greek philosopher and historian Xenophon (430โ355 BCE). He viewed the concept as multifaceted and connected it to political action. The word for innovation that he uses, kainotomia, had previously occurred in two plays by Aristophanes (c. 446 โ c. 386 BCE).
Plato (died c. 348 BCE) discussed innovation in his Laws dialogue and was not very fond of the concept. He was skeptical to it both in culture (dancing and art) and in education (he did not believe in introducing new games and toys to the kids).
Aristotle (384โ322 BCE) did not like organizational innovations: he believed that all possible forms of organization had been discovered.
Before the 4th century in Rome, the words novitas and res nova / nova res were used with either negative or positive judgment on the innovator. This concept meant "renewing" and was incorporated into the new Latin verb word innovo ("I renew" or "I restore") in the centuries that followed. The Vulgate version of the Bible (late 4th century CE) used the word in spiritual as well as political contexts.
It also appeared in poetry, mainly with spiritual connotations, but was also connected to political, material and cultural aspects.
Early modern period
Machiavelli's The Prince (1513) discusses innovation in a political setting. Machiavelli portrays it as a strategy that a Prince may employ in order to cope with a constantly changing world as well as the corruption within it. In The Prince innovation is described as introducing change in government: new laws and new institutions;[page needed] Machiavelli's later book The Discourses (1528) characterises innovation as imitation, as a return to the original that has been corrupted by people and by time.[citation needed] Thus for Machiavelli innovation came with positive connotations.
This is however an exception in the usage of the concept of innovation from the 16th century and onward. No innovator from the renaissance until the late 19th century ever thought of applying the word innovator upon themselves, it was a word used to attack enemies.
From the 1400s[citation needed] through the 1600s, the concept of innovation was pejorative โ the term was an early-modern synonym for "rebellion", "revolt" and "heresy".
In the 1800s[timeframe?] people promoting capitalism saw socialism as an innovation and spent a lot of energy working against it. For instance, Goldwin Smith (1823-1910) saw the spread of social innovations as an attack on money and banks. These social innovations were socialism, communism, nationalization, cooperative associations.
20th and 21st centuries
A study by McKinsey & Co. notes that patterns of innovation as measured by patent applications followed the economic cycle during the first part of the 20th century, with businesses reluctant to innovate during the depression of the 1930s. Later in the century, the concept of innovation became more popular after the Second World War of 1939โ1945.
This was the point in time when people started to talk about technological product innovation and tie it to the ideas of economic growth and competitive advantage. Joseph Schumpeter (1883โ1950), who contributed greatly to the study of innovation economics, is seen as the one who made the term popular. Schumpeter argued that industries must incessantly revolutionize the economic structure from within, that is: innovate with better or more effective processes and products, as well as with market distribution (such as the transition from the craft shop to factory).
He famously asserted that "creative destruction is the essential fact about capitalism". In business and in economics, innovation can provide a catalyst for growth when entrepreneurs continuously search for better ways to satisfy their consumer base with improved quality, durability, service and price - searches which may come to fruition in innovation with advanced technologies and organizational strategies.
Schumpeter's findings coincided with rapid advances in transportation and communications in the beginning of the 20th century, which had huge impacts for the economic concepts of factor endowments and comparative advantage as new combinations of resources or production techniques constantly transform markets to satisfy consumer needs. Hence, innovative behaviour becomes relevant for economic success.